Kohlberg Kravis Roberts has expanded its public markets business with the acquisition of Prisma Capital Partners, a portfolio manager that specialises in hedge funds, according to a statement. Financial terms of the deal were not disclosed.
The deal is expected to close in the fourth quarter of 2012.
KKR’s $16 billion public markets business is largely dedicated to high-yield debt and loans, as well as some mezzanine distressed debt, according to a source. The Prisma acquisition will expand the firm’s public assets under management by about $8 billion.
Prisma co-founder and chief executive officer Girish Reddy will join KKR to lead the firm’s global hedge fund of funds effort, and fellow co-founders Thomas Healey and Gavyn Davies will become senior advisors. As of 1 April, Prisma had $7.8 billion in assets under management – 90 percent of which belongs to institutional investors.
“Many institutional investors are seeking more liquid alternative investment products, and we believe customised hedge fund solutions play a key role in meeting that need,” said KKR co-founder Henry Kravis in a statement.
Cash proceeds received by Prisma’s management in the deal will be reinvested in Prisma funds, and the firm’s investment team will remain intact, KKR said in a statement. Dutch insurance group AEGON will sell its minority stake in the firm, but will remain an investor in Prisma’s funds.
As private equity firms have gone public, many have expanded beyond their core private equity business. Prior its 2010 float, KKR added infrastructure investing and capital markets advisory businesses, and continued its expansion shortly after the IPO when it hired nine members of Goldman Sachs’ proprietary trading team away from the investment bank.
Prisma also sports a Goldman pedigree, with all three co-founders having been executives for the bank. Prior to launching Prisma in 2004, Reddy was a co-head of equity derivatives at Goldman, Davis was chief economist and Healey was the head of the pension services group.