Sunday, April 10, 2011

Carlyle Group Shatters $100 Billion Barrier

The Carlyle Group smashed through the $100 billion under management mark, rising $9 billion to $106.7 billion.  Carlyle co-founders David Rubenstein, William Conway and Daniel D'Aniello stand to shoot up the Fortune richest list with a Carlyle IPO.  Other groups beside the DBD, David-Bill-Danny, stand to gain.

Mubadala Development Company, a United Arab Emirates sovereign wealth fund, holds 9.35% of Calyle
This is up from their initial stake of 7.5%, purchased in 2007.  Offering additional equity before a looming IPO could help assuage Arab anger.

CalPERS owns 5.5% of Carlyle.  Reuters reported CalPERS bought the stake in 2001 for $175 million.  CalPERS estimated its Carlyle ownership at $334 million in a 2010 investment report.

Private equity underwriters (PEU's) experienced huge growth over the last decade.  Carlyle grew from $3.3 billion in 2000 to $106.7 billion in 2011, a 3,133% increase.  As an early investor, CalPERS should participate mightily from Carlyle's IPO.

Carlyle brags of 30% annual returns for investors, driven in part by being a private firm.  Why give up this distinctive competency?  It's time for the DBD's to monetize their holdings, a la Pete Peterson and David Schwarzman of Blackstone.  Pete got out at the top.  Maybe the DBD's will have similar luck.  I hope they're sitting down when they receive their winnings.

Update 4-16-11:  Both CalPERS and Carlyle face ethical issues regarding bribes, a.k.a. placement fees.