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Case Study

FX deal-contingent hedging for a large private equity fund


A recent example of deal-contingent hedging for a large European private equity fund.


  • A large EUR PE fund was acquiring a UK business with a consideration payable in GBP.
  • Equity for the transaction was denominated into EUR giving rise to FX risk between signing and closing of the acquisition price.
  • The deal was subject to regulatory approval which implied that the risk of the acquisition failing to complete was low.
  • The client had the choice between eight deal-contingent providers (inbounds and banks involved in the deal).

Our Approach

  • Chatham conducted an independent review of the sales and purchase agreement (SPA) to offer two alternatives for implementation achieving different objectives and timelines.
  • We managed and coordinated an efficient process with a tight schedule (three business days to trade) with the client, the selected banks, and all other parties involved (M&A lawyer for due diligence and a derivatives lawyer to review the deal confirmation).
  • We provided additional input during the process: deal-contingent option discussion, flexibility to settle before closing, and other commercial points.
  • Finally, Chatham conducted live benchmarking during implementation of the trade ensuring efficient, transparent pricing was achieved.


  • A tailor-made process to the underlying M&A situation, the banks involved, and the size of market risk in order to create the best pricing environment, while limiting the amount of work/resources on the client side.
  • The deadline for implementation was very tight.
  • Highly attractive pricing with a deal-contingent premium of less than 20% of the at-the-money option.
  • The flexible settlement mechanism allowed for the delivery of the contract at any date between the first and the long-stop date at no additional cost.

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About the author

  • Benoit Duhil de Benaze

    Managing Director
    Hedging and Capital Markets

    Private Equity | London

    Benoit Duhil de Benaze is a member of Chatham’s European Private Equity team. He helps clients with their risk management, from FX deal-contingent hedges in multibillion, cross-border M&A to large interest rate financing/ refinancing situations.


This material has been created by Chatham Financial Europe, Ltd. and is intended for a non-U.S. audience. Chatham Financial Europe, Ltd. is authorised and regulated by the Financial Conduct Authority of the United Kingdom with reference number 197251.