Carlyle Gets Extension for Boom-Era Fund
10 Marzo 2016 - 7:50AM
Noticias Dow Jones
Alternatives asset manager Carlyle Group was granted two extra
years to exit the remaining holdings in a $7.8 billion boom-era
buyout fund it raised in 2005, said people familiar with the
matter.
As Carlyle Partners IV LP neared a Dec. 23 deadline to liquidate
its holdings, Carlyle asked for and received investors' consent to
extend the fund's life. The firm now has more time to sell down
publicly listed shares in the portfolio's last two investments,
chip maker NXP Semiconductors NV and aerospace supplier Wesco
Aircraft Hardware Corp.
Private-equity funds typically have 10-year terms, with the
option to extend them for up to two years. As a crop of funds
approach the end of their lifespans in today's volatile markets,
more firms likely will take advantage of these extension periods to
avoid forced sales, industry players said. Funds launched in 2005
and the years prior held about $115 billion in unrealized assets at
the end of 2014, according to research firm Preqin Ltd.
Carlyle Partners IV is among the funds launched in the run-up to
the 2008 financial crisis that went through the turbulent years
after the collapse of Lehman Brothers Holdings Inc. The firm is
hoping more time will buy it higher returns.
Carlyle promised to waive the management fees it charges fund
investors for the remainder of the pool's life, two of the people
with knowledge of the matter said. The Washington, D.C., firm,
which holds minority stakes in the fund's final investments,
doesn't expect to carry out heavy operational work on the
portfolio, one of these people said.
The fund, which returned 2.4 times its invested capital by the
end of 2015, is looking to steer its last two leveraged buyout-era
deals to an orderly wind-down.
In 2006, Carlyle was part of a consortium including Blackstone
Group, Permira and TPG that took chip maker Freescale Semiconductor
Inc. private in a $17.6 billion deal, one of the largest technology
leveraged buyouts of the time. Freescale was saddled by debt and
used proceeds from its 2011 initial public offering to pay down
some of the burden rather than cash out its private-equity
backers.
The lukewarm IPO raised alarm bells the deal would be a black
eye for the consortium. Freescale merged with Netherlands-based
rival NXP Semiconductors NV in 2015, in a deal that valued
Freescale at roughly $11.8 billion. With a two-year extension,
Carlyle Partners IV has more time to decide how to sell its shares
of the combined company, NXP.
The fund also has shares in Wesco Aircraft, an aerospace
supplier that bought chemicals distributor Haas Group International
Inc. in a 2014 debt-financed deal. The acquisition loaded Wesco
Aircraft with more debt and didn't boost profitability as quickly
as hoped for, according to a Moody's Investors Service note Sept.
17.
Wesco Aircraft ended Wednesday's trading session at $13.71, down
nearly 40% from its all-time highest close of $22.74 in early 2014.
NXP Semiconductors closed at $76.73, down more than 46% from its
historic highest closing price of $112.25 in May. The stock prices
of both companies have ticked upward in the past month, however,
after dipping in early February.
Carlyle Partners IV also bore some of the cost of a 2014 legal
settlement Carlyle entered into after a lawsuit alleged it colluded
with other private-equity firms to drive down the prices of
corporate buyout deals. The fund was investing during the period
covered by suit, which Carlyle co-Chief Executive William Conway
said "was without merit" in a 2014 earnings call. At the time, he
said the firm would incur risks if it didn't settle claims and the
settlement fees wouldn't significantly affect the fund's
returns.
The longer Carlyle draws out the life of its fund, the more it
risks damping its net internal rate of return. Since its inception
in late 2014, the fund has delivered net internal rate of return of
13% and a gross internal rate of return of 16%, as of Dec. 31,
according to the firm's fourth-quarter earnings report.
Write to Dawn Lim at dawn.lim@wsj.com
(END) Dow Jones Newswires
March 10, 2016 08:35 ET (13:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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