Tyrus Capital hit hard by half-a-billion dollar bet on NXP Semiconductors

 August 10, 2018

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“Monaco hedge fund bore significant losses from investment in Dutch chipmaker.” – reports Financial Times

The Monaco based Tyrus Capital and its hedge fund made a highly significant loss when Tyrus Capital, headed by Tony Chedraoui invested into NXP Semiconductors.

“a half-a-billion dollar bet that went very wrong.” – reports the Financial Times

The Financial Times recalls when last year Tony Chedraoui stood on stage in front of his hedge fund industry peers at the Monaco Yacht Club, presented NXP Semiconductors as an investment with “very low” downside and potentially double-digit upside.

The presentation, made in front of peers and prospective clients, turned into the latest blow for Tyrus, which in 2012 paid $5m to settle a regulator’s fraud allegations in Brazil and during 2014 suffered a heavy paper loss betting on an aborted takeover of Shire.

Just over a year later, Mr Chedraoui’s Monaco-based hedge fund Tyrus Capital is dealing with the aftermath of a half-a-billion dollar bet that went very wrong.

The Financial Times also highlights that the confidence came from two fronts: NXP had an agreed takeover offer from Qualcomm, the US semiconductor company, and the chip sector had rallied since that deal was struck in October 2016. Either Qualcomm would have to improve its offer, or NXP would remain independent but be buoyed by the broader rally.

In February 2018, Qualcomm had upped its offer to $44 billion. However, the Chinese government blocked the purchase in July amid President Trump’s trade war with China.

Tyrus Capital held 4.3m shares in NXP at the end of the first quarter this year. By the end of the second quarter, the fund had sold off its entire shareholding. Losses for the fund were “significant”.

Tyrus Capital did not provide comment for publication.

Originally published by Lindsay Fortado, Arash Massoudi and Miles Johnson at Financial Times

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