KKR Looks to Grow Prisma As Its Consolidated Hedge Fund Platform

By Hedge Fund Insight Staff

Quoted PE behemoth KKR & Co LP is looking to significantly expand its hedge fund related businesses.  KKR  started in hedge funds by bringing over the 8-man equity strategies team from Goldman Sachs Principal Strategies Americas in mid 2011. Then last year KKR bought $8bn fund of hedge funds firm Prisma Capital Partners. KKR has also launched direct hedge fund strategies with capital from its own balance sheet, and earlier this year KKR took a strategic stake in insurance investment specialists Nephila. KKR CFO Bill Janetschek described the firm as pretty excited about the capital deployment in the Public Markets business ( the business segment for KKR’s hedge fund businesses) over the last 12 months.

The strategic logic of bringing Prisma under K.K.R.’s umbrella was that the global reach of the quoted Private Equity firm would give an opportunity for Prisma to market its products to sovereign wealth funds and other institutions not among its previous clients. Since the aquisition was finalised in October last year Prisma has raised $400 million of new capital, according to the  recent 2Q earnings release from KKR.

KKR is now looking to take its hedge fund activities to a new level using Prisma as a platform. “What we found,” says Scott Nuttall, Global Head of Capital & Asset Management at KKR, ” is that there is significant opportunity, and synergy, from having those hedge fund businesses more closely aligned together. So we are moving the hedge fund businesses to be under two individuals – Girish Reddy, who heads up the Prisma business, and new recruit Todd Builione, who was president of Highbridge until recently. ” According to Nuttall, Girish and Builione are going to oversee a consolidated hedge fund platform for the firm. The road map is that you’ll see a credit and capital markets business that’s more closely aligned, and then one combined hedge fund effort for KKR.

Scott Nuttall described  it as a big commercial opportunity to scale these two platforms of hedge fund business – direct investing in hedge fund strategies and the fund of hedge funds opportunity. “They’ve been scaling nicely already, ” said Nuttall. “We think we can take it to the next level.”