Carlyle Group is selling a 7.5% stake to Mubadala Development, an investment and development company wholly owned by the Abu Dhabi government, for $1.35 billion in cash, confirmed Chris Ullman, Carlyle spokesman. The transaction is expected to close in October.
The purchase price represents a 10% discount due to the illiquid nature of an investment in the general partnership of Carlyle, a private firm, Mr. Ullman explained. The parties agreed to value Carlyle at $20 billion. Mubadala also agreed to commit $500 million to a new U.S. buyout fund being raised by Carlyle. This is the second stake Carlyle has sold; the $246.6 billion California Public Employees Retirement System, Sacramento, bought a 5.5% stake in Carlyle in 2000 for $155 million.
Since then, Carlyle has increased its global reach and product diversity, and Carlyle officials were looking for partners in the Middle East and Africa, Mr. Ullman said. It provides us capital to expand the firm and put into investments, and it creates a long-term partner that can invest in Carlyles funds, he said. Citigroup and Goldman Sachs advised.
The sale of the stake removes the pressure Carlyle has been under to file an IPO, Mr. Ullman said. It gives us more flexibility. There is no pressure to do anything. We have permanent capital now. The markets are choppy anyhow, and so we can continue thinking about it.