District-based Carlyle Group is buying 55 percent of Emerging Sovereign Group, a $1.6 billion emerging markets hedge fund backed by legendary Wall Street investor Julian Robertson.

The stake in New York-based ESG helps Carlyle diversify its business as the firm gets closer to an initial public offering, which is expected later this year.

Carlyle paid an undisclosed sum of cash and an ownership interest in Carlyle, as well as future payments based on ESG’s performance, according to a Carlyle spokesperson.

Robertson’s investment vehicle, Tiger Management, will maintain an ownership interest in ESG as well as its stakes in ESG funds. This is the first of Robertson’s so-called Tiger Cubs, investment funds he has nurtured over decades.

The deal is expected to close by the end of the month.