Carlyle to Dump Synagro

Waste Recycling News reported:

The Carlyle Group, owners of organic waste recycling and wastewater treatment heavyweight Synagro Technologies Inc., is reportedly in talks to sell the subsidiary.

Reuters reports that Carlyle has directed its financial advisory firm Evercore Partners to reach out to potential buyers. Synagro has been saddled with debt and received a waiver to work on its debt problems in late 2012.

First LifeCare Hospitals imploded from Carlyle loading the affiliate with debt, now Synagro Technologies faces a similar fate:

The company's debt climbed with decreased spending by municipalities after the 2008 financial crisis and the loss of major contracts in New York City and Detroit, the report indicates. If a sale does not go through, Synagro could be taken over by the debt holders.. 

The Detroit loss came from Synagro's bribing Councilwoman Monica Conyers, who was recently released from prison for her conviction.  Fresh testimony on Synagro's dirty dealings came from Detroit. A number of ethical violations occurred under Carlyle's PEU ownership.  How will Synagro's last chapter as a Carlyle Group affiliate end?  Will it be a bloated carcass?

Update 1-21-13:  The Carlyle Group isn't mentioned in the dozens of stories on Synagro's bribing of Detroit City Council members.   It's fascination how the media helps Carlyle keep their "good name."

Update 5-11-13:  Synagro executives were aware of the bribery, but the company was never charged, nor was its owner, The Carlyle Group.  

China Pacific Five Bagger for Carlyle Group

The Carlyle Group sold the remainder of its China Pacific Insurance Group shares as Chinese IPO's dried up.  

More than $130 billion in private equity and venture capital investments in China are locked inside deals with no easy exits for limited partners, posing a risk that the robust market for private fund investment into China could dry up, according to a report Wednesday by China First Capital.

China Pacific was already trading on the Hong Kong exchange.  China Daily reported:

Carlyle Group, one of the world's largest private equity firms, has sold its remaining stake in China Pacific Insurance (Group) Co Ltd in a deal valued at $793 million.

Carlyle began selling its stake in the insurer in late 2010. It earned about $4 billion from stock sales over that time, five times the $800 million it had invested between 2005 and 2007 for a 17 percent stake in the Chinese firm, according to calculations by Thomson Reuters.

Ring the bell for a PEU five-bagger!  One down, at least seven more to go. 

Carlyle's ARINC Procurement Violations: Bribery?

KHL Group reported:

US engineering company ARINC has been banned from World Bank projects for 33 months for procurement violations on a Bank-funded airport development project in Egypt.

The news comes just a week after Serbian contractor Energoprojekt Niskogradnja was debarred from World Bank projects for 2.5 years after admitting fraud on a Bank-financed road and development project in Uganda.

The World Bank did not illuminate "procurement violations", but Carlyle Group affiliates have a history of bribery.   Serbian Fraud got 30 months from the World Bank.  Carlyle-ARINC's offense warranted an extra 10% penalty at 33 months.

The Carlyle Group and its partners settled a New York "pay to play" pension fund investigation without admitting guilt.  Carlyle's Synagro Technologies bribed the wife of Representative John Conyers.

Another recent Carlyle bribery story came courtesy of WSJ.

Allison Transmission, which is backed by Carlyle Group and Onex Corp., is being sued by a former employee who alleges he lost his job after reporting bribery in China.

If something smells, it's a PEU (private equity underwriter).  Extrinsic motivators distort behavior.  Greed compounds it exponentially.

Update 3-10-13:  Despite being banned by the World Bank for unethical behavior on an Egyptian project, ARINC won more Egyptian work.  

Hagel's PEU Rally

Senator Chuck Hagel's financially powerful brethren threw their support behind his Pentagon nomination.  Consider the spate of private equity underwriters (PEU's) in this one paragraph of Hagel supporters:

Hagel’s supporters, former National Security advisors Brent Scowcroft, Zbigniew Brzezinski, former US Ambassador to Iraq Ryan Crocker, former US Ambassador to Israel Tom Pickering, former Defense Secretary  Frank Carlucci, and World Bank President James Wolfensohn.

Brent Scrowcroft - Strategic Partner with Torch Hill Investment Partners (Bloomberg).  Torch Hill's website offered the following Scowcroft quote:

"Globalization has made the world economy more integrated, more efficient and more susceptible to disruption than ever before in our history."--Brent Scowcroft, Former National Security Advisor, Strategy Partner, Torch Hill Investment Partners

Torch Hill's portfolio is a spate of Defense Department Contractors.  Torch Hill's Chairman co-chairs the Brent Scowcroft Center on International Security.

Mr. Thomas Reeve Pickering is a Strategic Advisor at NGP Energy Capital Management.  The Carlyle Group invested in NGP just before Christmas.

Frank Carlucci, Chairman Emeritus for The Carlyle Group.  Carlucci also is Co-Founder and Chairman of Advisory Board at Frontier Group

James Wolfensohn is founder of Wolfensohn and Company, an investment and advisory firm specializing in emerging market economies.  Chuck Hagel is a director of Wolfensohn and Company.

I illuminated Chuck Hagel's other PEU ties, Advisory Board Member for Corsair Capital and Senior Advisor for McCarthy Capital.  If you search under retired political heavyweight rocks, there's likely a PEU.

Banner Year for General Peter Pace

General Peter Pace added two more board slots to his already heavy governance load.  The two new positions are with Alien Vault and Laserlock Technologies:

Berman Capital
SM&A Strategic Advisers
Neohapsis
Finmeccanica
Pike Electric
ILC Industries
Pelican Products
Wi2Wi
AAR Corp.
Qualys
*Alient Vault LLC
*Laserlock Technologies 

Alien Vault showed its bipartisan side by taking $22.5 million from Al Gore's Kleiner Perkins Caulfield and Byers.  Al Gore just grossed $100 million from selling Current TV to a Qatari sovereign wealth fund. 

How much will General Pace gross from private company governance?  Eisenhower's Military-Industrial Complex, engorged from trillions in federal steroids, morphed into the Government-Corporate Monstrosity.  Pace is no Eisenhower. 

Gore Monetizes Current TV

Al Gore cashed in on one private investment:

Former Vice President Al Gore has made himself a much, much richer man by selling his little watched cable channel Current TV to the Emir of Qatar-funded Arab news channel Al-Jazeera.

Gore netted $100 million with his 20 percent stake in the network when it was sold for a reported $500 million on Wednesday.

How much profit did Al make on Current TV?  Maybe Eliot Spitzer will reveal Al's take.  It's ironic that a Qatari Sovereign Wealth Fund bought out Current TV through affiliate Al-Jazeera.

PEU Al is a co-founder of Generation Investment Management, a partner at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, an adviser to Google and a board member at Apple.

Red and Blue love PEU and Al Gore got more than a little love.  Al got a seven bagger.

Carlyle Leads Bet on Duff & Phelps

The Carlyle Group leads a consortium of private equity underwriters (PEU's) in taking Duff & Phelps private.  Duff &Phelps last went public in 2007.  Carlyle's Olivier Sarkozy (of Olsen Twin fame) stated why the PEU consortium paid a 20% premium relative to Duff & Phelps recent stock prices.

"Regulatory demands, implementation of new accounting policies and requirements for increased corporate disclosure and third party validation provide significant growth opportunities for Duff & Phelps core products and services. We will harness Carlyle's and Stone Point's global networks while leveraging Duff & Phelps preeminent brand to foster growth in new geographies. Additionally, we believe the involvement of Pictet and Edmond de Rothschild Group will support the Company's initiatives to enhance its international presence and expand its Limited Partner client base. We are excited to work with Noah and his management team on this opportunity."

Carlyle et al can send affiliates to Duff & Phelps for the services cited.  Rothschild recently advised Carlyle regarding LifeCare Hospitals.  Carlyle took LifeCare into a Rothschild recommended bankruptcy.  Duff & Phelps has a restructuring division.  Might business soar given the billions in PEU refinancing coming in 2013 and 2014?

Another Carlyle affiliate, Sandler O'Neill, advised the PEU consortium on Duff & Phelps.  Might Duff & Phelps tag team with Sandler on future PEU refinancings and/or sales.  They could partner in a fee generating explosion, benefiting Carlyle.

Centerview Partners, with Bob Rubin, advised Duff & Phelps on the deal.

Below are items of historical note on Duff & Phelps website:

Valuation advisor for the U.S. Congressional Oversight Committee's Troubled Asset Relief Program (TARP)

Financial advisor to the Examiner in the Lehman Brother's bankruptcy

Expert Witness regarding the Madoff Estate

Carlyle knows leverage in its many forms.  How will The Carlyle Group lever Duff & Phelps? What new bailout might Duff & Phelps support?  What huge bankruptcy will need their services.  What monster fraud will need untangling? 

Update 11-1-2017:  Carlyle and company are ready to flip Duff & Phelps, which was taken private nearly five years ago for about $665.5 million.  Sale price is $1.75 billion.