Google's Schmidt takes stake in DE Shaw

Echoing Victor Kiam's refrain about liking the product so much he bought the company, Google chairman Eric Schmidt has purchased a stake in hedge fund manager DE Shaw.

Mr Schmidt, who said he had been an investor in DE Shaw's funds for many years, acquired a 20 per cent stake in the company on Thursday from the liquidators of collapsed investment bank Lehman Brothers.

Mr Schmidt agreed to buy the stake without voting rights over the management of the company, something which was welcomed by the hedge fund group's founder, David Shaw.

Mr Shaw and other leaders of the firm preferred Mr Schmidt over other mooted purchasers of the stake - which last year included boutique asset management group AMG - some of whom wished to assert more control over the company.

"I've known and respected David for many years," Mr Schmidt said, "and as a longstanding investor in the DE Shaw group's funds, I have the highest regard for their team and the firm that they've built."

The stake has been purchased by Hillspire, the family office set up by Mr Schmidt in 2006, two years after Google's stock market flotation, to manage a fortune now estimated by Forbes at $9.1bn.

DE Shaw, which now manages $36bn, was founded by Mr Shaw in 1988, when he left Columbia University's computer science department to pursue the emerging field of computational finance. He has ceded day-to-day control of the company to a new generation of managers, but retains a say over strategic decisions.

The firm sold a 20 per cent stake to Lehman Brothers in March 2007. Hillspire's purchase price was not disclosed.

"I've always regarded Eric as a kindred spirit," Mr Shaw said in a statement, "someone who shares our belief in the power of groundbreaking innovation, analytical rigour, and extraordinarily gifted employees."

The bankruptcy of Lehman Brothers in September 2008 marked the start of the most dangerous phase of the credit crisis, and its assets have been sold off piecemeal to recover as much as possible for creditors.

The proceeds have outstripped expectations; the liquidators' latest cash distributions last month took the total returned to Lehman's unsecured creditors to $99.6bn.

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