Carlyle’s IPO filing exposes Mubadala’s pain. The Abu Dhabi fund may have lost up to half the value of its $1.85 billion signature investment into the US private equity firm, despite clawing back some of the losses last year on its original 2007 punt. The final valuation will remain unclear until Carlyle prices its shares, but the outcome is unlikely to spare the emirate’s blushes.
Mubadala initially bought a 7.5 percent stake in Carlyle for $1.35 billion at the top of the cycle four years ago. Public valuations of the sector have since plummeted. And when Abu Dhabi invested a further $500 million into Carlyle last year, the emirate managed to extract a 10-year convertible bond with the same face value, paying an annual 7.25 percent coupon, as well as 2 percent equity interest — essentially thrown in for free.
But Carlyle might only be worth around $7.5 billion, according to a Breakingviews calculation based on the market capitalisation of rival Blackstone. Abu Dhabi would need to end up with about 25 percent of the entire Carlyle group to break even on its investment. Yet the IPO filing states that Mubadala will not be able to own more than 19.9 percent of the firm on a fully diluted basis.
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