KKR hires a team of 9 proprietary traders of Goldman Sachs

Bob Howard and his colleagues now run strategies for the new equity long-short fund of KKR ...

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Led by Bob Howard, 39 years, the team recruited by Kohlberg Kravis Roberts (KKR) was not the most famous of Goldman Sachs

They have never posted outsized gains in the past, and had been showing a year-to-date performance below 5%. But the team’s ability to generate stable trading profits without significant losses and the brand "Goldman" were enough to convince KKR.

The firm believes to easily raise the cash for the first long-short fund about to be launched.

The hiring by KKR of a team of Goldman’s traders is a sign of radical change within the private equity industry. KKR, one of the oldest and most renowned private equity houses, now seems to reduce allocation to leveraged buyouts, which once made its reputation, to position themselves on bond fund management and equity trading.

Until 2004, 95% of assets - $ 14.4 billion out of $ 15.1 billion - were dedicated to KKR’s LBO. Today, only 75% of its assets - $ 41 billion out of $ 54.4 billion - are invested in LBOs.

Henry Kravis and George Roberts, KKR’s founders describe this move as "part of a strategic plan for building an asset management platform"

KKR will continue to strengthen its structure through the hiring of new trading teams. However, this strategy is not riskless: Carlyle Group, another leading industry player, was forced in 2008, after heavy losses, to liquidate Blue Wave, a 600 million dollars hedge fund they were managing.

For many analysts, KKR should follow the path of BlackRock, now the largest fund manager in the world.

Next Finance , October 2010

Article also available in : English EN | français FR

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