(Reuters) – Private equity firm Carlyle Group CYL.UL is expected to pick JPMorgan Chase & Co, Citigroup Inc and Credit Suisse Group Ltd to lead its initial public offering, two sources familiar with the process said on Friday.
Private equity firms are major clients for Wall Street banks, paying them millions of dollars in fees for underwriting IPOs of their portfolio companies and in securing financing for leveraged buyout deals.
Getting underwriting business to take buyout firms public is a prestigious mandate for banks and can reveal which Wall Street firms have the closest relationships with buyout shops.
Winning underwriting business for large IPOs is also lucrative for banks, which compete hard to take the lead position on an offering.
Citi and Credit Suisse were among the banks that worked on Blackstone Group’s offering in 2007, while JPMorgan also had a role.
Apollo Global Management LLC’s listing, earlier this year, was led by Goldman Sachs Group Inc, JPMorgan and Bank of America Merrill Lynch.
Goldman Sachs is currently at the top of the U.S. Equity Capital Markets league table, with JP Morgan in second place and Citi third.
Carlyle, based in Washington, D.C., could raise about $1 billion based on what banks are pitching, two of the sources said.
Carlyle hopes to file its IPO prospectus with the U.S. Securities and Exchange Commission in the third quarter, sources previously told Reuters.
Carlyle will join rivals Blackstone Group LP, Kohlberg Kravis Roberts & Co and Apollo Global Management as publicly traded private equity companies.
Private equity firms saw the value of their portfolio companies diminish and their ability to strike new deals evaporate after the credit crisis. However, the outlook for selling portfolio companies and making deals has improved.
Publicly traded shares can help a company give incentives to employees and provide a currency for acquisitions.
JPMorgan, Carlyle, Credit Suisse and Citi declined comment.
(By Paritosh Bansal, Megan Davies and Michael Erman; editing by Derek Caney, Andre Grenon,Gary Hill)