Hedge funds are threatening to outmanoeuvre private equity on three fronts and force their rivals to seek safety in sophistication.
Private equity firms are fighting over public company ownership, the search for talent and competing for assets under management, but hedge funds are gaining ground.
The acquisition last week of a minority stake in K2 Advisors, a US fund of hedge funds manager with $5.5bn (€5.1bn) of assets by TA Associates, a US buyout firm, was a rare example of firms in the two industries combining. There has been little takeover activity between hedge fund managers and private equity firms, despite the fact that investors often want to invest in both and would rather build relations with one firm than two. The industries are fighting each other rather than joining forces.
Differences in remuneration can lead to insoluble rivalries that prevent firms combining. Investment banks have made successful acquisitions of hedge fund managers as well as private equity firms but they are the exception.
