What would Carlyle Group be worth in an IPO?June 1, 2011: 2:44 PM ET
The Carlyle Group is planning to file for an initial public offering sometime next quarter, Reuters reports today. So, how much would it be worth?
This might sound like a specious question, given that we haven't yet seen any official paperwork from Carlyle, but we actually do have some numbers to work with. And I'm not just talking about matching assets under management to market caps of already-public buyout firms like Apollo Global Management (APO), Blackstone Group (BX) or Kohlberg, Kravis Roberts & Co. (KKR).
Ten years ago, Carlyle sold a 5.5% ownership position in its management company to the California Public Employees' Retirement System (CalPERS), for $175 million. At the time, that worked out to an enterprise value of around $3.18 billion.
CalPERS updates the carrying value of its Carlyle stake each year in its Annual Investment Report, although it's buried inside of a section titled "Expansion Capital." The most recent edition has data through June 30, 2010 -- yes, these run on a serious lag -- and lists the value of CalPERS' Carlyle position at around $334 million. That's an enterprise value of approximately $6.07 billion, compared to $4.04 billion in June 2009 and nearly $17 billion in June 2008 (an era that Carlyle co-founder David Rubenstein called the "Golden Age" of private equity).
It's unfortunate that we don't have a more current value, so now let's look at those public comps. Blackstone Group stock today opened trading 80.36% higher than it did on July 1, 2010. KKR stock today opened 78.57% higher than it did on July 12, 2010 -- which is the day that its listing transfered from Amsterdam to New York.
Given that these two increases are nearly identical, I think it's fair to extrapolate that Carlyle Group today would be valued around 79% more than it was at the end of last June. I stipulate that it's hardly a perfect comparison, given that private market valuations and public market comps may differ, and every firm has different portfolios. But it's the best we've got right now, and works out to Carlyle being worth around $10.86 billion.