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Steve Schwarzman’s Blackstone Group held talks about an investment in Ken Griffin’s Citadel LLC, the Wall Street Journal reported Saturday, citing unidentified people familiar.
The investment pertains to Citadel’s flagship hedge-fund firm, which has $32 billion in assets under management, and its fast-growing securities-trading operations.
Talks between the firms have been described as contentious and it’s unclear if there’ll be a deal, the report said. Citadel executives estimate the hedge fund to be worth between $5 billion and $7 billion.
The talks come as private equity is booming, while the hedge fund industry grapples with years of mediocre returns and high fees. Outflows are accelerating and more hedge funds have shut than started in each of the past four years.
Citadel’s flagship hedge fund, however, managed to keep an edge over its rivals for at least the early part of this year. In 2018, it gained 9.1% while the industry sank.
“Given the value that we have delivered for our partners and stakeholders over nearly 30 years, a number of investors have expressed interest in our management company,” Citadel’s spokesman Zia Ahmed told Bloomberg by email.
A Blackstone spokeswoman told Dow Jones that the parties were not in talks at this time.
Blackstone, which managed $472 billion in assets as of the end of last year, has a multibillion-dollar fund that invests in other investment firms. In August, it bought as much as 15% of European private-equity firm BC Partners in return for about 500 million euros of investment.
A deal would add to Griffin’s fortune, currently estimated at close to $10 billion. Griffin, who turns 51 next week, set a U.S. record this year with the purchase of a $238 million penthouse at 220 Central Park South. That came days after he paid about 95 million pounds ($122 million) for a 200-year-old London mansion near Buckingham Palace.
— With assistance by Hailey Waller
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