Sunday, May 27, 2012

Carlyle's David Rubenstein: Aw Shucks Billionaire

WaPo published a lengthy piece in their Lifestyle section on Carlyle Group co-founder David Rubenstein.  The piece wasn't so much on the lifestyle of a billionaire.  It dealt more with Rubenstein's career path, sort of "How I Became a Private Equity Underwriter..."

It started with The Carlyle Group IPO and how the shy and self effacing Rubenstein avoided the media spotlight.  It didn't mention how Rubenstein had to discount Carlyle's IPO price to $22 or hawk it as a sure first day moneymaker.

The story moved to Rubenstein's upbringing, his education, his work for the Senate and later the Carter White House. It gave his starting Carlyle a Bill Gates garage feel, only Rubenstein worked with experienced businessmen from Marriott and MCI.

Rubenstein recruited the list of political power players, pivotal to Carlyle's growth.  He pretended like the hiring of Frank Carlucci, President George H.W. Bush and James A. Baker, III were errors that Rubenstein rectified.  Hardly.  Rubenstein recruited a new batch with Red and Blue credentials.

The piece glossed over Carlyle's debacle in mortgage based assets, Carlyle Capital Corporation.  Rubenstein's lawsuit defense asserts "unprecedented tumult."  WaPo missed Carlyle's collapsed hedge fund, Blue Waver Partners.  It made no mention of The Carlyle Group's numerous bankruptcies.

Hawaiian Telecom
IMO Carwash
Stallion Oilfield Services
Verari Systems
Oriental Trading

Church Street Management

Also absent, the lawsuit alleging private equity underwriters conspired to fix buyout prices via club bids.  Carlyle and company recently offered $200 million to settle the suit.  Speaking of settlements, Carlyle and its energy JV partner, Riverstone Holdings, paid $70 million combined to the New York Attorney General to get carved out of a PEU "pay to play" investigation regarding public pension funds.

PEU's say their task is noble, as they earn money for pension funds.  They're silent on deals where Carlyle dumps the company pension in the takeover process, as recently happened with RAC and Brintons.

I find it ironic WaPo cited Carlyle's investment in "forests in China."  China Forestry's books were fiction, given an investigation could only confirm 1% of sales.  China Forestry's stock hasn't traded in over a year, yet The Carlyle Group maintains the company has value. China Forestry is but one of many.

There are many David Rubenstein stories.  Most show the penultimate salesman, with seemingly little regret when promises fall short..

Rubenstein grew up from the bookish Baltimore child.  Today, he milks money from just about anything, amply aided by his media/government friends...

Update 6-3-12:  Rubenstein might get his own "WaPo PEU" section, given WaPo's penchant for writing about him.