Carlyle Group

Founding and early history

Carlyle was founded in 1987 as an investment banking boutique by five partners with backgrounds in finance and government: William E. Conway Jr., Stephen L. Norris, David Rubenstein, Daniel A. D'Aniello and Greg Rosenbaum. The founding partners named the firm after the Carlyle Hotel in New York City where Norris and Rubenstein had planned the new investment business. Rubenstein, a Washington-based lawyer, had worked in the Carter Administration. Norris and D'Aneillo had worked together at Marriott Corporation; Conway was a finance executive at MCI Communications. Rosenbaum left in the first year and Norris departed in 1995. Rubenstein, Conway and D'Aneillo remain active in the business. Carlyle was founded with $5 million of financial backing from T. Rowe Price, Alex. Brown & Sons, First Interstate Equities, and the Richard King Mellon family.In the late 1980s, Carlyle raised capital deal-by-deal to pursue leveraged buyout investments, including a failed takeover battle for Chi-Chi's. The firm raised its first dedicated buyout fund with $100 million of investor commitments in 1990. In its early years, Carlyle also advised in transactions including, in 1991, a $500 million investment in Citigroup by Prince Al-Waleed bin Talal, a member of the Saudi royal family.Carlyle developed a reputation for acquiring businesses related to the defense industry. In 1992, Carlyle completed the acquisition of the Electronics division of General Dynamics Corporation, renamed GDE Systems, a producer of military electronics systems. Carlyle would sell the business to Tracor in October 1994. Carlyle acquired Magnavox Electronic Systems, the military communications and electronic-warfare systems segment of Magnavox, from Philips Electronics in 1993. Carlyle sold Magnavox for about $370 million to Hughes Aircraft Company in 1995. Carlyle also invested in Vought Aircraft through a partnership with Northrop Grumman. Carlyle's most notable defense industry investment came in October 1997 with its acquisition of United Defense Industries. The $850 million acquisition of United Defense represented Carlyle's largest investment to that point. Carlyle completed an IPO of United Defense on the New York Stock Exchange in December 2001, then sold the rest of the stock in April 2004. In more recent years, Carlyle has invested less in the defense industry.Carlyle's 2001 investor conference took place on September 11, 2001. In the weeks following the meeting, it was reported that Shafiq bin Laden, a member of the Bin Laden family, had been the "guest of honor", and that they were investors in Carlyle managed funds. Later reports confirmed that the Bin Laden family had invested $2 million into Carlyle's $1.3 billion Carlyle Partners II Fund in 1995, making the family relatively small investors with the firm. However, their overall investment might have been considerably larger, with the $2 million committed in 1995 only being an initial contribution that grew over time. These connections would later be profiled in Michael Moore's Fahrenheit 911. The Bin Laden family liquidated its holdings in Carlyle's funds in October 2001, just after the September 11 attacks, when the connection of their family name to the Carlyle Group's name became impolitic.

2002–2006

Buyouts declined after the collapse of the dot-com bubble in 2000 and 2001. But after the two-stage buyout of Dex Media at the end of 2002 and 2003, large multibillion-dollar U.S. buyouts could once again obtain high-yield debt financing and larger transactions could be completed. Carlyle, together with Welsh, Carson, Anderson & Stowe, led a $7.5 billion buyout of QwestDex, the third-largest corporate buyout since 1989. QwestDex's purchase occurred in two stages: a $2.75 billion acquisition of assets known as Dex Media East in November 2002 and a $4.30 billion acquisition of assets known as Dex Media West in 2003. R. H. Donnelley Corporation acquired Dex Media in 2006. Shortly after Dex Media, other larger buyouts would be completed signaling a resurgence in private equity.

Lou Gerstner, former chairman and CEO of IBM and Nabisco, replaced Frank Carlucci as chairman of Carlyle in January 2003. Gerstner would serve in that position through October 2008. The hiring of Gerstner, was intended to reduce the perception of Carlyle as a politically dominated firm. At the time, Carlyle, which had been founded 15 years earlier had accumulated $13.9 billion of assets under management and had generated annualized returns for investors of 36%.Carlyle also announced the $1.6 billion acquisition of Hawaiian Telcom from Verizon in May 2004. Carlyle's investment was immediately challenged when Hawaii regulators delayed the closing of the buyout. The company also suffered billing and customer-service issues as it had to recreate its back-office systems. Hawaiian Telcom ultimately filed for bankruptcy in December 2008, costing Carlyle the $425 million it had invested in the company.

As the activity of the large private equity firms increased in the mid-2000s, Carlyle kept pace with such competitors as KKR, Blackstone Group, and TPG Capital. In 2005, Carlyle, together with Clayton, Dubilier & Rice and Merrill Lynch completed the $15.0 billion leveraged buyout of The Hertz Corporation, the largest car rental agency from Ford.The following year, in August 2006, Carlyle and its Riverstone Holdings affiliate partnered with Goldman Sachs Capital Partners in the $27.5 billion acquisition of Kinder Morgan, one of the largest pipeline operators in the US. The buyout was backed by Richard Kinder, the company's co-founder and a former president of Enron.In September 2006, Carlyle led a consortium, comprising Blackstone Group, Permira and TPG Capital, in the $17.6 billion takeover of Freescale Semiconductor. At the time of its announcement, Freescale would be the largest leveraged buyout of a technology company ever, surpassing the 2005 buyout of SunGard. The buyers were forced to pay an extra $800 million because KKR made a last-minute bid as the original deal was about to be signed. Shortly after the deal closed in late 2006, cell phone sales at Motorola Corp., Freescale's former corporate parent and a major customer, began dropping sharply. In addition, in the recession of 2008–2009, Freescale's chip sales to automakers fell off, and the company came under great financial strain.Earlier that year, in January 2006, Carlyle together with Blackstone Group, AlpInvest Partners, Hellman & Friedman, KKR and Thomas H. Lee Partners acquired Nielsen Company, the global information and media company formerly known as VNU in an $8.9 billion buyout. Also in 2006, Carlyle acquired Oriental Trading Company which ultimately declared bankruptcy in August 2010 as well as Forba Dental Management, the owner of Small Smiles Dental Centers, the largest US chain of dental clinics for children.

2007–2017

In 2011, The Carlyle Group- Carlyle Asia Growth Partners IV and Yunfeng Capital acquired an approximately 80% stake in GDC Technology Limited, a digital cinema solutions provider.

In August 2011, The Carlyle Group announced that it had completed the acquisition of French-based Sagemcom, a global high-technology group specializing in broadband communications and energy activities, from The Gores Group. Carlyle said in a statement it now owned 70 percent of Sagemcom, while the company's management and employees had the remaining 30 percent. Sagemcom has more than 6,000 employees globally and posted sales of 1.4 billion euros in 2010.

2017 - present

In October 2017, The Carlyle Group announced that its founders would remain executive chairmen on the board of directors but step down as the day-to-day leaders of the firm; they named Glenn Youngkin and Kewsong Lee to succeed them, as co-CEOs, effective January 1, 2018.On October 2017, The Carlyle Group made a $500 million investment in the brand Supreme valuing the company at $1 billion. In 2020 the investment acquired by VF Corporation, which owns The North Face, Timberland, and Vans for $2.1 billion.

On October 14, 2019, The Carlyle Group and private equity firm Stellex Capital Management announced it had completed the acquisition and merger of shipbuilder Vigor Industrial LLC, Portland, Ore., and MHI Holdings LLC, a ship repair and maintenance company based in Norfolk, Va. The terms of the deal were not disclosed.On 2 June 2020, The Carlyle Group and T&D Holdings reported that they had concluded their purchase of a 76.6% stake in Fortitude Group Holdings, the latter of which comprises Fortitude Re, and American International Company Inc. Also in June 2020, Unison had been purchased by the Carlyle Group and Unison management strategic investment company.In September 2020, The Carlyle Group acquired a majority stake in Minneapolis-based sanitizing machine maker Victory Innovations. Terms of the deal were not disclosed.At the end of September 2020, Youngkin retired from the firm, stating his intention to focus on community and public service efforts; this left Lee as sole CEO. Youngkin would later go on to be elected Governor of Virginia in the state's 2021 gubernatorial election.

In January 2021, The Carlyle Group acquired a majority stake in Jagex, a UK video game development studio known for the massively multiplayer online game RuneScape.In March 2022, The Carlyle Group acquired Dainese - an Italian motorcycle kit and clothing company from Investcorp. Following this in May 2022, The Carlyle Group announced the acquisition deal of US government contractor for cyber security and IT defence, ManTech International. The deal worth $3.9 billion, will include the firm to buyout shares at $96 a share, representing a 32% premium to ManTech's closing price on February 2, 2022. The acquisition aimed to increase the firms steady stream of recurring revenue.In November 2022, it was announced The Carlyle Group has acquired the international marketing agency, Incubeta.

Ownership changes

For the first 25 years of its existence, Carlyle operated as a private partnership controlled by its investment partners. In 2001, the California Public Employees' Retirement System , which had been an investor in Carlyle managed funds since 1996, acquired a 5.5% holding in Carlyle's management company for $175 million. The investment was valued at about $1 billion by 2007 at the height of the 2000s buyout boom.In September 2007, Mubadala Development Company, an investment vehicle for the government of Abu Dhabi of the United Arab Emirates, purchased a 7.5% stake for $1.35 billion.In February 2008, California legislators targeted Carlyle and Mubadala, proposing a bill that would have barred CalPERS from investing money "with private-equity firms that are partly owned by countries with poor records on human rights." The bill, which was intended to draw attention to the connection between Carlyle and Mubadala Development, was later withdrawn.In May 2012, Carlyle completed an initial public offering of the company, listing under the symbol CG on the NASDAQ. The firm, which at the time managed about $147 billion of assets, raised $671 million in the offering. Following the IPO, Carlyle's three remaining founding partners, Rubenstein, D'Aniello and Conway retained the position as the company's largest shareholders.In June 2017, Carlyle took its non-traded BDC, TCG BDC, Inc., public in the first business development company IPO since 2014.