Exclusive: Carlyle seeking to buy a traditional asset manager

Wed Mar 26, 2014 1:02am EDT
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By Greg Roumeliotis

NEW YORK (Reuters) - Carlyle Group LP (CG.O: Quote) is considering buying a traditional money manager to broaden its own investment platform, as the private equity firm tries to attract more retail investors and achieve the higher stock market valuation commanded by such managers, according to sources familiar with the situation.

In a sign of this interest, Carlyle recently considered buying Northwestern Mutual Life Insurance's Russell Investments fund managing unit using its own rather than investors' money, the sources said.

But Washington, D.C.-based Carlyle eventually decided to pursue the business through its private equity division, where it buys and sells companies using money primarily from institutional investors, they said. The auction for Russell Investments is ongoing.

In 2012, Carlyle had considered adding bond fund manager TCW Group Inc to its investment capabilities, but it also ended up buying that business through its buyout funds, the sources added.

Despite those decisions, Carlyle is still in the market for an asset management deal of its own, a reflection of its growing impatience with the lower valuations for alternative asset managers in public markets compared to traditional asset managers.

Carlyle declined to comment for this article.

Its shares are currently trading at 10.3 times 12-month projected earnings, a steep discount to the 14 to 18 times multiples that traditional asset managers boast, according to Thomson Reuters data.

It is not alone in being frustrated with a lower valuation.   Continued...

A general view of the lobby outside of the Carlyle Group offices in Washington, May 3, 2012. REUTERS/Jonathan Ernst