Fred Prouser/ReutersDavid M. Rubenstein, the co-founder and co-chief executive of the Carlyle Group.The Carlyle Group is expanding into the business of trading commodities.
The private equity firm said on Wednesday that it had taken a 55 percent stake in Vermillion Asset Management, a commodities hedge fund with about $2.2 billion in assets. Carlyle, which paid a mix of stock and cash, will make Vermillion its main commodities trading platform.
The partnership represents the latest effort by Carlyle to diversify. The firm and its private equity rivals have been building out areas like hedge funds and real estate, as the market for buyouts proves challenging.
“This is an important addition” to Carlyle’s global market strategies business, Michael J. Petrick, the head of that division, said in a statement. “For many years, Carlyle has successfully invested in a variety of energy, agriculture and infrastructure companies.”
The global market strategies business at Carlyle includes hedge funds that focus on credit, equities and broad economic trends. With Vermillion, which was founded in 2005, Carlyle is adding three commodities strategies to that lineup.
The firm has also been keeping busy with its traditional business, buyouts.
The deal for Vermillion, the value of which was not disclosed, includes contingent payments for Vermillion’s principals based on performance, Carlyle said. Vermillion’s co-founders, Drew Gilbert and Chris Nygaard, are set to continue as co-chief investment officers.
“Global, secular trends are fundamentally reshaping the supply and demand balance for many commodities worldwide,” Mr. Nygaard said in a statement. “Our partnership with Carlyle will help us maximize these opportunities to deliver more alpha to our investors.”