The founders of Vermillion Asset Management, the commodities hedge fund firm owned by Carlyle Group LP, have left after losses, a person with knowledge of the matter said.
Chris Nygaard and Drew Gilbert, who started Vermillion in 2005, parted ways with Carlyle after assets in Vermillion’s main fund fell to less than $50 million from $2 billion, said the person, who asked not to be named because the moves haven’t been announced. Nygaard and Gilbert referred calls for comment to Carlyle.
“We are successfully repositioning our commodities business, particularly in commodities finance, to capture an enormous global opportunity,” Carlyle said in a statement.
Losses in Vermillion’s Viridian commodity fund, which invested in oil, metals and agriculture assets, have led to investor redemptions that shrank its size. The vehicle had $1.7 billion when Washington-based Carlyle bought a 55 percent stake in Vermillion in 2012, before starting its decline.
The Bloomberg Commodity Index has slumped 28 percent in the past year and 36 percent in the past three years. Vermillion, which has $1.4 billion in assets under management, started shifting strategy toward financing last year as traditional bank lenders retreated, said the person. Carlyle sees commodity financing as a multi-billion-dollar opportunity, the person said.
The Wall Street Journal earlier reported Nygaard’s and Gilbert’s departures.
The exits add to troubles Carlyle has had in its other hedge funds, Claren Road Asset Management and Emerging Sovereign Group. Carlyle’s hedge funds fell 4.3 percent in the second quarter, and its global market strategies unit, which houses the funds, reported zero profit for the quarter, compared with $44 million a year earlier.
“It’s been a volatile and a tough environment generally for investing,” Bill Conway, Carlyle’s chief investment officer and co-founder, said earlier this week when asked on a conference call about the hedge funds. “I don’t think there’s any kind of systemic problem with regard to our oversight or the job of the people running the hedge funds are doing, or governance, or anything like that.”
Carlyle rose 0.5 percent to $26.67 at 3:11 p.m. in New York, extending gains this year to 3.9 percent, including reinvested dividends.