Carlyle to buy funds-of-hedge-funds manager DGAM

DGAM has more than $6.7 bln in AUM

Deal follows KKR purchase of Prisma Capital

Carlyle hired Morgan Stanley exec to head solutions group

DGAM has more than $6.7 billion in managed and advised assets and will become part of Carlyle’s solutions platform, which includes funds of private equity funds and had $48.4 billion in assets under management as of the end of September.

The deal follows peer KKR & Co LP’s acquisition last year of Prisma Capital Partners LP, which added $8.1 billion of such assets to its platform. Both deals may be some way off from posing major competition to Blackstone Group LP, whose fund-of-hedge-funds unit BAAM had $53.2 billion in assets under management as of the end of September.

“With the DGAM partnership, Carlyle’s solutions platform is now positioned to offer investors the ability to allocate across alternatives in hedge funds, private equity and real estate,” said co-CEO David Rubenstein, who founded Carlyle in 1987 with William Conway and Daniel D’Aniello.

Carlyle’s acquisition of DGAM follows the recruitment of Morgan Stanley’s fund-of-hedge-funds chief Jacques Chappuis as head of its solutions business earlier this year, with a mandate to grow both organically and through acquisitions. 

Earlier this month, Chappuis completed Carlyle’s takeover of funds-of-real-estate-funds manager Metropolitan Real Estate Equity Management LLC, which has more than $2.6 billion in capital commitments.

Founded in 2004 by George Main, Warren Wright, Graham Thouret and Jeff Lucassen, Toronto-based DGAM will become part of Carlyle by February 2014. Main and Wright will continue in their roles as chief executive and chief investment officer, respectively, after the acquisition, Carlyle said.

Goldman Sachs Group Inc advised DGAM on the deal.

Greg Roumeliotis is a reporter for Reuters News in New York