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Irvine-based fund of hedge funds Pacific Alternative Asset Management Company plans to join with a unit of KKR Inc. in New York to form a firm with $34 billion in assets under management, according to a statement by both companies.

KKR will retain a 39.9% stake as a long-term strategic partner in the new company, which will include the operations of PAAMCO and KKR hedge-fund unit Prisma.

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The other 60.1% will be majority owned by employees of PAAMCO and Prisma.

PAAMCO has $24 billion of alternative investment assets under management or advisement dedicated while KKR Prisma has approximately $10 billion of assets.

The new business will be led by co-CEOs Jane Buchan, co-founder and chief executive of PAAMCO, and Girish Reddy, co-founder of KKR Prisma.

The combined business will operate under the new global brand, PAAMCO Prisma Holdings. PAAMCO’s and KKR Prisma’s core investment and client teams will remain unchanged, the statement said. The transaction is expected to close in the second quarter of 2017.