A New Zealand hedge fund targeting the opportunities created by takeover bids - such as Toll Holdings' move on Tranz Rail - is expected to be started before year's end.
Locally-owned merchant bank Bancorp has told financial planners it is setting up a fund of up to $30 millionto operate for retail investors in New Zealand and Australia.
The case of Tranz Rail illustrates the type of opportunity the fund would seek to exploit.
Six months ago, the company's share price went as low as 30c.
The takeover bid from Toll Holdings, of Australia, went from 75c per share in June to 95c to $1.10, and remains open until November 7 - but some shareholders are holding out for more.
Sharebroker ABN Amro last week upgraded Tranz Rail from a "hold" to a "buy".
Yesterday, the stock was trading at $1.25.
The Mainfreight takeover offer for Owens Group, which closes at the end of this month, is another to have been sweetened along the way.
A third example of the type of company that might feature as an investment is Fletcher Challenge Forests, would-be seller of a forestry estate attracting bids of up to $725 million.
The hedge fund best known to New Zealand investors is Perry Corporation, of the United States, which swooped on Fletcher Forests' biggest shareholder, Rubicon.
In Australia, Rubicon Asset Management - no relation - last year started an A$35 million ($40.6 million) fund of the type proposed by Bancorp.
