* AlpInvest to be sold to Carlyle Grp, AlpInvest mgmt
* AlpInvest vendors APG, PGGM to commit new funds
* Carlyle says deal will expand its product offerings
(Adds comments from AlpInvest partner, background on Carlyle)
By Aaron Gray-Block
AMSTERDAM, Jan 26 Private equity firm Carlyle
Group [CYL.UL] said it would buy Dutch-based private equity
fund of funds AlpInvest Partners, Europe's largest, to bulk up
its product menu and attract more money from investors.
The deal would make Carlyle the world's largest private
equity firm by assets under management, ahead of Blackstone
(BX.N), and provide a springboard for AlpInvest to expand
Financial details of the deal were not disclosed.
"We can say to our own investors we have an array of
products, not just our own funds, but we have AlpInvest funds,"
David Rubenstein, Carlyle's co-founder and managing director,
told Reuters on Wednesday at a news conference in Amsterdam.
"A number of investors around the world have said sometimes
they don't want to invest in our funds directly, they would
like to go in a fund of funds, and asked who do we recommend
... and now we have somebody to recommend."
(For a factbox on AlpInvest, click on [ID:nLDE70P14P].)
Rubenstein, who trained as a lawyer and worked in the White
House during the Carter administration, co-founded Carlyle in
Carlyle competes against mammoth rivals which at times have
grabbed more of the limelight, such as Blackstone Group and
Kohlberg Kravis Roberts & Co (KKR.N).
Large private equity houses have been broadening their menu
of services to cater to large institutional investors who
increasingly want to deal with just one asset manager for all
"Private equity houses, particularly those which are listed
or will be listed, want to have a broad alternatives platform,"
said a person familiar with the situation.
"They want to do private equity, they want to do hedge
(funds), they want to do fund of funds, fund of hedge funds --
they want to offer the whole gamut of alternative products to
As a fund of funds, AlpInvest invests in other private
equity funds, including those run by Blackstone, Bain Capital
and KKR, rather than directly in companies and assets.
Such access had sparked industry concerns about possible
conflicts of interest if Carlyle were to gain control of
Rubenstein said that to avoid such conflicts, AlpInvest
will no longer be allowed to invest in Carlyle funds, and there
will be an "information firewall" between the two to prevent
Carlyle from accessing information on its rivals.
Speaking on the sidelines of a Dow Jones conference in New
York, AlpInvest partner Tjarko Hektor said that to avoid
conflicts of interest, there would be no exchange of
information on underlying investments.
"It has been an extremely crucial part for us in this whole
transaction," Hektor said. "The arrangements that have been
agreed have been watertight."
AlpInvest's existing investments with Carlyle will not be
"The investments will just play out," Rubenstein said,
adding that "all the information they get from anybody they
invest with has to be kept within AlpInvest. We can't get
access to it ... so nobody should be worried."
DUTCH PENSION GIANTS
Carlyle, which managed $97.7 billion in assets at
end-September 2010, will take a 60 percent stake in AlpInvest,
with AlpInvest management taking the other 40 percent.
AlpInvest has more than 40 billion euros in private equity
funds and new commitments, including money for its current
owners, APG and PGGM, two major Dutch pension fund managers who
are selling their stakes in AlpInvest but who will continue to
APG is the asset manager for ABP, the world's third-largest
sovereign pension fund. PGGM is the asset manager for PFZW, the
pension fund for the Dutch care and welfare sector.
AlpInvest Chief Executive Volkert Doeksen said the firm
expects to attract an extra couple of billion euros in money in
the next three to four years from large institutional investors
as it takes advantage of Carlyle's global network.
Doeksen, a former Dresdner Kleinwort Benson partner and
investment banker at Dillon Read and Morgan Stanley, helped
start AlpInvest in 2000 and will stay on as AlpInvest CE0.
Both APG and PGGM said they will commit an additional 10
billion euros to AlpInvest's various investment programmes for
the 2011-2015 period.
The deal with Carlyle, which is subject to regulatory
approval, is expected to close in March.
The deal would significantly increase Carlyle's assets
under management and allow it to diversify its businesses as it
prepares to follow Blackstone and KKR to a potential public
Carlyle, which has investments in companies such as Dunkin'
Brands, may file papers to go public late this year, a source
previously told Reuters.
But Rubenstein said there were no immediate plans for a
listing and investors "should not hold their breath."
Credit Suisse and Catalyst Advisers acted as exclusive
advisers to APG and PGGM on the deal.
(Additional reporting by Simon Meads in London and Megan
Davies in New York; Editing by Sara Webb and Jon