Sunday, August 28, 2016

Carlyle Group May Shutter Remaining Hedge Funds

FT reported:

Carlyle is weighing whether to withdraw from its hedge fund activities, as the private equity group struggles with its offerings and as one of its remaining vehicles has shrunk by almost 90 per cent in two years. 

One of the hedge funds majority owned by Carlyle, Emerging Sovereign Group, told investors this month that Carlyle was selling its stake back to ESG’s partners. Assets in another Carlyle hedge fund, Claren Road, have fallen to less than $1bn, from $8.5bn two years ago.

Another Carlyle hedge fund, Vermillion, was reconfigured last year. It has been renamed Carlyle Commodity Management and lumped into the group’s other commodities business. In February, Carlyle shut its fund of funds business, Diversified Global Asset Management, and three months later the head of the Global Market Strategies unit, Mitch Petrick, stepped down to start his own investment management company.
Two Carlyle funds failed in 2008, just months before the financial crisis. Affiliate Carlyle Capital Corporation declared bankruptcy (March 2008) and Carlyle announced it would liquidate Blue Wave Partners (July 2008). 

Carlyle current hedge funds exit may be because the PEU doesn't want to throw good money after bad.  Is it capital preservation time?