Investment firm KKR has agreed to merge its hedge fund unit KKR Prisma with Pacific Alternative Asset Management (PAAMCO) to create a new liquid alternatives investment firm.

The new firm will operate under the name PAAMCO Prisma Holdings, managing over $30bn in assets.

Existing employees of PAAMCO and KKR Prisma will own about 60.1% of the combined business, while KKR will own a 39.9% stake as a strategic partner.

The new company will be jointly led by PAAMCO co-founder and CEO Jane Buchan and KKR Prisma co-founder Girish Reddy.

The deal is expected to close in the second quarter of 2017, subject to regulatory approvals.

“Joining forces with PAAMCO will enable us to better serve our clients’ evolving investment requirements. I believe greater scale, flexibility, and additional resources will enhance our ability to generate strong investment performance and to build and service bespoke solutions for our clients. Additionally, we look forward to continuing our strong partnership with KKR,” Reddy said.

KKR co-founders and co-chairmen Henry Kravis and George Roberts added: “The decision to combine KKR Prisma with PAAMCO is based on our shared view that a larger enterprise with exceptional resources, technology and investment acumen will be even better positioned to support clients in today’s marketplace.”