Orient-Express becomes hedge funds' darling

Amid speculations that Indian conglomerate Tatas may soon come out with a takeover bid, the global luxury hotel chain Orient-Express is seeing a rush of hedge fund investors seeking a play in any potential deal.

At least three large hedge funds, including one promoted by billionaire investor Steven Cohen, disclosed over the past week having raised their holdings to more than 5% each in the NYSE-listed Orient-Express.

In addition, these investors, as well as a few others, are already in the process of further consolidating their holdings in the company in anticipation that an eventual takeover bid would lead to some handsome returns for their investments, according to an investment banker associated with one of such recent deals.

"The buzz here is that Tata group might soon look into consolidating their 11.5% holding into a majority one and any such move would give the hedge funds a handsome return if they decide to tender their shares in favour of the Indian group," the banker said.

According to another person close to one of the hedge funds that has purchased OEH shares, even if Tatas decide against any takeover bid for OEH and they exit the company, which is unlikely as selling shares at current levels would not give them much upward return, the road would become clear for another interested party to look into acquiring the company.

A number of investors, who have purchased OEH shares in large quantity of late, have done so with a clear intention to participate in a potential merger or acquisition deal.