The California Public Employees’ Retirement System (Calpers) plans to sell its entire 4 per cent stake in Carlyle Group LP as the US public pension fund plans its exit from the private equity manager after 12 years.
The sale of the stake in Carlyle – valued at $373.3 million as of the end of stock market trading on Monday – comes 13 months after Carlyle’s initial public offering. Its shares have risen 34 per cent since then.
Alternative asset managers such as Carlyle and Apollo Global Management LLC (APO.N) sold stakes to some of their biggest fund investors before they went public in a bid to raise cash. Their subsequent IPOs have given those investors an opportunity to more easily cash out on their investment.
Calpers, which is the biggest US public pension fund and is also an investor in many of Carlyle’s funds, acquired a 5.5 per cent stake in Carlyle in 2001 for $175 million. That later got diluted to 4 per cent.
In May 2012, Thomson Reuters Buyouts Magazine reported Calpers had until then received $225.2 million in carried interest, fees and distributions from its Carlyle stake, based on a California Public Records Act request.
Also accounting for Carlyle’s distributions as a public firm since May 2012, this would mean Calpers stands to make close to 3.5 times its money on its Carlyle stake investment over a period of 12 years, calculations by Reuters show.
The sale of the stake in Carlyle, disclosed in a regulatory filing on Monday, comes one month after Calpers moved to sell a quarter of its 8 per cent stake in Apollo.
Calpers joined Abu Dhabi Investment Authority and two of Apollo’s founders in selling some of its shares in New York-based Apollo. It raised $187.5 million by cutting its stake in Apollo to 6 per cent from 8 per cent.
Founded in 1987 by David Rubenstein, William Conway and Daniel D’Aniello, Carlyle had total assets under management of $176.3 billion as of the end of March, including in private equity, corporate credit and hedge funds.
Citigroup, Credit Suisse and JPMorgan will serve as the book-running managers for Calpers’ offering.
Calpers also has a stake in Silver Lake, a technology sector-focused private equity firm which, unlike Carlyle and Apollo, has not gone public. Calpers acquired the 9.9 per cent share in 2008.
Calpers had $4 billion – equivalent to 10 per cent of its private equity program – invested with Carlyle as of the end of the end of March, ranking the Washington, D.C.-based firm as the second-largest exposure in Calpers’ private equity portfolio. It had $4.3 billion invested with Apollo and $1.1 billion invested with Silver Lake.