Carlyle raising $15 billion buyout fund; Blackstone plans $4 billion IPO
23 Mar 2007
Mumbai:
Private equity funds looking for acquisitions around the
world are arming to the teeth. And, the boom in private
equity investments is showing no signs of abating.
While the Carlyle Group is raising a $15 billion US leveraged
buyout fund, Blackstone Group LP, another investment firm
known for buying out large companies, has filed for a
public offer worth up to $4 billion.
At $15 billion, Carlyle's new fund would be nearly double
the size of its last fund; Carlyle Partners IV, launched
in 2005 at $7.8 billion and used for leveraged buyouts
in North America. Carlyle sources, however, declined to
comment on any fund-raising activity.
A
public issue would give Blackstone quick and steady access
to money than they would otherwise have to take the time
to raise privately.
The IPO filing would also give public access to what had
previously been undisclosed numbers, including the $2.27
billion of net income Blackstone earned last year, the
doubling of revenue to $1.12 billion and net gains from
investment activities of $7.6 billion.
Blackstone
said the public equity would also offer flexibility in
pursuing future deals and permit a range of financial
and retention incentives for its employees.
The move also comes at a time when some private equity
investors are facing regulator criticism for massive deals
that make markets volatile. It is believed that several
firms are looking for ways to diversify their strategies.
Carlyle is one of the world's largest private equity firms,
with more than $54.5 billion under management and offices
in 16 countries.
Private
equity firms raise money from institutional investors
such as pension funds and use the cash to buy or invest
in companies. They also have a track record of returns
above those of public markets.
The biggest funds ever closed include the Blackstone Group's
$15.6 billion global buyout fund called Blackstone Capital
Partners V, which could be bumped up to around $20 billion,
sources familiar with the matter said.
Goldman Sachs Private Equity Group is also in the process
of raising a $19 billion US fund called GS Capital Partners
VI, according to equity analysts.
Private equity fund managers make a 2 per cent management
charge and a 20 per cent performance fee, and these have
held steady even as fund sizes have ballooned.
Private equity mergers and acquisitions now make up 28
per cent of US deals, up from 13 per cent in 2005. In
2006, 712 funds were closed globally, raising a massive
$446 billion among them.
Analysts expect these funds to raise $450-500 billion
this year.
Investors
are keen to know what gives these private equity and buyout
funds so much clout in the market.
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