Thursday, October 20, 2011

Carlyle's IPO: Double Cash In?

The NYPost reported The Carlyle Group's planned IPO values the private equity underwriter (PEU) at $8.5 billion.  That's a little more than half of rival Blackstone's valuation.

Despite sinking valuations, there are signs Carlyle will push ahead with its public offering. Sources said the firm recently lined up a $600 million loan to replace its existing $150 million credit facility.

The banks providing the loan, led by JPMorgan Chase, will have a difficult time reselling it in the tight credit markets and will take a loss on the deal, sources said.

But the lenders hope t recover that money and more through feeso they collect by underwriting the IPO, expected to happen in early 2012, they added.

As for Carlyle, companies often borrow money right before a public offering because they can gain access to capital at below-market rates.
NYPost missed that PEU affiliates borrow before a public offering to pay special dividends, a pre-cash in to the later IPO cash in.  Before HCA's public offering, KKR and company bled the for-profit hospital firm for $4.25 billion, a hefty chunk of it debt financed.  Blackstone later ran the debt for dividend scheme on Vanguard Health Systems, its captive for-profit hospital affiliate.

How much of Carlyle's new $450 million in debt will end up in their founders' pockets?  The greedy billionaire race continues...