Hedge Fund's Derivative Play in UK Student Housing Mega-Merger

LONDON, UK – November 25, 2025

A recent regulatory filing has pulled back the curtain on a sophisticated financial maneuver by Balyasny Asset Management, a global multi-strategy hedge fund. The disclosure reveals the firm has built a significant economic interest in The Unite Group PLC, the UK's largest provider of student accommodation, just as its takeover of rival Empiric Student Property plc nears completion. However, this is no ordinary stock purchase. Balyasny's position, totaling nearly 1% of Unite's value, is held entirely through cash-settled derivatives, signaling a calculated bet on the successful outcome of one of the year's most significant property sector deals.

The filing, a Form 8.3 mandated by the UK's Takeover Code, shows Balyasny holding an interest equivalent to 4,804,713 ordinary shares in Unite. Made public on November 25, 2025, the disclosure details dealings from the previous day that involved both increasing and reducing its long position through Contracts for Difference (CFDs) at prices hovering between £5.30 and £5.34. This move provides a fascinating glimpse into the world of event-driven investing and the strategic use of derivatives to capitalize on major corporate actions.

Anatomy of a Sector-Defining Deal

Balyasny's interest is centered on a takeover that promises to reshape the UK's student housing landscape. The Unite Group's acquisition of Empiric Student Property is the culmination of months of negotiations and regulatory scrutiny. The process began with an initial approach in May 2025, leading to a formal agreement announced on August 13, 2025. The recommended cash and share offer values Empiric at approximately £723 million, including dividends.

Under the terms, Empiric shareholders are set to receive 0.085 new Unite shares plus 32 pence in cash for each share they hold. Upon completion, Empiric's shareholders will own roughly 10% of the newly enlarged entity. The strategic logic is compelling: the deal combines Unite's scale and operational platform with Empiric’s high-quality portfolio, which is heavily focused on returner and postgraduate students, creating significant synergies and strengthening their collective market position.

A key hurdle was cleared just this week, as the UK's Competition & Markets Authority (CMA) initiated an investigation on October 23, 2025, to assess whether the merger would reduce competition. However, the authority gave the transaction its unconditional clearance on November 27, 2025, removing the final major obstacle. With the Court Sanction Hearing scheduled for January 26, 2026, the acquisition is on a clear path to become effective just two days later, creating a dominant force in the UK's Purpose-Built Student Accommodation (PBSA) sector.

A Resilient Market Attracting Smart Money

The Unite-Empiric merger is not happening in a vacuum. It underscores the immense investor appeal of the UK student accommodation market, which has proven to be one of the most resilient and rewarding real estate asset classes. Despite broader economic headwinds, the sector is buoyed by powerful and consistent fundamentals: high demand and a structural undersupply.

Investment continues to pour in, with £2.8 billion transacted in the first nine months of 2025 alone. The market's strength is driven by ever-growing student numbers. UCAS projects a surge in university applications to one million by 2030, and international student demand remains robust. These students increasingly seek high-quality, purpose-built housing with modern amenities, a demand that consistently outstrips supply in many key university cities.

This imbalance fuels high occupancy rates and strong rental growth. Unite itself reported 97.5% occupancy for the current academic year and is projecting rental growth of 7%. While Empiric noted a slight dip in its own occupancy to 89% for the upcoming 2025/26 year, citing a slowdown in reservations and fewer Chinese students, this was a known factor that Unite had likely priced into its offer. The overall picture remains one of a sector with long-term security and stable, predictable returns, making it a prime target for consolidation and strategic investment from players like Balyasny.

The Derivative Gambit and Regulatory Transparency

Balyasny's choice of instrument—the cash-settled derivative—is central to this story. As a multi-strategy hedge fund with over $29 billion in assets, the firm is known for its event-driven and M&A arbitrage strategies. By using CFDs, Balyasny gains economic exposure to Unite's share price movements without actually owning the shares. This allows the fund to profit from price fluctuations related to the merger's progress without acquiring voting rights or the administrative burden of direct ownership.

The disclosure is mandated by Rule 8.3 of the UK Takeover Code, a regulation specifically designed to bring transparency to such maneuvers. In the past, firms could build up significant economic interests through derivatives without public disclosure, creating so-called 'shadow shareholdings' that could influence markets opaquely. The modern Takeover Code requires anyone with an interest—direct or economic—of 1% or more in a company involved in a takeover to disclose their position and any dealings.

Balyasny’s filing, detailing an interest just shy of the 1% threshold at 0.98%, exemplifies the spirit of this rule. It forces the fund's position into the light, providing crucial information to all market participants. The disclosure also confirms that no other arrangements, such as those relating to voting rights or future acquisitions, are in place. This clarifies that Balyasny's play is a pure economic bet on the deal's successful completion, not an attempt to influence its outcome.

For other investors, this filing acts as a powerful market signal. The involvement of a sophisticated hedge fund like Balyasny, which has clearly done its due diligence, bolsters confidence that the Unite-Empiric merger will cross the finish line as expected in early 2026. It is a vote of confidence not only in the specific terms of the deal but in the enduring strength of the UK student accommodation sector as a whole.