Sunday, April 19, 2015

Carlyle's Cayman Islands Exploits

The announced closing of The Carlyle Group's initial mutual fund offerings came before a full year had run.  It's dying from poor returns.  In exploring the fund I found several links to Cayman Islands subsidiaries.  That isn't unusual for a company where an afternoon could be consumed playing "Count the Caymans" on Carlyle's monstrous subsidiary list.

Research showed two Cayman subsidiaries in Carlyle Select.  The Cayman Islands Monetary Authority listed seven Carlyle Group affiliates under their 200 page list of Cayman based mutual funds.  Missing were the two Carlyle Select Cayman subs.  It could be a matter of timing as Carlyle's new mutual funds began August 1, 2014.

Research led back to Carlyle's IPO prospectus, which stated:

Our business has historically been owned by four holding entities: TC Group, L.L.C., TC Group Cayman, L.P., TC Group Investment Holdings, L.P. and TC Group Cayman Investment Holdings, L.P. We refer to these four holding entities collectively as the “Parent Entities.” The Parent Entities have been under the common ownership and control of our senior Carlyle professionals and two strategic investors that own minority interests in our business — entities affiliated with Mubadala Development Company, an Abu-Dhabi based strategic development and investment company (“Mubadala”), and California Public Employees’ Retirement System (“CalPERS”). 

Two of Carlyle's four holding entities are based in the Cayman Islands.  Carlyle's PEU game started in 1990, so it's run through the corporate Presidencies of Geroge H.W. Bush, Bill Clinton, George W. Bush and Barack Obama.  No President or Congress put a stop to offshore shenanigans, nor did they put a stop to private equity underwriters preferred carried interest taxation.