Carlyle Group

The Carlyle Group, L.P.

Type	Private Partnership
Industry	Financial Services
Founded	1987
Headquarters	Washington, D.C.
Key people	William E. Conway, Jr., Founder Daniel A. D'Aniello, Founder David M. Rubenstein, Founder
Products	Private equity, Management buyouts Real estate Leveraged finance and growth capital
Revenue	US$ 4.109 billion (June 2011)[1]
Net income	US$ 2.489 billion (June 2011)[1]
AUM	US$153.7 bil (June 2011)[1][2]
Total assets	US$ 17.690 billion (June 2011)[1]
Employees	1,100 [1]
Website	www.carlyle.com

The Carlyle Group is an American-based global asset management firm, specializing in private equity, based in Washington, D.C. The Carlyle Group operates in four business areas: corporate private equity, real assets, market strategies and fund-of-funds, through its AlpInvest subsidiary. In its 2010 annual report, Carlyle reported assets in excess of $150 billion under management diversified over 84 distinct funds.^[2] The firm employs more than 890 employees, including 495 investment professionals, in 20 countries with offices in the Americas, Europe, Asia, and Australia, and its portfolio companies employ more than 415,000 people worldwide. The firm has over 1,300 investment partners in 71 countries.

According to a 2011 ranking called the PEI 300 based on capital raised over the last five years, Carlyle was ranked as the third largest private equity firm in the world, after TPG Capital and Goldman Sachs Principal Investment Area.^[3] Carlyle had been ranked first in the 2007 listing.^[4]

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 privatized British defense contractor.

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 2000s (Dot-com bubble to the credit crunch)

v · d · e

Carlyle was founded in 1987 by five Washington executives: William E. Conway, Jr., Stephen L. Norris, David M. Rubenstein, Daniel A. D'Aniello and Greg Rosenbaum.^[5] Rosenbaum left in 1987;^[6] Norris left in 1995.^[7][8] The three remaining founders are reported to collectively own around a 50% interest in the group's general partnership. The rest of Carlyle is owned by a group of individuals, most of whom serve as managing directors, and by two institutional investors.

Carlyle Group Historical Logo

In 2001, the California Public Employees' Retirement System (CalPERS) acquired a 5.5% holding in Carlyle's management company for $175 million. The investment was valued at approximately $1 billion by 2007 at the height of the 2000s buyout boom.^[9]

Lou Gerstner, former chairman and CEO of IBM and Nabisco, was appointed chairman of Carlyle in January 2003 and served in that position through October 2008. Gerstner remains with Carlyle as a senior advisor.

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.^[9]

In November 2008, The Carlyle Group was named Private Equity firm of the year in the U.S. at the Financial Times-Mergermarket 2008 M&A Awards.^[10]

In 2000, Carlyle entered into a joint venture with Riverstone Holdings, an energy and power focused private equity firm founded by former Goldman Sachs investment bankers. In March 2009, New York State and federal authorities began an investigation into payments made by Carlyle and Riverstone to placement agents allegedly made in exchange for investments from the New York State Common Retirement System, the state's pension fund. It was alleged that these payments were in fact bribes or kickbacks, made to pension officials who have been under investigation by New York State Attorney General, Andrew Cuomo.^[11] In May 2009, Carlyle agreed to pay $20 million in a settlement with Cuomo and accepted changes to its fundraising practices.^[12]

In September 2011, Carlyle filed with the SEC for an initial public offering that could raise as much as $1 billion.^[13]

Current portfolio and major acquisitions

Carlyle has investments spread out over several different industries, with about 22% of their investments in energy and power, 19% in real estate, 15% in technology and business services, 8% in consumer and retail, 8% in industrial, 6% in telecommunications and media, 6% in transportation, 6% in healthcare, 5% in aerospace, and 4% devoted to other industries, according to their 2008 annual report.^{[citation needed]}

Noted current and former portfolio companies include 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 consumer companies that Carlyle owns include: Dunkin' Brands, which owns Dunkin' Donuts and Baskin-Robbins, as well as oral hygiene company Water Pik Technologies.

In March 2006, Carlyle acquired UC4 Software and became a majority shareholder in the company.

In 2006 Carlyle acquired 68 percent interest in Oriental Trading Company which declared bankruptcy in August 2010.^[14]

In October 1997 Carlyle acquired United Defense Industries , 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.^[15] (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.^[16]) Since then, The Carlyle Group has divested the majority of its interest from the defense industry.

In July 2004, Carlyle formed DHS Technologies LLC, when it became a major investor in DHS Systems, the manufacturer of Deployable Rapid Assembly Shelter, or DRASH, military shelters and support equipment, and Reeves EMS emergency medical supplies.^[17]

In September 2006, Carlyle acquired Forba Dental Management, the owner of Small Smiles Dental Centers, the largest US chain of dental clinics for children.^[18]

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.^[19]

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.^[20]

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 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.^[21]

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 sell 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.^[22]

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

On October 16, 2009, Carlyle Group bought Metaldyne - a global automotive components supplier.^[23]

On September 4th, 2011, the carpet manufacturer Brintons announced that it had been acquired by the Carlyle Group.^[24]

Carlyle Capital Corporation

In March 2008, Carlyle Capital Corporation, established in August 2006^[25] 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.^[26] 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.^[27] 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.^[28] 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."^[29] 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^[30] for a "compulsory winding up proceeding" to permit all its remaining assets to be liquidated by a court appointed liquidator.^[31]

The losses to the Carlyle Group due to the collapse of Carlyle Capital is reported to be "minimal from a financial standpoint".^[32]

AlpInvest

Main article: AlpInvest Partners

AlpInvest Partners

Type	Private
Industry	Private Equity
Headquarters	Amsterdam, Netherlands
Products	Fund investments, Secondaries, Co-Investments, Mezzanine
Total assets	€42 billion ($55 billion)
Parent	The Carlyle Group
Website	www.AlpInvest.com

AlpInvest Partners is one of the largest private equity investment managers globally with over €42 billion (approximately $55 billion) under management at the end of 2009, invested alongside more than 250 private equity firms. Founded in 1999, AlpInvest has historically been the exclusive manager of private equity investments for the investment managers of two of the world's largest pension funds Stichting Pensioenfonds ABP (ABP) and Stichting Pensioenfonds Zorg en Welzijn (PFZW), both based in the Netherlands. In January 2011, Carlyle announced the acquisition of AlpInvest. The acquisition will add a leading fund-of-funds and secondary platform, significantly expanding Carlyle's global asset management business.

AlpInvest pursues investment opportunities across the entire spectrum of private equity including: large buyout, middle-market buyout, venture capital, growth capital, mezzanine, distressed and sustainable energy investments.

The firm also invests through a range of private equity investment channels, which include: new fund commitments, secondary market purchases, equity co-investments and mezzanine investments. AlpInvest invests primarily in private equity limited partnerships and effectively acts as a fund investor, making commitments to private equity funds globally. Between 2000 and 2010, AlpInvest made 389 fund investments managed by 226 different general partners.^[2] AlpInvest will invest with these firms either by making commitments to new investment funds or by purchasing funds through the private equity secondary market. AlpInvest is one of the largest private equity fund investors and is also among the largest and most active and experienced investors in private equity secondaries. The Secondary Investments team acquires or restructures portfolios of private equity assets ranging in size from €1 million to more than €1 billion.^[2] AlpInvest also invests directly alongside some of the largest private equity investors through an active co-investment program and will make mezzanine debt investments into companies owned by financial sponsors.^[33]

AlpInvest has offices in New York, Amsterdam, Hong Kong and London with over 70 investment professionals and over 115 employees.

Carlyle in the Media

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 was, in essence, the 11th largest defense contractor in the United States.^[34] 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.^[35] Carlyle also has provided detail on its links with the Bin Laden family, specifically the relatively minor investments by an estranged half brother.^[36]

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.^[36][37]

Zeitgeist The Movie makes similar claims that The Carlyle Group may have played a part in 9/11.

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.^[38]

Also 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.^[39]

Notable current and former employees and advisors

Business

• G. Allen Andreas - Chairman of the Archer Daniels Midland Company, Carlyle European Advisory Board
• Daniel Akerson -Board member at 7 companies, Managing director at Carlyle
• Joaquin Avila - former managing director at Lehman Brothers, Managing director at Carlyle
• Laurent Beaudoin - CEO of Bombardier (1979-), former member of Carlyle’s Canadian Advisory board
• Peter Cornelius - Managing Director of Nielsen Australia.
• Paul Desmarais - Chairman of the Power Corporation of Canada, former member of Carlyle’s Canadian Advisory board
• David M. Moffett - CEO of Freddie Mac, Former Senior advisor to the Carlyle
• Karl Otto Pöhl - former President of the Bundesbank, Former Senior advisor to the Carlyle Group
• Olivier Sarkozy (half-brother of Nicolas Sarkozy, President of France) - co-head and managing director of its recently launched global financial services division, since March 2008.^[40]

Political figures

North America

• James Baker III, former United States Secretary of State under George H. W. Bush, Staff member under Ronald Reagan and George W. Bush, Carlyle Senior Counselor, served in this capacity from 1993 to 2005.
• George H. W. Bush, former U.S. President, Senior Advisor to the Carlyle Asia Advisory Board from April 1998 to October 2003.
• Frank C. Carlucci, former United States Secretary of Defense from 1987 to 1989; Carlyle Chairman and Chairman Emeritus from 1989 to 2005.
• Arthur Levitt, Chairman of the U.S. Securities and Exchange Commission (SEC) under President Bill Clinton, Carlyle Senior Advisor from 2001 to the present
• Luis Téllez Kuenzler, Mexican economist, former Secretary of Communications and Transportation under the Felipe Calderón administration and former Secretary of Energy under the Zedillo administration.
• Frank McKenna, former Premier of New Brunswick, Canadian Ambassador to the United States between 2005 and 2006 and current Deputee Chairman of Toronto-Dominion Bank; served on Carlyle's Canadian advisory board.
• Mack McLarty, Carlyle Group Senior Advisor (from 2003), White House Chief of Staff to President Bill Clinton from 1993 to 1994.
• Randal K. Quarles, former Under Secretary of the U.S. Treasury under President George W. Bush, now a Carlyle managing director

Europe

• John Major, former British Prime Minister, Chairman, Carlyle Europe from 2001 - 2004

Asia

• 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
• Peter Chung, former associate at Carlyle Group Korea, who resigned in 2001 after 2 weeks on the job after his infamous email scandal
• Thaksin Shinawatra, former Prime Minister of Thailand (twice), former member of the Carlyle Asia Advisory Board until 2001 when he resigned upon being elected Prime Minister.^[41]

Media

• Norman Pearlstine - editor-in-chief of Time magazine from (1995–2005), senior advisor telecommunications and media group 2006-

See also

• Carlyle Group companies (category)

References

1. ^ ^{a b c d e} Carlyle Group Form S-1 Registration Statement.
2. ^ ^{a b c d} Carlyle Group annual report
3. ^ "PEI 300". Private Equity International. May 2011. http://www.peimedia.com/pei300. Retrieved 25 May 2011. 
4. ^ "PEI 50" (PDF). Private Equity International. May 2007. p. 2. http://www.peimedia.com/resources/Conference/downloads/PEI50_Brochure_final.pdf. Retrieved 23 July 2010. 
5. ^ David A. Vise, "Area Merchant Banking Firm Formed," Washington Post, Oct. 5, 1987, F33
6. ^ Paul Farhi, "Chi-Chi's Bid Won D.C. Investment Firm Wall Street's Attention," Washington Post, June 6, 1988, F1
7. ^ John Mintz, "Founder Going Beyond the Carlyle Group," Washington Post, Jan. 9, 1995, F9
8. ^ Thornton, Emily "Carlyle Changes Its Stripes," BusinessWeek, February 12, 2007
9. ^ ^{a b} Heath, Thomas. "Government of Abu Dhabi Buys Stake in Carlyle." Washington Post, September 21, 2007, page D01.
10. ^ [1]
11. ^ "NY Cuomo: Tainted deals included Carlyle Group" Reuters, March 19, 2009
12. ^ Carlyle Pays $20 Million to Resolve Inquiry. New York Times, May 20, 2009
13. ^ "Private equity giant Carlyle files for IPO". Renaissance Capital. 06 September 2011. http://www.renaissancecapital.com/ipohome/news/Private-equity-giant-Carlyle-files-for-IPO-10265.html. 
14. ^ McCarty, Dawn (2010-08-25). "Oriental Trading Co. Files for Bankruptcy in Delaware". Bloomberg. http://www.bloomberg.com/news/2010-08-25/oriental-trading-co-files-for-bankruptcy-with-as-much-as-1-billion-debt.html. Retrieved 2010-09-28. 
15. ^ United Defense Industries. GlobalSecurity.org, July 31, 2005. Retrieved October 22, 2008.
16. ^ Peterson, Laura. Windfalls of War. United Defense Industries, L.P. Center for Public Integrity, October 31, 2003.
17. ^ The Carlyle Group: The Big Boys of Private Equity Defense Ventures
18. ^ Carlyle Group website, healthcare portfolio, http://www.carlyle.com/Portfolio/item7490.html
19. ^ "The Carlyle Group to Acquire Synagro Technologies for $5.76 Per Share" 2007-01-29
20. ^ Reuters/Yahoo! News: "GM selling Allison for $5.6 billion," 2007-06-28
21. ^ "Carlyle Group acquires Applus," 2007-07-28
22. ^ http://www.boozallen.com/news/39856120?o9002123=&lpid=66005
23. ^ http://www.metaldyne.com/metaldyne/sections/newsroom/documents/2009-10-16-Metaldyne-Press-Release.pdf
24. ^ http://www.bbc.co.uk/news/uk-england-14779688
25. ^ Carlyle Capital Corporation Intends to File for Compulsory Winding up in Guernsey
26. ^ Carlyle Capital in default, on brink of collapse - Reuters
27. ^ Washington Post "Carlyle Group Holding 'Crisis' Talks in N.Y.," 03-10-08
28. ^ 'Fed Hopes to Ease Strain on Economic Activity' 03-11-08
29. ^ "Hedge fund on verge of collapse". BBC News Online. 13 March 2008. http://news.bbc.co.uk/2/hi/business/7293663.stm. 
30. ^ Companies Law of Guernsey (1994)
31. ^ "Carlyle Capital Corporation Intends To File For Compulsory Winding Up In Guernsey" Carlyle Capital Corporation New Release, March 16, 2008
32. ^ 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. 
33. ^ LPs Seeking Co-investment Opportunities in Emerging Markets (Emerging Markets Private Equity, Quarterly Review Q4 2006). Page 13.
34. ^ Moore, Michael "Factual Back-Up for Fahrenheit 9/11: Section Four" michaelmoore.com
35. ^ Doward, Jamie (2003-05-23). "'Ex-presidents club' gets fat on conflict". The Observer. 
36. ^ ^{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.
37. ^ The Carlyle Group. Economist, Jun 26th 2003
38. ^ Heath, Thomas. "Pair of Proposals Take Aim at Carlyle Group." Washington Post, February 15, 2008.
39. ^ Kasler, Dale. "Bill limiting CalPERS, CalSTRS investments withdrawn." Sacramento Bee, April 9, 2008.
40. ^ Nick Clarck, Carlyle poaches Olivier Sarkozy, The Independent, 4 March 2008 (English)
41. ^ [2]

Further reading

• James K. Glassman, "Big Deals," Washingtonian Magazine, June 2006
• Geoffrey Colvin & Ram Charan, "Private Lives," Fortune Magazine, November 27, 2006
• Private Equity Firms, Directory of Private Equity Firms
• Emily Thornton, "Carlyle Changes Its Stripes," BusinessWeek, February 12, 2007
• Dan Briody, The Iron Triangle: Inside the Secret World of the Carlyle Group, John Wiley & Sons, 2003, ISBN 0-471-28108-5.
• Bin Laden Family Liquidates Holdings With Carlyle Group. New York Times: October 26, 2001.
• Bin Laden Family Could Profit From a Jump In Defense Spending Due to Ties to U.S. Bank. Wall Street Journal: September 27, 2001.

External links

• The Carlyle Group (company website)