Private equity giant Kohlberg Kravis Roberts is to buy Prisma Capital Partners, a New York-based fund of hedge funds, for an undisclosed amount.
The transaction is expected to close in the fourth quarter.
Founded in 2004 by former Goldman Sachs partners Girish Reddy, Thomas Healey and Gavyn Davies, Prisma had $7.8 billion in assets under management as of April 1, 2012, 90% of that from institutional investors.
The Prisma team will join KKR’s public markets division. Co-founder and CEO Reddy will run KKR’s global hedge fund of funds effort while Healey and Davies become senior advisors to KKR. As part of the agreement, all cash proceeds received by management at closing will be reinvested in Prisma funds.
“Prisma has a superb track record of investing, consistently performing in the top quartile and we have come to know the management team well over the last two years,” said Henry Kravis, co-founder and co-CEO of KKR, in a statement announcing the purchase. “Many institutional investors are seeking more liquid alternative investment products, and we believe customized hedge fund solutions play a key role in meeting that need. This makes Prisma a good fit for KKR and we’re pleased to welcome the team.”
George Roberts, also co-founder and co-CEO of KKR, said the Prisma team has "generated strong investment results through a deep understanding of the managers they invest in and an intense focus on risk management," moreover, he said, the business has "never ‘gated its clients, has consistently added clients and doubled its assets under management over the past 2 1/2 years.”
As part of the transaction, AEGON will sell its minority stake in the firm but remains a significant investor in Prisma’s funds.