Thursday, October 18, 2007

Bush's Community Banker Does Deal with Carlyle

Robert L. Johnson posed with President Bush nearly a year ago as a small business owner and community banker. The Washington Post noted his deal with the politically connected private equity firm, the Carlyle Group. Billionaire Bob Johnson espoused his vision of having the largest black owned, asset management firm. The first phase of the fund will come in at 125 to 150 million dollars. It will then grow to $300 million. RLJ Equity expects to announce its first acquisition in the near future.

How much of a small business owner is Mr. Johnson? According to the Post, he's not one at all.

Johnson has been on a tear since he became a billionaire when he sold his interest in BET to Viacom in 2001. He bought the National Basketball Association's Charlotte Bobcats for $300 million, started a bank called Urban Trust that caters to minorities and has started private funds for real estate and buyouts. His real estate arm owns more than $3 billion worth of hotels and expects to close a $1.3 billion fund by the end of October.

He recently teamed with Thomas F. "Mack" McLarty, former chief of staff to President Bill Clinton, in an automobile dealership venture that would create several minority-owned dealerships centered in the southeastern United States. McLarty's family has decades of experience in automobile dealerships. Johnson and McLarty hope to grow a $400 million dealership business to more than $1 billion in revenue in the next three to five years.

I have a model that is the best practices model for minority businesses to compete in the business economy," Johnson said in an interview. "The trait that runs through all my businesses is that I attract superior minority talent, give them access to capital and bring strategic partners like Carlyle . . . to contribute to the business plan. It's not driven by color, it's driven by talent, access to capital and the right strategic partner."

It appears to be driven by high dollar funders with insider political connections from both sides of the aisle. How much extra business will RLJ subs get for having a minority owner? You'd better believe Carlyle has done that math. Mr. Bob Johnson is not a small business owner and Carlyle doesn't get in bed with anyone without expectations of high returns. They're expecting the community banker to add to those 25% annual returns.