Monday, June 27, 2016

Carlyle Group's AUM Drops Again

The Carlyle Group's website stated today:

The Carlyle Group is a global alternative asset manager with $178 billion of assets under management across 125 funds and 164 fund of funds vehicles. 
Assets under management fell from $203 billion across 129 funds and 141 fund of funds vehicles as of September 30, 2014.  Most recently Carlyle had $183 billion in AUM, down from $188 billion.

Carlyle's AUM dropped $25 billion in less than two years, with the last two drops being $5 billion apiece.   

Sunday, June 26, 2016

Alaska Governor Appoints PEU to Critical Role

Alaska Governor Bill Walker appointed a private equity underwriter (PEU) to head the state's Department of Natural Resources.  Andrew T. "Andy" Mack is Managing Director of Pt Capital, the only Arctic focused private equity firm.

The Governor's Office and news reports omitted Mack's other roles as President of Pt Public Policy, a sister company to Pt Capital that focuses on public policy consulting, and principal of Andrew Mack and Associates, a boutique consulting operation based in Anchorage.  Mack and Associates received a $50,000 contract from the Governor's Office to produce an Arctic Oil and Gas Master Plan.  

They also failed to note his role as a public board member for the Alaska Board of Marine Pilots.  When Mack applied to serve in February 2012 he indicated that he or family members could be affected financially from his being in this role.  Mack did not to go on to explain the "potential financial benefit."

The Governor appointed a man with significant interests in the areas he will oversee.  Mack admitted that himself in 2012 in applying for a much smaller role.

Private equity underwriters generally hold an equity stake in their firm and its offerings.  Government has been supremely bad in making these known, often acting like no conflict exists.  Mack has much to declare in regard to any holdings in Pt Capital, Pt Public Policy and any of their holdings.  However, in the shadowy world of PEUs most things remain secret.

Sunday, June 19, 2016

Partnering with Mrs. Rubenstein Distatsteful

The Alaska Dispatch News reported on a lawsuit against its owner Alice Rogoff-Rubenstein:

The former president and editor of Alaska Dispatch News has filed a lawsuit against Alaska Dispatch Publishing LLC and its owner, Alice Rogoff, asserting she failed to pay money he says was promised to him.
Tony Hopfinger now lives in Chicago and hasn't been involved in the operations of the newspaper since the end of 2015. The suit was filed on Wednesday in state Superior Court in Anchorage. 
Hopfinger co-founded the news website Alaska Dispatch in 2008 with his then-wife Amanda Coyne. Rogoff purchased a majority of Alaska Dispatch Publishing LLC in 2009, and Hopfinger and Coyne each retained 5 percent of the company. 
Hopfinger asserts he did not wish to retain his 5% ownership of the company when Rogoff sought to buy the Anchorage Daily News from McClatchy.  

Hopfinger approached Rogoff to discuss the buyout in April 2014, the suit says. That's when, it continues, Rogoff wrote a promise to Hopfinger on a cocktail napkin that read: "I agree to pay Tony $100K at end of each calendar year (beginning '14) for 10 years. 
Buying someone's equity stake is different than paying them a salary for services provided. 

Hopfinger's employment contract, attached in court records, shows his annual salary was $190,000.
The question is now does Mr. Hopfinger's 5% equity stake fit in the complex corporate structure Rogoff likely learned from her PEU husband?

A company called AK Publishing LLC now owns Alaska Dispatch News' assets, and is entirely owned by Rogoff through another company called The Moon and the Stars LLC.
Rogoff is married to billionaire David Rubenstein, co-founder of the Carlyle Group.
Alaska Dispatch News did not report their paper is bleeding cash  Nor did it mention their $700,000 lawsuit against McClathy for not fulfilling contractual commitments in the sale of the Anchorage Daily News to Rogoff's Alaska Dispatch

Rogoff's lawyer characterized Hopfinger's lawsuit as:

“On June 15, 2016, Tony Hopfinger, former executive editor and president of the Alaska Dispatch News, filed suit against Alice Rogoff and Alaska Dispatch Publishing, LLC, a now-defunct online news outlet."
Oddly, the "now defunct online news outlet" has the $700,000 lawsuit against McClatchy 

Rogoff shouldn't be able to have it both ways.  However she's married to a master of the PEU world where greed and power rule.  Language and law are something to be distorted in their favor.

Saturday, June 11, 2016

Okumus Talks Long on Carlyle Group After Selling 500,000 Shares

WaPo reported on June 3rd:

Some big shareholders such as Okumus Fund Management have pounced on Carlyle shares. Okumus began buying Carlyle shares late last year and now owns more than $100 million.

“We don’t agree with how the public market values the company,” said Tim McAlea, director of research at Okumus. “Over the long run, the earnings will grow more with the assets under management and the fees Carlyle earns. Through the cycle, Carlyle will make a lot of money for its shareholders.”
Franklin Independent reported on June 10th:

Ahmet Okumus decreased its stake in Carlyle Group LP (NASDAQ:CG) by 6.95% based on its latest 2016Q1 regulatory filing with the SEC. Okumus Fund Management Ltd sold 532,678 shares as the company’s stock rose 8.48% with the market.  
It wouldn't be the first time an investment expert screamed buy while selling.  We'll see what Okumus Q2 filing shows in regard to Carlyle. 

Thursday, June 2, 2016

CalPERS CEO Sentenced for PEU Activity (Bribes)

Zero Hedge reported:

Former California Public Employees' Retirement System (CalPERS) CEO Federico Buenrostro was sentenced Tuesday by a federal judge to four and a half years in prison for accepting more than $200,000 in bribes trying to steer investments.

Buenrostro pleaded guilty to fraud and bribery charges two years ago, saying he started taking bribes around 2005 to try and get CalPERS staff members to make investment decisions that helped Alfred Villalobos, an investment manager and former board member of the fund. The judge called the case "seriously troubling", and said it reflected a "spectacular breach of trust for the most venal of purposes, which is self-enrichment."
CalPERS owned 5% of The Carlyle Group at the time CEO Buenrostro started taking bribes to steer investments to former board member Alfred Villalobos, an investment placement agent.

Buenrostro acknowledged giving Villalobos access to confidential investment information and forging letters that enabled firms connected with Villalobos to collect a $14 million commission on $3 billion worth of pension fund investments.
Carlyle settled a New York pension pay to play investigation in 2009.  One has to wonder if this was accepted behavior among PEUs and their part owners.  A NYT article on Carlyle's $20 million settlement mentioned CalPERS Villalobos.

In 2007, Fernando Ferrer, the former Bronx borough president, introduced Mr. DiNapoli to Alfred Villalobos, who runs Arvco Capital, a Nevada placement agency. Seven months later, an Arvco client landed a $10 million investment from the state pension fund. Mr. DiNapoli’s staff has said he was not aware that Mr. Ferrer was a paid consultant to Arvco, and the relationship was never disclosed.
Even though CalPERS CEO Buenrostro started taking bribes in 2005 his most egregious behavior happened in 2008-2009.  Bloomberg reported:

After Calpers’ legal and investment offices declined to sign a letter, Villalobos and Buenrostro allegedly conspired to create a series of fraudulent letters that were transmitted to Apollo in 2008 and 2009, according to the indictment.

Villalobos committed suicide five weeks before his trial was to start in 2015.  Thus the voice that could have shed light on both sides of the CalPERS situation was silenced.  It's amazing how PEU money washing gets swept under a rug with a huge settlement.  It almost feels like a bribe to public officials to make their former bribes to public pension officials go away.  

Update 5-5-22:  The PEU "public pension savior" narrative may burst if one New York Assemblyman gets his wish for PEUs to reveal their contracts and fee arrangements with New York's public pension funds.