Carlyle Sells Claren Road in Final Step Away From Hedge Funds

  • Claren Road management will buy back the 55 percent stake
  • Carlyle shifting focus to its global credit business

Carlyle Group LP is selling its majority stake in Claren Road Asset Management back to the fund’s top executives as the private equity firm moves to end its six-year foray into hedge funds.

Claren Road, founded in 2005 by former Citigroup Inc. credit traders Brian Riano, John Eckerson, Sean Fahey and Albert Marino, will buy the 55 percent stake that Carlyle acquired in December 2010, according to a note sent last week to investors. The transaction is expected to occur on Jan. 31, the note said. Claren Road started this year with $1.25 billion in assets, down from a high of $8.5 billion in September 2014, amid losses and client redemptions.

“With our opportunity set expected to improve with the return of volatility, we look forward to restoring our unique, long-term value proposition as a long/short credit manager focusing on the global high-grade and high-yield markets," Claren Road told its clients in the note.

Marino, Claren Road’s chief operating officer, didn’t immediately respond to a call seeking comment.

Carlyle has struggled with its hedge fund business after buying majority stakes in three firms from 2010 to 2012. The firm purchased a stake in Vermillion Asset Management, which is in the process of winding down. Carlyle sold its majority stake in the $3.5 billion Emerging Sovereign Group back to its management earlier this year.

Carlyle, led by founders David Rubenstein, Bill Conway and Dan D’Aniello, managed $169.1 billion in assets as of Sept. 30.

“We wish Claren Road much success as an independent firm,” Christopher Ullman, Carlyle’s director of global communications, said in a statement. “Carlyle is focused on growing our global credit business, which we believe has significant potential.”

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