Carlyle to exit fund-of-hedge-funds business

Two years after launching the business, the US private equity house has agreed to sell its hedge fund advisory group to employees.

( Carlyle Group, the US private equity house, has confirmed that it has sold a majority stake in its hedge fund-of-funds business to management.


According to Christopher Ullman, a spokesman for Carlyle Group, the firm will sell Carlyle Asset Management to a team headed by Afsaneh Mashayakhi Beschloss, the division’s current chief executive officer and chief investment officer.


Initially, Carlyle Group’s stake in Carlyle Asset Management will drop to 40 per cent from 100 per cent. Over the “next year or two,” Carlyle will sell its entire stake to Beschloss and her senior management, Ullman said.


Carlyle Asset Management, with roughly $600m in assets under management, will not immediately change its name.


“We mutually agreed that having [Beschloss’] team manage and own the business is the better course,” Ullman said, adding that Carlyle “reserves the right to get into the hedge fund business in the future.”


Carlyle hired Beschloss in April 2001 to oversee the firm’s foray into hedge funds. She was the treasurer and CIO of The World Bank. Carlyle Asset Management subsequently hired additional World Bank investment professionals, including Jin Park, World Bank’s manager of alternative investments, and Sudhir Krishnamurthi, the Bank’s former co-head and director of investment management.


Sources close to the situation said Carlyle Group has been disappointed with the early performance of its hedge fund advisory business. The fund-of-hedge-funds’ initial performance has been weak, sources said. Carlyle is dominant in the private equity field and had hoped to apply its franchise to a hedge fund advisory business.


Ullman declined to discuss specifics of fund performance, adding, “We have full confidence in Afsaneh and her team and in their performance to date.”


In addition, there were tensions between Park and Beschloss, sources said. Park will resign from Carlyle Asset Management and will not be joining Beschloss in the spin-out.


Carlyle Asset Management also includes Robert Picard, a former managing director at RBC Capital Risk Advisors; David Kupperman, a former vice president in Goldman Sachs’ private equity wing; and Jimmy Liew, who formerly worked as a consultant for Hypo VereinsBank.


At press time, it was unclear whether Carlyle Group would retain control of the primary and secondary private equity fund-of-funds businesses within Carlyle Asset Management.