Friday, March 11, 2011

Carlyle Group Adds R to PEU

The Carlyle Group announced plans to form the largest private equity underwriter (PEU) in Peru.  This came after their partner spilled the beans.  Peru has a rising middle class, something citizens in America and the Middle East would like.

Carlyle's plans to invest in the Middle East remain on track, according to co-founder David Rubenstein..  WSJ reported:

Rubenstein declined to comment on how middle-east investors may react to foreign investment firms in the area in particular those with existing or past links to Western governments.
Hosting that 2008 dinner for Saif Gadhafi at The Washington Club may or may not come back to haunt The Carlyle Group.  How about the Tripoli wedding Rubenstein and fellow PEU Stephen Schwarzman attended in 2009?

Rubenstein spoke at the Super Return conference in Berlin.  He did his impression of Donald Rumsfeld with known "knowns and unknowns:"  Here's his list:

Known positives
1. The economy has rebounded
2. Stock markets have improved
3. The unemployment problem has improved
4. Regulatory constraints are now largely known
5. Press attention has been elsewhere
6. Business communities are now more accepting of private equity
7. Exit opportunities are better
8. Limited partner distributions are coming back
9. Investment pace is increasing
10. Fundraising is picking up slightly and will probably rise
11. Relationships between general partners (buyout firms) and limited partners (investors in buyout funds) have improved since the crisis

Known negatives
1. Price multiples are increasing
2. The general view of private equity is still sub-optimal
3. First time funds are becoming harder to raise
4. Tax issues will continue to be debated

Known unknowns

1. The impact of Middle East turmoil on valuations and opportunities in the emerging markets
2. The effect of social networking on private equity
3. The impact of US government resolution of budget and debt problems
4. The ability of EU banks to deal with their debt problems
5. The ability of the EU to support the euro in light of sovereign debt issues
6. The impact of Middle East uncertainty on oil prices
7. The willingness of sovereign wealth funds and pension funds to remain committed to the private equity model

The general view of private equity is sub-optimal.  Which is why Carlyle calls itself a "global alternative asset manager" and their trade group changed its name, adding "growth capital:".


In other news Carlyle finally exited JMC Steel.  A planned 2008 sale to a Russian firm fell through.  Terms were not disclosed.  It's not clear how much federal ERRP funding added to Carlyle's take home.

The following deal added to Carlyle's general creepiness:

DIGIOP Technologies, a developer of video and data management software (VDMS) solutions for the surveillance industry, today announced that an investor group led by The Carlyle Group, a global alternative asset manager, has acquired the Indianapolis-based company.
Carlyle knows how to find the sweet spot. 

Also, the Russians are calling all PEU's, dangling a $10 billion lure.