The arcane, barely noticeable note, buried in a section about tax calculations, revealed that the private equity firm assumed its existing owners would own “approximately 90% of Carlyle Holdings I L.P.,” an investment fund, after the I.P.OThe note doesn't reveal who is liquefying a portion of their PEU stake in Carlyle. Is it the DBD's, Carlyle's co-founders, CalPERS, and/or Mubadala Development Corp, a United Arab Emirates sovereign wealth fund?
Dealbook missed what wasn't in the fine print, that Carlyle's co-founders would decide executive compensation, not the Board of Directors. It also couldn't find Carlyle's virtual tax free status, paying a mere 1-2% in income taxes on billions in economic net income.
President Obama ensured that Carlyle's co-founders could cash in their PEU stakes at discount tax rates. Taxes on their recent "liquidity recap," better presented as "debt for dividend" won't come due until the debt matures. It's a PEU world.
That said, my hope grows when Carlyle has to employ 21 investment banks to liquefy a mere 10% of the firm. It takes a lot of people to shovel malodorous products. The smell backs up in your taste buds.