Carlyle Group LP (CG), in a transaction nine months before it filed to go public, saddled itself with debt to pay owners including William Conway, Daniel D’Aniello and David Rubenstein a $398.5 million tax-deferred dividend.
The private equity firm borrowed $500 million from Abu Dhabi’s Mubadala Development Co. in December 2010, saying it would use part of that to expand investment products. Instead, it paid out almost 80 percent of the money to existing owners, according to regulatory filings. Separately, the Washington- based firm negotiated bank credit giving it the option to distribute an additional $400 million prior to its initial public offering, lending agreements filed last month show.
The deals, which echo the dividend recapitalization private equity managers use to extract cash from the companies they acquire, leave Carlyle’s future shareholders with the cost of servicing the debt. Assuming Carlyle holds its IPO by the end of June, Mubadala will have earned a return in excess of 50 percent, including a $200 million equity stake the owners gave away to obtain a loan that lasted about a year and a half.
No comments:
Post a Comment