Carlyle shopping for hedge fund platform

As the firm looks for ways to further bulk up and diversify its assets under management, Carlyle is also seeking to strengthen economic ties with energy firm Riverstone.

The Carlyle Group, already the largest private equity firm in the world, has approached at least one hedge fund manager about a potential acquisition, according to a source.

The news is reported in greater detail in the May issue of sister magazine Private Equity International.

The source said Carlyle is attempting to rectify its lack of a major hedge fund or fund of hedge funds platform ahead of an eventual listing. The Blackstone Group and Fortress Investment Group last year were rewarded by public investors with lofty valuations in part because they each controlled large real estate, private equity and hedge fund operations.

Carlyle’s private equity division is the largest in the world, according to the recently released PEI 50. Its private equity real estate platform ranks seventh in the world, according to the recently released PERE 30.
But Carlyle, based in Washington DC, has to date failed to build a major hedge fund operation.

Blackstone recently further diversified its investment business through the acquisition of GSO Capital Partners, a credit-focussed fund manager.

In related news, Carlyle is seeking to bolster its ownership stake in Riverstone Holdings, based in New York. Riverstone is an independent energy-industry focussed private equity firm in which Carlyle owns a small minority stake. However, the two firms have since 2000 been jointly marketing funds bearing Carlyle/Riverstone branding. Two new energy funds branded “Riverstone/Carlyle” are set to raise some $13 billion in aggregate.

According to the source, Carlyle is seeking to bolster its ownership in Riverstone’s management company. The deal may involve Carlyle temporarily forgoing some amount of economics in current funds, the source said.