Carlyle to go public

The Washington, DC behemoth is to join the ranks of KKR, The Blackstone Group and Apollo Global Management via an initial public offering.

The Carlyle Group today filed for an initial public offering, confirming long-standing rumours that the global alternatives behemoth was planning to follow some of its private equity peers by tapping the public markets.

Carlyle hopes to raise $100 million via the offering, which is expected to happen in 2012, according to the registration statement filed with the US Securities and Exchange Commission. The Washington, DC firm, with $153 billion of assets under management, will join the ranks of other major alternative asset managers that have gone public, such as The Blackstone Group, Kohlberg Kravis Roberts & Co and Apollo Global Management.

As part of its activities in all alternatives, Carlyle has a sizeable ‘real assets’ business housing real estate, infrastructure and energy and renewable resources. According to the filing, the firm has $12 billion of property assets under management as at the end of June and employs 110 investment professionals, who generally focus on acquiring single-property opportunities rather than large-cap companies with real estate portfolios. At $12 billion, property far outweighs the $1 billion Carlyle has in infrastructure assets, but it is significantly smaller than the $18 billion it has in energy and renewable resources.

Carlyle, which was co-founded by David Rubenstein, began its real estate arm in 1997 with its first US real estate fund, Carlyle Realty Partners I. The filing lists Carlyle Realty Partners VI as its most recent fund, established in 2010 with $1.6 billion in equity commitments as of June 30 this year.

Real assets account for 21 percent of all assets under management at Carlyle. The largest chunk of its assets, however, are in corporate private equity with 36 percent. Its core buyout business has $51 billion of assets under stewardship. Fund of funds accounts for 29 percent, and global market strategies accounts for 14 percent.

Carlyle has been expanding its investment portfolio over the past year in preparation for the IPO. In June, the firm picked up a 55 percent stake in emerging markets equities firm Emerging Sovereign Group. In January, Carlyle acquired Dutch fund of funds AlpInvest from Dutch pension funds PPMG and APG. The firm also acquired minority stakes in Australian online foreign exchange payments company OzForex in November, as well as financing the North Carolina community banking merger between FNB United and Bank of Granite.

Overall, Carlyle has registered for an offering of $100 million of common units, but that is designed to cover registration fees. The final sum likely will be much larger.

In June, Reuters reported that Carlyle was moving closer to an initial public offering and could raise around $1 billion. The capital raise will be used to generate funds to repay debts, additional finance for acquisitions and other strategic investments.

In the filing, Carlyle said: “The number of common units to be offered and the price range for the offering have not yet been determined. Carlyle intends to use the net proceeds from the offering to repay indebtedness and for general corporate purposes, including general operational needs, growth initiatives, acquisitions and strategic investments and to fund capital commitments to, and other investments in and alongside of, its funds.”

Carlyle was valued at $20 billion in September 2007, when an investment unit of the Abu Dhabi government bought a 7.5 percent stake, before the credit crisis sent stock markets sliding.

Additional reporting by Sam Sutton