Do you love hedge funds? Do you love private equity? Do you ever wish you could have the both of them like peanut butter and jelly?

Well, DE Shaw may soon be able to oblige, as they are considering launching a new private equity fund. Lehman Brothers - a 20% stakeholder in DE Shaw - has been discussing the idea with the company.

Among the features of this fund would be its lack of hedge fund charges. Instead, the Financial Times reports, it would have "fixed life and buy-out-style fees."

There is risk, however, that such a move could create some conflict of interests. However, as large private equity funds make grand deals and huge headlines, hedge funds have been wanting to divert their investments to - well - where the money is.

DE Shaw, the $29bn US hedge fund, is considering launching a private equity fund into which it could inject some of its existing holdings, potentially including New York’s biggest toy shop, said investors consulted on the idea.

According to people who have discussed the fund with DE Shaw, in which Lehman Brothers bought a 20 per cent stake last month, a separate fund would be structured with fixed life and buy-out-style fees, rather than hedge fund charges.

(Continue reading this story on Financial Times)

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