Friday, October 31, 2014

Carlyle's PEU Dividend Recapitlizations

The Carlyle Group held its Q3 earnings call.  Items of note included:

We took advantage of access to cheap credit to complete over $700 million in dividend recaps from the third quarter in companies such as PPD in the United States; Emeos [ph], Twin Set and Marle in Europe; 7 Days Group in China; and Tsubaki Nakashima in Japan.

In addition to Booz Allen (over $60 million dividend payment to Carlyle) and excluding the aforementioned recaps, we realized approximately $300 million in additional proceeds from dividends and operating proceeds across the portfolio.  

Sometimes when we do a recap, we don't actually think of that as a realization.
That's the recap on recaps.  Overall Carlyle is set to win in whatever world its sponsored officials create:

It is important to note, however, that our business model allows us to take advantage in any economic environment. If the equity markets appreciate, we will continue to exit. But if the equity markets fall, we will find more compelling investment opportunities, and we are under no obligation to sell.
Imploding debt markets pose the biggest threat to Carlyle and their bloated ex-affiliates.  The Fall 2008 financial crisis saw Carlyle making capital calls, over $650 million alone to CalPERS.  A financial meltdown, where the big money boys no longer trust one another to make good on their debts or bets, can happen again, it will.  The question is when.