Vermillion founders leave as fund investors flee commodities

Andrew Gilbert and Chris Nygaard, who set up commodities hedge fund manager Vermillion 10 years ago, left at the end of June, the source said on Friday.

Their abrupt departure comes as majority shareholder and U.S. private equity group Carlyle Group LP pushes ahead with plans to switch the company's focus to commodities financing, rather than trading.

The two veteran traders had remained co-chief investment officers at Vermillion, managing day-to-day operations, after Carlyle bought a 55 percent stake in the firm almost three years ago.

Their exit also follows a prolonged stream of redemptions by investors. Assets under management at the main fund, called Viridian, shrank to less than $50 million from $2 billion, the source said. The company has $1.5 billion under management.

Carlyle would not comment on the personnel changes but confirmed the shift in strategy toward financing, sector-specific strategies and index products, which the sources said has been going on for the last 18 months.

"We are successfully repositioning our commodities business, particularly in commodities finance, to capture an enormous global opportunity," Carlyle said in a statement.

The Wall Street Journal first reported the exit on Friday. The fund's two founders were not immediately available for comment.

The news reflects deepening pain across the fund industry, which flourished over the past decade as oil and industrial raw materials prices like copper soared due to China's economic boom.

This week, two commodity-focused hedge fund managers, Armajaro and Cargill's [CARG.UL] Black River, shuttered funds after hefty losses.

(Reporting by Greg Roumeliotis in New York; Writing by Josephine Mason; Editing by Jeffrey Benkoe and Lisa Von Ahn)