Thursday, 5 May 2016
Last updated 5 hours ago
Jul 14 2014 | 8:33am ET
Private equity giant KKR has added to its hedge fund collection, buying a minority stake in Houston, TX-based BlackGold Capital Management.
KKR will acquire 24.9% stake of the Texas firm, $1.4 billion credit-oriented hedge fund specializing in energy and hard asset investments. The value of the deal was not disclosed.
KKR has been making a push into the hedge fund space via a hedge fund platform led by Girish Reddy and Todd Builione. In addition to its $10 billion fund of hedge funds, KKR Prisma, it runs a Strategic Stakes & Seeding business and last year bought a 24.9% stake in Bermuda-based Nephila Capital.
It has also had its hedge fund flops, recently closing a $500 million stock hedge fund, citing "lack of scale" for the decision to close up shop.
People familiar with the deal told The Wall Street Journal the move into hedge funds is part of a KKR effort to diversify its business, which to date has relied heavily on corporate buyouts and similar deals.
BlackGold was established in 2006 by co-founders Erik Dybesland and Adam Flikerski who will continue to manage the business independently. All BlackGold founders' capital will remain invested in the funds and the majority of the proceeds received from this transaction will be re-invested in the funds. According to the terms of the deal, BlackGold management team will own 75.1% of BlackGold.
"Through this strategic investment in BlackGold, we are partnering with an outstanding team with an excellent track record of delivering returns to investors. We are thrilled to add BlackGold to our hedge fund platform and we look forward to a long-term partnership with Erik, Adam and the full BlackGold team," said Builione in a statement.
Said Dybesland and Flikerski: "KKR has nearly three decades of experience investing in the energy sector and maintains a significant presence and technical expertise in the industry. Having access to KKR's global network of relationships, institutional infrastructure and management expertise will introduce new areas of opportunity for BlackGold and our investors. We are confident that our partnership will strengthen relationships with our counterparties and within our investment universe, while enhancing the durability and unique capabilities of our franchise."