Carlyle starts liquidating Blue Wave funds

SAN FRANCISCO (MarketWatch) — The Carlyle Group said on Thursday that it will liquidate and eventually shut down its Blue Wave hedge funds after they failed to raise enough assets.

Carlyle, which has historically focused on leveraged buyouts, launched its first hedge fund business, called Carlyle-Blue Wave Partners Management, LP, as the credit crunch was getting underway last year. The private-equity firm was a minority partner in the business.

The equity-focused part of the Blue Wave hedge funds is up more than 2% so far this year. However, Carlyle said that the funds started in a “challenging” market last year and haven’t been able to raise assets under management to a level that will generated enough fees to cover the costs of running a big multi-strategy hedge fund business.

Carlyle Blue-Wave “today announced that it has voluntarily decided to end its multi-strategy investment program and to begin liquidating positions in an orderly manner in anticipation of an eventual closing of the Carlyle Multi-Strategy Partners (CMSP) funds,” the private-equity firm said in a statement on its Web site.

“Investors have been informed that the funds have begun to liquidate their portfolio in an orderly manner,” the firm added.

Carlyle Capital, a fixed-income investment fund affiliated with Carlyle, collapsed earlier this year after failing to meet margin calls on a big portfolio of mortgage-backed securities. See full story

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