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Carlyle gets into commodities

October 3, 2012: 7:22 AM ET

Carlyle's co-founders

Private equity giant expands hedge fund group.

FORTUNE -- The Carlyle Group (CG) this morning announced that it has acquired a 55% economic stake in Vermillion Asset Management, a $2.2 billion commodities hedge fund manager.

Mitch Petrick, Carlyle's head of global market strategies, says that the deal is more partnership than acquisition, with Vermillion expected to maintain both its brand and its senior management. In terms of assets under management, however, all $2.2 billion is expected to be consolidated onto Carlyle's balance sheet (something of particular import for publicly-traded PE firms, which often get judged more by analysts on AUM than on actual performance).

Petrick says that Carlyle has been interested in adding a commodities platform for the past couple of years, and that he had been "agnostic" as to whether it should be built in-house or acquired from the outside. The decision to go with Vermillion, he says, was largely based on the New York-based manager's diversification.

"Vermillion isn't tied to a single strategy," Petrick explains. "It does energy and agriculture and soft commodities and metals... This was what we would have tried to build anyway from scratch."

Through the end of June, Carlyle's global markets strategies group managed around $29 billion in assets.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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