JPMorgan’s Highbridge Capital Seeks $1 Billion to Bet on SPACs

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JPMorgan Chase & Co.’s Highbridge Capital Management is in talks to raise $1 billion or more for a strategy dedicated to investing in special purpose acquisition companies and related financial instruments, according to people with knowledge of the matter.

The New York-based firm has begun discussions with prospective institutional investors such as pension funds and endowments, and with retail investors through wealth-management platforms, said the people, who asked not to be identified because the talks are private.

Including leverage, Highbridge expects to amass $2 billion to $3 billion, for which it may hold a first close as soon as the first quarter of 2021, one of the people said.

Highbridge, which has made wagers on blank-check firms through its flagship hedge fund, plans to spend much of its new vehicle on SPAC-related instruments including private investments in public equity, or PIPEs, convertible debt and warrants. PIPEs represent new equity that’s issued to support a merger with a target company once a deal has been agreed.

“We believe that 2020’s record SPAC issuance represents the potential for more than $100 billion of near-term transactional value,” the firm said in a presentation discussing the vehicle, known as the Highbridge SPAC Opportunities Fund, seen by Bloomberg. “This activity level has created multiple asymmetric trading opportunities.” Highbridge made its first SPAC investment in 2006.

The new fund will be overseen in part by Highbridge co-Chief Investment Officers Jason Hempel and Jonathan Segal. Its formation comes amid a boom for U.S. SPACs, which have raised a record total in excess of $68 billion. The pace of issuance has caused some investors to hit their limits, with some institutions sidelined from partaking in new transactions until deals featuring SPACs they’ve already backed are completed.

A representative for JPMorgan’s asset-management unit, which owns Highbridge, declined to comment.

Highbridge last week said it raised $685 million in equity commitments for the Highbridge Convertible Dislocation Fund which is earmarked for opportunities that arise in North America and Western Europe.

©2020 Bloomberg L.P.

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