Carlyle liquidating Blue-Wave hedge fund

NEW YORK, July 31 (Reuters) - Private equity firm Carlyle Group [CYC.UL] said on Thursday it is liquidating its only hedge fund, Carlyle-Blue Wave Partners Management LP after the fund failed to achieve "critical mass" in a "challenging market."

Carlyle started the fund in April 2007 with two former Deutsche Bank (DBKGn.DE) executives, Rick Goldsmith and Ralph Reynolds and focused on credit strategies. But the fund, which held about $900 million at its peak, was hurt by widespread turmoil in the credit markets and posted losses in 2007.

While it posted returns of about 2 percent in 2008 in a subsequent equity strategy, beating the S&P 500 index .SPX, Carlyle said it could not sustain the cost of the staff and infrastructure, so it chose to liquidate the fund.

"This is an orderly liquidation to ensure fair and equitable treatment of all investors," said Chris Ullman, a Carlyle spokesman. (Reporting by Dane Hamilton; editing by Jeffrey Benkoe) (Reuters email: dane.hamilton@thomsonreuters.com. 646 223 6161)