Carlyle Group
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The Carlyle Group is a Washington, D.C. based global private equity investment firm with more than $81.1 billion of equity capital under management.[1] The firm operates four fund families, focusing on leveraged buyouts, venture & growth capital, real estate and leveraged finance investments. The firm employs more than 575 investment professionals in 21 countries with several offices in North America, South America, Europe, Asia and Australia; its portfolio companies employ more than 286,000 people worldwide. Carlyle has over 1200 investors in 68 countries. The firm is well known for the dozens of world political figures and luminaries it has employed. Some of these figures, such as George H. W. Bush and his Secretary of State James A. Baker III, have generated controversy stemming from allegations of conflicts of interest. In March 2008, Carlyle Capital Corporation, established in 2006 for making investments in U.S. mortgage-backed securities, defaulted on about US$ 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, and it expects its creditors to seize its remaining assets.[2]
OriginCarlyle was founded in 1987 by Stephen L. Norris, and David M. Rubenstein[3] They later hired Dan D'Aniello, William Conway and Greg Rosenbaum[4]. Rosenbaum left in 1987[5]; Norris left in 1995[6]. The three remaining founders are reported to collectively own around a 50% interest in the group's general partnership. The California Public Employees Retirement System (or CalPERS) is the only US institution which owns a stake in the partnership, holding 5.5% of Carlyle for which it paid $175 million in 2001. In 2007 Mubadala Development, an investment vehicle for the Government of Abu Dhabi, purchased a 7.5% stake for $1.35 billion.[7]. 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. Carlyle's current chairman is Lou Gerstner, former chairman and CEO of IBM and Nabisco. SpecializationCarlyle deals in the following industries: Aerospace & Defense, Automotive, Consumer & Retail, Energy & Power, Healthcare, Real Estate, Technology & Business Services, Telecommunications & 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. Defense investments represent about 1% of the group's current portfolio[citation needed] — though this translates, for example, into a 33.8% ownership of QinetiQ, the UK's recently privatized defence company. The PartnershipCarlyle has only allowed two outsiders to buy into its partnership.[8] The first is the California Public Employees' Retirement System (CalPERS), who "own a 5.5% stake in the company that is estimated to be worth about $1 billion."[8] The second is Mubadala Development Company - "an investment group owned by the government of Abu Dhabi, which is part of the United Arab Emirates."[8] In September of 2007, they bought a "7.5 percent share of [Carlyle's] general partnership for $1.35 billion."[8] Current portfolio and major acquisitionsThough known for its expertise in aerospace and defense, Carlyle invested more than thirty percent of its assets in the telecommunications and media sector. 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. Brand-name companies that Carlyle owns include: Dunkin' Brands, which owns Dunkin' Donuts and Baskin-Robbins, and dental hygiene company Water Pik. Carlyle also recently took rental car company Hertz public. 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.[9] 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.[10] On July 2 2007, it was disclosed that the Carlyle Group was looking to buy Virgin Media UK cable business.[11] Richard Branson is the largest shareholder, and the Virgin Group own the name Virgin, and Virgin Media have the rights to use the name Virgin for 10 years[citation needed]. 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.[12] 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. In March 2008, Carlyle Capital Corp., a Guernsey-based affiliate of Carlyle established in 2006 for the purpose of investing in U.S. mortgage-backed securities, came under substantial pressure as the American subprime mortgage crisis expanded. The investments of Carlyle Capital Corp. are heavily leveraged - up to 32 times by some accounts - and 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.[13] 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. [14] 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."[15] Past acquisitionsCarlyle acquired United Defense Industries in October 1997, 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[16]--in private equity terms, the investment was "realized" at that time.[17] (One major United Defense program was the XM2001 Crusader self-propelled howitzer which was canceled by Secretary of Defense Donald Rumsfeld in early 2002 causing United Defense stock prices to fall 27 percent.[18]) ControversyConnections between the Carlyle and the Bush family have inspired controversy, particularly in relation to the War on Terror and the Iraq War. George H. W. Bush and his Secretary of State James A. Baker III have at times been advisors to the group. One writer claimed that Saudi Arabian interests have given $1.4 billion to firms connected to the Bush family. Of this figure, $1.18 billion comes from contracts awarded to defense contractor Braddock, Dunn & McDonald, which Carlyle sold before George H. W. Bush became an advisor.[19] A Carlyle spokesman noted in 2003 that its 7 percent interest in defense industries was far less than several other venture capital groups.[20] Notable current and former employees and affiliated personsBusiness
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