Carlyle eyes $7.5-$8 billion valuation in IPO: source

Wed Apr 11, 2012 4:06am EDT
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By Greg Roumeliotis

NEW YORK (Reuters) - Carlyle Group LP is eyeing a market valuation of $7.5 billion to $8 billion in an initial public offering, as the U.S. private equity firm prepares to kick off a marketing blitz to investors, perhaps as soon as next week, said a source with knowledge of the situation.

Carlyle, which has $147 billion in assets under management, plans to sell a 10 percent stake to raise $750 million to $800 million in the IPO, the source told Reuters on Tuesday.

The firm had said in a regulatory filing earlier this month that it might sell a 10 percent stake but its expectation on market value was not previously known.

Carlyle declined to comment.

Carlyle's market value represents a significant comedown from the peak of the private equity industry in 2006-2007, when easy credit spurred the largest leveraged buyouts of all-time. 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.

Blackstone Group LP, which went public in 2007, raised about $7 billion by selling a 24 percent stake at the time, implying a value of around $29 billion. Blackstone, which had $166 billion under management at the end of 2011, has a current market capitalization of $16.5 billion.

The sharp difference in the estimated market value of Carlyle and that of Blackstone, even though the latter manages only slightly more assets, highlights the difficulty investors have in valuing private equity firms.

"Although these companies are all thrown into the same bucket in the eyes of many, under the hood their operations and culture and the way they share economics are all different," said David Snow, founder of PrivCap, a media company that covers the private equity market.   Continued...

Carlyle Group co-founder and Managing Director David Rubenstein speaks at the panel discussion "Global Opportunities in Private Equity" at The Milken Institute Global Conference in Beverly Hills, California May 2, 2011. REUTERS/Fred Prouser