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UK activist Parvus builds position in Ryanair

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Ryainair CEO Michael O'Leary is expecting "seismic" changes in airlines post-Covid. Photo: Peter Nicholls

Ryainair CEO Michael O'Leary is expecting "seismic" changes in airlines post-Covid. Photo: Peter Nicholls

REUTERS

Ryainair CEO Michael O'Leary is expecting "seismic" changes in airlines post-Covid. Photo: Peter Nicholls

Hedge fund owner Edoardo Mercadante has established a more than 3pc economic interest in Ryanair as the carrier eyes opportunities amid the debris of Europe’s post-Covid aviation sector.

Mr Mercadante, who controls and co-founded London-based Parvus Asset Management, has been a kingmaker in some major deals in recent years.

He helped to thwart a planned £4.6bn (€5.1bn) merger between gambling firms William Hill and PokerStars owner Amaya in 2016.

Amaya later changed its name to The Stars Group, which last year completed an €11bn merger with Paddy Power owner Flutter Entertainment.

Mr Mercadante’s exposure to Ryanair is via equity swap derivative instruments.

A stock exchange filing shows that Mr Mercadante and Parvus control an interest equivalent to 3.09pc of Ryanair. A stake equivalent to 2.67pc of the airline held by an equity swap position is listed as due to expire in September next year.

Neither Parvus Asset Management nor Mr Mercadante were contactable yesterday.

The hedge fund boss is a former fund manager at Merrill Lynch Investment Management. Born in Italy, he runs Parvus alongside Mads Gensmann.

Parvus has about $5.5bn of assets under management.

Ryanair is eyeing expansion in Europe once the pandemic fades. In December, it inked a deal to buy an additional 75 Boeing Max jets as the troubled aircraft re-entered service around the world following two deadly crashes. That brought Ryanair’s total order for Max jets to 210.

Ryanair said it will use the aircraft to expand into new EU countries and markets. It hopes to take delivery of about 50 of them this year.

The fallout amongst Europe’s airline sector will present growth opportunities for Ryanair, group CEO Michael O’Leary believes.

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“I have never in my 30 years in the industry seen such a clean-out,” Mr O’Leary told the Financial Times last month. “The real seismic change from Covid will be the growth opportunities across Europe. They are much greater than after the financial crisis or 9/11.”

Mr O’Leary owns just over 4pc of Ryanair.

Last week, Ryanair said it expects to operate “few, if any” flights from Ireland or the UK from the end of January after fresh lockdowns were implemented in both countries. It expects the lockdowns to cut its passenger traffic in the 12 months to the end of next March to between 26 million and 30 million from a previous estimate of below 35 million.

Parvus Asset Management has established a track record of closely probing potential deals involving its investments.

In 2011, the firm opposed a planned £5.2bn acquisition by security giant G4S of Danish support services firm ISS. Parvus had established a 3.7pc stake in G4S after swapping out contracts for difference in the security business. G4S ditched the takeover plan after shareholder opposition.

At William Hill, Parvus had a 14pc economic interest in the firm via derivatives by 2016. Parvus believed the market was overvaluing Amaya at the time of the planned takeover.

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