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Benoit Duhil de Benaze on how a rise in cross-border M&A drives the need for deal-contingent hedging

June 17, 2024


Euromoney interviewed Benoit Duhil de Benaze on the surge in deal-contingent hedging due to the recent M&A boom, aimed at mitigating interest rate, currency, and commodity risks.

His white paper, Deal-contingent Hedging, explains how deal-contingent hedging mitigates FX risk between the signing and closing of a cross-border M&A transaction. The interview with Euromoney explored drivers beyond interest rates that are resulting in an increased interest in deal-contingent hedging, such as currencies trading at historic levels, an inverted yield curve, and the volatility in commodity pricing.

“Some currencies are trading at attractive historical levels and there are markets trading at lower multiples — such as the UK, which has seen increased private market activity.”

Benoit Duhil de Benaze in EuroMoney

Our deal-contingent hedging expertise

Private equity investors who purchase foreign assets run the risk that movements in local currency rates can materially increase the volatility of your expected return. Chatham can mitigate this risk by helping you understand your risk profile, quantifying your exposures, and identifying appropriate hedging strategies to meet your specific circumstances and desired outcomes.

Our expertise encompasses both fund-level and investment-level foreign currency hedging needs, including share class hedging, FX capital structure optimization, and EBITDA/cash flow hedging programs. For deal-contingent FX hedges, we help you identify potential FX exposures within the deal and implement an appropriate sign-to-close hedging strategy that protects the deal economics and reduces the negative impact of unfavorable currency movements.

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