Carlyle’s Credit, Hedge-Fund Head Mitch Petrick to Step Downby
Hedge-fund performance slumped even as unit’s assets grew
Youngkin to oversee energy as Hersh named CEO of Bush center
Carlyle Group LP’s top credit and hedge-fund executive, Mitch Petrick, will leave the alternative-asset manager after several funds in his unit posted losses even as assets expanded.
Petrick, a trader at Morgan Stanley for two decades before he joined Washington-based Carlyle, will become a senior adviser and plans to start his own investment firm, according to a statement Friday. Kewsong Lee, Carlyle’s deputy chief investment officer for private equity, will take on Petrick’s responsibilities overseeing the credit and hedge-fund group, called global market strategies, or GMS.
The departure comes after an 18-month stretch in which two of Carlyle’s largest hedge-fund firms -- credit-oriented manager Claren Road Asset Management and commodities-focused Vermillion Asset Management -- produced losses and clients pulled out billions of dollars.
Carlyle returned $1.8 billion to hedge-fund investors in the first quarter and expects to give back $1 billion to $2 billion in the next several quarters, it said last month. Its hedge funds declined 4.6 percent in the first three months of the year.
“Mitch and his team have grown the GMS platform, developing numerous scalable investment strategies,” David Rubenstein and Bill Conway, Carlyle’s co-chief executive officers, said in the statement. “Carlyle intends to continue to invest in and build out the GMS platform.”
In addition to hedge funds, Petrick’s business managed collateralized loan obligations, energy credit funds, distressed-debt pools and publicly traded credit investment vehicles known as business development companies. Across the strategies, about 200 employees manage 68 funds in the unit, with $34 billion under management as of March 31. That’s up from $20.5 billion in June 2011, the earliest figures included in the firm’s earnings statements.
Petrick, 54, joined Carlyle in 2010 from New York-based Morgan Stanley, where he had been global head of various businesses, including institutional sales and trading, corporate credit, leveraged finance and restructurings, and distressed investing.
Rubenstein, speaking about hedge funds on Bloomberg Television last week, said Claren Road, Emerging Sovereign Group and Vermillion, which was renamed Carlyle Commodity Management, benefit from being owned by Carlyle. The firm acquired majority stakes in the three hedge-fund firms from 2010 to 2012.
“While our hedge-fund people are walled off from the other information in our firm, I think they do have some benefit by being part of our firm,” said Rubenstein, who started Carlyle with Conway and Chairman Dan D’Aniello in 1987.
“If you have one quarter that’s bad or two quarters that’s bad and you decide to go home, you’re not likely to be a very dedicated investor,” he said. “All investors have challenges over a period of time.”
Carlyle also said Friday that President Glenn Youngkin will oversee the firm’s energy and natural resources group, after Ken Hersh was named CEO of the George W. Bush Presidential Center in Texas last week. Hersh, 53, will continue to work on Carlyle deals as deputy chief investment officer for energy and natural resources, reporting to firm-wide CIO Conway.
Carlyle manages $178 billion in private equity holdings, real estate, credit assets and hedge funds. The firm makes almost all of its profits from its private equity investments, which have returned 18 percent a year after fees since its founding.