Friday, August 10, 2012

Carlyle Sticks TCW in Two PEU Funds

The Carlyle Group announced it will take a 60% share in asset manager TCW Group.  The Carlyle Group has $156.2 billion in assets under management, while TCW has $131 billion.  Combined they total $287.2 billion. 

Fortune stated Carlyle would hide the AUM total by parking TCW within two of The Carlyle Group's PEU funds.  If one planned on divesting TCW in a year or two, it wouldn't behoove claiming TCW's $131 billion in assets as under Carlyle management.

Economic net income, a fictitious number to begin with, varies widely from quarter to quarter.  PEU's don't want assets under management to behave similarly.

TCW ended up a distressed sale by Societe Generale.  Bloomberg reported:

Carlyle, based in Washington, started a team dedicated to financial services in June 2007 and, after turnover and leadership changes, hired Olivier Sarkozy in 2008 from Swiss bank UBS AG to head it. The group also includes former Wachovia Corp. treasurer James Burr.

Sarkozy and his team are seeking $2 billion for a new fund to follow the inaugural one that completed raising capital in 2010, according to a presentation viewed by Bloomberg News. The fund is seeking to take advantage of turmoil in the European financial-services industry, regulatory changes and emerging- markets opportunities. 

Distressed investor Carlyle might the first PEU to $300 billion in AUM, the double secret kind.

Update 1-21-13:  Carlyle plans to give 50 of TCW's 150 employee stock holders additional equity in the firm. TCW continues to lose investment managers and teams.  Also, TCW plans to more than double its debt.  Increasing interest expense by 133% should cause managers to roll the dice harder or more often?