(Bloomberg) -- Greg Coffey is in talks to acquire Emso Asset Management to create a money manager with $13 billion in combined assets as the macro trader diversifies his hedge fund firm.

Discussions are at an advanced stage between Coffey’s Kirkoswald Asset Management and emerging markets-focused EMSO, which manages $5 billion, according to people with knowledge of the matter. The transaction would see EMSO founder Mark Franklin and his team move over to Kirkoswald, the people said, asking not to be identified because the details are private.

Representatives for EMSO and Kirkoswald, which oversees $8 billion, declined to comment. 

If Kirkoswald completes the acquisition, it would bolster Coffey’s attempts to beef up his operation as part of a plan to transform the firm into an emerging markets and macro investing platform. EMSO’s long-only absolute return and private credit businesses would complement Coffey’s outfit. 

The move also follows the recent departure of Diana Amoa who had joined Kirkoswald in 2021 to build a long-biased investment business.  

After the acquisition, Coffey will continue to be the chief investment officer and chief executive officer, focused solely on his hedge fund strategy. Franklin will be chairman of the EMSO strategies and vice chairman of Kirkoswald’s board, while Kirkoswald’s Joseph Mauro will be president of the combined business, one of the people said.

Consolidation among money managers is one top trend investors are watching for this year as the hedge-fund industry’s biggest players — after adding tens of billions of dollars in assets in recent years — look for quick ways to acquire talent.

Dmitry Balyasny, whose firm oversees $21 billion, said in October that hedge funds will need to acquire external teams of traders in order to have enough experienced employees to push into new areas. While developing talent internally is critical, it’s not sufficient, he said at an investor conference in Toronto. In December, Man Group Plc said it’s open to buying businesses as the firm expands into various credit strategies.

Coffey came out of retirement to start his hedge fund Kirkoswald in 2018 and has since grown firm-wide assets. Last year, his hedge fund barely made money, halting a four-year streak of double-digit gains.

Kirkoswald has been trying to expand its offerings. It started a strategy that allows clients daily access to their money and complies with the European Union’s UCITS Directive. It also announced plans to build a long-only fund business in 2021.

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