On the whole, public shareholder investments in private equity firms and alternative asset managers have been hit or miss in recent years, and now one of the biggest of all is hoping to join the hits when it goes public in the next few weeks.
That would be Carlyle Group, the firm that's aiming to raise more than $700 million in an upcoming IPO. Marketing efforts for the soon-to-list stock will ramp up this week, according to Reuters, as investors are pitched on the company's plans ahead of a target date of May 2 for the actual IPO pricing.
Optimists on Carlyle can note that at the moment, the PE arena looks to be in pretty solid shape. A CNNMoney report says the industry is "on pace for a record year for sales and initial public offerings of its companies" after the first quarter amounted to around $21 billion of such deals. In that regard, it was the strongest first quarter in five years.
Now whether Carlyle ends up taking advantage of the environment this year and paying off for investors in the longer term can't be predicted, but it also isn't your average PE shop, making direct comparisons a bit more challenging. In addition to being one of the best known private investment firms in the world, it's also one of the largest and most influential.
According to PEI, a financial information group that tracks alternative asset classes, Carlyle ranked No. 3 on its PEI 300 list, which measures the capital that PE firms raised or created since the start of 2006, at $40.54 billion. As of June 2011, the firm's web site listed assets under management of some $160 billion.
Carlyle wouldn't be the first PE firm to start trading this year. Oaktree Capital Group (OAK), another private equity company, went public last week. The bad news is it's currently trading below its offering price of $43. Inauspicious? Not necessarily. But while Oaktree barely has a public history, the "below its offering price" part isn't unique to the firm.
The industry has been rocky at best for investors, as demonstrated by the performance of some of the better known names with common stock. Blackstone Group (BX) has gone from about $29 on its first day in mid-2007 to $14.53 this past Friday -- a 50% drop. Apollo Global Management (APO), public for right at a year, started at $18 and is down to $13.56 since, making for a decline of around 25%. Fortress Investment Group (FIG), an investment manager with a private equity component, was a $30 stock at its beginning on the public markets in 2007, but it closed last week at $3.62, for a loss nearing 90%.
On the plus side, KKR & Co. LP (KKR), which listed on the New York Stock Exchange in July 2010, has gone from around $10 then to $14.19 now. That's good for a gain of about 42%. Canada's Onex Corp. (OCX.TO) has a longer publicly traded history, dating back to the 1980s, and it has been a steady winner for investors. In just the last five years, it's up 11% to C$36.85.
If Carlyle does in fact complete its IPO next month, it likely will do so around the same time as another big name, Facebook, which is expected to start trading in the coming weeks. The IPO market has had a number of prominent deals on the docket in the past few months, including Zynga (ZNGA), Groupon (GRPN) and BATS, the latter of which had to withdraw its public offering after a trading glitch hit its shares and derailed its opening day.
- Carlyle Group