Carlyle float may herald market peak

Kimberly Romaine
06 September 2011

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The buyout titan may actually be timing the market well. Kimberly Romaine reports.

"We all should have known the end was nigh," a banker told your correspondent in 2008. "When the guys at the top exit, we should too," he added, referring to Foxtons' founder John Hunt selling to BC in 2007 - as the property bubble was cresting. He was also referring to private equity firms cashing out via stock markets.

In 2007, Blackstone founders cashed out roughly $2bn in the flotation of a stake in the business, a handy pay packet for co-founder Peterson at the age of 81. It was thus also an indication that public investors may have been investing more in someone's retirement than in the future growth of a business. Incidentally, Blackstone's share price had fallen more than 50% by the end of last year since listing at $31.

KKR, which floated in 2006, also suffered share price pressure, though it rebounded on the back of relisting last year. Other public market endeavours around that time also fared poorly, including Permira formalising its relationship with listed investor SVG as well as Candover's liquidity issues on the back of its listed status. More recently, 3i is now in danger of losing its FTSE 100 status as an ailing share price drags it down.

Carlyle in June hired Citigroup, Credit Suisse and JPMorgan Chase to progress its listing and expects to raise more than $1bn, perhaps as soon as this month. The move was mooted as far back as 2006, when many deemed the floats of KKR and Apollo the advent of permanent capital (never mind the under-publicised failure of Doughty Hanson to launch). Unquote" reported back then that other diversified buyout houses - including TPG and Carlyle - would follow suit. Carlyle co-founder Conway publicly said that the firm indeed looked into the idea in 2007, but that the subsequent debt market jitters saw Carlyle favour a partial sale to an Abu Dhabi government investment vehicle instead, in September 2007.

Carlyle is renowned for timing the markets well - having avoided listing in the 2006/07 heyday, which has since seen KKR, Apollo and Blackstone all suffer in the downturn. Some now comment that renewed market mayhem may mean Carlyle suffers a setback - but given the buyout giant's reputation for sensible moves and stellar timing, maybe Carlyle deems the current market the best it will be for some time.