First, sell to self, i.e. move stale investments from one Carlyle fund to another. Charge fees. Repackage. Partner with financial advisors. Sell to retirees. More fees.
In 2017 I wrote about Carlyle monetizing to self regarding PPD. The first round went at $3.6 billion while the second flipped at $9 billion.
Non-arm's length transactions going at a "mark to whatever" price are core PEU strategies. My wise friend wrote two years ago:
All this cross ownership/ investment in each other also raises another interesting point about arms' length transactions. What happens when they are equity holders and debt holders of the same entity? Especially with private debt transactions where they get to restructure the terms privately. If they are on both sides couldn't there be a quid pro quo under the table type of acknowledgement where there is a give and take on different deals?
No one will know because none of this will be out in the open but many of the investors that have funds with them on both sides will be in the dark as usual. I just remember CVNA defaulting and the next minute busy restructuring which was a little unclear to this date still and that was an Apollo deal. I still think they manage the default figures through PIKS's and other covenant violations that don't seem to make it to market.
The whole space stinks and the Fed allows it because it helps narrate the environment for policy making decisions.
Politicians Red & Blue love PEU and their new TechGod brethren. Increasingly, more are one. The greed and leverage boys' lack of arms is more than made up by the ever present open palms of elected officials.
