Saturday, March 30, 2013

Carlyle's Filing for Smaller Investors

The Carlyle Group's SEC filing for CPG Carlyle Private Equity Fund LLC indicates a historical Gross Internal Rate of Return of 31%.  Here's the addendum:

Any performance information presented in this Confidential Memorandum does not reflect the Fund's Management Fee, Sub-Placement Agent Fee, expenses or a placement fee (if applicable) that are borne by Investors in the Fund which will reduce returns and in the aggregate are expected to be substantial.

When investments blow up due to management inattention or management methods that distort behavior, Carlyle has been know to plead puffery, i.e. Carlyle cited any implied promises were purely sales talk. .  

After Carlyle Capital Corporation, a $22 billion Guernsey based mortgage security fund, imploded The Carlyle Group ran from its carcass.  It claimed "unprecedented tumult" as a defense in a Carlyle Capital Corporation investor lawsuit.

Carlyle's good name is nowhere to be found in Stallion Oilfield Services bankruptcy.  They're not responsible for this new fund from the get go:

Carlyle is not a sponsor, promoter, adviser or affiliate of the Fund.  Past performance of Investment Funds sponsored by Carlyle is not indicative of future results.  The Fund may not invest in all of the Carlyle Investment Funds described herein.

 The SEC filing spoke to who can invest in this new fund:

The stated minimum initial investment in the Fund is $50,000, which minimum may be reduced by the Fund in the sole discretion of the Adviser based on consideration of various factors, including the Investor's overall relationship with the Adviser, the Investor's holdings in other funds affiliated with the Adviser, and such other matters as the Adviser may consider relevant at the time.  The minimum additional investment in the Fund is $10,000. 
For those interested in fees, here they are:

Maximum sales load - 3.5%
Maximum early redemtpion fee - 2%
Total annual management fee plus expenses - 3.68%
I can see why Carlyle would warn how aggregating fees could be substantial.  I'm not sure their defenses of "puffery" and "unprecedented tumult" are likewise.  Substance is the tangible nature of things. Carlyle seems the exact opposite.