Carlyle raising $15 billion buyout fund; Blackstone plans $4 billion IPO

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.