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The Carlyle Group is a Washington, D.C. based global private equity investment firm with more than $75.6 billion of equity
capital under management.[1] The firm operates four
fund families, focusing on leveraged buyouts, venture & growth capital, real
estate and leveraged finance investments. The firm employs more than 515
investment professionals in 21 countries with several offices in North America, South America, Europe, Asia and Australia; its
portfolio companies employ more than 286,000 people worldwide. Carlyle has over 1100 investors in 61 countries.
Origin
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Carlyle was founded in 1987 by William E. Conway, Jr., Daniel A.
D'Aniello, Stephen L. Norris, Greg A. Rosenbaum, and
David M. Rubenstein[2]. Rosenbaum left in 1987[3];
Norris left in 1995[4]. The three remaining founders are
reported to collectively own around a 50% interest in the group's general partnership. The California
Public Employees Retirement System (or CalPERS) is the only institution which owns a stake in the partnership, holding
5.5% of Carlyle.
As they wanted the firm to outlive them, the founders named the firm after the upper east side hotel in New York City, the Carlyle Hotel, where they first met to discuss
the idea. Carlyle's current chairman is Lou Gerstner, former chairman and CEO of
IBM and Nabisco.
Specialization
Carlyle deals in the following industries: Aerospace & Defense, Automotive, Consumer & Retail, Energy &
Power, Healthcare, Real Estate, Technology & Business Services,
Telecommunications & Media, and
Transportation. The Carlyle Group's investments are focused on East Asia, Europe and North America,
with most investment money coming from the United States (65%), Europe (25%), Asia (6%), Latin America, and the Middle East.
Defense investments represent about 1% of the group's current portfolio [citation needed] — though this translates, for example, into a 33.8% ownership of
QinetiQ, the UK's recently privatized defence
company.
Current portfolio and major acquisitions
Though known for its expertise in aerospace and defense, Carlyle invested more than thirty percent of its assets in the
telecommunications and media sector. Noted portfolio companies are Dex Media, the former directories business of Qwest Communications; Willcom, a Japanese wireless company; Casema, a Dutch cable company; and Insight Communications, the ninth largest cable company in the U.S. The
Carlyle Group is also a major investor in US Investigations Services, which
is the privatized arm of the United States Office of Personnel
Management's Office of Federal Investigations.
Brand-name companies that Carlyle owns include: Dunkin' Brands, which owns Dunkin' Donuts and Baskin-Robbins, and dental hygiene company
Water Pik. Carlyle also recently took rental car company Hertz public.
On January 29 2007, Carlyle announced that it would acquire
Synagro Technologies, Inc, which according to Synagro's website is "the largest recycler of
biosolids and other organic residuals in the United States". The total enterprise value of the transaction, including the
assumption of debt, is $772 million.[5]
On June 28 2007, Carlyle announced that it would partner with
Onex Corporation to buy the Allison
Transmission unit from General Motors for $5.6 billion.[6]
On July 2 2007, it was disclosed that the Carlyle Group was
looking to buy Virgin Media UK cable business.[7] Richard
Branson is the largest shareholder, and the Virgin Group own the name Virgin, and Virgin Media have the rights to use the name
Virgin for 10 years[citation needed].
On July 28 2007, Carlyle announced the acquisition of Applus
from its shareholders Agbar, Union Fenosa and Caja Madrid for an enterprise value of €1,480 million.[8]
Past Acquisitions
Caryle acquired United Defense Industries in October
1997, bringing in over 60% of Carlyle's defense business. United Defense went public on the New
York Stock Exchange in December 2001 with Carlyle retaining a stock ownership position. Caryle completed the sale of all of its
United Defense stock and exited the investment in April 2004[9]--in private equity terms, the investment was "realized" at that time.[10] (One major United Defense program was the XM2001 Crusader self-propelled howitzer which was cancelled by Secretary of Defense Donald Rumsfeld in
early 2002 causing United Defense stock prices to fall 27 percent.[11])
Controversy
Critics of the Carlyle Group frequently note its connections to various political figures. Some of the sectors and companies in which it invests are highly sensitive to political activity; indeed, its actions may be viewed as a form of political arbitrage. This may create conflicts of interest when political decision makers have their own personal wealth [4] linked to such investments. Carlyle is the largest private equity firm located in Washington, D.C. - its corporate headquarters are located on Pennsylvania Avenue. Some have also linked Carlyle to some of lesser-known companies that have been linked to US Intelligence, such as Centre Analytics and In-Q-Tel.
In the book House of Bush, House of Saud, author Craig Unger states that Saudi Arabian interests have given $1.4
billion to firms connected to the Bush family. Nearly 85% of the $1.4 billion, or about
$1.18 billion, refers to Saudi Arabian government contracts awarded to defense contractor BDM in
the early to mid 1990s. Carlyle, however, sold its interest in BDM before former President
George H. W. Bush joined as an advisor.
The Saudi Arabian relatives of Osama bin Laden were also investors in Carlyle until
October 2001 when the family sold its $2.02 million investment back to the firm in light of the public controversy surrounding
bin Laden’s family after the terrorist attack on September 11 2001. The bin Laden family has publicly disowned the al-Qaeda leader.[5] Osama bin Laden has not publicly known or acknowledged economic interest in Saudi Binladin Group (SBG), whose investments were in part managed by the Carlyle Group until the
arrangement was terminated by mutual consent.
Notable current and former employees and affiliated persons
Business
Politics and public service
- James Baker III, former United States
Secretary of State under George H. W. Bush, Staff member under Ronald Reagan
and George W. Bush, Carlyle Senior Counselor, served in this capacity from 1993 to 2005.
- George H. W. Bush, former U.S. President, Senior Advisor to the Carlyle Asia
Advisory Board from April 1998 to October 2003.
- George W. Bush, current U.S. President. Was appointed in 1990 to the Board of Directors of one of Carlyle's first acquisitions, an airline food business called
Caterair, which Carlyle eventually sold at a loss. Bush left the board in 1992 to run for
Governor of Texas.
- Frank C. Carlucci, former United
States Secretary of Defense from 1987 to 1989; Also, former
Princeton wrestling partner of former US Secretary of Defense, Donald Rumsfeld. Carlyle Chairman and Chairman Emeritus from 1989 to 2005.
- Richard Darman, former Director of the U.S. Office of Management and Budget under
George H. W. Bush, Senior Advisor and Managing Director of The Carlyle Group from 1993
to the present
- Allan Gotlieb, Canadian ambassador to the United States (1981-89) and member of
Carlyle's Canadian advisory board.
- Liu Hong-Ru, former chairman of China's Securities Regulatory Commission
- William Kennard, Chairman of the U.S. Federal Communications Commission (FCC) under President Bill Clinton, Carlyle's Managing Director in the Telecommunications & Media Group from 2001 to the
present.
- Arthur Levitt, Chairman of the U.S. Securities and Exchange Commission (SEC) under President
Bill Clinton, Carlyle Senior Advisor from 2001 to the present
- Peter Lougheed - Premier of Alberta (1971-85)
- John Major, former British Prime Minister, Chairman, Carlyle Europe from 2002 until 2005
- Frank McKenna, Canadian ambassador to the United States and former member of Carlyle's
Canadian advisory board
- Mack McLarty, White House Chief of
Staff under President Bill Clinton, President of Kissinger McLarty Associates, Carlyle Senior Advisor from 2003 to the present
- Anand Panyarachun, former Prime Minister of Thailand (twice), former member of the Carlyle Asia Advisory Board until the board was disbanded in 2004
- Fidel V. Ramos, former president of the Philippines, Carlyle Asia Advisor Board Member until the board was disbanded in 2004
- Dan Senor - political consultant
- Thaksin Shinawatra, deposed Prime Minister of Thailand, former member of board,
who resigned on taking office in 2001
- Luis Téllez Kuenzler, Mexican economist, current Secretary of Communications and
Transportation under the Calderon administration and former Secretary of Energy under the
Zedillo administration.
Other
See also
References
- ^ Carlyle Group website http://www.carlyle.com/eng/company/l3-company732.html
- ^ David A. Vise, "Area Merchant Banking Firm Formed," Washington Post, Oct.
5, 1987, F33.
- ^ Paul Farhi, "Chi-Chi's Bid Won D.C. Investment Firm Wall Street's
Attention," Washington Post, June 6, 1988, F1.
- ^ John Mintz, "Founder Going Beyond the Carlyle Group," Washington Post, Jan.
9, 1995, F9.
- ^ "The Carlyle Group to Acquire Synagro Technologies for $5.76 Per Share" 2007-01-29
- ^ Reuters/Yahoo! News: "GM selling Allison for $5.6 billion," 2007-06-28
- ^ CNN Money: "Virgin Media In Talks With Carlyle Group Over Buyout," 2007-07-02
- ^ "Carlyle Group acquires Applus," 2007-07-28
- ^ [1]
- ^ [2]
- ^ [3]
Further reading
- James K. Glassman, "Big Deals," Washingtonian Magazine, June 2006 http://carlyle.com/eng/news/l3-presskit591.html
- Geoffrey Colvin & Ram Charan, "Private Lives," Fortune Magazine, November 27, 2006 http://money.cnn.com/magazines/fortune/fortune_archive/2006/11/27/8394344/?postversion=2006112713
- Emily Thornton, "Carlyle Changes Its Stripes," Business Week, February 12, 2007 http://www.businessweek.com/magazine/toc/07_07/B4021magazine.htm
- Dan Briody, The Iron Triangle: Inside the Secret World of the Carlyle Group, John Wiley & Sons, 2003, ISBN
0-471-28108-5.
External links
Documentary on Google Video
Criticism
- What Did Eisenhower
Mean When He Warned of a Military Industrial Complex? Take a Look at the Carlyle Group An interview with Dan Briody
- The Carlyle Group
purchases Stop Carlyle web domains and The SLZ Group AG., in French.
- The Carlyle Group at
hereinreality.com, with many links.
- VPRO Tegenlicht: Carlyle Group
(uses Flash), documentary created by Dutch VPRO TV program Tegenlicht; in Dutch.
- De IJzeren Driehoek (Exposed: The Carlyle Group) by VPRO Dutch television High-speed
internet connection. Note: The first minute and fortyseven seconds of this program is broadcast in Dutch, The remainder is in
English.
- Sourcewatch article
- "Greed of the
highest order and the worst privatisation since rail" by George Monbiot, on the
privatisation of Qinetiq, the British government's defence research service, giving the Carlyle
Group around £351m on their 31% share bought in 2002 for £42m. The Guardian,
February 14, 2006
- "Bush special
envoy embroiled in controversy over Iraq debt" by Naomi Klein, about a deal in
Kuwait. The Guardian, October 13, 2004
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