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Carlyle, with IPO, Wants to Be Just Like Blackstone

I never thought the Carlyle Group would be a “wannabe.”

The PE firm is meeting privately with analysts to convince them that Carlyle is worth at least as much as the Blackstone Group, according to Bloomberg News. The Carlyle IPO could raise as much as $1 billion and the offering could be filed as soon as this month, the story says. Carlyle, in the article, is claiming that its steadier earnings should reward shareholders with a more predictable dividend than other PE firms.

The Carlyle IPO has been over-reported. All year we’ve been hearing that the deal is expected this year. But then it’s not, and then it is. For what it’s worth, my co-workers at Thomson Reuters said in June that Carlyle was interviewing investment banks to pick underwriters for the IPO. The offering could weigh in at $750 million to $1 billion, Reuters said at the time.

Such an offering has been a long-time coming. In 2007, Carlyle planned to launch an IPO but opted instead to sell a 7.5% stake to Mubadala Development Co., an arm of the Abu Dhabi government.

For potential investors, Carlyle’s claim it will be just like Blackstone is dangerous. Blackstone went public in 2007 raising $4.13 billion. However, shares of the buyout shop haven’t even neared their $31 IPO price this year. Blackstone’s stock is currently trading at $13.77 a share and hit a 52-week high of $19.63 in the spring. This lackluster share price comes even after Blackstone reported second quarter profits last month that more than tripled.

What about other public PE firms? Fortress Investment Group also went public in 2007, and surged nearly 68% on its first day to $31 (it priced at $18.50). However, Fortress’s stock now trades at a shocking $3.50 a share. In May, Apollo Global Management went public at $19 a share but recently changed hands at $14.41.

KKR also went public via a reverse merger with affiliate KPE, and then subsequently re-listed to the NYSE last year. Earlier this month, KKR reported that Q2 profits fell 27%. KKR’s stock gained more than 3%, or 40 cent, to $11.44 Wednesday.

The question may be should Carlyle go public at all? An IPO would give them permanent capital to build out the franchise, a public currency to attract/retain employees and money for new PE funds. But some think Carlyle is going public just to be like its rivals.

“Me-too is the answer,” one PE exec says. “The IPO is not strategic, it is ego.”