The Carlyle Group is worth between $7 billion and $7.6 billion and will price its shares between $23 and $25 on the Nasdaq stock market when it goes public in the next few weeks, according to people familiar with the firm’s plans.
The company will file papers with the Securities and Exchange Commission on Monday detailing the offering structure.
The firm is selling 30.5 million shares in its initial public offering, which is about 10 percent of the total shares. If shares price at the top end of the price range, Carlyle would raise around $760 million for a variety of purposes, including debt pay-down and investment in new products.
Carlyle’s founders and top managers Monday are fanning out across the globe as part of its “road show,” where the teams will explain why the firm’s stock is a good investment to institutions, wealthy individuals and others.
Experts and others said the value on the private equity firm is conservative, reflecting the recent rough patch in the stock market, especially for Carlyle’s peers, such as Oaktree Capital.
The relatively low firm valuation reflects a more conservative approach by Carlyle, whose leadership wants to project a stock with long-term appeal. As part of that approach, Carlyle has said in past government filings that none of its partners will sell any shares at the time the firm goes public. In addition, the firm has self-imposed restrictions on sales that allow its founders and employees to sell shares only during certain windows.
Los Angeles-based Oaktree went public during last week’s rocky stock market and saw its shares open below its $43 offering price. Oaktree sold only around $400 million of the more than $500 million in stock it had hoped to sell.
Carlyle’s disclosure Monday is the last step before the District-based private equity giant puts its shares on the Nasdaq.
Carlyle’s stock pricing is a page out of the playbook of its portfolio companies that have gone public.The history of Carlyle’s portfolio IPOs suggests that they typically file with conservative valuation ranges, with the intention to build demand. Those shares have sold within or above the price range and trade at a higher price in the days and weeks subsequent to the IPO, according to a banker familiar with the methodology.
David W. Dupree, founder and managing director of the Halifax Group, a mid-level private equity firm based in Washington, said Carlyle’s pricing and its restrictions on the selling of shares by founders and employees shows that the firm is trying to take a long view.
“This is going to be good for investors because there’s going to be something left on the table,” said Dupree, who worked at the Carlyle Group early in his career and is close to some of the founders. “You are forming a long-term partnership with your investor base, and if you extract the last dime on an offering like this, they aren’t going to be happy.”
Carlyle has $147 billion in assets under management.
Its projected market value is much lower than in the private equity industry’s heyday back in 2007, when giant deals funded with cheap credit were the norm. In 2007, Abu Dhabi state investment firm Mubadala paid $1.35 billion for a 7.5 percent stake in Carlyle, valuing the private equity firm at $18 billion.