Credit Suisse has paid an upfront $425 million for a minority interest in York Capital Management, a global hedge fund manager based in New York. York will continue to operate independently and to be led by founder and chief executive Jamie Dinan, chief investment officer Dan Schwartz and the firm’s senior management team.

The deal also provides for earn-out payments based on five-year financial performance by York and retention arrangements for Dinan, Schwartz and other York principals.

The bank expects to enter into non-exclusive arrangements to provide distribution services for York funds.

“This relationship with York is an important next step in executing our growth strategy in asset management. Our clients will have access to a top-tier suite of products, independently managed by York, and benefit from using York’s proven approach that has delivered superior returns to investors across market cycles,” said Rob Shafir, chief executive of Credit Suisse’s asset management division.

“We see tremendous opportunities in the marketplace for event-driven and credit strategies and we think our ability to capitalize on these opportunities will be enhanced by Credit Suisse’s global reach and resources, particularly in parts of the world where we are increasing our investment activity. We will continue to manage York as we always have – independently and with a disciplined, research-driven and flexible approach to investing that has enabled us to build an enduring institution and to generate superior risk-adjusted returns for our clients over the past two decades,” said Dinan.

Founded in 1991, York has offices in New York, Washington, London and Hong Kong. It manages approximately $14 billion on behalf of institutions, endowments, foundations, fund of funds, wealthy individuals and families.

The transaction is expected to close in the fourth quarter of 2010 subject to the customary closing conditions, including regulatory approvals.