Dyal buys stake in MKP Capital

MKP Capital Management sold a minority stake to Dyal Capital Partners, said Patrick McMahon, MKP's founder, CEO and a managing member.

MKP manages about $6 billion in global macro, credit and fixed-income hedge fund strategies. It will continue to operate under its own name from its New York office. Dyal Capital Partners is an institutionally oriented, $1.28 billion private equity fund managed by Neuberger Berman Group that takes 20% passive minority stakes in hedge fund managers.

Alexander Samuelson, a Dyal spokesman, confirmed the fund's acquisition of a passive minority interest in MKP but declined to comment about the terms of the deal.

Mr. McMahon said it took two approaches by Dyal Capital Partners before MKP's executives agreed to the deal.

“Selling a minority stake in MKP to Dyal Capital fit in well with the way that we have been structuring the firm to pass ownership on to the next generation,” Mr. McMahon said.

Mr. McMahon noted that he had become a supermajority owner of the firm as other managing members retired or left the firm and the deal allowed him to reduce the size of his ownership stake. Some of the proceeds from the sale also were used to discount MKP's phantom equity permitting three high-ranking employees to buy more equity and move from partner to managing member status, Mr. McMahon said.

MKP's newest managing members are Jason Bonanca, head of strategy and research; Henry Lee, chief risk officer; and Richard Lightburn, senior portfolio manager.

MKP Capital is the fifth hedge fund investment from Dyal's portfolio; the four preceding investments were in Capital Fund Management, MAST Capital Management, Pinnacle Asset Management and Scopia Fund Management.