Carlyle plans to sell a stake of about 10 percent in the IPO and will 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 gauging public interest since last year, is targeting an IPO in early May, said another person.
At $8 billion, Carlyle would fetch less than half the market value of Blackstone Group LP (BX), the world’s largest private-equity firm, which has led a push to diversify 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.
Chris Ullman, a spokesman for Carlyle, declined to comment.
Carlyle has $147 billion under management, according to the IPO prospectus, and Blackstone had $166 billion as of Dec. 31, its filings show. 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 (FIG) in 2007.
Losing Value
The amount Carlyle is seeking is as much as 25 percent less than the $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 what’s 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 $9.4 billion, according to a regulatory filing today. 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.
Blackstone, which went public at a market value of $33.5 billion in 2007, has since shrunk by half to about $16.4 billion. The stock has gained 4 percent this year to close at $14.57 in New York today. KKR (KKR)& Co., which gained a New York listing by combining with its publicly traded European fund and moving the company to the NYSE from Amsterdam in July 2010, has risen 30 percent since then.
Oaktree Offering
Carlyle, which has been weighing a public offering since 2007 and put those plans on hold because of the global financial crisis, may delay the roadshow if investors aren’t receptive to Oaktree Capital Group LLC’s IPO, scheduled for tomorrow, and if the stock market continues to decline, said one of the people. The Standard & Poor’s 500 (SPX) Index fell for a fifth straight day today, its longest losing streak since November.
Oaktree, the world’s largest distressed-debt investor, is seeking to raise as much as $517.5 million, offering 11.3 million shares at $43 to $46 each. Chairman Howard Marks and President Bruce Karsh, two of Oaktree’s co-founders, are set to get almost 40 percent of the proceeds from the firm’s share sale.
‘Difficult Test’
“Oaktree will be a test for alternative-asset firms entering the public market, and I think ultimately public investors are going to view both Carlyle and Oaktree in a similar fashion,” Douglas Kelly, a Santa Monica, California- based analyst at IBISWorld Inc., said in a telephone interview. “It will be a difficult test because hedge funds and alternative assets, relative to their fees, have not performed well over the last two to three years.”
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.
They’re also diversifying. Blackstone has expanded into hedge funds, a business that grew to $40.5 billion at the end of last year.
Carlyle’s revenue rose 1.7 percent to $2.85 billion last year, according to a regulatory filing dated March 14. Net income fell 11 percent to $1.36 billion from a year earlier.
Carlyle’s owners, unlike Oaktree’s, have no plans to sell stock in the IPO, a person briefed on the plans said earlier today. The owners paid themselves a $398.5 million dividend in December 2010, nine months before the firm filed to go public, by borrowing $500 million from Mubadala. Carlyle repaid the remaining balance to Mubadala last month, refinancing it with new debt, according to a regulatory filing. The firm’s three founders earned a combined $413 million last year, mainly from distributions.
Carlyle’s stock will trade on the Nasdaq Stock Market under the symbol CG. Carlyle hasn’t set a price range or the number of shares it plans to offer.
To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net
To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net
http://www.bloomberg.com/news/2012-04-10/carlyle-said-to-seek-value-of-up-to-8-billion-in-ipo.html
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