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Carlyle to Buy Investor in Hedge Funds

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November 26
3:15 AM 2013

Private equity powerhouse Carlyle Group LP said it will acquire hedge fund investor Diversified Global Asset Management Corp (DGAM).  The transaction is valued at USD33 million. Another USD70 million could be added to the value should the hedge-fund firm achieves a specified level of performance. This was according to a report published by The Wall Street Journal.

The private equity group already owns large stakes in a handful of hedge funds. However, the DGAM deal would signal Carlyle's entry into the business of investing in hedge funds, the report said.

More investors have shunned the charges from fund-of-funds firms. They have instead turned to investing directly in hedge funds. Since 2009, hedge-fund returns have been relatively low compared to the overall market. Still, DGAM has been able to double its assets under management. Executives of the firm say the firm's assets rose to about USD6.7 billion in the last three years. DGAM's clients include endowments, pension funds, and sovereign-wealth funds, the report explained.

For this transaction, Carlyle is using its own cash rather than the money from its funds, The Wall Street Journal reported.

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