Commodity funds have been hot, increasingly a must-own asset category for alternative investment providers.
Carlyle Group has jumped into the industry in a big way. The second-largest private equity firm has just bought commodities hedge-fund manager Vermillion Asset Management, allowing it to add .2 billion in commodities assets as the firm diversifies in the wake of its public offering. The price wasn't disclosed.
The Washington Post notes that Vermillion will be part of the firm's Global Market Strategies business, headed by Mitch Petrick. That unit manages about billion across 53 funds, and is key to the firm's desire to offer a more diversified menu of investment options to investors.
"As part of the deal, Carlyle agreed to give Vermillion principals 1,439,788 shares over 4 1/2 years if certain performance targets are met. Those shares would be valued at .9 million at yesterday's closing share price of .64."
You certainly can't fault management for making the move, and shareholders will likely appreciate the need to diversify. You do have to wonder just a bit what the firm's long-time limited partners in private equity funds think. One concern all along was that public private equity companies inevitably will focus like a laser on the needs of shareholders, whereas the needs of limited partners used to come first. This is a newly familiar tension and one that the top companies have been able to manage. In the end, strong performance will reduce these sorts of conflicts significantly.
- here's the article