Friday, March 7, 2008

Fund Run at Carlyle Capital

Reminiscent of Great Depression bank runs, Carlyle's public investment fund received a wave of margin calls from its investors. Carlyle Capital is listed on the Amsterdam Exchange. It fell from $20 per share to $5. Yesterday trading was suspended all together. The private equity firm is "considering all options available to the company."

One might expect David Rubenstein to make sure the fund doesn't fail. Just last week he spoke of the bright future of private equity, including future public offerings. If Carlyle's first public investment opportunity bites the dust, how might that impact future syndications?

MarketWatch reported, "The company believes these additional margin calls and increased collateral requirements could quickly deplete its liquidity and impair its capital."

Carlyle co-founder William Conway's mantra is now being said by Carlyle Capital shareholders. "Make me money!", or at least don't lose it all. Fund run is the modern bank run.