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Tuesday, June 02, 2009

This from the Private Equity Blog of the WSJ:

Carlyle Group: Humbler, but in Many Ways Bigger

Laura Kreutzer, of Private Equity Analyst, reports:

Carlyle Group may have been “humbled” in 2008 as it suffered some body blows in the weakened economy, the firm’s second annual report makes clear its own business still expanded, even as its employee ranks and the total volume of its commitments to its funds contracted.

peaThe Washington private-equity firm wrapped up 10 funds in 2008 and 2009, raising a total of $19.9 billion in new capital to deploy, according to the 2008 annual report, though at least some of that money appears to have closed prior to 2008. The firm’s total assets under management increased to $85 billion across 64 funds, up $4 billion from the $81 billion across 60 funds it reported a year earlier.


The report didn’t specify exactly how much of the asset growth came from new inflows of capital since the last report and how much came from increases or declines in overall value of assets held.

New inflows were likely significant, given that the firm’s assets increased even though it liquidated at least two funds in 2008, hedge fund Carlyle Blue Wave Partners Management and the publicly traded Carlyle Capital Corp.

Carlyle also appears to have reeled in about 100 new investors since its last annual report, increasing its total investor base from more than 1200 limited partners to more than 1300, according to the two reports.

While Carlyle’s investment pace slowed in 2008, the firm still managed to deploy $12.6 billion in equity, including $9.7 billion in equity in 117 new corporate and real-estate transactions with an enterprise value of $16 billion, according to the 2008 report.

Since its inception in 1987, Carlyle has invested a total of $54.6 billion in 896 private equity and real estate transactions, the report stated.

Despite the growth, Carlyle underwent its first company-wide layoff last year, cutting about 100 positions, or roughly 10% of its work force, and closing several offices. The firm has about 900 professionals and 28 offices, according to the 2008 report.

At the same time, the total overall capital that Carlyle has committed to its own funds declined slightly to $3.3 billion from $3.5 billion a year earlier. A decrease in the general partner commitment seems unusual, given the overall increase in Carlyle’s assets.

However, spokesman Chris Ullman said the decline in Carlyle’s own capital commitments resulted from discontinued funds. Though he didn’t name specific funds, the 2008 demise of Carlyle Capital and Carlyle Blue Wave, both of which received significant support from Carlyle itself, would have wiped out those GP commitments.

At $3.3 billion, Carlyle’s overall commitment to its funds represents a total of about 3.9% of its assets under management, slightly ahead of the industry average. The average general partner contribution to funds raised in 2008 and 2009 was 3.5% of total capital raised, according to the 2009 edition of Dow Jones Private Equity Partnership Terms & Conditions. That represents an increase over the 2.5% average GP commitment that firms made to funds raised in 2006 and 2007.


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