Neuberger Berman Group seeks to raise as much as $1 billion from endowments, foundations and other investors for its latest private-equity fund, Dyal Capital Partners, which will buy 20% stakes in established hedge fund managers.
Dyal will take a passive stake in from 12 to 15 hedge fund managers with assets ranging from $1 billion to $6 billion, and its share of fee income from the underlying hedge fund managers will be distributed to its investors, providing an annual yield that could exceed 25%, according to a source who asked not to be identified and a Neuberger Berman regulatory filing.
Dyal will have a typical private-equity structure, but “the end game is an IPO in four or five years,” said the source.
Randall Whitestone, a spokesman for Neuberger Berman, declined to comment.
Dyal's management team is led by Michael Rees, COO of NB Alternatives, and Andrew Komaroff, Neuberger's chief operating officer. Both worked in the unit of Neuberger's former parent company, Lehman Brothers Holdings, that bought stakes in hedge fund managers. Lehman's hedge-fund-staking investments totaled $2 billion before the firm filed for Chapter 11 bankruptcy protection in September 2008.
Dyal will also receive input from George Walker, Neuberger's CEO, and Anthony Tutrone, managing director and head of alternative investments. Both were members of the Lehman team that invested in hedge fund managers.
Bloomberg contributed to this story.