Frequently Asked Questions About
The Carlyle Group and Private Equity:
The Carlyle Group
- What is The Carlyle Group?
- Who owns The Carlyle Group?
- How is the firm structured?
- Who are your investors?
- How is Carlyle different from other private equity firms?
- Why doesn’t Carlyle publish detailed accounts of its funds’ performance? How about audited financials of The Carlyle Group itself?
- Who benefits from Carlyle’s investments?
The Private Equity Industry
- What is private equity?
- Who can invest with The Carlyle Group?
- What is a leveraged buyout?
- What is venture capital?
- What is leveraged finance?
- Why are the returns in private equity so high compared to the public markets?
The Carlyle Group
1. What is The Carlyle Group?
The Carlyle Group is a global private equity firm with $82.7 billion under management committed to 60 funds. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. Since 1987, the firm has invested $46.3 billion of equity in 802 transactions for a total purchase price of $216 billion. The Carlyle Group employs more than 900 people in 21 countries. In the aggregate, Carlyle portfolio companies have more than $109 billion in revenue and employ more than 415,000 people around the world.
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2. Who owns The Carlyle Group?
Carlyle is a private partnership, which means that it is owned by a group of individuals, most of whom are Managing Directors at Carlyle, and two institutional investors. CalPERS, the California Public Employees Retirement Systems, owns approximately 5 percent, and Mubadala Development Company, a strategic investment and development company headquartered in Abu Dhabi, owns 7.5 percent. The companies and real estate in which Carlyle invests are owned by the funds that made the investments.
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3. How is the firm structured?
Carlyle, with over 900 employees, is based in Washington, DC and has offices in 21 countries. Day to day management of the organization is conducted by its three Co-founders and Managing Directors, William E. Conway, Jr., Daniel A. D’Aniello and David M. Rubenstein. Carlyle’s Chairman is Louis V. Gerstner and it has 100+ Managing Directors and 500 investment professionals. One of the reasons Carlyle has a large staff is because many of the roles other private equity firms contract out are done in-house at Carlyle, including investor relations, accounting oversight, deal sourcing and due diligence and various back office duties.
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4. Who are your investors?
Carlyle's investors are public and private institutional investors and high net worth individuals. Carlyle does not disclose information about its investors.
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5. How is Carlyle different from other private equity firms?
Carlyle's global presence and local market knowledge sets us apart from other private equity firms. We have Global Vision : Local Insight - Global because Carlyle operates 60 funds in 21 countries; Local because our more than 500 investment professionals work in their home countries. Carlyle is also different because of its conservative investment philosophy; rather than swing for the fences with every investment, we strive for consistency, hitting singles, doubles, and triples with far fewer strike-outs. Carlyle investment professionals also invest their own money alongside our investors, so when we say we treat our investors' money like our own, we mean it.
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6. Why doesn’t Carlyle publish detailed accounts of its funds’ performance? How about audited financials of The Carlyle Group itself?
As a private partnership, Carlyle is not subject to the same disclosure rules as public companies. Nonetheless, this website contains a wealth of information about Carlyle, its investment professionals, investment approach, and portfolio companies.
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7. Who benefits from Carlyle’s investments?
Carlyle invests on behalf of public and private institutional investors and high net worth individuals. In many cases, our institutional investors are pension funds that represent state and city employees and workers at large corporations. Indirectly, millions of people are investors in Carlyle funds. We are proud of the fact that millions of people are able to benefit from the success of Carlyle’s investment activities.
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The Private Equity Industry
1. What is private equity?
Private equity is a form of investing in which companies such as Carlyle invest in private companies and real estate. Occasionally private equity firms make investments in public companies, which are called PIPEs or private investment in public equities. Of Carlyle’s more than 350 portfolio companies, only 17 are publicly held companies and most of these went public after Carlyle had invested in them.
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2. Who can invest with The Carlyle Group?
Because of applicable U.S. securities laws, firms such as Carlyle work only with "accredited investors" and "qualified purchasers" as those terms are defined under the securities laws. These types of investors are highly sophisticated investors with considerable financial resources, such as high net worth individuals and institutional investors. Carlyle is prohibited from offering its products to the general public under applicable securities law regulations.
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3. What is a leveraged buyout?
Carlyle engages in management-led buyouts, which are the purchase of companies in cooperation with the current management. A combination of equity and debt is used for the typical transaction. The equity mostly comes from Carlyle’s various funds and other “co-investors” and the debt typically comes from major banks.
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4. What is venture and growth capital?
Venture and growth capital is money that is invested in companies to help them get started or to grow. Carlyle is a venture and growth capital firm with funds in the U.S., Europe, and Asia. Investments range in the $5 - $20 million range and are usually coupled with funding from other venture and growth capital firms. Carlyle specializes in technology & business services companies.
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5. What is leveraged finance?
Carlyle's high yield investments consist of structured vehicles known as Collateralized Debt Obligations (CDOs) that primarily invest in a portfolio of non-investment grade assets. An equity investment in the CDOs affords investors the opportunity to diversify their holdings and gain exposure to the high yield fixed income and leveraged bank loan markets.
Mezzanine is the level of securities that resides between common equity and senior debt and includes preferred stock and senior subordinated debt. Mezzanine investments have high risk adjusted returns with significant current income.
Distressed or "strategic" investments are made in the debt of operationally sound, financially distressed, U.S. middle market companies using a control-oriented strategy that focuses on the debt of smaller, less liquid issuers in industries in which Carlyle has demonstrated expertise. Distressed investing offers investors the opportunity to earn high, risk adjusted returns.
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6. Why are the returns in private equity typically higher than the public markets?
In the world of investing, rates of returns correlate well with rates of risk: the greater the risk, the greater the return; the lower the risk, the lower the return. Private equity investments are among the most risky investments. Nonetheless, Carlyle is a conservative investor, which is why we have few “black holes or blow-ups,” which are large investments that fail.
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