CalPERS to sell stake in Carlyle

Roughly 12 years after purchasing a minority stake in Carlyle’s management company, CalPERS plans to exit its investment in the fund manager via a Carlyle secondary offering.

The California Public Employees’ Retirement System has plans to sell its entire ownership stake in The Carlyle Group.

NASDAQ-listed Carlyle has filed a secondary offering of about 11 million shares, with an option to increase the total to 12.7 million shares, to be sold by CalPERS. Carlyle’s shares were trading at a price of $29.39 per share as of the end of Monday, which would bring the value of CalPERS’ stake to about $374 million. 

CalPERS purchased a 5.5 percent stake in Carlyle’s management company in 2001 for about $175 million. That stake was later diluted to about 4.1 percent after Abu Dhabi’s sovereign wealth fund, Mubadala, bought a 7.5 percent stake in Carlyle in 2007 for $1.35 billion and after additional share sales, according to a source with knowledge of the situation. Citigroup, Credit Suisse and JPMorgan are acting as lead book-runners for the offering. 

“After the sale of the common units, Carlyle will continue to manage a significant amount of limited partnership investments for CalPERS,” Carlyle said in a statement. 

CalPERS has been an investor in Carlyle’s funds since 1996. The pension system sold portions of a number of mega-fund stakes, including funds managed by Carlyle, in an $800 million secondary sale in 2011.

Carlyle is expecting reach its $10 billion target for Carlyle Partners VI later this year, co-chief executive officer David Rubenstein said during a recent earnings call. The investment period for the fund began on 1 June.

Carlyle continued its aggressive pace of investing and fundraising during the first quarter of the year, raising a total of $4.9 billion, with $1.4 billion for private equity, and deploying $2.5 billion, of which $1.9 billion went into private equity deals.