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The Carlyle Group is a Washington, D.C. based global private equity investment firm with more than USD$40 billion of equity capital under management. The firm operates four fund families, focusing on leveraged buyouts, venture & growth capital, real estate and leveraged finance investments. The firm employs more than 300 investment professionals in 14 countries with multiple offices in North America, Europe and Asia. It has on its staff 138 MBAs, 24 JDs and 14 Ph.D/MDs from many of the world’s most prestigious universities. Today, Carlyle serves 900 investors in 55 countries and its portfolio companies employ 184,000 people worldwide.

Origin

Carlyle was founded in 1987 by William E. Conway, Jr., Daniel A. D'Aniello, Stephen L. Norris, and David M. Rubenstein. Only Norris has since left the Group, at the behest (some say demand) of the other founders. The three remaining founders are reported to collectively own around a 50% interest in the group's general partnership. The California Public Employees Retirement System (or CalPERS) is the only institution which owns a stake in the partnership, holding 5.5 percent of Carlyle. However, as journalist James K. Glassman writes, CalPERS “has a reputation as an advocate for socially responsible investing . . . That’s the business equivalent of the Good Housekeeping Seal.”

As they wanted the firm to outlive them, the founders named the firm after the upper east side hotel in New York City, "The Carlyle," where they first met to discuss the idea. Carlyle's current chairman is Lou Gerstner, former chairman and CEO of IBM.

Specialization

Carlyle specializes in the following industries: Aerospace & Defense, Automotive, Consumer & Retail, Energy & Power, Healthcare, Industrial, Real Estate, Technology & Business Services, Telecommunications & Media, and Transportation. The Carlyle Group's investments are focused on East Asia, Europe and North America, with most investment money coming from the United States (65%), Europe (25%), Asia (6%), Latin America, and the Middle East. Defense investments represent about 1% of the group's current portfolio — though this translates, for example, into a 33.8% ownership of QinetiQ, the UK's recently privatized defence company.

Current Portfolio and Major Acquisitions

Though known for its expertise in aerospace & defense, more than 30 percent of Carlyle’s invested assets are in the telecommunications & media sector. Noted portfolio companies are Dex Media, the former directories business of Qwest Communications; Willcom, a Japanese wireless company; Casema, a Dutch cable company; and Insight Communications, the ninth largest cable company in the U.S.

Brand-name companies that Carlyle owns include: rental car company Hertz, Dunkin’ Brands, which owns Dunkin’ Donuts and Baskin-Robbins, and dental hygiene company Water Pik.

Controversy

Critics of the Carlyle Group frequently note its connections to various political figures. Some of the sectors and companies in which it invests are highly sensitive to political activity, indeed, its actions may be viewed as a form of political arbitrage. This may create conflicts of interest when political decision makers have their own personal wealth * linked to such investments. Unlike most private equity firms which are predominantly located in New York, Boston or around San Francisco, Carlyle is the only large private equity firm located in Washington, DC. Corporate headquarters are on Pennsylvania Avenue.

Critics refer to Carlyle as a private defense contractor, but this is not accurate. It is a private equity firm that owns controlling or partial interests in a portfolio of companies, some of which are contractors for the military (though this is the area for which it is most well known). For example, it used to own United Defense Industries, which was developing the Crusader artillery project. This project was funded in eight consecutive Clinton budgets but was cancelled soon after Bush became president, which eliminated the remaining $9 billion of the original $11 billion contract. A much smaller contract was awarded to United Defense to capture technologies developed during the eight years of development.

In the book House of Bush, House of Saud, author Craig Unger states that Saudi Arabian interests have given $1.4 billion to firms connected to the Bush family. That figure was quoted by Michael Moore in his film Fahrenheit 9/11. Nearly 90% of the 1.4 billion, about 1.18 billion, refers to Saudi Arabian government contracts awarded to defense contractor BDM in the early to mid 1990s. Carlyle sold its interest in BDM before former President George H.W. Bush joined as an advisor.

The connection to the Bush family, however, is somewhat tenuous. Former President George H.W. Bush retired from Carlyle in October 2003. He never invested in any defense deals or any companies that do business with the government and his only role as a Senior Advisor to the Carlyle Asia Advisory Board was to give speeches at Carlyle events. Meanwhile, while it is true that President George W. Bush served on the Board of Directors of early Carlyle acquisition CaterAir, he was asked to leave two years later by one of the founders and has had no personal dealings with Carlyle ever since.

The Saudi Arabian relatives of Osama bin Laden (not Osama bin Laden himself) were also minor investors in Carlyle until October 2001 when the family sold its $2.02 million investment back to the firm in light of the public controversy surrounding bin Laden’s family after September 11. However, the Binladin family has disowned the al-Qaeda leader, who has no economic interest whatsoever in Saudi Binladin Group (SBG). While the Carlyle Group did invest on SBG’s behalf, said financial arrangement was terminated by mutual consent.

Politicians affiliated with Carlyle

Businesspersons affiliated with Carlyle

See also

External links

Criticism

Further reading

  • James K. Glassman, "Big Deals," Washingtonian Magazine, June 2006.
  • Dan Briody, The Iron Triangle: Inside the Secret World of the Carlyle Group, John Wiley & Sons, 2003, ISBN 0471281085.

Carlyle Group | Companies based in Washington, D.C.

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