Bloomberg News

JPMorgan Wins Lead Role on Carlyle IPO Amid Plunge in Offerings

September 06, 2011

Sept. 6 (Bloomberg) -- JPMorgan Chase & Co., Citigroup Inc. and Credit Suisse Group AG landed lead roles managing the initial share sale for Carlyle Group LP, taking one of the last major private-equity firms public in a faltering market.

The mandate may give the banks a boost among underwriters as companies and their bankers struggle to complete deals. JPMorgan currently ranks third for U.S. IPOs, while Citigroup ranks fourth and Credit Suisse is eighth, according to data compiled by Bloomberg.

U.S. listings have slowed almost to a halt because of investors’ concerns about the economy, eroding fee income at investment banks. U.S. IPOs have been shelved or scrapped at a faster rate in the past three months than the comparable period of any year since 2004, Bloomberg data show. Only five offerings were completed last month.

“They should be doing cartwheels and jumping in the air to get any kind of revenue in the door right now,” said Tom Jalics, a senior investment analyst at the private-banking unit of KeyCorp in Cleveland, which oversees $22 billion. “From what we’re hearing anecdotally, this quarter is going to be extraordinarily weak, and estimates across the board are coming down for investment banks.”

The three banks all have a track record for taking private- equity firms public. Citigroup helped lead the February 2007 IPO of Fortress Investment Group LLC, as well as Blackstone Group LP’s in June 2007 along with Credit Suisse. JPMorgan, Credit Suisse and Citigroup all helped lead Apollo Global Management LLC’s share sale in March. Washington-based Carlyle is the second-biggest private-equity firm after Blackstone.

Average Fees

Absent from Carlyle’s filing with the U.S. Securities and Exchange Commission was Morgan Stanley, which shared the lead role with Citigroup on Blackstone’s offering. Goldman Sachs Group Inc., which helped manage both Apollo’s share sale and the Fortress IPO, also wasn’t mentioned in the filing.

Barclays Plc is the top-ranked underwriter for U.S. IPOs this year, and Morgan Stanley is ranked second, according to Bloomberg data. Banks have earned underwriting fees averaging 5.4 percent of the total IPO size for U.S. deals this year, the data show.

--Editors: Elizabeth Wollman, Jennifer Sondag

To contact the reporter on this story: Lee Spears in New York at lspears3@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.


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