After more than 20 years working on Wall Street, brothers Ben and Luke Drums chose to start a new investment firm in their hometown of Dallas.
Focused on real assets, specialty finance and structured credit, D2 Asset Management will launch with more than $1 billion in assets under management.
The premise behind D2 (a name derived from two companies with the same surname) is to invest in businesses and assets, such as operating companies that own assets or portfolios of assets, through the lens of credit. D2’s primary strategy is to invest in debt by making loans.
Ben is six years older than Luke. The two co-founders and managing partners of D2 originally worked at Deutsche Bank in New York City before moving on to separate ventures.
Ben most recently served as partner and managing director at hedge fund H/2 Capital Partners, and Luke was previously partner and managing director at New York private equity firm TowerBrook Capital Partners.
“We’ve dabbled in everything from public markets to private markets, liquid to illiquid, but everything we’ve done has always been centered around various forms of asset-backed financing,” Luke said.
The firm expects that today’s high interest rate environment will create opportunities, particularly in the areas of asset-backed financing, private credit and commercial real estate assets.
“This was also a time when the market opportunity was attractive to us, which aligned with our desire to build a business and our vision of shared values and culture,” Luke said.
The brothers have been keeping an eye on the strength of Dallas’ financial services sector in recent years.
“Dallas has historically been a financial services city, and has always had a lot of real estate, back office, and middle office,” Ben says. “The relocation of front office to Dallas is a really positive trend.”
Beyond the business case for launching D2 in Dallas today, Ben and Luke expect that the overlaps and differences in their respective skill sets will actually be complementary.
“Being able to do this together in the place where we grew up and in the community that we have such a deep attachment to is really important to us and an important part of our story,” Ben said. “That’s why we knew we wanted to start our business and spend the next phase of our careers here in Dallas.”
The brothers are zeroing in on office space, likely in Uptown Dallas, and they’re in “active discussions” with a variety of people to help build the business, from investment professionals to operations to compliance.
The company’s launch coincides with the announcement of a strategic partnership with Koch Real Estate Investments, the real estate division of Dallas-based Koch Industries.
The KREI business focuses on real estate assets and operating companies.
“Partnering with D2 aligns well with KREI’s strategy to partner with best-in-class management teams and provide flexible capital solutions,” said Jake Francis, President of KREI. “Ben and Luke’s approach to addressing relative value while navigating complex investments across market cycles and asset classes is impressive. We believe this strategic partnership will create significant value and look forward to supporting D2’s growth and success.”
Terms of the partnership with KREI have not been disclosed.
