Cristina Alesci Carlyle Group, the second largest manager of private-equity funds, filed plans to join rivals Blackstone Group LP and KKR & Co. as a publicly traded company amid signs the buyout market is weakening.
Carlyle, which hasn’t set a price range or the number of shares it aims to sell, registered for an initial public offering of $100 million by next year, according to a filing today with the U.S. Securities and Exchange Commission. That amount is a placeholder to calculate filing fees and the final amount may vary.
The Washington-based firm, which has discussed an IPO for years, is proceeding as investors again grow skittish about the buyout business. Last month, Blackstone and KKR had their worst one-day declines in more than a year on concerns that a falling stock market will hinder their ability to sell companies. A surge in borrowing costs, signs that the U.S. economy has stalled and skittish lenders are also threatening deals.
“Firms don’t seek capital unless they need it or they think investors will overpay for an asset,” said Harold Bradley, chief investment officer of the Ewing Marion Kauffman Foundation in Kansas City, Missouri, which promotes entrepreneurship. “Carlyle is looking into the future and seeing its fundraising cycle lengthening and, as a result, declining fees and they’ve identified this as the time to sell.”
Private-equity firms combine debt with money from endowments, foundations, pensions and wealthy individuals to buy stakes in companies or acquire them. The firms usually take fees equal to about 2 percent of fund assets and 20 percent of investment profits.
Carlyle co-founder William Conway told Bloomberg News last year that the firm was gearing up for a public share sale to amass permanent capital. The offering will also give Carlyle’s co-founders, including Daniel D’Aniello and David Rubenstein, a way to eventually begin converting their ownership stakes to cash while helping the firm compete with Blackstone, whose assets have surged 43 percent year-over-year to a record $159 billion.
Carlyle has internally debated an IPO since at least 2007, when Blackstone first sold shares to the public. The global financial crisis of 2008 brought leveraged buyouts to a halt and prevented Carlyle from moving forward.
