Carlyle in Lead to Buy TCW

Private equity firm Carlyle Group is in the lead to buy Societe Generale’s TCW Group, a California-based asset manager, sources told Reuters. Other LBO shops including CD&R and Warburg Pincus have bailed on the auction, those sources said.


(Reuters) – Private equity firm Carlyle Group is in the lead to buy the Los Angeles-based asset management arm of Societe Generale, TCW Group, according to people familiar with the matter.
Two other buyout firms that also bid for TCW — Clayton, Dubilier & Rice and Warburg Pincus LLC — are no longer working on the deal, the sources said.
TCW, which oversees about $128 billion in assets including $40 billion of mutual fund assets, could fetch about $700 million in a sale, they said.
A deal could come by the end of the month, according to a separate source familiar with the situation. But the timing could still slip or no deal may be reached at all, they cautioned.
“I would be surprised if the process went on for much longer were it not for the seller being Societe Generale, which has an infinite capacity for delay,” said one of the sources.
The people could not be named because the discussions remain private. Representatives of TCW, Carlyle and Warburg Pincus declined to comment, while CD&R and Societe Generale could not be immediately reached for comment.
Sources told Reuters previously that TCW’s management is leading the buyout discussions and could take an equity interest if a deal materializes. The private equity firms have lined up financing for the transaction, they had said.
The asset manager, which once employed star bond trader Jeffrey Gundlach as chief investment officer, has been the subject of buyout speculation on many occasions in the aftermath of the financial crisis of 2008. SocGen in the past has denied it was looking to sell the business.
Sources have said that a deal has been complicated because of the difficulty of valuing TCW’s share of profits from two units that it separated in the past couple of years – EIG Global Energy Partners LLC, which specializes in private investments in energy, and Crescent Capital Group, which invests in credit.
However, the asset manager looks more attractive now. Its assets under management have grown in the last year as investors pile into bonds in search for yield and capital preservation.
French bank SocGen is seen as a laggard in the industry race to meet tougher capital requirements under the pending Basel III rules.
The bank has responded by speeding up its efforts to bolster its balance sheet — it scrapped its dividend and has been selling loans and other assets — but a sale of an actual business line would bring a quick injection of capital and potentially ease investor jitters.
Financial services bankers expect more European banks to sell assets abroad, including in the United States, to raise capital as they struggle to deal with the impact of the ongoing sovereign debt crisis.
(By Greg Roumeliotis and Soyoung Kim; additional reporting by Christian Plumb in Paris; Editing by Leslie Gevirtz)