Carlyle Group, the private equity firm in which Abu Dhabi’s Mubadala Development Company, will seek a valuation of US$7.5bn to US$8bn in its initial public offering (IPO), sources close to the plans told Bloomberg on Wednesday.
The Washington-based firm, which is the second-biggest private-equity operator in the US, plans to sell a stake of about 10 percent in the IPO and will start marketing the deal to investors as early as next week.
At US$8bn, Carlyle would fetch less than half the market value of Blackstone Group LP (BX), the world’s largest private-equity firm, which has led an industry push into hedge funds and real estate to reduce its reliance on buyouts, Bloomberg said.
Carlyle has US$147bn under management, according to the IPO prospectus, and Blackstone had US$166bn as of December 31, its filings show.
Co-founded in 1987 by David Rubenstein, William Conway and Daniel D’Aniello, Carlyle would be at least the fifth buyout firm to go public since Fortress Investment Group LLC (FIG) in 2007.
The amount Carlyle is seeking is as much as 25 percent less than the US$10bn implied valuation the firm used when selling debt to Abu Dhabi’s Mubadala Development in December 2010.
The difference in part reflects the firm’s desire to attract investors with a price sweetener known as an IPO discount, said the people, who asked not to be named because the information is private.
At the end of last year, Carlyle had an implied enterprise value of about $9.4 billion, according to a regulatory filing yesterday. The amount was based on fair value estimates of equity interests tied to Carlyle’s 2010 purchase of a majority stake in hedge-fund manager Claren Road Asset Management LLC. Enterprise value calculations include debt as well as market capitalization.
Blackstone, which went public at a market value of US$33.5bn in 2007, has since shrunk by half to about US$16.4bn.
The stock has gained 4 percent this year to close at US$14.57 in New York on Tuesday.
While the volatility of global markets means an offering is unlikely until the first half of 2012, the Abu Dhabi’s Mubadala, which bought a 7.5 percent stake in 2007, is likely to be one of the benefactors of the move.
Mubadala invested a further US$500m in Carlyle in December 2010.