Goldman Sachs' prized U.S. proprietary traders will move to private equity giant Kohlberg Kravis Roberts next year.
Nine members of Goldman Sachs Principal strategies, led by U.S. prop. trading chief Robert Howard, are near a deal to join KKR. The New York-based firm, whose asset-management business currently focuses on credit and oversees $13 billion, bested Avenue Capital Partners and Perella Weinberg Parters for the group.
Howard will become a managing director at KKR and will oversee the new hedge fund unit, KKR's first liquid equities business, and will report to William Sonneborn, who heads the firm's asset management group. The team, set to join KKR in January, will first set up its trading and operation systems before launching their long/short hedge fund later in the year.
In a change from their previous gig, Howard's team will not manage KKR's own capital, but will instead raise money from clients. KKR did not say what its fundraising plans or hopes for the new vehicle are.
"Our goal has been to add new capabilities and exceptional talent that allows us to strengthen our product offering and better service our clients," KKR founders Henry Kravis and George Roberts said. "Bob and his team will be an ideal fit for that objective as we've been impressed with their investment experience and performance as well as their ability to manage risk."
Goldman chose to shutter its Principal Strategies prop. trading unit following the passage earlier this year of new financial regulations that bar banks from trading with their own capital. The firm confirmed earlier this week that it had closed the group.
The Wall Street giant's Asia prop. traders are expected to found a hedge fund of their own.