Deals

Carlyle to float $1bn vehicle on Euronext

Carlyle is set to become the latest private equity firm with shares of an affiliate, Guernsey-based investment company listed on Amsterdam’s Euronext exchange. It has already raised $600 million for the vehicle, and expects the public offering to raise an additional $400 million.

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The Carlyle Group plans to list a $1 billion (€738 million) vehicle, Carlyle Capital Corporation, on the Euronext exchange in the second or third quarter of 2007.

The Washington, DC-headquartered firm had reportedly abandoned plans to list the vehicle last year, amid concerns of poor post-IPO performances of similar listings from rival firms Apollo Management and Kohlberg Kravis Roberts. The latter two firms’ Euronext vehicles are investment pools primarily focused on private equity investments, while Carlyle’s will be more debt-focused, consisting largely of mortgage-backed securities. Both KKR and Apollo have US-listed, debt-focused vehicles called KKR Financial and Apollo Investment, respectively.

The Guernsey-based Carlyle Capital Corporation, or CCC, has already raised $600 million. The public offering is expected to generate another $400 million, Carlyle said in a statement.

“As of March 31, 2007, CCC had invested a majority of the net proceeds of the private placement in a diversified portfolio of residential mortgage-backed securities and, with the use of leverage, acquired investment assets of approximately $17 billion,” the company said. “As a dividend yield vehicle, CCC expects to distribute approximately 90 percent of adjusted net income on a quarterly basis.”

John Stomber, Carlyle managing director and chief executive officer of CCC, said: “CCC’s investment grade assets will provide significant liquidity and attractive risk adjusted returns. Access to The Carlyle Group’s infrastructure and industry expertise will be a significant competitive advantage for CCC.”

Rubenstein

Carlyle co-founder David Rubenstein said last month that all major firms will eventually join the trend and go public in some form, in order for firms to be competitive with one another as well as attract and retain employees.

The key issue private equity firms will have to deal with is how to appease both public and private shareholders, Rubstenstein said at the Milken Institute’s 10th annual Global Conference in Los Angeles.

“Many of the private investors have been worried that we will worry about quarterly earnings instead of the longer term rates of return that we’ve been getting for our private investors,” he said. “That tension will exist if you’re public; it’s not yet clear how it will work.”