Forbes – Despite record numbers of hedge funds closing up shop last year, firms continue to be lured to the business.
Earlier this week, Kohlberg Kravis & Roberts announced plans for a new distressed debt-focused fund, to be rolled out Jun. 30 with an initial $1 billion in assets. It becomes the latest private equity firm to jump the fence and join the hedge fund crowd. Carlyle Group has operated a $3 billion hedge fund since 2004 and Blackstone Group started a $500 million fund last year.
Just about every investment bank is figuring out ways to capture a bigger piece of the hedge fund pie, as well. Morgan Stanley (nyse: MS – news – people ) is said to even have held discussions about taking a stake in Frontpoint Partners, a $6.4 billion fund in Greenwich, Conn. In the last year, JPMorgan Chase (nyse: JPM – news – people ) has taken a sizeable stake in Highbridge Capital while Lehman Brothers (nyse: LEH – news – people ) bought 20% of Ospraie Management.
Continued enthusiasm for the sector comes despite evidence that funds are struggling for survival.
