The Carlyle Group, the staid and conservative investor based on Pennsylvania Avenue, has upped its swagger.
The $180 billion asset management firm has invested $500 million in Beats Electronics, the headset company founded by music industry icon Dr. Dre, according to people familiar with the deal.
The hugely popular Beats by Dr. Dre headphones are a fixture in nearly every locker room in professional sports. The company says it has a 64 percent market share of the $100-plus premium headphone segment.
The plunge into headphones is not the norm for Carlyle, most well-known for hiring ex-prime ministers and ex-presidents and buying and selling aerospace and defense firms.
But Carlyle has recently ventured into the consumer space, including buying Dunkin’ Donuts, Hertz, Mrs. Fields’ Cookies and NBTY vitamins.
“Like with Dunkin’ and Hertz, this is a great opportunity to show everyday consumers the power of private capital from a global firm like Carlyle,” said Carlyle spokesman Chris Ullman. “We’re used to buying companies that make airplane wings and pumps, so headphones by Dr. Dre is creating a lot of buzz within the firm.”
Carlyle’s investment, which is part of its $13.7 billion Carlyle Partners V fund, will give it a minority share in Beats.
“Carlyle is a fantastic investment partner and we look forward to building the next chapter of Beats,” Beats co-founder and chief executive Jimmy Iovine said in a statement.
Beats said that it also plans to buy back the 24.8 percent stake in the company held by Taiwanese smartphone maker HTC.
Dr. Dre, a musical artist and producer, and Iovine, the chairman of Interscope Geffen A&M Records, established Beats Electronics in 2008.
Carlyle Group Managing Director Sandra Horbach said, “Streamed digital media continues to be a strong growth area and the Beats team is well positioned to capitalize on this trend with its headphones, speakers and other audio equipment.”