The Carlyle Group is primarily known as a private equity firm, but its latest acquisition continues to diversify the business away from vanilla buyouts and other cash infusions into companies.
The $185 billion firm announced Wednesday it had agreed to buy Diversified Global Asset Management Corporation, a $6.7 billion Toronto-based firm that specializes in hedge fund investing through so-called funds of hedge funds. In other words, institutional investors like pensions and endowments pay DGAM to select third-party managers for them.
Carlyle will initially pay $33 million for DGAM and then up to $70 million more over the next seven years "subject to performance and service requirements," according to a filing with the Securities and Exchange Commission. The transaction is expected to close in February 2014.
DGAM has grown quickly: the firm's cash under management increased by $3.56 billion over the last five years, equivalent to an asset growth of 139.96 percent, according to InvestHedge.