Thursday, March 11, 2010

Rubenstein Ticker

Forbes released their list of world billionaires, populated by numerous private equity underwriters (PEU's). David Rubenstein made the list. His 2010 net worth is $2.5 billion. That happened to be his net worth in 2007, when Rubenstein first stormed the list. Forbes' data shows:

Rubenstein's Net Worth:
2007 $2.5 billion
2008 $2.7 billion
2009 $1.4 billion
2010 $2.5 billion

Has your net worth recovered in similar fashion?

It's been a heck of a decade for Rubenstein and The Carlyle Group. They managed $5.8 billion when Texas Governor George W. Bush ran for President. Bush served on the board of Carlyle affiliate CaterAir in the 1990's. The Carlyle Group achieved stratospheric growth during the Bush years, reaching $91.5 billion in managed assets.

When the bubble burst, heavily leveraged affiliates imploded. It started with two canaries, Carlyle Capital Corporation and hedge fund BlueWave Partners. Carlyle sashayed away from these implosions, but the carnage continued. Carlyle bankruptcies include:

Carlyle Capital Corporation
BlueWave Partners
Hawaiian Telecom
IMO Carwash
Stallion Oilfield Services
Verari Systems
Oriental Trading
Moody's believes more are at risk, including:

Allison Transmissions

American Achievement-rated selective default
Freescale Semiconductor

Frontier Drilling

Harrah's-(not credited to Carlyle in the report)
HD Supply
LifeCare Holdings

PQ Corporation

Sequa Corporation
Synagro Technologies
TSI Acquisitions (Titan Specialties)

UCI Holdco (United Components)

Veyance Technologies
One might expect this record and Carlyle's $681 million capital call to CALPERS in 2008 to add up to systemic risk. Sorry.

Yet, Rubenstein's personal portfolio made a resounding comeback. How much came from the taxpayer? Carlyle affiliate Boston Private Financial Holdings received $153 million in TARP funds? Unlike many banks, they are yet to return all the money. Carlyle invested in BankUnited, a recipient of $4.9 billion in FDIC subsidies. A U.S. agency loaned $130 million to Carlyle's Repco Home Finance to support mortgage lending in India.

With direct government help and insider political connections, how much higher will David Rubenstein's net worth grow? It depends on how mean and greedy he is. If his Blue Duck Tavern dining partner is any indication...

Update: Monica Conyers, wife of Rep. John Conyers, received a three year jail sentence for accepting bribes from The Carlyle Group's Synagro Technologies. This stain hasn't hurt Carlyle's success in landing other infrastructure projects.

Update 6-30-11:  I shifted Oriental Trading from distressed to bankrupt