Carlyle deal for Dutch firm would make it world's largest private equity manager
Wednesday, January 26, 2011; 8:03 PM
District-based Carlyle Group has agreed to purchase a Dutch asset manager in a deal that would significantly expand its investment portfolio and make it the world's largest private equity firm.
Carlyle said Tuesday the acquisition of AlpInvest Partners would give it nearly $150 billion in assets under management, up from the current $98 billion. By that metric, Carlyle is expected to overtake rivals Blackstone Group and KKR to become the world's largest buyout firm once the deal closes.
In acquiring AlpInvest, Carlyle diversifies its businesses in the event the private equity firm decides to sell its shares to the public.
"By partnering with sophisticated global investors, Carlyle is better able to provide the range of products and services our investors seek," Carlyle co-founder David M. Rubenstein said.
AlpInvest is one of the world's largest private equity managers, running $43.3 billion mainly on behalf of two Dutch pension fund managers. It has invested with several U.S.-based private equity firms, including Carlyle, Blackstone Capital Partners and Kohlberg Kravis Roberts, according to its Web site.
"What it does for Carlyle is it gives them access to very large, very influential limited partners as well as guys who have been in fund investing in a big way for a long time," said Brent Whisenant, managing director with Medley Partners, a San Francisco-based family office. "It opens the Carlyle platform to a whole lot of smaller investors who are more inclined to invest in 'fund of funds' as opposed to make concentrated commitments to individual funds.
Under the deal, Carlyle will own 60 percent of AlpInvest but will share governance of the firm with its current management. The transaction is expected to close in March.
"Carlyle is a strong, long-term partner for AlpInvest," Volkert Doeksen, chief executive of AlpInvest, said in a statement.
Founded in 1987, Carlyle for years embodied the traditional private-equity model - buying companies, fixing or expanding them, and then selling them at a hefty profit for Carlyle and its investors. The company takes a percentage of the profits and a flat fee for money under management.
In recent years, Carlyle has repositioned itself as an asset management firm, seeking other ways to make profits, some of which offer a lower return than the traditional buyout model.
Rubenstein has emphasized the need to expand Carlyle's brand as both a diversified financial services firm as well as a high-quality asset management company, similar to the one Goldman Sachs enjoys in the world financial community.
"AlpInvest has products we don't have, such as fund of funds [which invest in other private equity funds] and secondary offerings," said Carlyle spokesman Chris Ullman. "They bring new products to the table for us, and we help them add new products to the stable of offerings."
Ullman said the deal also gives Carlyle a stronger presence in Europe. The firm already has strong partnerships in North America and the Middle East. The California Public Employees' Retirement System owns a 5 percent stake in the firm, and Mubadala Development, owned by Abu Dhabi, owns around 9 percent.
Malon Wilkus, chairman of American Capital, a publicly held private equity firm based in Bethesda, said the deal shows how private equity firms have successfully navigated the recession.
"Carlyle is accumulating more assets under management, including breaking for the first time into fund-of-funds investing," Wilkus said. "It's another arena for private equity investing that expands out their platform and their capabilities to be more attractive to institutions and pension funds the world over."