KKR Agrees to Buy 25% Stake in Hedge Fund Nephila Capital

hedge fundAccording to Katherine Burton, KKR & Co. (KKR) agreed to buy a 24.9 percent stake in hedge fund Nephila Capital Ltd. as it expands beyond its main private-equity business. Financial terms weren’t disclosed.

Nephila, a Bermuda-based firm with $8 billion in assets that makes reinsurance-related investments, will continue to operate under its own name, New York-based KKR said yesterday in a statement. KKR will acquire its shares from Nephila’s management as well as a portion of the stake owned by Man Group Plc (EMG), the biggest publicly traded hedge-fund manager, according to the statement.

KKR, which is making the purchase through the firm and not its investment funds, has been expanding into hedge funds as a way to broaden its business beyond corporate buyouts. Last year, it bought Prisma Capital Partners LP, a hedge fund of funds, and in 2011 it hired Bob Howard from Goldman Sachs Group Inc. to run an in-house long-short stock fund. Together those two funds manage about $8.5 billion. Henry Kravis and George Roberts, two cousins who started KKR in 1976 with Jerome Kohlberg, also have branched into stock and bond underwriting, infrastructure investing and real estate.

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