“It was a chance,” says Conway, 61, now a billionaire looking back on a day that transformed his life. “There was nothing sure about it.”
And so The Carlyle Group was born.
After meandering for a couple of years, they hit upon a game plan to build a showcase of Washington insiders who could find deals and draw investors. Former presidents and Cabinet secretaries signed up. Fat profits and growth followed. Pension funds and the governments of countries got in line to give Carlyle money.
Forged not on Wall Street but on Pennsylvania Avenue, Carlyle has grown into a financial powerhouse. It manages more than $100 billion that is invested in 270 companies and properties around the world with names like Hertz and Dunkin’ Donuts. Its companies have more than 500,000 employees, or five times those of ExxonMobil.
The rise of Carlyle embodies the evolution of American private equity, climbing from its niche as a boutique buyout firm to the height of global finance. Like the mutual funds industry before it, Carlyle helped revolutionize the financial sector by creating a new investment class — and then mass-producing it.
Now the intensely private firm is about to make its biggest deal yet: an initial public stock offering. About 10 days ago, Carlyle began contacting banks including Goldman Sachs, J.P. Morgan Chase, Credit Suisse and UBS, an effort led by managing director and partner Glenn Youngkin. It is likely to choose underwriters by the end of June. An inside team is working on the paperwork, but the timing of the IPO will depend on market conditions. The company is believed to be worth at least $10 billion.
Overnight, Carlyle’s 99 partners will become millionaires and billionaires, with stakes valued from $3 million to $2 billion. The firm’s innermost financial workings will be laid bare. The general public will be able to buy a piece and share in its profits.
Carlyle makes money three ways: First, it collects 2 percent of what it manages; second, private equity firms keep 20 percent of the profit they earn for investors; third, Carlyle invests alongside its investors in Carlyle funds.
The stock sale may propel Washington’s growing reputation as a finance hub. It’s three founders, David M. Rubenstein, Conway and Daniel D’Aniello (known as DBD), hope to eventually cash out and leave the firm with a battle-tested cadre of new leaders.
When Carlyle goes public, the upper management will be reorganized. D’Aniello will be chairman of Carlyle Group, while Rubenstein and Conway will be co-chief executives.