Carlyle targets $762m in IPO
The Carlyle Group is seeking to raise as much as $762.5 million through its initial public offering. This would value the company at up to $7.6 billion, less than half the current market capitalization of The Blackstone Group and more than $2 billion behind KKR.
According to a regulatory filing, Carlyle will offer 30.5 million shares at $23-25 each. This amounts to 10% of its enlarged share capital, and underwriters have the option to purchase an additional 4.57 million shares if demand proves to be strong. J.P. Morgan, Citigroup and Credit Suisse are the lead underwriters. Pricing is expected on May 2.
Private equity firms haven't performed well in the public markets. Blackstone has lost about half of its market value since listing in 2007 while Apollo Global Management is trading at around a 25% deficit to its March 2011 opening price. Last week, Oaktree Capital Management raised $387 million in its IPO, 25% less than its target, and the stock declined 1.4% on its trading debut.
KKR, however, which listed in 2010, continues to trade above its IPO price.
Last year, Carlyle was expected to pursue a $1 billion offering, but the target price range reflects wider market uncertainty. The private equity firm was valued at $20 billion in September 2007 when an investment unit of the Abu Dhabi government purchased a 7.5% stake. California Public Employees Retirement System (CalPERS) paid $334 million for a 5.5% holding in June 2010, suggesting a value of $6 billion.
Carlyle had about $147 billion in assets under management as of December 31, compared to $166 billion for Blackstone and $82 billion for Oaktree. It returned a record $19 billion to fund investors in 2011 and reported a 152% year-on-year increase in distributable earnings after several funds exited investments.
The firm has sought to diversify its business in recent years as a means of generating more consistent revenue streams. In the last two years it has acquired Claren Road Asset Management, a $4.5 billion credit hedge fund, private equity fund-of-funds AlpInvest Partners, and a 55% stake in Emerging Sovereign Group, a US-based hedge fund manager.
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