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Carlyle Aims For Value In Private Equity IPO Pricing (CG, BX, APO, KKR)

Administrator — Thu, 03 May 2012 15:33:08 +0000

Carlyle Group (NASDAQ: CG) is originally being viewed as a mixed debut for an initial public offering. The market remains a bit cautious when it comes to investing into private equity outfits because the investors are last in line behind the partners and firm’s customers receiving payouts. Stakeholders also effectively have no real vote and cannot take any control over the operations and procedures of a private firm that is public. Perhaps the biggest worry is that the only real reason these companies need to be public is so that the already wealthy partners inside these private equity shops can liquidate a portion of their interests through time.

So you have some of the negative cases against public private equity shops. So why is the IPO for Carlyle being considered a win or at worst a mixed bag? The reduced pricing was deemed to be aiming very low at the offering price because other private equity IPOs have seen the value of their interests (share equivalents) drop after coming public.

The 30.5 million common unit offering priced at $22.00 per unit and that is shy of the $23.00 to $25.00 originally projected. This While it depends upon which valuation metric you use, Carlyle was thought to be valued at as much as half of rival private equity shop The Blackstone Group LP (NYSE: BX) despite a $6.5 billion market valuation for the rival. Those valuation comparisons may need some caveats but the idea was to get the shares out at a price that was attractive to Carlyle partners AND attractive to investors.

Kohlberg Kravis Roberts & Co. (NYSE: KKR) and Apollo Global Management, LLC (NYSE: APO) are both relatively new as publicly traded private equity shops worth $3.07 billion and $1.55 billion, respectively.

The last amended filing showed that if the 30.5 million common units were sold without relation to the overallotment option that some 304,500,000 common units would be outstanding if all outstanding Carlyle Holdings partnership units held by existing owners were exchanged for newly issued common units on a one-for-one basis. We will wait for a new filing to see exactly what the share count is in the coming weeks but that at least offers a read into the full value of the company.

Now Carlyle has to join the ranks of other public companies and open up its books each quarter. Shares have fluctuated between slightly positive and slightly negative so far on the debut and some 8 million shares having traded with a last print of $22.08 at the 11:30 AM time stamp.

JON C. OGG

Filed under: Brokerage Firms, Financial Stocks, IPOs, Private Equity Tagged: APO, BX, CG, KKR

Carlyle Soon To Be Worth Over $7 Billion After IPO (CG)

Administrator — Mon, 16 Apr 2012 12:50:17 +0000

Carlyle is already one of the top and largest private equity firms in the world. Now it is set to be valued somewhere around $7.6 billion if its pricing goes off around the current targets. An amended filing shows that the private equity shop plans to sell some 30.5 million units in a range of $23 to $25 per unit in an offering that would raise close to $760 million.

Carlyle has a huge underwriting group and the book-runners are listed as J.P. Morgan, Citigroup, and Credit Suisse. Other underwriters listed on the tombstone are as follows: BofA Merrill Lynch; Barclays; Deutsche Bank Securities; Goldman Sachs; Morgan Stanley; UBS; ICBC International; Sandler O’Neill; Keefe Bruyette & Woods; CIBC; Itaú BBA; Nomura; Ramirez & Co.; Scotiabank; Societe Generale; The Williams Capital Group; Mizuho Securities; and SMBC Nikko.

This private equity leader managed roughly $147 billion in total assets as of the end of 2011 when the four business segments of corporate private equity, real assets, global market strategies, and funds of funds are included. The company established the Fund of Funds Solutions segment on July 1, 2011 when it completed the acquisition of a 60% equity interest in AlpInvest.

This was one of our own Top 17 IPOs to Watch in 2012 and the firm will trade under the stock ticker “CG” on NASDAQ.

JON C. OGG

Filed under: IPOs, Private Equity Tagged: CG

Carlyle IPO Moves Closer

Administrator — Wed, 04 Apr 2012 13:55:04 +0000

The Carlyle Group L.P. is still planning to come public via an initial public offering. The move will make one more private equity group public. If you have tracked the trends of small floats at the IPO launch to limit supply and to establish a value, it seems that the management team at Carlyle wants to go after the same strategy.

Financial terms are not set but the company has disclosed that it plans to list under the stock ticker of “CG” on NASDAQ. Be advised, Carlyle is one of our own TOP 17 IPOs TO WATCH IN 2012.

Carlyle has a huge underwriting group. Book-runners are listed as J.P. Morgan, Citigroup, and Credit Suisse. Other underwriters listed on the tombstone are as follows: BofA Merrill Lynch; Barclays; Deutsche Bank Securities; Goldman Sachs; Morgan Stanley; UBS; ICBC International; Sandler O’Neill; Keefe Bruyette & Woods; CIBC; Itaú BBA; Nomura; Ramirez & Co.; Scotiabank; Societe Generale; The Williams Capital Group; Mizuho Securities; and SMBC Nikko. A huge syndicate indeed.

This private equity leader managed some $147 billion in total assets as of the end of 2011 if you include its four business segments of corporate private equity, real assets, global market strategies, and funds of funds. The company established the Fund of Funds Solutions segment on July 1, 2011 when it completed the acquisition of a 60% equity interest in AlpInvest.

Consolidated revenue on a GAAP basis in 2011 was $2.84 billion, its GAAP cash distributions came to $1.49 billion, and distributable earnings came to $864.4 million.

FULL FILING

JON C. OGG

Filed under: Banking, Financial Stocks, IPOs, Private Equity Tagged: CG

Carlyle Remains On Track for 2012 IPO (CG, BX, KKR, ACAS, OZM, FIG, PSP)

Administrator — Wed, 11 Jan 2012 16:44:44 +0000

The Carlyle Group L.P. is still planning to be one of the top private equity initial public offerings of 2012. We even named it as one of the Top 17 IPOs to Watch in 2012. That charge is not due to its size… It is due to the notion that every private equity shop out there may start to value the company based upon what happens in the after-market in the weeks and months after the IPO.

Some of the private equity firms which will be watching this offering closely are The Blackstone Group (NYSE: BX) worth $7.4 billion, Kohlberg Kravis Roberts & Co. (NYSE: KKR) worth $3.1 billion, American Capital, Ltd. (NASDAQ: ACAS) worth almost $2.5 billion, Och-Ziff Capital Management Group LLC (NYSE: OZM) worth about $925 million, and Fortress Investment Group LLC (NYSE: FIG) worth about $665 million. There is also the PowerShares Global Listed Private Equity (NYSE: PSP) ETF that Carlyle will ultimately become a part of when it comes public.

Carlyle is going to list on NASDAQ rather than on the NYSE and it is going to list under the ticker “CG” for its units. No financial terms have been set for the deal. The private equity giant has selected J.P. Morgan, Citigroup, and Credit Suisse as the listed book-runners for this IPO.

It is hard to admit that it was hard to ignore that the founders made a combined $413 million in 2011 ahead of this IPO. The full amended filing is here.

One reason that private equity deals matter to the public right now is because of Mitt Romneys’s roots back to Bain and the current misconceptions about what private equity firms actually do. While layoffs happen at most private equity buyout targets, many of those businesses were failing to generate profits and many may have eventually folded on their own. Who are the largest clients of private equity firms? Usually company and governmental pension funds.

JON C. OGG

Filed under: Banking, Brokerage Firms, Financial Stocks, IPOs, Mergers and Buy Outs, Private Equity Tagged: ACAS, BX, CG, FIG, KKR, OZM, PSP

S&P Boots AMBAC (ABK, LO, CG, LTR)

247wallst — Tue, 03 Jun 2008 17:04:25 +0000

After the close of trading today, Standard & Poor’s announced that it is booting Ambac Financial Group Inc. (NYSE: ABK) out of the S&P 500 Index. The company’s size has gotten too small to be considered on of America’s top 500 by size (let alone by reputation). As of today’s close of trading Ambac’s market capitalization was roughly $860 million, which gave it a ranking of the lowest market cap of the S&P 500.

Lorillard Inc. (NYSE: LO) will replace Ambac in the S&P 500 after the close of trading on next Tuesday, June 10. Lorillard is being distributed to the public via a two-tier process first involving the retirement of the tracking stock Carolina Group (NYSE: CG), in exchange for which approximately 62% of Lorillard’s common stock will be issued; and second an offer in which shares of S&P 500 constituent Loews Corp. (NYSE: LTR) can be exchanged for the remaining shares of Lorillard.

Jon C. Ogg
June 3, 2008

Loews Sends Lorillard to Carolina As New Stock (LTR, CG)

247wallst — Mon, 17 Dec 2007 09:00:54 +0000

Loews Corporation (NYSE:LTR) has approved a plan to spin off its entire ownership interest in Lorillard, Inc. to holders of its Carolina Group (NYSE: CG) stock and Loews common stock in a tax free transaction. The deal is expected to close in mid-2008. Lorillard, presently a wholly owned subsidiary of Loews, would become a separate publicly traded company on the New York Stock Exchange.

The Lorillard shares distributed in the redemption of the Carolina Group stock would constitute approximately 62% of Lorillard’s outstanding common stock. Loews would effect a redemption of all of the outstanding Carolina Group stock in exchange for shares of common stock of Lorillard, in accordance with the terms of the Carolina Group stock contained in the Restated Certificate of Incorporation of Loews. Holders of Carolina Group stock would receive one share of common stock of Lorillard for each share of Carolina Group stock they own.

Loews would dispose of the remaining 38% of Lorillard’s outstanding common stock in an exchange offer for shares of outstanding Loews common stock if Loews determines that market conditions are acceptable for an exchange. If Loews determines not to effect the exchange offer or the exchange offer is not fully subscribed, the remaining shares of Lorillard would be distributed as a pro rata dividend to the holders of Loews common stock.

Loews currently has two classes of common stock outstanding:

Carolina Group stock, which is intended to reflect the economic performance of a group of assets and liabilities called the Carolina Group, principally consisting of Lorillard and its subsidiaries; and
Loews common stock, representing the economic performance of the remaining assets of Loews, including the interest in the Carolina Group not represented by outstanding Carolina Group stock.

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Loews Corp. (LTR) is seeing its shares indicated down almost 6% around $44.00 pre-market, its 52-week trading range is $40.21 to $53.46.

Jon C. Ogg
December 17, 2007

How Are Defensive Stocks Doing? (KO, MRK, PG, CAG, BUD, HRL, MO, CG MCD, KFT, GM)

247wallst — Thu, 09 Aug 2007 16:39:21 +0000

Last Friday, we wrote about defensive stock havens for a crummy stock market. We also warned that in true market selling extremes there is no such thing as a true haven, and stocks that do "less bad" are still down. But interestingly enough, some of these names are holding up rather well. These or related stocks are where investors start to look when things aren’t falling off a cliff. Here is how the market fared today, followed by the performance of defensive stocks:

DJIA             13,270.68 (-387.18; -2.83%)
S&P500       1,453.09 (-44.40; -2.96%)
NASDAQ       2,556.49 (-56.49; -2.16%)
10YR-Bond 4.79% (-0.07%)

THE ONES THAT WORKED, OR NOT SO BAD ANYWAY

Coca-Cola Co. (NUSE:KO) closed down only 1 penny at $55.85, just under recent highs of $55.88. That’s not too bad. Does anyone ever stop drinking sodas or water? Pepsi (NYSE:PEP) isn’t faring as well with a 2% drop to $68.50, but that is still close to its $70.17 recent highs. McDonalds (NYSE:MCD) fell only 0.7% in regular trading to $49.93, down from recent highs of $53.22. This is still better than the market as a whole, but this is still up close to 50% from year lows. ConAgra (NYSE:CAG) fell 1.8% to $25.91, down from recent highs of $28.35. The food giant is fairly valued, and this was positive some today. Procter & Gamble (NYSE:PG) spent most of the day up and closed down only 0.3% at $64.97 and still close to recent highs of $66.30. Not bad. Afterall, they get into your pocketbook regardless of the market unless you stop shaving, washing hands, and brushing your teeth.

DEFENSIVE STOCKS NOT WORKING

Merck (NYSE:MRK) fell only 1.7% in a crummy day and never really got to be profitable. Maybe a ‘less bad day’ is a good to some, but barely. Altria (NYSE:MO) fell 2.7% to $67.67 and Carolina Group (NYSE:CG) also fell 3.5% to $72.33.. Maybe the market tank isn’t making everyone go smoke afterall. Hormel (NYSE:HRL) fell 2.6% to $31.76 today, but this is now down from recent highs of $39.88. Maybe SPAM is not that well regarded afterall. Kraft (NYSE:KFT) fell 4% to $31.45, aldo down a lot from the $37.20 recent highs. Peltz and Buffett aren’t able to offer any stability? Anheuser Busch (NYSE:BUD) fell almost 5% today to $48.50, down a lot from the 455.19 recent highs. Booze, particularly cheap beer is supposed to do well.

General Motors (NYSE:GM) was the only one of DJIA components that closed UP…up a whole 3 cents to $34.85, but still. Go figure.

Jon C. Ogg
August 9, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.