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The fund is designed to track the performance of the index and provide exposure to a global merger arbitrage strategy. The index, and by extension the fund, seeks to produce consistent, positive returns in virtually all market environments, although there are no assurances it will achieve this result. The fund is non-diversified.

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Nineteen blank-cheque company (SPAC) mergers have been canceled in 2022 compared to three in the identical interval in 2021, with many failing resulting from a mix of excessive investor redemptions and insufficient money from 

Are SPAC Deals Going Out of Flavor?

Global Dealmaking Drops To Lowest Level Since Onset Of Pandemic: FT

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Deal Making Lifts M&amp;A ETF

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Nineteen blank-cheque company (<a class="editor-rtfLink" href="https://www.benzinga.com/topic/spacs" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">SPAC</a>) mergers have been canceled in 2022 compared to three in the identical interval in 2021, with many failing resulting from a mix of excessive investor redemptions and insufficient money from non-public traders through construction, often known as a Pipe,&nbsp;<a class="editor-rtfLink" href="https://www.ft.com/content/5e1c8ecc-79ae-4cc9-8db7-0d81a6d9f7c0" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">writes Financial Times.</a>

According to Dealogic, SPAC investor redemptions reached 81% in March. The U.S. Securities and Exchange Commission (SEC) recommended substantial revisions for SPAC last week, adding to market uncertainty.

Gelesis, a capsule manufacturer, merged with Capstar Particular Function Acquisition Firm in January. A $15 million backstop settlement was included in the terms provided to traders, in which capital is put up to modify investor withdrawals.

The deal team also tried to entice traders by forfeiting around 2 million shares from the sponsor group, including Capstar Companions and Pimco, allowing dealers unrestricted access to them. The deal additionally featured an earnout clause.

However, 99% of traders withdrew their funds anyway, allowing Gelesis to raise only $105 million instead of the planned $376 million. Later, the Boston-based pharmaceutical company laid off 140 advertising personnel.

The beneficent investor provisions for the Gelesis merger are one other signal of how the once-hot marketplace for particular goal acquisition corporations (SPACs) has fizzled.

During the peak of blank-cheque automobiles in 2020, some sponsors made billions, usually by purchasing 20% of the SPAC&rsquo;s equity for a minimal fee of $25,000, which converts to a lower stake once the merger is completed.

Photo by Capri23auto from Pixabay

Global dealmaking fell to its lowest level since the coronavirus pandemic as surging inflation, stricter regulation, and the war in Ukraine led to a slowdown in what had been a record period of mergers and acquisitions,&nbsp;<a class="editor-rtfLink" href="https://www.ft.com/content/47c9ec9f-e86e-427e-8a50-34e4a6757852" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">reported The Financial Times</a>.

According to Refinitiv data, just over $1 trillion worth of deals were struck in the first quarter of 2022, 23% lower than the same period last year, with all continents facing a decline in M&amp;A activity.

On the other hand, Private equity groups enjoyed their strongest ever start to the year, deploying vast cash piles accumulated during the pandemic. Buyout groups backed $288 billion worth of deals, a 17% rise compared with the first three months of 2021.

&ldquo;The uncertainty from geopolitical tensions, lower GDP growth, inflation, and the commodity cycle would typically dampen M&amp;A activity. But the ambitions that we see among CEOs and boards to grow their businesses remain quite high,&rdquo; stated Avinash Mehrotra, global head of activism and shareholder advisory at Goldman Sachs.

As per the Financial Times, the value of canceled deals peaked in 1Q21 at $215 billion, the highest level since 2018. About three-quarters of all abandoned deals involved a European target, highlighting the stricter regulatory stance taken by the UK and European competition authorities.

The rate of abandoned deals involving special purpose acquisition companies also increased as the SPAC merger frenzy of the past two years gave way to heightened regulatory scrutiny and poor performance.

Related:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/government/22/03/26393329/sec-proposes-for-greater-disclosures-from-blank-cheque-company-sponsors-ft" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">SEC Proposes For Greater Disclosures From Blank-Cheque Company Sponsors</a>

SPAC mergers accounted for 3% of total global dealmaking, compared with 17% in the same period in 2021. The SPAC initial public offerings fell 78% this year compared with 1Q21, while just 38 mergers have been completed.

From Comcast's (NASDAQ: <a class="ticker" href="/stock/cmcsa#NASDAQ">CMCSA</a>) $16.7 billion deal to acquire the portion of NBCUniversal it did not already own to US Airways (NYSE: <a class="ticker" href="/stock/lcc#NYSE">LCC</a>) purchasing rival AMR (OTC: <a class="ticker" href="/stock/aamrq#OTC">AAMRQ</a>) to Berkshire Hathaway (NYSE: BRK-A) and a Brazilian partner moving on H.J. Heinz (NYSE: <a class="ticker" href="/stock/hnz#NYSE">HNZ</a>), this week has been a busy one on the mergers and acquisitions front. 

The brisk deal-making pace has been good news for one ETF perceived to be a play on increased mergers and acquisitions activity. That being the IndexIQ Merger Arbitrage ETF (NYSE: <a class="ticker" href="/stock/mna#NYSE">MNA</a>), which gained more than 1.3 percent this week amid the flurry of M&A headlines.

What is important to note with MNA, and it is overlooked by those not familiar with the ETF, is that the fund is not comprised rumored takeover candidates. Rather, MNA is true to its name and is home to "global companies for which there has been a public announcement of a takeover by an acquirer," according to IndexIQ.

Rather, MNA is an arbitrage play, or a way to profit from the way professional investors buy and sell the stocks of the acquiring and target companies. In other words, Heinz is currently not one of MNA's constituents, but it could be in the future. 

Some of MNA's top equity holdings currently include NYSE Euronext (NYSE: <a class="ticker" href="/stock/nyx#NYSE">NYX</a>), Nexen Energy (NYSE: <a class="ticker" href="/stock/nxy#NYSE">NXY</a>), Best Buy (NYSE: <a class="ticker" href="/stock/bby#NYSE">BBY</a>) and Sprint (NYSE: <a class="ticker" href="/stock/s#NYSE">S</a>). 

At the sector level, MNA is diverse. Consumer staples lead the way with a 21 percent weight, but financial services, energy, health care and consumer discretionary also receive double-digit allocations. As of the end of 2012, MNA was heavily focused on U.S. stocks, but almost 39 percent of its weight was spread among <a href="http://www.indexiq.com/docs/mna/factsheet.pdf">Canada, the Netherlands and Australia</a>.

Speaking of global exposure, another overlooked feature of MNA is that the ETF features short positions on some international stocks a partial market hedge. MNA's equity market hedge was -14 percent of the total portfolio at the end of 2012.

MNA does have some rivals in the arbitrage in ETF niche, notably the Credit Suisse Merger Arbitrage Liquid Index ETN (NYSE: <a class="ticker" href="/stock/csma#NYSE">CSMA</a>) and the ProShares Merger ETF (BATS: MRGR), but the IndexIQ has been the top performer of the group over the past year.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Deal Making Lifts M&A ETF

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