Global alternative asset manager The Carlyle Group has agreed to acquire 55 percent stake in hedge fund Claren Road Asset Management. The terms of the transactions will be disclosed by the end of the year.

The brainchild of four former senior members of Citigroup’s Credit Trading Department - Brian Riano, John Eckerson, Sean Fahey and Albert Marino, Claren primarily manages two funds covering $4.5 billion of assets under management. It now plans to reinvest back to its own funds the initial cash proceeds from this negotiation.

Claren Road Chief Executive Officer Riano believes that the partnership will be beneficial to both Claren Road and its investors as it provides access to Carlyle’s “global network and industry expertise as well as its strong regulatory, compliance, legal and investor services capabilities.”

Carlyle’s move, on the other hand, confirms its renewed interest in hedge fund after the 1998 closure of its hedge fund Blue Wave Partners Management.

Michael Petrick, Carlyle managing director and global head of credit alternatives and capital markets says, “We have a view of which strategies are necessary to exploit the market opportunities,” adding that, “Claren Road is an important piece of the puzzle, and we are in various stages of development on additional strategies.”

Apart from the expansion of Carlyle’s credit product offerings, Petrick sees strength in this partnership with the two companies’ common view on the “optimal strategy to exploit investment opportunities in credit over the long term.”