Carlyle Group Grows a Billion

 

Every billion helps when you're headed for an IPO.  The Carlyle Group rose from $106.7 billion to $107.6 billion in assets under management.  The asset explosion will come when Carlyle closes on AlpInvest, with over $43 billion in funds under management.  Carlyle is a private equity underwriter (PEU), while AlpInvest is a fund of PEU funds. 

Financial News reported Carlyle took the top spot on Wall Street investment bank fees.  High deal volume, especially on the monetization end, drove up fees to near 2007 levels.  Carlyle had their best years with a Texas governor as President.  My guess is Rick Perry would be as PEU friendly as W.  He proved it at the state level with his $35 million gift to Carlyle's Vought Aircraft Industries.

Rick Perry would love to be on Pennsylvania Avenue, just blocks from Carlyle's Headquarters at 1001.  While I can't predict who'll be in the White House, my guess is they'll be PEU sponsored.  Red or Blue, they love PEU's.  (Click on the graph above to see bipartisan Presidential PEU love.)

Counselor DeParle's Missing PEU Stakes?

White House Health Czar Nancy-Ann DeParle's financial disclosure forms are curiously light in her ties to CCMP Capital Partners, a private equity underwriter (PEU) where she worked as Managing Director and served on the board of three affiliates, CareMore, Legacy Hospital Partners and Noble Environmental Partners..

CCMP sponsored Denny Shelton's Legacy Hospital Partners.  DeParle grossed $1.4 million on the sale of Denny's Triad Hospitals to Community Health Systems.  She acquired her shares and stock options during six years on Triad's board.  Surely, she invested some of those proceeds in Denny's latest venture.

Her filing is dated May 13, 2009.  A note at the bottom of the first page states "Per Pilar all conflicting assets have been divested."  The note is dated June 4, 2009.  It would've been hard to unload private equity stakes in summer 2009.  Any sales would've occurred at a deep discount.  Nevertheless, DeParle and CCMP had two months from her nomination to work out an arrangement that would keep PEU information private.

What happens when a Counselor to the President submits a curious financial disclosure form?  It's stamped OK.  An updated filing might show which conflicting assets were sold.  It wouldn't address any omitted PEU stakes.

Update 9-17-11:  DeParle's 2010 and 2011 disclosure forms reveal Obama's Chief of Staff to be as conflicted as Florida Governor Rick Scott.  One shows a residual PEU investment in a medical imaging company.  How could Nancy-Ann get a payment for a conflicting asset she no longer held?

Update 2-26-12:  Presidential hopeful Mitt Romney still receives carried interest from various Bain funds as part of an exit package.  He left Bain Capital in 1989.  

Will Nancy-Ann DeParle Profit from CareMore Sale?

President Obama's Health Czar Nancy-Ann DeParle worked as Managing Director for CCMP Capital Partners, a private equity underwriter (PEU) with a number of health care investments.  CCMP will sell CareMore to giant health insurer WellPoint for $800 million, earning five times its original investment.

Nancy-Ann DeParle helped craft the deal, then served on CareMore's board from March 2006 until March 2009.  Her financial disclosure form is silent on any equity stake in CareMore.  The filing shows her CCMP salary and bonus at $1 million. Her form states under "agreements and arrangements:"

CCMP - I will keep my 401(k) with CCMP.  Neither CCMP nor I will make any future contributions to the account.

It appears to be invested in various mutual funds.  There is no sign her retirement is invested in CCMP funds.

PEU's frequently have managing directors investing personally in deals, yet DeParle's disclosure form shows no stake in CareMore, Legacy Health Partners or Noble Environmental Partners.  It does reveal a piddling stake ($15,001 to $50,000) in CCP/JPMP Friends.  (Click on the image below to make it larger.)

I expect more skin in CCMP from a Managing Director.  DeParle held $1 to $5 million in a cash account at Smith Barney.

As short to medium term investors, PEU's are all about the carry, the 20% they take from investment profits.  CCMP's profit on CareMore is $666 million, making the carry a sweet $133 million.  Will any carry find its way back to deal maker DeParle?

Irregardless, Nancy-Ann and company set up a for-profiteers paradise under health reform.  It's clear why DeParle called Big Pharma "our industry" during reform.  She personally had a stake in pharmaceutical companies.

I fail to see how investor greed will save America's imploding health care system.  It will make PEU's future gazillions.  DeParle set a fine table for her friends.

Update 7-7-11:  Florida Governor Rick Scott "took care" of his conflict of interest re:  Solantic stock by putting it in his wife's name.  This indicates have far the bar has fallen in declaring and managing conflicts.  Did Nancy-Ann do likewise with any CareMore holdings?  Are they under an immediate family member?  Will WellPoint cut a check to a DeParle in its CareMore buyout?

Update 7-10-11:  Bloomberg/BusinessWeek found the DeParle-Caremore connection.  They list her as director of CareMore Health Plan and CareMore Medical Enterprises.

Monument Capital: Carlyle Group's Homeland Security Franchise

Monument Capital's team has James A. Baker, III, Frank Carlucci, Thomas F. "Mac" McLarty and Robert Dunn, all of Carlyle Group fame.  Monument's Senior Advisor is Frances Fragos Townsend, Carlyle risk manager while serving in the Bush White House.  Advisory Board member Mustafa Koc is a partner with Carlyle in Turkish deals.

Monument specializes in homeland security companies, according to promotional materials.

Monument is a pioneer in an emerging investment sector: security-related technology and services.  With an unrivalled investment team, and vastly experienced advisory board including former Secretary of State James Baker, our investment thesis is both expert and unique, but our individuality belies the vastness of the opportunity, and the diversity of this underexploited space.

Estimated at hundreds of billions of dollars per year globally and increasing to more than $280 Billion in 2014, security spending worldwide encompasses an unprecedented variety of applications and markets: from aviation to biometrics to border security, cyber security, critical infrastructure protection, and maritime security to name a few.

Apparently Monument has its eye on Saudi Arabia and the Middle East:

As the security environment around the Middle East region gets increasingly fraught, authorities are sourcing the latest in countermeasures and security systems to suit their increased threat perceptions.

Security fences, thermal scanners, monitoring and surveillance systems, biometric readers and specialised arms and hazard control equipment are high on the agenda as they step up measures to protect pipelines, oil and industrial installations and air and sea ports.

Monument affiliate Persistent Sentinel offers HiRSA, high resolution situational awareness.  Their website has this to say about HiRSA:

HiRSA’s intelligent agents monitor sensors, detect anomalies, provide alerts, offer recommended courses of action and supply other reports. Originally developed for the US military, HiRSA is deployed and proven in the world’s most difficult conditions.

HiRSA allows the operator to control camera, sensors, effectors and other subsystems. The operator can also issue directives to properly equipped sentries.

Summary execution could occur from more than military drones.  Properly equipped effectors and sentries could deliver lethal and sub-lethal force.  Monument's Vortex Systems could provide sensory gear, while Promena could help firms purchase the latest in homeland security technology.

Monument Capital has a new Managing Director, one with a government technology and private equity underwriter (PEU) background.  Jason Rigoli delivered high returns to White Oak Group clients:

Transactions generated by Mr. Rigoli have resulted in an internal rate of return (IRR) of greater than 50%.       

Private equity is expected to play a larger role in the Defense and Security space.  PEU's expect grand returns on Uncle Sam's security business.  Aren't they supposed to watching, not fleecing the federal wallet?

Update 9-24-14:  Monument Capital added three new advisors, all with expertise in big data. One works for Palantir, the seeing rock which guards the annual Bilderberg meeting from any public scrutiny.   How does hiding the machinations of global tamperers make the world more secure?  

Reward of the O-Bundler

President George W. Bush promised to run an honest and ethical administration.  His successor Barack Obama committed to change, saying he would deliver an open and transparent administration.  Both catered to campaign bundlers and high dollar donors.  IWatch News reported:

Nearly 80 percent of those who collected more than $500,000 for Obama took “key administration posts,” as defined by the White House. More than half the ambassador nominees who were bundlers raised more than half a million.

Big bundlers had broad access to the White House for meetings with top administration officials and glitzy social events. In all, campaign bundlers and their family members account for more than 3,000 White House meetings and visits. Half of them raised $200,000 or more. 

Influence peddling is alive and well, despite Presidential promises.  It's a PEU world.  (PEU stands for private equity underwriters - masters of financial and political leverage.)

Here's a trip down Obama campaign lane:

Moneyed interests "get the access while you get to write a letter, they think they own this government," Mr. Obama said in kicking off his presidential campaign in 2007. "But we're here today to take it back."

Obama simply turned it from Red to Blue. 

DeParle's CareMore Sold to WellPoint for $800 Million

Dealbook reported:

WellPoint, one of the nation’s largest health insurers, has agreed to buy CareMore for about $800 million, according to people briefed on the transaction.  The deal, which was announced on Wednesday morning, would add to WellPoint’s already dominant position in California, Arizona and Nevada, where the privately held CareMore provides managed care to about 54,000 elderly people.

“The Medicare market is particularly significant for WellPoint’s growth strategy,” Angela F. Braly, chairwoman and chief executive of WellPoint, said in a statement. “We anticipate that more than one million Baby Boomers will age into Medicare every year between now and 2030 across our 14 Blue states.”

 
CareMore is owned by CCMP Capital Parnters, formerly known as JP Morgan Partners.  CCMP is a private equity underwriter (PEU).  Businesswire reported on the original deal in January 2006:

JPMP teamed with Crystal Cove Partners to find a Medicare health plan designed to succeed with the environment created by the passage of the Medicare Modernization Act (MMA). JPMP also works closely with its consulting partner, Nancy-Ann DeParle. Ms. DeParle was the former head of HCFA (now known as Centers for Medicare and Medicaid Services) and is currently a Commissioner of the Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare policy and payment issues.

Ms. DeParle was in an ideal spot to pick winners for JP Morgan Partners/CCMP.
That spot got sweeter with her White House Health Czar appointment, where she crafted the nuts and bolts of health reform.  How did her redesign profit her former employer?  Dealbook provided insight.

CCMP, formerly JPMorgan Partners, acquired CareMore in 2006. The PEU is expected to earn about five times its original investment in the company, people familiar with the deal’s terms said.

A five bagger!  That's one bag per year of ownership.  Nancy did good for the for-profiteers, as CCMP cited the "very successful outcome of this investment."

How will selling CareMore to WellPoint for five times its original investment impact exploding health care costs?  Especially deals the increase a for-profit insurers already dominant position.  Please answer the question, Ms. DeParle.

Update 8-17-11:  I submitted the following to DealBook: White Health Health Czar Nancy Ann DeParle sat on the CareMore board for nearly three years. That usually comes with an equity stake of some sort. DeParle is now Deputy Chief of Staff for President Obama and despite disposing of all conflicting investments, in 2010 DeParle received a capital gain from a medical imaging company CCMP sold in 2007. She transferred her stakes in CCP/JPMP Friends to her son, a move similar to Rick Scott's giving his Solantic shares to his wife. Red and Blue love PEU's (private equity underwriters).

Google Does D.C.

 

Don't be evil, but scatter cash around Pennsylvania Avenue, Washington, D.C.  Google's lobbyist list includes:

Akin, Gump
Bingham
Capitol Legislative Strategies
Chesapeake Group
Crossroad Strategies
Crowell Strategies
Dutko Worldwide
Franklin Square Group
Gephardt Group
Holland & Knight
McBee Strategic Consulting
Normandy Group
Podesta Group
Prime Policy
RB Murphy & Associates
The First Group
The Madison Group
The Raben Group

"We have a strong story to tell about our business and we've sought out the best talent we can find to help tell it," the Google spokeswoman said.  This group will help Google with an antitrust investigation.  Google's "not evil code" is supposed to apply to suppliers of political muscle.

Failure of a Google contractor or consultant or other covered service provider to follow the Code can result in termination of their relationship with Google.  

Lobbying firms follow a different code, where influence is bought and sold.  Yet, this may not be a surprise to one Google founder.