Carlyle Group LP (CG:US) is losing one of its oldest and biggest shareholders as the California Public Employees’ Retirement System plans to exit its 4.1 percent stake.
Carlyle yesterday filed to sell as many as 12.7 million shares, including an over-allotment option of 1.66 million shares, to allow Calpers to exit its stake. Calpers bought 5.5 percent in Carlyle in 2001 for $175 million, according to a person familiar with the deal, before the stake was diluted by share sales.
Calpers last month registered to sell about a quarter of its stake in Carlyle competitor Apollo Global Management LLC. (APO:US) Shares of both asset managers have rallied this year, though Carlyle has lost about 9 percent from its peak in February. The pension has been one of Carlyle’s largest fund investors and has more than $3.7 billion in the firm’s pools currently, the person said.
“Calpers has been a substantial investor in Carlyle funds since 1996,” Carlyle said in the statement. “After the sale of the common units, Carlyle will continue to manage a significant amount of limited partnership investments for Calpers.”
Calpers’s stake was diluted when Mubadala Development Co., an investment vehicle owned by the Abu Dhabi government, bought a 7.5 percent stake in Carlyle for $1.35 billion in September 2007, and then again when Carlyle sold 30.5 million shares to the public on May 2, 2012.
Carlyle sold shares in last year’s public offering for $22 each. They rose (CG:US) as high as $37.30 on Feb. 19 before paring gains. At yesterday’s closing price of $29.39, a sale of Calpers’s full stake would generate $374 million in proceeds, more than two times the pension’s 2001 investment. That return doesn’t take into account the dividends Calpers has collected from its ownership.
Randall Whitestone, a spokesman for Carlyle, declined to comment. Calpers spokesman Brad Pacheco did not immediately return a message seeking comment.
Last month, Calpers and the Abu Dhabi Investment Authority registered to sell as much as $326 million of shares in Apollo, the world’s third-biggest private-equity firm, with $114 billion in managed assets. Calpers and Abu Dhabi invested a combined $1.2 billion in Apollo in 2007. Apollo co-founders Joshua Harris and Marc Rowan sold a fraction of their holdings in the New York-based firm’s May offering.
Investment firms sell stakes in their companies to large institutional investors to grow their franchises or seed new businesses. Providence Equity Partners Inc., the buyout firm with holdings in Univision Communications Inc. and the cable-television network of the New York Yankees, in September sold a minority stake to Florida’s state pension system and an unnamed sovereign-wealth fund.
CVC Capital Partners Ltd., based in London, told investors in September it agreed to sell a 10 percent stake to three sovereign-wealth funds, one in the Middle East and two in Asia.
Carlyle is the second-largest private-equity firm, managing $176 billion in assets across 114 funds and 76 fund-of-funds vehicles. The firm, founded in 1987 by William Conway, Daniel D’Aniello and David Rubenstein, invests in leveraged buyouts, real estate, hedge funds and funds-of-funds.
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