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Private equity firm Carlyle files for $100M IPO

Private equity firm Carlyle files for $100M IPO

Carlyle Group said Tuesday that it plans to raise $100 million through an initial public offering. The private equity firm wants to go public even as fears about the global economy have punished stock markets.
Many companies canceled their IPOs in August. Only four companies went public during the month, down from 14 in July and 13 in August of last year, according to data from Renaissance Capital. Carlyle, based in Washington, did not say how many shares it plans to sell, when it intends to go public, or predict a price for its stock. While a filing with the Securities and Exchange Commission said Carlyle plans to raise as much as $100 million, the offering's value may change as the IPO's bankers gauge demand for the stock.
Private equity firms buy companies and later try to sell them for more money. They often borrow money to fund their purchases. The business slumped during the recession, but several major firms have gone public following the revival in the stock market after the downturn. Blackstone Group's IPO was in 2007, before the Great Recession began that December, while KKR & Co. listed its stock in the U.S. in July 2010 and Apollo Global Management debuted in April.
It's a terrible time for a private equity company to go public, said IPO researcher Scott Sweet, the owner of IPO Boutique. Investors might not be hot on the stock of a private equity firm because of the declines in rivals' shares, he said. A sliding stock market will limit the firms' abilities to sell the companies in their portfolios back to the public.
Some of Carlyle's rivals have not fared well in the stock market since their IPOs. Blackstone has dropped 60 percent since its 2007 debut. Apollo has lost 36 percent. And Fortress Investment Group LLC has fallen 83 percent. KKR is up 4 percent since its U.S. listing.
There have been some notable successes for private equity firms, including Carlyle. It's Dunkin' Brands Group Inc., the parent company of the Dunkin Donuts and Baskin-Robbins chains, went public in July, and investors clamored for the stock. Carlyle's portfolio includes more than 200 companies.
The stock market decline and the lull in the IPO market may mean Carlyle won't be able to raise as much money in an IPO as it might have if it went public earlier this year.
But for private equity firms, going public isn't necessarily about raising as much money as possible to fund their business, said Colin Blaydon, professor of private equity and entrepreneurship at Dartmouth's Tuck School of Business. Instead, the IPO allows investment firms more flexibility. They can make acquisitions with stock instead of cash.
Proceeds from Carlyle's offering will be used to repay outstanding indebtedness and for general corporate purposes.
Going public also lets the private equity firm's founding partners and major shareholders cash out some of their stakes.
Carlyle was founded in 1987 in Washington by Daniel D'Aniello, David Rubenstein, and William Conway Jr. D'Aniello will serve as the chairman of the publicly traded company and Rubenstein and Conway will be co-CEOs.
The company has about $153 billion in assets under management. Carlyle said revenue for 2010 was $2.80 billion, up from $1.32 billion in 2009.
Net income attributed to the company more than doubled to $1.53 billion from $694.1 million in 2009. A measure preferred by private equity firms, called economic net income, which strips out charges related to stock-based compensation, income taxes and other charges, also more than doubled, to $1.01 billion.


Updated : 2021-04-15 08:28 GMT+08:00