Pegasus Investments, a Boston-based merger arbitrage specialist hedge fund manager, has launched its first offshore fund that is based in the Cayman Islands.

The Pegasus Merger Arbitrage fund, which raised $35m (€41m) from new investors, is among the funds in Deutsche Bank's new Xavex Hedge Select, a fund of hedge funds, said Andrew Kopperl, managing director at Pegasus in Boston.