TA Associates Adds Hedge Fund of Funds To Portfolio

Mar 28 2007 | 3:45pm ET

If you can’t (or don’t want to) raise it, buy it. This week, private equity firm TA Associates took the path to least resistance, buying a minority stake in K2 Advisors, a $5.5 billion fund of hedge funds. Terms of the transaction were not disclosed. 
Approximately $100 million of the proceeds will be invested in existing K2 strategies, as well as incubating new strategies. The firm will also broaden ownership to a greater number of K2 employees. K2 management will remain intact and there will be no changes to the firm’s strategy, operations or personnel.
“We have been looking for an institutional quality fund of hedge funds to invest in for a long time, and K2 Advisors is the type of profitable growth company in which TA seeks to invest,” said Roger Kafker, a managing director who will join the company’s board of directors. “K2’s key investment principals have their roots in the hedge fund industry, which gives them a distinctive perspective on managing risk.”
For its part, K2 is looking to expand its investor base to include TA Associates’ investors.  “We see a significant number of synergies with TA Associates and its limited partners and look forward to working closely with them,” said William Douglass, a K2 co-founder. “We also see opportunities to selectively expand our franchise and this investment will enable us to actively explore those opportunities.”

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