Carlyle Group

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The Carlyle Group
Type Private Partnership
Founded 1987
Key people Louis V. Gerstner, Jr., Chairman
William E. Conway, Jr., Founder
Daniel A. D'Aniello, Founder
David M. Rubenstein, Founder
John F. Harris, CFO
Industry Financial Services
Products Management buyouts
Real estate
Leveraged finance
Venture and growth capital
Revenue Undisclosed to public
Employees 415,000
Website www.carlyle.com

The Carlyle Group is a global private equity investment firm, based in Washington, D.C., with more than $91.5 billion of equity capital under management.[1] The firm operates four fund families, focusing on leveraged buyouts, growth capital, real estate and leveraged finance investments. The firm employs more than 575 investment professionals in 21 countries with several offices in the Americas, Europe, Asia and Australia; its portfolio companies employ more than 415,000 people worldwide. Carlyle has over 1200 investors in 68 countries.

The firm has employed political figures and notable investors. Some of these figures include former US President George H. W. Bush and former US Secretary of State James A. Baker III. The State of New York is currently investigating the firm in connection to an illegal kickback scheme with the state's pension fund.[2]

Contents

[edit] Investment focus

Carlyle invests primarily in the following industries: aerospace and defense, automotive, consumer and retail, energy and power, health care, real estate, technology and business services, telecommunications and media, and transportation. The Carlyle Group's investments are focused on East Asia, Europe and North America, with most investment money coming from the United States (65%), Europe (25%), Asia (6%), Latin America, and the Middle East.[citation needed] Defense investments represent about 1% of the group's current portfolio;[citation needed] for example, Carlyle owns 33.8% of QinetiQ,[citation needed] the recently privatized British defense contractor.

[edit] History

History of private equity
and venture capital

Early History
(Origins of modern private equity)
•
The 1980s
(LBO boom)
•
The 1990s
(LBO bust and the VC bubble)
•
The 21st Century
(Dot-com bubble to the Credit crunch)
 v • d • e 

Carlyle was founded in 1987 by Stephen L. Norris and David M. Rubenstein.[3] As they wanted the firm to outlive them, Norris and Rubenstein named the firm after the Upper East Side area hotel in New York City, the Carlyle Hotel, where they first met to discuss the idea.

Norris and Rubenstein later hired Dan D'Aniello, William Conway and Greg Rosenbaum.[4] Rosenbaum left in 1987[5]; Norris left in 1995[6]. The three remaining founders are reported to collectively own around a 50% interest in the group's general partnership.

Carlyle has only allowed two outsiders to buy into its partnership. The California Public Employees' Retirement System (CalPERS) is the only US institution which owns a stake in the partnership, holding 5.5% of Carlyle for which it paid $175 million in 2001 and which was worth about $1 billion by 2007.[7] In September 2007, Mubadala Development Company, an investment vehicle for the government of Abu Dhabi of the United Arab Emirates, purchased a 7.5% stake for $1.35 billion.[7]

Carlyle's current chairman is Lou Gerstner, former chairman and CEO of IBM and Nabisco. Carlyle is the largest private equity firm in the world, according to a ranking called the PEI 50.

[edit] Current portfolio and major acquisitions

Though known for its expertise in aerospace and defense, Carlyle invested more than thirty percent of its assets in telecommunications and media. Noted portfolio companies are Dex Media, the former directories business of Qwest Communications; Willcom, a Japanese wireless company; Casema, a Dutch cable company; and Insight Communications, the ninth largest cable company in the U.S. The Carlyle Group was once a major investor in US Investigations Services, which is the privatized arm of the United States Office of Personnel Management's Office of Federal Investigations, but has since divested itself, selling its stake to Providence Equity Partners in 2007.[citation needed]

Brand-name companies that Carlyle owns include: Dunkin' Brands, which owns Dunkin' Donuts and Baskin-Robbins, and oral hygiene company Water Pik. Carlyle also recently took rental car company Hertz public.

On January 29, 2007, Carlyle announced that it would acquire Synagro Technologies, Inc, which according to Synagro's website is "the largest recycler of biosolids and other organic residuals in the United States". The total enterprise value of the transaction, including the assumption of debt, is $772 million.[8]

On June 28, 2007, Carlyle announced that it would partner with Onex Corporation to buy the Allison Transmission unit from General Motors for $5.6 billion.[9]

In June 2007, Carlyle agrees to acquire HD Supply for $10.3 billion, along with Bain Capital and Clayton, Dubilier & Rice (with each agreeing to buy a one-third stake in the division). Home Depot sold their wholesale construction supply business to fund a stock repurchase estimated at $40 billion

On July 2, 2007, it was disclosed that the Carlyle Group was looking to buy Virgin Media UK cable business.[10] Richard Branson is the largest shareholder, and the Virgin Group own the name Virgin, and Virgin Media have the rights to use the name Virgin for 10 years[citation needed].

On July 28, 2007, Carlyle announced the acquisition of Applus+ from its shareholders Agbar, Unión Fenosa and Caja Madrid for an enterprise value of €1,480 million.[11]

On December 18, 2007, David Rubenstein, representing the Carlyle Group, purchased the Magna Carta (one of seventeen copies) at Sotheby's Auction House in New York City. He paid the Perot Foundation $21.3 million. Mr. Rubenstein expressed his intent for it to be returned to the National Archives for display.

On May 16, 2008, Booz Allen Hamilton announced that it would selling a majority stake in the US government business to The Carlyle Group for $2.54 billion. The transaction was expected to be complete July 31, 2008.[12]

On August 2008, Carlyle Group bought IRIS Unified Ag through FRS Global.

Carlyle acquired United Defense Industries in October 1997, bringing in over 60% of Carlyle's defense business. United Defense went public on the New York Stock Exchange in December 2001 with Carlyle retaining a stock ownership position. Carlyle completed the sale of all of its United Defense stock and exited the investment in April 2004.[13] (One major United Defense program was the XM2001 Crusader self-propelled howitzer which was canceled by Defense Secretary Donald Rumsfeld in early 2002 causing United Defense stock prices to fall 27 percent.[14])

[edit] Carlyle Capital Corporation

In March 2008, Carlyle Capital Corporation, established in August 2006[15] for the purpose of making investments in U.S. mortgage-backed securities, defaulted on about US$ 16.6 billion of debt as the global credit crunch brought about by the subprime mortgage crisis worsened for leveraged investors. The Guernsey-based affiliate of Carlyle was very heavily leveraged , up to 32 times by some accounts, and it expects its creditors to seize its remaining assets.[16] Tremors in the mortgage markets induced several of Carlyle's 13 lenders to make margin calls or to declare Carlyle in default on its loans.[17] In response to the forced liquidation of mortgage-backed assets caused by the Carlyle margin calls and other similar developments in credit markets, on March 11, 2008, the Federal Reserve gave Wall Street's primary dealers the right to post mortgaged-back securities as collateral for loans of up to $200 billion in higher-grade, U.S. government-backed securities. [18] On March 12, 2008, BBC News Online reported that "instead of underpinning the mortgage-backed securities market, it seems to have had the opposite effect, giving lenders an opportunity to dump the risky asset" and that Carlyle Capital Corp. "will collapse if, as expected, its lenders seize its remaining assets."[19] On March 16, 2008, Carlyle Capital announced that its Class A Shareholders had voted unanimously in favor of the Corporation filing a petition under Part XVI, Sec. 96, of the Companies Law (1994) of Guernsey[20] for a "compulsory winding up proceeding" to permit all its remaining assets to be liquidated by a court appointed liquidator.[21]

The losses to the Carlyle Group due to the collapse of Carlyle Capital is reported to be "minimal from a financial standpoint".[22]

[edit] Documentaries

Carlyle has been profiled in two notable documentaries, Michael Moore's Fahrenheit 911 and William Karel's The World According to Bush.

In the documentary film Fahrenheit 911, Michael Moore makes nine allegations concerning the Carlyle Group, including: That the Bin Laden and Bush families were both connected to the Group; that following the attacks on September 11, the bin Laden family’s investments in the Carlyle Group became an embarrassment to the Carlyle Group and the family was forced to liquidate their assets with the firm; that the Carlyle group is, in essence, the 11th largest defense contractor in the United States.[23] Moore focused on Carlyle's connections with George H. W. Bush and his Secretary of State James A. Baker III, both of whom had at times served as advisors to the firm.

A Carlyle spokesman noted in 2003 that its 7% interest in defense industries was far less than several other Private equity firms.[24] Carlyle also has provided detail on its links with the Bin Laden family, specifically the relatively minor investments by an estranged half brother.[25]

In his documentary The World According to Bush (May 2004), William Karel interviewed Frank Carlucci to discuss the presence of Shafiq bin Laden, Osama bin Laden's estranged brother at Carlyle's annual investor conference while the September 11 attacks were occurring.[25][26]

[edit] Controversial Legislation

In February 2008, a US Senate bill was introduced that would increase the regulation of nursing homes such as those run by HCR Manor Care which Carlyle purchased in December 2007.[27]

Furthermore in February 2008, a bill was introduced in California that would have barred CalPERS from investing money "with private-equity firms that are partly owned by countries with poor records on human rights," which would include Carlyle because Mubadala Development is owned by part of the United Arab Emirates. The California bill was later withdrawn.[28]

[edit] Notable current and former employees and advisors

[edit] Business

[edit] Political figures

[edit] North America

[edit] Europe

[edit] Australia

[edit] Asia

  • Liu Hong-Ru, former chairman of China's Securities Regulatory Commission
  • Anand Panyarachun, former Prime Minister of Thailand (twice), former member of the Carlyle Asia Advisory Board until the board was disbanded in 2004
  • Fidel V. Ramos, former president of the Philippines, Carlyle Asia Advisor Board Member until the board was disbanded in 2004
  • Thaksin Shinawatra, deposed Prime Minister of Thailand, former member of board, who resigned on taking office in 2001
  • Peter Chung, former associate at Carlyle Group Korea, who resigned in 2001 after 2 weeks on the job after his infamous email scandal

[edit] Media

[edit] See also

[edit] References

  1. ^ Carlyle Group website http://www.carlyle.com/Company/item1676.html
  2. ^ "NY Cuomo: Tainted deals included Carlyle Group" Reuters, March 19, 2009
  3. ^ Briody, Dan. The Iron Triangle: Inside the Secret World of the Carlyle Group. New York: John Wiley & Sons, 2003. ISBN 0-471-28108-5
  4. ^ David A. Vise, "Area Merchant Banking Firm Formed," Washington Post, Oct. 5, 1987, F33
  5. ^ Paul Farhi, "Chi-Chi's Bid Won D.C. Investment Firm Wall Street's Attention," Washington Post, June 6, 1988, F1
  6. ^ John Mintz, "Founder Going Beyond the Carlyle Group," Washington Post, Jan. 9, 1995, F9
  7. ^ a b Heath, Thomas. "Government of Abu Dhabi Buys Stake in Carlyle." Washington Post, September 21, 2007, page D01.
  8. ^ "The Carlyle Group to Acquire Synagro Technologies for $5.76 Per Share" 2007-01-29
  9. ^ Reuters/Yahoo! News: "GM selling Allison for $5.6 billion," 2007-06-28
  10. ^ CNN Money: "Virgin Media In Talks With Carlyle Group Over Buyout," 2007-07-02
  11. ^ "Carlyle Group acquires Applus," 2007-07-28
  12. ^ http://www.boozallen.com/news/39856120?o9002123=&lpid=66005
  13. ^ United Defense Industries. GlobalSecurity.org, July 31, 2005. Retrieved October 22, 2008.
  14. ^ Peterson, Laura. Windfalls of War. United Defense Industries, L.P. Center for Public Integrity, October 31, 2003.
  15. ^ Carlyle Capital Corporation Intends to File for Compulsory Winding up in Guernsey
  16. ^ Carlyle Capital in default, on brink of collapse - Reuters
  17. ^ Washington Post "Carlyle Group Holding 'Crisis' Talks in N.Y.," 03-10-08
  18. ^ 'Fed Hopes to Ease Strain on Economic Activity' 03-11-08
  19. ^ "Hedge fund on verge of collapse". BBC News Online. 13 March 2008. http://news.bbc.co.uk/2/hi/business/7293663.stm. 
  20. ^ Companies Law of Guernsey (1994)
  21. ^ "Carlyle Capital Corporation Intends To File For Compulsory Winding Up In Guernsey" Carlyle Capital Corporation New Release, March 16, 2008
  22. ^ Jessica Hall, Dane Hamilton (March 14, 2008). "CCC's Woes Seen as Small Blemish for Carlyle Group". Reuters. http://www.reuters.com/article/bankingFinancial/idUSN1361636620080314?sp=true. 
  23. ^ Moore, Michael "Factual Back-Up for Fahrenheit 9/11: Section Four" michaelmoore.com
  24. ^ Doward, Jamie (2003-05-23). "'Ex-presidents club' gets fat on conflict". The Observer. 
  25. ^ a b Glassman, James K. "Big Deals. David Rubenstein and His Partners Have Made Billions With the Carlyle Group, the World’s Hottest Private Equity Firm. How Have They Made All That Money? Why Are They in Washington?"Washingtonian, June 2006.
  26. ^ The Carlyle Group. Economist, Jun 26th 2003
  27. ^ Heath, Thomas. "Pair of Proposals Take Aim at Carlyle Group." Washington Post, February 15, 2008.
  28. ^ Kasler, Dale. "Bill limiting CalPERS, CalSTRS investments withdrawn." Sacramento Bee, April 9, 2008.
  29. ^ Nick Clarck, Carlyle poaches Olivier Sarkozy, The Independent, 4 March 2008 (English)

[edit] Further reading

[edit] External links

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