Rubenstein Supports DC Schools

WaPo's Bill Turque highlighted an "Academy Award like" teacher recognition ceremony for Washington D.C. schools:

But if the evening signaled a transition in tone and leadership, it also underscored the growing influence of private money in public education -- led by many funders who support changes in teacher pay and evaluation that are still subject to considerable debate.

The event was organized as a fundraiser by the D.C. Public Education Fund -- the nonprofit fundraising arm of the school system -- and sponsored by a group of corporations and nonprofits that are frequent contributors to local education causes, including CityBridge, McKinsey & Co., Mark David Ein, Verizon, Marriott and Alice and David Rubenstein, the latter being the co-founder and managing director of the Carlisle Group, the giant private equity firm.

To Bill and his editor:

It's The Carlyle Group, not Carlisle. 

Carlyle dropped their private equity underwriter (PEU) label for GAAM, global alternative asset management..  The Private Equity Council added Growth Capital to its name.  Will WaPo's Kaplan update their knowledge testing to reflect these developments?

WaPo has much in common with Carlyle, given its many subsidiaries.  No gold star for the education writer or his editor.

Fannie Mae Paid Treasury $2.1 billion Dividend, Asks for $2.5 billion

The AP reported, I assume with a straight face:

Government-controlled mortgage buyer Fannie Mae is asking for $2.5 billion in additional federal aid after posting a narrower loss in the third quarter.Fannie Mae said Friday it lost $3.46 billion, or 61 cents a share, in the July-September quarter. That takes into account $2.1 billion in dividend payments to the Treasury Department.

These machinations are intended to do what?  Make Treasury look better with a $2.1 billion collection, while another account, maybe from the Fed, shells out $2.5 billion.  Politicians can manipulate and hide money.  One can ask our newest National Security Adviser.  Tom Donilon covered for Fannie Mae, while profiting immensely.

Carlyle Group Oars into Central Pacific Bank

The Carlyle Group knows Sheila Bair won't hand out $2.3 billion in cash with every bank deal.  Carlyle's recent bank deals have been with TARP recipients, those still owing Uncle Sam.  Honolulu's Central Pacific Bank follows Hampton Roads Bankshares into Carlyle's portfolio.

Carlyle and Anchorage Capital plan to invest $98 million in equity (75 cents a share) in Central Pacific, which has struggled under the weight of commercial real estate and construction loans.  While existing shareholders will take a 50% haircut, they won't be zeroed out, like BankUnited shareholders under the FDIC-Carlyle/Blackstone/Ross/Centerbridge deal. 

Carlyle's 24.9% of Central Pacific will be held where?  If it's like Hampton Roads Bankshares, look offshore.  That's where pirates roam, when they're not raiding the federal treasury.

Carlyle's $333,000 million Management Fee for Booz Allen Hamilton

Booz Allen Hamilton's S-1/A states on page 67:

Increase to management fees paid to Carlyle of $333,000 million (see Note 19 to our consolidated financial statements for additional information regarding the management fees)

Carlyle is known for bleeding affiliates via transaction fees and management fees.

Booz Allen Holding pays TC Group an aggregate annual (management) fee of $1.0 million for such services, plus expenses. In addition, Booz Allen Holding made a one-time payment to TC Group of $20.0 million for investment banking, financial advisory and other services provided to Booz Allen Holding in connection with the acquisition.

 Another method is special dividends.  The S-1 indicated:

Special dividends in the aggregate amount of $114.9 million and $497.5 million as of July 29, 2009 and December 8, 2009.

That's over $610 million.  Dividends alone sent Carlyle into the black.   Bloomberg reported Carlyle paid $5.28 per share.  The $497.5 million dividend equaled $4.642 per share, while $114.9 million represented a dividend of $1.087 per share.  That's $5.73 per share, or  45 cents profit per share, prior to any IPO.
 

This is courtesy of Uncle Sam, the source of 98% of Booz's revenue.  Carlyle loves the federal wallet.  Through Booz's vast swath of government advisory services, Carlyle has a ringside seat to future federal check writing.  They aren't ready to kill the goose laying the golden egg.

I found another oddity on page II-3.

On May 15, 2008, we sold 10,000 shares of common stock to Carlyle Partners V US, L.P. for aggregate consideration of $10.00. 

The IPO will pluck but a few feathers.

At the middle of the offer range, Booz Allen would be valued at about 37 times earnings 

Investors should read the prospectus to see how much Carlyle profited pre-IPO.


Disclosure:  A note on page 53 did not have the million after the $330,000 increase in Carlyle's $1 million management fee.

Bayh Related Medical Innovation Funds

Susan Bayh, wife of Senator Evan Bayh, saw three of her firms benefit from Uncle Sam's latest PPACA largess.  Recipients of medical innovation grants include:

Curis--$$490,000
Dyax--nearly $1.5 million
Esperion--$245,000

Virtually all the federal funding was for 2009, with less than $90,000 for current year expenses.  That's a sweet cash injection.  Senator Bayh wrote in a post election op-ed:

We also overreached by focusing on health care rather than job creation during a severe recession. It was a noble aspiration, but $1 trillion in new spending and a major entitlement expansion are best attempted when the Treasury is flush and the economy strong, hardly our situation today. 

 Will Evan encourage his wife to return the money. at least until the Treasury is flush?

Update 1-23-11:  The Obama administration will establish the National Center for Advancing Translational Sciences, a federal research center for drug discoveries.  This comes atop the $1 billion in medical innovation grants recently distributed.  President George W. Bush took on drug company liability.  The Obama team took on a portion of retiree health insurance via ERRP and now will help subsidize research costs.  

Uncle Sam's $1 billion Health Giveaway

Health & Human Services revealed recipients of PPACA's latest cash bonanza, medical discovery grants and tax credits.  Like the $5 billion early retiree reinsurance program (ERRP), thousands of companies were approved in a short time frame.

One recipient is Quest Diagnostics, with ties to Gail Wilensky, former Medicare Chief, and Nancy-Ann DeParle, White House Health Czar.  Quest got roughly $490,000 for two projects.  However, Quest has an equity investment in SomaLogic, which raked in $1.9 million.  Over 75% of the funding was for work done in 2009, i.e., already expended.  Nearly $2.5 million for Quest affiliated projects?  Not bad for a day's work.  Might Gail send Nancy a thank you card?

A flummoxed President Obama need not ponder why $6 billion in corporate healthcare juice didn't impact election returns.  Virtually no voters knew of the programs.  Instead, the public was bombarded with inflammatory nonsense.  Funny, I saw no ad citing 51 million Americans without health insurance.  No candidate framed health reform as a seismic shift of responsibility from employers to the individual. 

While individuals bear more, even going without, corporations line up for goodies.  Will Republicans call for repeal of these corporate giveaways?  My bet, Reds stay mum. The uninsured don't vote.  None of them.

Carlyle Group's Yashili: Hong Kong Gags on IPO

Yashili International Holdings' IPO performed below expectations, raising $348 million vs. $458 million.  The shortfall continued after the public offering, as shares dropped 12% on the Hong Kong exchange.

Yashili performed like the tainted milk it once sold.  The Carlyle Group invested in Yashili during the toxic ingredient scandal. 

Carlyle owned 853.6 million shares in Yashili as of Oct. 20, according to data compiled by Bloomberg.

The problem was systemic in China, given 22 dairies sold toxic milk, sickening 300,000 children and killing six infants. Is Yashili's Hong Kong rejection due to poisonous ingredients or its toxic PEU partner?