(Adds second portfolio manager for Aeris; name of private
equity unit that bought Traxys)
By Barani Krishnan
March 20 Vermillion, the commodity arm of U.S.
private equity group Carlyle Group LP, started trading a
new gold and base metals fund this month as it seeks to rebuild
market presence after losing more than half of its capital,
people familiar with the matter said on Thursday.
In a regulatory filing dated Feb. 14, Vermillion's chief
operating officer, Christopher Zuech, said the Aeris Metals Fund
had raised $122.5 million from 23 investors in total. The filing
did not state the launch date.
Carlyle spokesman Randy Whitestone declined comment.
Aeris, focused on both physical and derivatives trading, is
one of the first commodity fund launches of the year, after a
tumultuous 2013 when institutional cash left the space to chase
a rally in equities. Commodity-focused hedge funds were also
roiled by lower volatility last year.
Trading at Aeris will be overseen by Greg Buechele and James
Tatum, both portfolio managers for precious and base metals at
New York-based Vermillion Asset Management, sources said.
Buechele was a commodity index products manager and timber
trader at Goldman Sachs before he joined Vermillion in
2007 to assist in trading base and precious metals and develop
livestock market strategies.
Tatum was head of European base metals trading at Ireland's
Susquehanna Investment Group before joining Vermillion in 2011.
Despite Vermillion's ups and downs in commodities, it has
"won a liking for its physical premium play in metals, combined
with options trading", said the manager of a rival metals hedge
fund in New York.
"That's one reason they've been able to get good support
from outside investors for this new venture," he said.
Separately, Carlyle, with prominent hedge fund manager Louis
Bacon and other investors, is acquiring a majority stake in
metals trader Traxys Group through the U.S. Equity Opportunity
Fund, one of Carlyle's private equity funds. The investment
comes as big banks scale back on commodities.
Aeris is the sixth fund within Vermillion, whose assets
under management fell from above $2 billion in March 2013 to
around $900 million by December.
Carlyle, which bought Vermillion in 2012, said in January
that Vermillion will also be responsible for one of its upcoming
commodity mutual funds, called the Carlyle Enhanced Commodity
Founded by Drew Gilbert and Chris Nygaard in 2005,
Vermillion trades agricultural products, metals, energy and
staples such as coffee, sugar and cocoa beans. Gilbert and
Nygaard remain co-chief investment officers at the firm.
(Reporting by Barani Krishnan; Editing by Marguerita Choy and