Alternative asset manager The Carlyle Group has purchased a 55 per cent stake in Vermillion Asset Management, a New York-based commodities investment manager with approximately USD2.2bn of assets under management.
Mitch Petrick (pictured), Carlyle managing director and head of global market strategies, says: “This is an important addition to Carlyle's GMS platform. For many years Carlyle has successfully invested in a variety of energy, agriculture and infrastructure companies. Vermillion employs a liquid, relative-value, low volatility approach to trading both physical commodities and their derivatives to produce positive, uncorrelated returns.”
Drew Gilbert, co-managing partner and co-founder of Vermillion, says: “Our team looks forward to leveraging Carlyle’s global network and deep knowledge of local markets to better exploit trading opportunities and inefficiencies in the global commodities markets.”
Vermillion was established in 2005 by Gilbert and Chris Nygaard. Today, Vermillion manages three commodities-focused strategies, including relative value, enhanced index and long-biased physical commodities. Each strategy uses Vermillion’s ability to make and take physical delivery, unique among its peer group.
Vermillion will become Carlyle’s exclusive commodities trading platform and Gilbert and Nygaard will continue in their current roles as co-chief investment officers, managing investments and the day-to-day operations of Vermillion.
The Vermillion ownership stake was acquired by Carlyle in exchange for cash, an ownership interest in Carlyle and performance-based contingent payments payable over five and a quarter years. If Vermillion achieves certain performance targets, Carlyle has agreed to issue to the Vermillion principals up to 1,439,788 Carlyle Holdings partnership units over a four and a quarter-year period. These units will be exchangeable one-for-one on a private placement basis for common units of The Carlyle Group L.P. subject to the terms of Carlyle’s exchange agreement. Vermillion’s principals reinvested cash proceeds from the transaction into Vermillion’s funds. The transaction received the requisite fund consents. Further terms of the transaction were not disclosed.