Tuesday, September 6, 2011

Carlyle Sprinting to the Finish, Like Benefactor Bush

The Carlyle Group cracked open its chest of secrets with an IPO filing.  Their S-1 shows Carlyle's growth from 2003.

The Bush years were incredibly good to The Carlyle Group, which spread its global tentacles as a private equity underwriter (PEU).  Carlyle went from $3.3 billion in 2001 to $91.5 billion in 2008.   Their chart omits the dip from $91.5 billion to $86.5 billion, resulting from the financial crisis.  A virtually radioactive President Bush said he was "sprinting to the finish" as his term wound down.  Carlyle co-founder David Rubenstein told the WSJ he too is sprinting, likely to Scrooge McDuck's pool of riches.

Globalization continued its charge under President Obama.  Carlyle's investment offerings did likewise.

I found it humorous to read the DBD's eating their words regarding the benefits of private equity.  They're now on the side of public investments:

Some of our fund investors may believe that we will strive for near-term profit instead of superior risk-adjusted returns for our fund investors over time or grow our AUM for the purpose of generating additional management fees without regard to whether we believe there are sufficient investment opportunities to effectively deploy the additional capital.
Investors believe this, because of Carlyle's sales pitch.  That and promises of 30% annual returns.  The S-1 shows an IRR of 32% for fully-invested funds and 31% for private equity (total corporate).

Despite making billions, Carlyle's DBD founders long disdained paying taxes.  This shows in Carlyle's financial statements. The income and tax picture for 2011, when the PEU monetized numerous affiliates, shows:

History shows the greed/leverage boys faring extremely well on taxes:

Carlyle's pictures tell a PEU story.  I hope you enjoyed Chapter 1:  Sprinting to a Low Tax Finish.  Lawyers love it.  Who will buy the puffery?