Tuesday, September 23, 2014

PEU Billionaires and Carlyle Group Raising Cash

The Carlyle Group monetized a number of assets this week, just as news reports revealed billionaires have been raising cash for their personal accounts.

Each uber wealthy person boosted their cash holdings by an average of $60 million over the past year, according to the 2014 Billionaire Census published by Wealth-X and UBS.

Billionaires don't typically park money in cash unless they're nervous about the market or preparing for a major investment.

Consider the affiliates Carlye sold or announced plans to sell.  The list includes Park Water with a selling price of $327 million vs. $102 million Carlyle paid for the company in 2011.  It also has an IPO of Philadelphia Energy Solutions train offloading assets for $250 million.  Carlyle also will exit from GDC Technology, a Chinese company specializing in digital cinema solutions.

But there's more:

Singapore's sovereign wealth fund, GIC , is in talks to buy the British roadside rescue business RAC from US private equity firm Carlyle Group LP for over 2 billion pounds (S$4.16 billion), Sky News reported

HTC Business reported:

Carlyle Group paid £300m for a majority stake in Addison Lee in April, but has decided to start an auction process after receiving unsolicited offers for the business, according to a source close to the company.

Private equity firms BC Partners, CVC Capital and Charterhouse are among the organisations that have been invited to bid, with reports suggesting the taxi firm could be sold for £800m.

Kansas City Star reported:

The second-largest holder of YRC Worldwide Inc. stock has sold off all 4,083,122 shares it owned in a broker-assisted deal last week.

The Carlyle Group, in a filing with the Securities and Exchange Commission, said it collected $89.4 million from the stock sales that took place Thursday. Its holding represented 14.3 percent of YRC’s total shares.

Back to the reason for moving assets, even ones owned for as short as five months.  WSJ noted:

The bull market in bonds won’t end well.

Worries about overheated debt markets dominated discussion at an investor conference in New York on Monday, with hedge-fund managers and corporate executives expressing concerns about the bond market as the Federal Reserve moves closer toward raising interest rates.

Bill Conway, co-founder of private-equity firm Carlyle Group, said he doesn’t yet see the specific catalyst that would roil the bond market. Almost every company in Carlyle’s buyout funds has benefited from ultra-low rates by refinancing, he said. “We have to take advantage of it while it’s here.” But overall, the message from Monday’s conference was clear: Rising rates are coming.
Many of those borrowings paid Carlyle huge dividends.  Carlyle and its billionaire PEU founders have lots of cash to put to work in the next disequilibrium.  India is calling for PEU money.

Update 9-25-14:  GIC completed the deal for a stake in RAC.  Ring the bell for a triple!