The Carlyle Group, one of the world's largest and most diversified alternative asset management firms, filed on Tuesday with the SEC to register for an initial public offering.
Since its inception in 1987, Carlyle has grown its portfolio steadily and currently operates on six continents with $153 billion in assets under management (AUM) across 49 funds of fund vehicles. Carlyle has raised $41 billion of capital in the last five years, making it the third fastest growing private equity firm behind TPG and Goldman Sachs (GS) ($51 billion and $47 billion respectively) during that time span. Furthermore, Carlyle has impressively more than tripled its AUM from $45 billion in 2006 to $153 billion as of July 1 and has achieved a 36% compound annual growth rate since 2003. The Washington, D.C.,-based company booked $4.1 billion in revenue and net income of $2.4 billion for the 12 months ended June 30, 2011. JP Morgan (JPM), Citigroup (C) and Credit Suisse (CS) are the lead underwriters on the deal.
Carlyle is the second notable private equity firm to initiate an IPO in recent months after Oaktree Capital filed in June. Both companies have filed in the wake of Apollo Global Management (APO) raising $565 million in its March IPO as private equity firms increasingly look to provide liquidity to management, enable succession planning and obtain a public currency that can be used for acquisitions and growth. However, Apollo traded poorly following its IPO, falling 4% on its first day of trading, and public alternative asset stocks such as Apollo, Blackstone (BX), KKR (KKR), Och-Ziff (OZM) and Fortress (FIG) have been hit hard by the recent market volatility, with all five down more than 25% YTD.
Although Carlyle has yet to officially announce terms and timing, it is reportedly looking to raise as much as $1 billion in its IPO that will be allocated toward debt repayment and the growth initiatives. Carlyle has backed some of the year's most prominent initial public offerings, including Dunkin' Brands (DNKN), Freescale Semiconductor (FSL), Nielsen Holdings (NLSN), Kinder Morgan (KMI) and Wesco Aircraft Holdings (WAIR).
Following August's market volatility, which is spilling into the first day of September, many companies will likely be waiting on IPOs until the market stabilizes. However, filing activity has remained robust, suggesting that issuers and bankers are confident that the IPO window will remain open for at least the next several months. The first companies to launch deals post-Labor Day will set the tone for the rest of the year and provide a litmus test for investor risk appetite. Carlyle's filing is another indication that investment banks are confident of market demand, but it remains to be seen whether weak trading by Apollo and other alternative asset stocks will have a negative effect on its IPO.