Merrill Lynch & Co. Inc. announced that it has taken a minority stake in alternative investment firm DiMaio Ahmad Capital LLC.

The Wall Street giant announced that it has agreed to take a passive, minority stake in D/A Capital, an alternative investment management firm specializing in credit products. D/A Capital manages several credit-oriented hedge funds and has a substantial business in CLOs and CDOs.

As part of the deal, Merrill Lynch has also committed proprietary capital to be invested in D/A Capital hedge funds. D/A Capital will remain an independent firm. Terms of the deal were not disclosed.

“D/A Capital has an outstanding group of investment professionals who specialize in innovative credit market solutions,” said Dow Kim, president of the Global Markets & Investment Banking group at Merrill Lynch. “They have successfully built a valuable business, and we look forward to working together to further grow the firm by utilizing the global resources of Merrill Lynch.”

“We are very excited about this strategic alliance,” said Jack DiMaio, CEO of D/A Capital. “These additional resources will allow us to accelerate our plans to expand our capabilities for investing in the global credit markets, in our efforts to capture superior returns for our investors.”

D/A Capital manages approximately $2 billion in hedge fund assets and over $1 billion in structured vehicles and is based in New York. The firm’s principal strategies are in credit investing, offering its clients investment opportunities in various hedge fund and structured credit vehicles. Founded by Jack DiMaio and Nasser Ahmad, D/A Capital spun-out from Credit Suisse Alternative Capital, Inc. in April 2005.