peHUB-Carlyle co-founder says firm may stay private

Tue Oct 25, 2011 6:41pm EDT

* Poor market conditions cited

* Filed S-1 in September

* PE giant manages $153 bln-plus in assets

By Greg Roth

QUEBEC CITY, Oct. 25 (peHUB) Saying markets are "not friendly," one of The Carlyle Group's co-founders said that the diversified private equity firm may actually not go through with its planned initial public offering after all.

"We're in no hurry," said Daniel D'Aniello, one of Carlyle's three co-founders, who was speaking Tuesday at the Quebec City Conference in Canada. "We've been around for 25 years," he said, adding that the firm "might stay private for another 25 years."

Carlyle, which filed its S-1 in September, is the last of four giant U.S.-based private equity firms that have either gone public or are trying too. Other mega-firms that are considered Carlyle's peers -- Apollo Global Management , the Blackstone Group and Kohlberg Kravis Roberts & Co -- have all gone public in the last few years.

Apollo initially filed for its IPO more than three years ago, but it held off actually going public until March of this year, citing the ongoing market difficulties as a result of the financial crisis.

In his speech, D'Aniello cited the valuations of those peer private equity firms, saying that each of them has been punished by stock markets in the last few months.

Blackstone, for instance, has lost nearly 30 percent of its value since its recent 52-week peak in April. KKR has lost nearly 35 percent of its share price since then. Apollo, the worst-performing of the three, has lost nearly 40 percent of its value since it went public at $19 per share at the end of March.

As part of its long pre-IPO build-up, Carlyle has been active on the acquisition front, notably purchasing AlpInvest, the world's largest funds-of-funds manager, which immediately added more than $40 billion to the merged company's assets under management, and now exceed $153 billion. Crucially, the AlpInvest purchase further diversified Carlyle's revenue base beyond managing its own private equity funds to managing the funds of other firms as part of the funds-of-funds pools.

Separately, as part of his speech on the prospects for private equity generally, D'Aniello pointed out the contrast between the size of the world's public markets overall, whose value he pegged at $56 trillion, and the assets that are managed collectively by private equity firms, which he said amounted to roughly $2 trillion. He said that the vast discrepancy between the two numbers showed that private equity still had a great deal of room to grow.

Still, with the market environment as tough as it is, fund-raising has becoming more difficult, with funds taking longer to reach their targets, if at all. He also cited the increased competition among a greater number of private equity firms as a reason for the ongoing difficulty in fund-raising.

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