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Say what you will about Wall Street, but if ever there was a group that can smell weakness a mile away, this is it. No sooner had the theoretical temptation of a price cut been dangled before the salivating swarm of IPO investors, and the Carlyle Group (CG) had "caution" stamped all over it. Try as they might to manage demand in order to generate a first-day "pop," the famed private equity fund—located halfway between the White House and the Capitol Building in Washington D.C.—was at the mercy of the market-makers.
Dealwatchers like Francis Gaskins, president and editor of IPO Desktop, say it was all over once the price was dropped below the targeted range of $23—$25 a share.
"They really, really strong-armed Wall Street—they did everything they could. They had the cadre of salespeople out there pushing, pushing, pushing,'' says Gaskins in the attached video clip, filmed from his office in Los Angeles. "When there's that much pressure behind an IPO and it doesn't do anything more, at this point, I would stay away from it."
To be fair, the $761 million dollar stock sale is the biggest IPO of the year so far. And while it may not have soared in its debut, it didn't tank either. Within the first hour of trading, the stocks briefly moved up as much as 2%, or 45 cents, before easing off again.
Aside from outright performance, there were other matters at stake with this high-profile offering, notably its relative value versus a half dozen or so peers that now populate the universe of so-called alternative asset managers. They include such firms as The Blackstone Group (BX), Kohlberg Kravis Roberts & Co. (KKR), and Apollo Group, Inc. (APO).
It all begs the question: so now what?
"First of all, you have to decide whether you like the segment—a lot of people don't," Gaskins says, pointing out that the "Street didn't buy it" when Carlyle tried to convince them that its stock was cheap. "[Carlyle co-founder David] Rubenstein has been trying to say that they are a partner, and Wall Street realized they were opponents." He says it is at least Carlyle's third attempt to list in the past five years in the footsteps of its rivals, and adds that "it's really for the benefit of their own shareholders and not the investing public."
