The Carlyle Group has agreed to buy a majority stake in New York hedge fund Claren Road Asset Management.
The Washington, D.C.-based private equity giant will take a 55% stake in the $4.5 billion credit specialist, it said today. The move comes just months after news that Carlyle was in talks with several hedge funds about buying a stake as it seeks to expand into more liquid investments.
"We have a view of which strategies are necessary to exploit the market opportunities," Mitch Petrick, global head of credit alternatives and capital markets at Carlyle and the executive charged with making its hedge fund push, said. "Claren Road is an important piece of the puzzle and we are in various stages of development on additional strategies."
John Eckerson, Sean Fahey, Albert Marino and Brian Riano, the Citigroup veterans who founded New York-based Claren Road five years ago, will remain at the helm. Riano said that the firm's strategy is "very scalable" and said they would "grow the business as opportunity presents itself."
For Carlyle, buying Claren road represents its return to the hedge fund business more than two years after exiting it with its tail between its legs. The firm was forced to shutter its Blue Wave Partners hedge fund after just 16 months after it proved unable to raise enough money.
Carlyle will pay for its stake in Claren road with cash, stock and future payments based on performance, it said. It will be buying the large minority stakes in the hedge fund owned by Citigroup and Goldman Sachs' Petershill private equity fund.