Updated Oct. 4, 2012
Carlyle Group acquired a 55% stake in commodities investment specialist Vermillion Asset Management.
The deal on Monday involved an exchange of cash and an ownership interest in Carlyle as well as performance-based contingent payments after 5.25 years.
Michael “Mitch” Petrick, managing director and head of Carlyle's global market strategies business, declined to specify terms.
All of Vermillion's employees have become Carlyle employees and will move into Carlyle's New York office to join Mr. Petrick's unit. Vermillion was founded in 2005 in New York by Drew Gilbert and Chris Nygaard, co-managing partners and co-chief investment officers. They will retain the latter title and will continue to manage the investments and day-to-day operations of Vermillion, Mr. Petrick said in an interview.
Vermillion managed $2.2 billion as of Sept. 30, mostly for institutional investors, in three commodities-related strategies: relative value, enhanced index and long-biased physical commodities. Vermillion's investment strategies will become Carlyle's exclusive commodities trading approach in the global strategies unit, Mr. Petrick said, noting that Vermillion's liquid, low-volatility approach will complement the firm's less liquid private equity commodity funds.
The 45% economic and ownership stake that Vermillion employees retain will be “a very strong incentive” for continued strong performance, Mr. Petrick said, noting that “Vermillion and Carlyle share very similar views about how to invest in commodities over the long term.”
Sandler O’Neill & Partners advised Vermillion on the deal, confirmed Vermillion spokesman Armel Leslie.
Melanie Zanona contributed to this story.