Carlyle sells stake to Abu Dhabi
By James Politi in New York
Published: September 20 2007 19:41 | Last updated: September 20 2007 19:41
Carlyle agreed on Thursday to sell a 7.5 per cent stake in itself to an arm of Abu Dhabis government the latest US private equity group to bring in a sovereign wealth fund as a big investor.
Blackstone sold a near 10 per cent stake in its management company to the Chinese government in May. A different arm of the Abu Dhabi government bought a stake in Apollo Management in July. Selling stakes to international sovereign wealth funds has become a popular way for US buy-out groups to cash in on their booming businesses while expanding their influence in new markets. The Carlyle deal demonstrates that the credit squeeze has not halted such transactions.
Mubadala, the arm of Abu Dhabi which has invested in sectors as diverse as Libyan oil exploration and Ferrari, the Italian motor company, is paying $1.35bn for the Carlyle stake.
The deal was struck at a 10 per cent discount to a valuation of $20bn for all of Carlyle. The Washington-based buy-out group agreed to guarantee a floor to Mubadalas investment, pledging to compensate the arm of the oil-rich emirate if Carlyle goes public and the share price drops.
Carlyle co-founder David Rubenstein said, in an interview with the Financial Times, that the deal gave his firm more capital to invest in our funds and more flexibility in terms of deciding whether to go public.
Mr Rubenstein said the relationship with Mubadala could foster co-investments, although he did not identify any particular sectors. Several Gulf investors have invested heavily in Carlyle funds but the firm has not done many deals in the Middle East.
The investment comes as Carlyle faces pressure on Capitol Hill from lawmakers who want to impose a tax hike on the private equity industry.
The deal could also come under political scrutiny if Carlyle pursues sensitive takeovers in areas such as defence, technology or critical infrastructure.
Carlyle has alerted key lawmakers to the deal, including Chuck Schumer, the New York Senator, and Bush administration officials at the Committee on Foreign Investment in the US.
Copyright The Financial Times Limited 2007