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Carlyle To Buy Emerging Markets Hedge Fund

By Finalternatives.com

  • 15 Jun 2011

The Carlyle Group will buy a majority stake in hedge fund Emerging Sovereign Group as it prepares for an initial public offering later this year or early next year.

The Washington, D.C.-based private equity giant has agreed to take a 55 per cent stake in the New York-based emerging markets specialist, both companies said today. The deal for ESG follows Carlyle's December acquisition of a majority stake in Claren Road Asset Management.

ESG was founded in 2002 by former Morgan Stanley emerging-markets bond-trading chief Kevin Kenny, backed by Tiger Management. Tiger will retain its stake both in ESG and ESG's funds.

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Kenny and ESG's other principals will split an undisclosed amount of cash and a stake in Carlyle. They have agreed to invest the bulk of the proceeds in ESG's funds, and could receive further payments depending on ESG's performance. The fund is up 6.9% this year and returned 8.5 per cent last year.

The deal is expected to close before the end of the month.

ESG has about $1.6 billion in assets under management and employs 26. The firm features four strategies, among them macro and long/short equity.

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