The Real Deal New York

Carlyle going forward with IPO in spite of low valuation

October 20, 2011 02:07PM

The Carlyle Group is going ahead with its initial public offering
plans, even though its valuation is at $8.5 billion, only a little
more than half the valuation of its competitor, Blackstone Group, the
New York Post reported.

The reason is that Wall Street doesn’t place as high a value on the
money it makes from buying and selling companies, according to the
Post. Blackstone has $15.3 billion in enterprise value, although the
two private equity firms have roughly the same $150 billion in assets
under management.

The company recently placed two Midtown development sites on the market in a joint venture with Extell Development.

Steven Schwarzman’s Blackstone has a higher valuation because it has
diversified into advisory services such as corporate restructuring,
while David Rubenstein’s Carlyle still depends heavily on buyout
deals. It has not been able to persuade bankers that it was worth as
much as Blackstone because it could promise steadier earnings.

But sources said the firm still recently lined up a $600 million loan
to replace its existing $150 million credit facility ahead of its IPO filing.

The banks providing the loan, led by JPMorgan Chase, will have a
difficult time reselling it in the tight credit markets and will take
a loss on the deal, sources said. But the lenders hope to recover that
money and more through fees they collect by underwriting the IPO,
expected to happen in early 2012, they added.
[Post]

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