Carlyle Group

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The Carlyle Group is a Washington, DC based private investment firm which describes itself as "one of the world's largest global private equity investment firms" with more than $18 billion of equity capital. The firm employs more than 300 investment professionals in 14 countries with multiple offices in North America, Europe and Asia. The firm operates four fund families, focusing on leveraged buyouts, venture capital, real estate and high-yield investments.

Carlyle was founded in 1987 by William E. Conway, Jr., Daniel A. D’Aniello, and David M. Rubenstein. The three founders are reported to collectively own around a 50% interest in the group's general partnership. The founders named the firm after the upper east side hotel in New York City, "The Carlyle." The industries the group currently specializes in are: Aerospace & Defense, Automotive, Consumer & Industrial, Energy & Power, Healthcare, Real Estate, Technology & Business Services, Telecom & Media, and Transportation.

The Group's aerospace and defense investments have been a source of criticism (much due to Michael Moore's depiction in "Fahrenheit 9/11") because of the Group's alleged connections to the Middle East. Carlyle Group's investments are focused on East Asia, Europe, and North America and defense investments represent only about 7% of the group's portfolio.

Critics of The Carlyle Group also frequently note its political connections. Unlike most private equity firms, which are predominately located in New York, Boston or around San Francisco, Carlyle is the only large private equity firm located in Washington, DC.

Contents

Overview

According to the company web site, The Carlyle Group, headquartered in Washington D.C., was established in 1987 as a "private global investment firm that originates, structures and acts as lead equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings."[1]

Carlyle states that its "mission" is to become the premier global private equity firm and to generate extraordinary returns while maintaining our good name and the good name of our partners. Toward that end, we have established a family of funds in the Carlyle name and a network of offices around the world. We maintain the highest standards of ethical conduct and employ a conservative, proven and disciplined approach to investing."[2]

Hoover's Online describes the Carlyle Group as a military-industrial complex. The Carlyle Group, Hoover's continues,

takes part in management-led buyouts (MBOs), acquires minority stakes, and provides other investment capital for companies. It is particularly hawkish on the aerospace and defense industries, putting to good use the experience of its chairman emeritus Frank Carlucci, a former Secretary of Defense. Firms in this arena make up a significant share of the portfolio at Carlyle, one of the world's largest private equity firms. The company has also engineered MBOs and other capital deals for firms in such industries as consumer products, energy, health care, information technology, real estate, beverages, and telecommunications. Carlyle's directorship reads like George Walker Bush's inaugural ball invite list. Reagan Secretary of the Treasury James Baker serves as a senior counselor, and Richard G. Darman, former director of the Office of Management and Budget under George Herbert Walker Bush, is a managing director. Former President George Bush has served with Carlyle and Colin L. Powell, before becoming Secretary of State, made an appearance on behalf of the firm.[3]
The company has more than $13 billion in assets under management and has invested in such names as: United Defense Industries, of Crusader artillery and Bradley Fighting Vehicle fame; Dr Pepper/Seven Up Bottling Group; and MedPointe Inc..[4] Carlyle owns about 90% of Voight Aircraft Industries, Inc..
Although the majority of the firm's money is in North America, it is also pushing more intensely overseas, launching funds aimed at Asia, Europe, Latin America, and Russia. The firm (along with Apax Partners and UK-based Cinven) bought a 28% share of France-based health care and business publisher Vivendi Universal Publishing. One of the company's larger moves overseas is the purchase of the transportation business of The Daiei, Japan's #2 retailer in which the company has a 90 percent stake, worth $28 million.[5]
Its moves overseas haven't all been as easy as picking up the phone or as lucrative, however. Carlyle, along with investment firm Welsh, Carson, Anderson & Stowe, are planning to buy the yellow pages business of the financially strapped Qwest Communications while navigating the lawsuit filed by Milberg Weiss Bershad Hynes & Lerach LLP. The firm also returned portions of its European venture capital group funds to investors after the values of its investments lessened and the availability of target acquisitions decreased.[6]
Carlyle is keeping an eye on the transportation and healthcare industries as possible candidates for deal making, but the maturing buy-out market creates fewer prize deals and more competitors.[7]
California Public Employees' Retirement System, or CalPERS, owns more than 5% of Carlyle.[8]

History

The following is taken from Hoover's Online:

In 1987 T. Rowe Price director Edward Mathias brought together David Rubenstein, a former President Carter aide; Stephen Norris and Daniel D'Aniello, both executives with Marriott Corp.; William Conway, Jr., the CFO of MCI; and Greg Rosenbaum, a VP with a New York investment firm. They pooled their experience along with a load of money from T. Rowe Price Associates, Alex. Brown & Sons (now Deutsche Banc Alex. Brown), First Interstate (now part of Wells Fargo), and Pittsburgh's Mellon family to form a buyout firm.
Named after the Carlyle Hotel in New York, the firm opted to make Washington, DC, its headquarters so it wouldn't get lost in the crowd of New York investment firms. The company spent its first years investing in a mish-mash of companies, using Norris' and D'Aniello's Marriott experience to focus primarily on restaurant and food service companies (including Mexican restaurant chain Chi-Chi's).
In 1989 it wooed the well-connected Frank Carlucci, who had served as President Reagan's secretary of defense, to join the group. Soon thereafter, Carlyle began making more high-profile deals. That year it acquired Coldwell Banker's commercial real estate operations (sold 1996) and Caterair International, Marriott's airline food services (sold 1995).
Carlucci helped redirect the firm's focus to the downsizing defense industry. Among its targets were Harsco Corp. (1990), BDM International (1991), and LTV Corp.'s missile and aircraft units (1992). Carlyle helped overhaul their operations and make them attractive (for the right price) to the industry's elite, including Boeing and Lockheed Martin.
As the company's reputation grew, so did its cast of players. Among its new backers were James Baker and Richard Darman (both Reagan and Bush administration alums) and investor George Soros, who chipped in some $100 million into the Carlyle Partners L.P. buyout fund. With the help of its 'access capitalists' such as Baker and Saudi Prince al-Waleed bin Talal (whom the firm helped add to his fortune in a 1991 Citicorp stock transaction), Carlyle made deals in the Middle East and Western Europe (including a bailout of Euro Disney) in the mid-1990s.
While the firm continued to be a side in the iron triangle, acquiring such defense companies as aircraft castings maker Howmet in 1995, it picked up a grab bag of holdings, such as natural food grocer Fresh Fields Markets (1994; sold 1996); the quick turnaround helped build Carlyle's war chest. The firm also began investing in industrial-cleanup companies, seeing increased government spending as a major opportunity for profit.
As Carlyle's esteem rose, so did the number of its investors. In the late 1990s the firm launched buyout funds targeting Asia (closed 1999), Europe (closed 1998), Russia, and Latin America. At home, it faced a dwindling number of opportunities as the long-running bull market drove up prices and more investors chased fewer deals. Among those was its partnership with Cadbury Schweppes to buy the Dr Pepper Bottling Co. of Texas and merge it with its own American Bottling Co.
Carlyle began the new century by launching Carlyle Asset Management Group, selling its stake in Le Figaro to Socpresse, acquiring Rexnord and a majority stake in CSX Lines. Extending its reach, the company partnered with GMT Communications Partners and acquired Casema in 2003.

Founding Partners and Senior Advisors

Notable people

Notable people currently or formerly affiliated with the Carlyle Group include:

George Soros is also a notable partner of the Group, investing $100 million.

The current chairman of The Carlyle Group is Louis V. Gerstner, Jr., former CEO and chairman of the IBM Corporation.

The Saudi Arabian relatives of Osama bin Laden (not Osama bin Laden himself) were also minor investors in the Carlyle Group until October 2001 when the family sold its $2.02 million investment back to the firm in light of public controversy surrounding the family after the September 11, 2001 attacks.

Carlyle Group was chosen as the most suitable investor in QinetiQ, which was created from the privatization of most of the Defence Evaluation and Research Agency, a UK government agency.

Carlyle Funds

The Carlyle Funds include: U.S. Buyout Funds group; U.S. Venture Funds group; U.S. Real Estate Funds group; U.S. High Yield Funds group; Europe Buyout Fund; Europe Venture Fund; Asia Buyout Fund; Asia Venture Fund; and Carlyle/Riverstone Global Energy and Power Funds.

Contact

1001 Pennsylvania Ave. NW, Ste. 220 South
Washington, DC 20004-2505
Phone: 202-347-2626
Fax: 202-347-1818
URL: http://www.thecarlylegroup.com

External Links

Report of the Center for Public Integrity, Investing in War, The Carlyle Group profits from government and conflict.

  • "Meet the Carlyle Group. Former World Leaders and Washington Insiders Making Billions in the War on Terrorism", News From Reality ... series of articles and links.
  • "Carlyle Group Spins the Revolving Door. How Bush and Other Ex-Politicos Profit from Connections and Access" at Democracy NOW!, no date.
  • Carlyle Group, Global Security, no date.
  • The Carlyle Group, Spectrezine.com, no date.
  • Bush-Carlyle Group Archive, Buzz Flash Perspective, no date.
  • Jerry Politex, CHRONOLOGY: The Bushes And The Carlyle Group, Bushnews.com, January 10 and 12, 2000; includes links to supporting articles.
  • The Bin Ladens Bail on Carlyle Group, From the Wilderness, October 26, 2001.
  • Oliver Burkeman and Julian Borger, "The ex-presidents' club", Guardian Unlimited, Wednesday October 31, 2001.
  • Dan Briody, "Carlyle's way. Making a mint inside 'the iron triangle' of defense, government, and industry", Red Herring, January 8, 2002.
  • Mark Fineman, Arms Buildup Enriches Firm Staffed by Big Guns. Defense: Ex-president and other elites are behind weapon-boosting Carlyle Group, Truthout.org, January 10 2002.
  • Tim Shorrock, Making Money, the Bush Way, The Nation, February 19, 2002.
  • Tim Shorrock, Crony Capitalism Goes Global, The Nation, March 14, 2002.
  • Tim Shorrock, Company Man (Carlucci), The Nation, March 25, 2002.
  • Geoffrey Gray, "How the Pentagon Learned to Love the Weapon No One Wanted. The Carlyle Connection", The Village Voice, May 1-7, 2002.
  • The Carlyle/United Defense Money Trail, compiled from MSN, May 10, 2002.
  • G. Bush I as employee of bin Laden family/Carlyle Group.
  • How closely is Osama bin Laden involved in his family business?
  • Jamie Doward, "'Ex-presidents club' gets fat on conflict", The Observer, 23 March 2003.
  • US Arms Group Heads for Lisbon, The Portugal News, April 4, 2003.
  • Dan Briody, The Iron Triangle: Inside the Secret World of the Carlyle Group (John Wiley & Sons, April 2003).
  • "What Did Eisenhower Mean When He Warned of a Military Industrial Complex? Take a Look at the Carlyle Group," interview with Dan Briody, Buzzflash.com, June 23, 2003.
  • "Exposed: The Carlyle Group," a 48-minute video documentary, Tegenlicht webspecial, June 2003. (Note: The first two minutes of this documentary are in Dutch; the rest is in English.)
  • Connections Helped United Defense Business, Bloomberg News Service, 5 August 2003; "Carlyle Group Inc. has turned a $180-million 1997 investment in United Defense Industries Inc. into $1.2 billion. ... United Defense has acknowledged Carlyle's connections helped its business. 'Our board of directors consists of members who have served in senior positions within the U.S. government, such as secretary of defense, chairman of the Joint Chiefs of Staff and commander-in-chief of the United States Central Command,' it said in its October 2001 prospectus. The management and board's 'unique insights into the U.S. Department of Defense and allied militaries is one of our key assets.'"
  • 11 December 2003: "Carlyle Group in $350 million Asia plan", Business Standard.
  • 19 April 2004: "Pipeline plan leads back to high-profile investing group" by Robert Trigaux, St. Petersburg Times.
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