Carlyle Group (CG) Acquires Majority Stake in Vermillion; May Issue ~1.44M Units
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The Carlyle Group (Nasdaq: CG) and Vermillion Asset Management (Vermillion) announced that the Carlyle publicly traded partnership has purchased, effective October 1, 2012, a 55% stake in Vermillion, a New York-based commodities investment manager with approximately $2.2 billion of assets under management as of September 30, 2012, which has become affiliated with Carlyle’s Global Market Strategies business.
Vermillion was established in 2005 by Drew Gilbert and Chris Nygaard. Today, Vermillion manages three commodities-focused strategies, including relative value, enhanced index and long-biased physical commodities. Each strategy utilizes 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.
Carlyle’s Global Market Strategies business comprises an array of long/short credit hedge funds, emerging markets equities and macroeconomic strategy hedge funds, structured credit, middle-market credit, energy mezzanine and distressed products – 53 funds with $29 billion in assets managed by 100 investment professionals in New York, Washington, DC, Los Angeles, Houston, Hong Kong and London as of June 30, 2012.
Sandler O’Neill + Partners, L.P. and Katten Muchin Rosenman LLP served as financial and legal advisors to Vermillion, respectively. Simpson Thacher & Bartlett LLP served as legal advisor to Carlyle.
Vermillion was established in 2005 by Drew Gilbert and Chris Nygaard. Today, Vermillion manages three commodities-focused strategies, including relative value, enhanced index and long-biased physical commodities. Each strategy utilizes 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.
Carlyle’s Global Market Strategies business comprises an array of long/short credit hedge funds, emerging markets equities and macroeconomic strategy hedge funds, structured credit, middle-market credit, energy mezzanine and distressed products – 53 funds with $29 billion in assets managed by 100 investment professionals in New York, Washington, DC, Los Angeles, Houston, Hong Kong and London as of June 30, 2012.
Sandler O’Neill + Partners, L.P. and Katten Muchin Rosenman LLP served as financial and legal advisors to Vermillion, respectively. Simpson Thacher & Bartlett LLP served as legal advisor to Carlyle.
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