IRISH investment giant Avoca Capital has closed a deal to buy a €100m UK hedge fund business from Liontrust Asset Management.
The deal sees Avoca taking control of two high-yield bond hedge funds that manage contracts worth €100m.
The acquisition includes fund managers experienced in hedging risk by "shorting" the market through trading in derivatives contracts such as credit default swaps (CDS).
It's the first venture into the lucrative but often controversial world of hedge fund investment by Avoca, which previously focused on corporate loans.
High-yield bonds, or junk bonds, are used to fund many of the same types of leveraged buyout deals Avoca already backs through its investments in corporate leveraged loans.
"We have been looking for more than a year to recast our business model in order to take a credit hedge fund strategy on board to complement our loan business," Clayton Perry, Avoca's chief operating officer in London, said in an interview.
Avoca was set up in 2002 by former AIB executives Alan Burke and Donal Daly and is now one of the biggest investors in the European corporate loan market. Its 43 staff manage €6bn worth of assets from their St Stephen's Green offices.
In February Avoca hired London-based banker Robert Burns from Citigroup as a director to work in sales and marketing in London.
Avoca is one of the senior lenders to Eircom and its executives are currently part of a co-ordinating committee of lenders that will act as the main contact between the company and its creditors in debt talks.