Carlyle Group closes IPO for its $1.4 bln BDC

  • New BDC among the largest traded on Nasdaq
  • TGC BDC portfolio opened at $18.50
  • Typical portfolio companies have $15 mln-$50 mln EBITDA

Carlyle Group closed its initial public offering of its business-development company on Monday, making TCG BDC one of the largest such companies traded on Nasdaq, a news release from the exchange said.

Carlyle launched its BDC in 2012 and the vehicle was approaching the end of its initial investment period, Managing Director and Partner Michael Hart told Buyouts. Proceeds from the public offering will be used to repay existing debts, as well as to fund new investments.

TCG BDC priced the shares at $18.50 on the Nasdaq Global Select Market on June 13 and they began trading the following day. The shares closed Tuesday at $18.35.

“We’d reached the scale in the portfolio and the scale platform to make it a compelling opportunity for the public market,” he said, noting that public markets have often been “fickle” when it comes to BDCs. “It was a fairly attractive window.”

Many business-development companies trade below their net asset values, indicating the shares are discounted by the market at large, TCG BDC disclosed in a filing related to its public offering. The BDC’s net asset value stood at $763.3 million.

At the end of the first quarter, its portfolio included 94 investments in 82 portfolio companies, which it held at a fair value of roughly $1.4 billion.

TCG BDC invests in the senior secured loans issued by sponsor-backed middle-market companies. Portfolio companies in its portfolio typically generate between $10 million and $100 million of annual EBITDA.

According to Hart, the BDC tends to invest in companies on the smaller end of that range, usually targeting companies with $15 million to $50 million EBITDA.

“We feel that with our size and scale, and the benefit of our partnerships, we feel we can be a solutions provider to sponsors who traffic in that size,” Hart said. “There’s healthy competition, but we still see plenty of white space” in which to invest.

The BDC’s investment committee includes Mark Jenkins, Carlyle’s head of global credit, along with private credit chief Hart. BDC President Jeffrey Levin, Thomas Hennigan, Grishma Parekh, Linda Pace and Erica Frontiero also hold seats on the committee.

Action Item: For more about Carlyle’s BDC:

A view of the exterior of the Nasdaq market site in Times Square after the Nasdaq breached the 6,000 mark for the first time, on April 25, 2017. Photo courtesy REUTERS/Shannon Stapleton

Correction: The story’s second paragraph was corrected to reflect how the BDC will use the proceeds from its IPO.