Balyasny's Derivative Play in Just Group Signals Arbitrage Strategy

LONDON, UK – December 09, 2025 – A regulatory filing has pulled back the curtain on a sophisticated investment play by Balyasny Asset Management, revealing the global hedge fund holds a significant 1.26% interest in Just Group plc. The disclosure, mandated by the UK's Takeover Code, is not a simple story of share acquisition. Instead, it highlights the intricate world of derivative-driven strategies, as Balyasny's entire position is held through cash-settled contracts for difference (CFDs).

This move comes as Just Group, a FTSE 250 specialist in retirement products, is in the final stages of a recommended £2.4 billion cash acquisition by Brookfield Wealth Solutions (BWS). The filing provides a fascinating glimpse into the world of merger arbitrage, where investors bet on the successful completion of announced takeovers, and underscores the critical role of transparency regulations in modern M&A.

A Classic Merger Arbitrage Footprint

Balyasny's disclosure is a textbook example of a merger arbitrage strategy. This investment approach seeks to profit from the small but predictable price discrepancy—the “spread”—that exists between a target company's stock price and the price offered by an acquirer. In this case, Brookfield offered 220 pence per share for Just Group back in July. Yesterday, on December 8, Just Group's shares traded around 215.5p. An arbitrageur's goal is to capture that remaining spread as the deal moves toward completion.

The Form 8.3 filing reveals that Balyasny, a multi-strategy fund managing approximately $29 billion, has a history of engaging in such event-driven investments. The firm has made similar disclosures in other takeover situations, consistently using derivatives to gain economic exposure. The filing details several transactions undertaken on December 8, all of which involved Balyasny reducing its long position in Just Group CFDs at prices between 215p and 216p. This activity is not a sign of wavering confidence in the deal; rather, it indicates a strategic decision to begin locking in profits as the share price converges on the offer price and the potential for further gains diminishes.

By holding an economic interest equivalent to 13,175,589 shares, Balyasny has placed a significant bet on the acquisition receiving its final shareholder and regulatory approvals. The firm's actions suggest a high degree of confidence that the deal will close as planned in the first half of 2026.

The Strategic Edge of Derivatives

The decision to use cash-settled derivatives instead of purchasing shares directly is a deliberate and strategic one for hedge funds like Balyasny. CFDs offer several advantages that are particularly well-suited to merger arbitrage. Firstly, they provide leverage, allowing the fund to gain a large economic exposure with a smaller initial capital outlay, thereby amplifying potential returns. Secondly, in the UK, trading CFDs does not incur stamp duty, offering a significant cost saving compared to direct share purchases.

Crucially, holding an interest via CFDs means Balyasny does not possess voting rights in Just Group. This signals that the fund's interest is purely financial; it is not seeking to influence the takeover's outcome or engage in shareholder activism. The play is about capitalizing on the price movement, not steering corporate direction. This separation of economic interest from voting power is a key feature of modern financial markets.

The UK's Takeover Code specifically requires the disclosure of these derivative positions through Form 8.3 during an offer period. This rule was designed to increase market transparency and prevent the build-up of “hidden” stakes that could be used to influence M&A outcomes without the market's knowledge. Balyasny's filing, therefore, serves its intended purpose, providing all market participants with a clear view of a major player's economic position in the ongoing takeover.

Just Group: An Attractive Prize in the UK Pension Market

Brookfield's pursuit of Just Group underscores the immense value within the UK's retirement income sector. Just Group has carved out a leadership position, particularly in the defined benefit (DB) de-risking market, where it provides bulk annuities to pension schemes seeking to offload long-term liabilities. This has been a booming market, and Just Group's expertise in medical underwriting gives it a competitive edge in pricing these complex, long-term contracts.

The company's financial health has been robust. In its full-year 2024 results, Just Group reported a 34% surge in underlying operating profit to £504 million, achieving a five-year growth target in just three years. This strong performance, coupled with a solid Solvency II capital coverage ratio of 204%, made it a prime target.

When Brookfield announced its 220p-per-share offer on July 31, 2025, it represented a massive 75% premium over Just Group's prior closing price. The market reacted instantly, with the stock soaring to trade just shy of the offer price, where it has remained remarkably stable ever since. This stability signals a very high probability of the deal's successful completion. For Brookfield, the acquisition is a strategic move to merge Just Group with its existing UK insurance business, Blumont Annuity, creating a powerhouse in the UK pension risk transfer and annuity space under the respected Just Group brand.

The deal provides Just Group's shareholders with a certain and attractive cash exit, crystallizing the company's value and removing future market and execution risks. For arbitrageurs like Balyasny, this certainty is precisely what creates the investment opportunity. The fund's recent profit-taking is a logical step in a well-executed strategy, capitalizing on the market dynamics that have unfolded since the blockbuster deal was first announced.