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Report: Carlyle on the hunt for traditional asset manager

  • Having had it "up to here" with its low valuation, Carlyle (CG) group is in the market to buy a traditional asset manager - not with its investment funds - but with its own money, reports Reuters. Carlyle trades at 10.3x expected earnings, a steep discount to traditional players in the 14x-18x area - this despite faster earnings growth, faster AUM growth, and generating more earnings for dollar of assets at the P-E firm.
  • Carlyle isn't the only one frustrated - Blackstone's (BX) Stephen Schwarzman has expressed the exact same sentiments. KKR and Apollo Global (APO) also trade between 9x-11x earnings. One reason for the gap is the reliance of P-E firms on performance fees as opposed to the predictable income streams of the traditional players.
  • Carlyle did buy TCW in 2012, but that was through a buyout fund, and it has bid for Russell Investments, but again also through a buyout fund.
Comments (2)
  • Uncle Pie
    , contributor
    Comments (2665) | Send Message
    CG's equity to asset ratio is a little over 4, which means it is levered almost 25 to one. About twice as levered as a bank, but unlike a bank, CG cannot take government insured deposits. It must depend on the kindness of strangers (ie the markets) for its funding. We've been through this movie before.
    26 Mar, 08:34 AM Reply Like
  • DAG1996
    , contributor
    Comments (3056) | Send Message
    (BX) analysis and price target update:
    26 Mar, 11:14 AM Reply Like
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