The Carlyle Group will acquire MAI Capital, a registered investment advisor (RIA) rollup, from Harvest Partners.
MAI is a gatekeeper, able to steer their account holders into Carlyle affiliated investments.
As for Carlyle, their most recent annual report states:
...we may cause different funds to invest in a single portfolio company, for example, where the fund that made an initial investment no longer has capital available to invest.
We also may cause different funds that we manage to purchase different classes of securities in the same portfolio company. For example, one of our CLO funds could acquire a debt security issued by the same company in which one of our private equity funds owns common equity securities. A direct conflict of interest could arise between the debt holders and the equity holders if such a company were to develop insolvency concerns, and we would have to carefully manage that conflict.
A decision to acquire material non-public information about a company while pursuing an investment opportunity for a particular fund gives rise to a potential conflict of interest when it results in our having to restrict the ability of other funds to take any action with respect to that company.
Our affiliates or portfolio companies may be service providers or counterparties to our funds or portfolio companies and receive fees or other compensation for services that are not shared with our fund investors.
In such instances, we may be incentivized to cause our funds or portfolio companies to purchase such services from our affiliates or portfolio companies rather than an unaffiliated service provider even though a third-party service provider could potentially provide higher quality services or offer them at a lower cost.Individual investors may wish to consider if they want even a penny of their retirement account allocated to opaque, potentially "conflict of interest" riddled private investments.
Carlyle already holds a minority stake in Captrust, another RIA. Last year Carlyle purchased Intelliflo, a practice management software suite for RIAs. It carved out RedBlack, its U.S. subsidiary, from Intelliflo but news sources stated Carlyle is supporting both businesses.
RedBlack’s team is “excited to be backed in this endeavour by a sponsor with the reputation and credentials of Carlyle.”
I smell an impending computer conversion. Oh MAI....
