EIG Global Energy Partners, an energy investment team that spun off from TCW in 2009, announced Tuesday that it is suing TCW to stop a buyout of the money manager because of the involvement of private equity firm The Carlyle Group.
French banking giant Societe Generale agreed on Aug. 9 to sell its majority stake in TCW to two Carlyle funds and to TCW’s managers
The complaint filed in federal court in U.S. District Court in Los Angeles involves a $4.2 billion joint private equity fund that closed in April 2011 after EIG was no longer part of TCW. The fund was raised by EIG, but both TCW and EIG share in the profits as part of a 10-year spinout agreement, said Blair Thomas, CEO of EIG, in a phone interview.
EIG officials maintain in the court complaint that its agreement with TCW for the private equity fund ensures EIG cannot be forced into a business relationship with a firm with which it does not want to do business.
EIG and Carlyle Group both invest in energy projects.
The suit alleges that if the deal goes through, Carlyle would have access to competitively sensitive information about EIG's operations.
“We view Carlyle as a competitor,” Mr. Thomas said. “We negotiated specific protections against this happening for exactly this reason.”
Mr. Thomas said Carlyle is one of several buyout firms that have aggressively invested in the energy and energy infrastructure business in the last several years.
Mr. Thomas said his firm’s concerns over the deal were made known to TCW, its owner — French bank Societe Generale — and Carlyle, but negotiations were unsuccessful.
He said the agreement with TCW on the energy fund calls for disputes between his firm and TCW to be settled by arbitration. While Mr. Thomas said his firm filed for arbitration last week, he is concerned that the TCW buyout could occur before the arbitration process is completed.
TCW spokesman Peter Viles said, “We do not comment on matters in arbitration.” But he praised the deal. “This is an excellent transaction for TCW, its clients and its employees, and we are confident it will go forward on schedule.”
The transaction is expected to close in the first quarter of 2013, Mr. Viles said.
Elizabeth Gil, a spokesman for the Carlyle Group, declined comment.
EIG is represented in this litigation by the law firm Munger, Tolles & Olson.