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The Carlyle Group
Type Private Partnership
Founded 1987
Headquarters Washington, D.C.
Key people William E. Conway, Jr., Founder
Daniel A. D'Aniello, Founder
David M. Rubenstein, Founder
Industry Financial Services
Products Management buyouts
Real estate
Leveraged finance
and growth capital
Revenue Undisclosed to public
Employees 890
Website www.carlyle.com

The Carlyle Group is a global private equity investment firm, based in Washington, D.C., with more than $84.5 billion of equity capital under management, diversified over 64 different funds as of March 31, 2009.[1] The firm operates four fund families, focusing on leveraged buyouts, growth capital, real estate and leveraged finance investments. The firm employs more than 890 employees, including 495 investment professionals in 20 countries with several offices in the Americas, Europe, Asia and Australia; its portfolio companies employ more than 415,000 people worldwide. Carlyle has over 1300 investors in 71 countries.

Carlyle was ranked as the largest private equity firm in the world, according to a ranking called the PEI 50 based on capital under management.

Contents

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.

History

History of private equity
and venture capital
Objectivist.jpg

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)

  

Carlyle was founded in 1987 by Stephen L. Norris and David M. Rubenstein.[2] 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 E. Conway, Jr. and Greg Rosenbaum.[3] Rosenbaum left in 1987[4]; Norris left in 1995[5]. 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 in 2001. The investment was valued at approximately $1 billion by 2007 at the height of the 2000s buyout boom.[6]

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.[6]

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. [7]

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.[8] In May 2009, Carlyle agreed to pay $20 million in a settlement with Cuomo and accepted changes to its fundraising practices.[9]

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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. 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, in a consortium of investors, recently acquired the Hertz, the world's largest rental car corporation.

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.[10] (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.[11]) 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.[12]

In September 2006, Carlyle acquired Forba Dental Management, the owner of Small Smiles Dental Centers, the largest US chain of dental clinics for children.[13]

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.[14]

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.[15]

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.[16]

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.[17]

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. [18]

Carlyle Capital Corporation

In March 2008, Carlyle Capital Corporation, established in August 2006[19] 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.[20] 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.[21] 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. [22] 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."[23] 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[24] for a "compulsory winding up proceeding" to permit all its remaining assets to be liquidated by a court appointed liquidator.[25]

The losses to the Carlyle Group due to the collapse of Carlyle Capital is reported to be "minimal from a financial standpoint".[26]

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.[27] 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.[28] Carlyle also has provided detail on its links with the Bin Laden family, specifically the relatively minor investments by an estranged half brother.[29]

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.[29][30]

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.[31]

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.[32]

Notable current and former employees and advisors

Business

Political figures

North America

Europe

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. [34]

Media

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

See also

References

  1. ^ Carlyle Group website http://www.carlyle.com/Media%20Room/item10143.html
  2. ^ Briody, Dan. The Iron Triangle: Inside the Secret World of the Carlyle Group. New York: John Wiley & Sons, 2003. ISBN 0-471-28108-5
  3. ^ David A. Vise, "Area Merchant Banking Firm Formed," Washington Post, Oct. 5, 1987, F33
  4. ^ Paul Farhi, "Chi-Chi's Bid Won D.C. Investment Firm Wall Street's Attention," Washington Post, June 6, 1988, F1
  5. ^ John Mintz, "Founder Going Beyond the Carlyle Group," Washington Post, Jan. 9, 1995, F9
  6. ^ a b Heath, Thomas. "Government of Abu Dhabi Buys Stake in Carlyle." Washington Post, September 21, 2007, page D01.
  7. ^ [1]
  8. ^ "NY Cuomo: Tainted deals included Carlyle Group" Reuters, March 19, 2009
  9. ^ Carlyle Pays $20 Million to Resolve Inquiry. New York Times, May 20, 2009
  10. ^ United Defense Industries. GlobalSecurity.org, July 31, 2005. Retrieved October 22, 2008.
  11. ^ Peterson, Laura. Windfalls of War. United Defense Industries, L.P. Center for Public Integrity, October 31, 2003.
  12. ^ The Carlyle Group: The Big Boys of Private Equity Defense Ventures
  13. ^ Carlyle Group website, healthcare portfolio, http://www.carlyle.com/Portfolio/item7490.html
  14. ^ "The Carlyle Group to Acquire Synagro Technologies for $5.76 Per Share" 2007-01-29
  15. ^ Reuters/Yahoo! News: "GM selling Allison for $5.6 billion," 2007-06-28
  16. ^ "Carlyle Group acquires Applus," 2007-07-28
  17. ^ http://www.boozallen.com/news/39856120?o9002123=&lpid=66005
  18. ^ http://www.metaldyne.com/metaldyne/sections/newsroom/documents/2009-10-16-Metaldyne-Press-Release.pdf
  19. ^ Carlyle Capital Corporation Intends to File for Compulsory Winding up in Guernsey
  20. ^ Carlyle Capital in default, on brink of collapse - Reuters
  21. ^ Washington Post "Carlyle Group Holding 'Crisis' Talks in N.Y.," 03-10-08
  22. ^ 'Fed Hopes to Ease Strain on Economic Activity' 03-11-08
  23. ^ "Hedge fund on verge of collapse". BBC News Online. 13 March 2008. http://news.bbc.co.uk/2/hi/business/7293663.stm. 
  24. ^ Companies Law of Guernsey (1994)
  25. ^ "Carlyle Capital Corporation Intends To File For Compulsory Winding Up In Guernsey" Carlyle Capital Corporation New Release, March 16, 2008
  26. ^ 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. 
  27. ^ Moore, Michael "Factual Back-Up for Fahrenheit 9/11: Section Four" michaelmoore.com
  28. ^ Doward, Jamie (2003-05-23). "'Ex-presidents club' gets fat on conflict". The Observer. 
  29. ^ 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.
  30. ^ The Carlyle Group. Economist, Jun 26th 2003
  31. ^ Heath, Thomas. "Pair of Proposals Take Aim at Carlyle Group." Washington Post, February 15, 2008.
  32. ^ Kasler, Dale. "Bill limiting CalPERS, CalSTRS investments withdrawn." Sacramento Bee, April 9, 2008.
  33. ^ Nick Clarck, Carlyle poaches Olivier Sarkozy, The Independent, 4 March 2008 (English)
  34. ^ [2]

Further reading

External links


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