Monday, May 11, 2009

Carlyle Group: Too Big to Fail?

The Treasury Department wants authority to take over nonbank financial firms that pose systemic risk to the economy. Billions in pension money are invested in private equity underwriters (PEU's). The Carlyle Group lost Carlyle Capital Corporation, BlueWave Partners, SemGroup, Hawaiian Telecom, and Edscha. Teetering on the edge of implosion is IMO Carwash.

Since the Wall Street meltdown, Carlyle issued capital calls to various pension funds. Some chose not to pony up millions more. Is Carlyle too big to fail?

The Carlyle Group is a global private equity firm with $85.5 billion of assets under management committed to 66 funds as of December 31, 2008. Carlyle invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. Since 1987, the firm has invested $54.6 billion of equity in 896 transactions for a total purchase price of approximately $226.6 billion. The Carlyle Group employs more than 890 people in 20 countries. In the aggregate, Carlyle portfolio companies have more than $109 billion in revenue and employ more than 415,000 people around the world.

My guess is the Obama team has Carlyle's back. No regulation and a public money backstop? That'd be a sweet deal.