Thu, Apr 12, 2012 - Page 10 News List

Carlyle IPO set to value firm at under US$8 billion

Bloomberg

The Carlyle Group, the second--biggest US private-equity firm, will seek a valuation of between US$7.5 billion and US$8 billion in its initial public offering (IPO), according to people with knowledge of the firm’s plans.

Carlyle plans to sell a stake of about 10 percent in the IPO and start marketing the deal to investors as early as next week, said the people, who asked not to be identified because the information is private.

The Washington-based firm, which has been weighing public interest since last year, is targeting its share sale for early next month, another person said.

At US$8 billion, Carlyle would fetch less than half the market value of Blackstone Group LP, the world’s largest private-equity firm, which has led an industry push into hedge funds and real estate to reduce its reliance on buyouts.

Carlyle had initially sought to convince analysts it deserved a valuation comparable to Blackstone’s because its steadier earnings would provide investors with a more stable dividend than most peers’, people briefed on the matter said last year.

Carlyle has US$147 billion under management, according to the IPO prospectus and Blackstone had US$166 billion as of Dec. 31 last year, its filings showed.

Co-founded in 1987 by David Rubenstein, William Conway and Daniel D’Aniello, Carlyle would be at least the fifth buyout firm to go public since Fortress Investment Group LLC in 2007.

The amount Carlyle is seeking is as much as 25 percent less than the US$10 billion implied valuation the firm used when selling debt to Abu Dhabi’s Mubadala Development Co in December 2010.

The difference in part reflects the firm’s desire to attract investors with a price sweetener known as an IPO discount, said the people, who asked not to be named because the information is private.

At the end of last year, Carlyle had an implied enterprise value of about US$9.4 billion, according to a -regulatory filing on Tuesday. The amount was based on fair value estimates of equity interests tied to Carlyle’s 2010 purchase of a majority stake in hedge-fund manager Claren Road Asset Management LLC. Enterprise value calculations include debt as well as market capitalization.

Blackstone, which went public at a market value of US$33.5 billion in 2007, has since shrunk by half to about US$16.4 billion. Its stock has gained 4 percent this year and closed at US$14.57 in New York on Tuesday.

KKR & Co, which gained a New York listing by combining with its publicly traded European fund and moving the company to the New York Stock Exchange from -Amsterdam in July 2010, has risen 30 percent since then.

Carlyle, which has been weighing a public offering since 2007 and put those plans on hold because of the global financial crisis, could opt to delay the roadshow if investors are not receptive to Oaktree Capital Group LLC’s IPO, scheduled for yesterday, and if the stock market continues to fall, said one of the people.

Oaktree, the world’s largest -distressed-debt investor, is seeking to raise as much as US$517.5 million, offering 11.3 million shares at between US$43 and US$46. Oaktree chairman Howard Marks and president Bruce Karsh, two of the firm’s co-founders, are set to get almost 40 percent of the proceeds from the share sale.

Carlyle’s assets under management have more than tripled since 2006. The 25-year-old firm and rivals such as Blackstone and KKR are lowering fees or offering deals as they vie for investors for their buyout funds.

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