EIG drops opposition to Carlyle's TCW deal
By Randy Diamond | January 16, 2013 4:12 pm
EIG Global Energy Partners agreed to drop its opposition to a buyout of money management firm TCW by employees and private equity firm The Carlyle Group, removing an impediment to the sale of the firm by French bank Societe Generale.
The three companies announced the deal Wednesday in a joint news release, ending the legal dispute in which EIG, a former TCW affiliate that still runs joint energy investment funds with the Los Angeles money manager, sued to stop the deal.
Informed sources say the TCW buyout is now expected to close by the end of January. TCW officials announced the deal in August and said publicly that they expected to close the transaction in the first quarter of 2013.
An arbitration session had been scheduled for Jan. 28 over EIG's contention that the TCW sale would give Carlyle, which competes with EIG through its own energy funds, access to confidential EIG information.
EIG CEO Blair Thomas said in an interview that the settlement resolves all outstanding issues and the deal involves EIG paying a fee to TCW; in exchange, the money manager will share no economic interest in future EIG funds. EIG spun off from TCW in early 2010.
Mr. Thomas would not disclose the fee, but said he was very happy with the outcome.
A TCW document had shown that TCW planned to receive management and incentive fees from future funds that it anticipated would raise more than $7 billion through December 2020.
Mr. Thomas said TCW will still receive a 33% fee split from funds totaling $6 billion that were raised when EIG was part of TCW and a 25% fee split from another $4 billion-plus fund that was raised after the spinoff.
In a statement, TCW President and CEO David Lippman said he was pleased with the agreement, noting it allows TCW to maintain its economic interest in existing funds and protects the interests of investors in the funds because EIG will still manage them.