KKR Shuts First Equity Hedge Fund

Jun 2 2014 | 6:32am ET

Kohlberg Kravis Roberts’ first foray into stock hedge funds has come to an end after less than three years.

The firm has liquidated its KKR Equities Strategies, launched with great fanfare in 2011, a year after the private-equity giant hired a team of Goldman Sachs proprietary traders to lead the effort. KKR blamed a “lack of scale” for the decision; KES managed only $500 million last month, one-third of which came from KKR and firm employees. The fund has fewer than 20 outside investors.

KES posted annualized returns of about 5% during its short life.

KKR continues to run two credit hedge funds. But the firm said it will now focus on buying stakes in established managers rather than running funds in-house.

“As our hedge-funds business has evolved, we have decided to focus on our hedge-fund solutions business, the building of strategic stakes and seeding effort modeled after what we did with Nephila Capital, and scaling our credit-oriented hedge funds,” KKR said.

Robert Howard, Goldman’s former head of U.S. proprietary trading, will remain a senior adviser to KKR. Most other members of the KES team, about a dozen people, will leave the firm.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

The healthcare sector went on a tear beginning in 2011, thanks in large part to the passage of the Affordable Care Act and its impending implementat