Carlyle Group Research Articles

Texas Private Equity Conference 2022: Session I: The State of and Prospects for U.S. Private Equity

Kewsong Lee, CEO of the Carlyle Group was interviewed by Rich Hall, Chief Investment Officer of UTIMCO. From his vantage point at Carlyle overseeing 300 portfolio companies, Lee sees US economic growth as positive but decelerating while inflation continues to be high. So far, Carlyle‐owned firms have been able to pass through higher costs to their consumers although the expected Fed tightening would reduce asset values and general confidence.Lee identified the international focus on climate change and achieving a “net‐zero” CO2 emissions level as a secular change. He warned that decarbonizing will be expensive and difficult to achieve and that divesting of carbon producing assets offered no solution. Private equity firms make their money by improving the operations of the companies they buy and not through financial engineering, according to Lee.Lee cautioned listeners that a forty year long trend of declining interest rates is now reversing. This will have consequences for the real economy. Nevertheless, Lee emphasized, one should not underestimate the power of companies and technology to improve productivity. Relatively modest rate increases will not damage Carlyle's ability to buy companies as money is available and the leveraged finance markets are “wide open.”Despite his industry's success, lee said that PE industry has “done a very bad job in helping the outside world appreciate who we are and what we do.” Accordingly, the PE industry must become becoming more stakeholder focused, and more socially comprehensive and aware, while also generating high returns.

Nouryon readies for stock market listing

Just 3 years after being purchased from AkzoNobel by the investment firms the Carlyle Group and GIC for $11.6 billion, Nouryon has announced plans to offer shares on the New York Stock Exchange. The Dutch specialty chemical maker has yet to disclose the number of shares or the planned price per share. The firm intends to use money from the share offering to pay down debt and meet other corporate requirements. Nouryon’s annual sales will be about $4.5 billion after the spin-off of its base-chemical unit.

Nouryon to spin off base-chemical unit

The Dutch specialty chemical maker Nouryon says it plans to spin off its base-chemical business, Nobian, into a separate company owned by Nouryon’s owners, the Carlyle Group and GIC. Nouryon itself is a 2018 spin-off from AkzoNobel. Nobian plans a financing to raise money that Nouryon will use to reduce debt. Nobian, a maker of salt, chlor-alkali, and chloromethanes, had sales of about $1.2 billion in 2020; Nouryon’s sales were about $4.5 billion.

Carlyle buys most of Unchained Labs

The Carlyle Group has agreed to acquire a majority stake in Unchained Labs, a life sciences instrumentation company focused on biologics and gene therapy research, for $435 million. Unchained, whic...

Carlyle Group takes a major stake in Unchained Labs

Carlyle Group takes a major stake in Unchained Labs

A Supreme Case of Coolness?

This case uses Supreme, a skater-clothing brand from New York City, and a framework for understanding the concept of “coolness” (see A General Theory of Coolness, UVA-M-0953), which is the cornerstone of the firm's success, to set the stage for analyzing consumer behavior. Written using public sources, the case discusses the firm's overall strategy, including limited supply, unique shopping drops for newly released items, and a fan-like customer base. It introduces “coolness” as a marketing term to be explored with the Supreme brand. The case opens with an MBA's first assignment with her new company, in a business strategy role, to learn about the retail fashion business, understand the customer experience, and make recommendations to reengage Supreme as “cool.” While conducting due diligence, the protagonist walks readers through the Supreme shopping experience, introduces what she sees as crucial to “coolness,” and mulls over challenges the brand faces around how to sustain the customer experience through growth efforts. Excerpt UVA-M-1006 Aug. 26, 2020 A Supreme Case of Coolness? It was June 2020 and the United States was just coming out of COVID-19 lockdown. Amelia Sanchez, a recent MBA graduate from a top program, clicked off the Zoom video call in her parents' house in the New Jersey suburbs and considered the surprising words of her new boss, Rose Milton. Sanchez had just started in a business strategy role for Supreme, the skater clothing brand founded in 1994 that had grown to become a streetwear fashion phenomenon. Supreme seemed to be doing well. The Carlyle Group (Carlyle), one of the world's largest private equity (PE) firms, bought half the company a few years before, valuing it at $ 1 billion. Sanchez's younger brother, Carmello, regarded Supreme as one of the coolest brands around. His bedroom was a shrine to the company's products. That's why Milton's words troubled Sanchez. Milton had talked rapidly, waving her hands for emphasis as she spoke. “For your first assignment, Amelia, we'd like you to figure out how to make Supreme cool again. Times are tough; retail is a mess with the virus. Bankruptcies are coming, and it's not just the virus that has stalled things. At Supreme, we are out of step and need to figure out how to get back to the top. If we don't turn this thing around in two years, we might need to say goodbye to Supreme.” Sanchez knew that her response to the challenge was crucial to her career at Supreme. She had turned down top consulting jobs to tackle what she thought was a unique project: the chance to be one of the only female MBAs in the office and shape the future of a fashion brand she admired. Sanchez had won the job by networking intensively and was proud to be reporting to Milton, a VP at Supreme who reported directly to the legendary founder, James Jebbia. While she was surprised to be assigned to such a big challenge on day one, Sanchez had been through enough battles early in her career as a junior investment banker covering retail companies to project calm and strength when she responded to Milton, “I understand. How long do I have to come back with some recommendations?” . . .

Warburg Pincus seals Sundyne acquisition

Private equity firm Warburg Pincus has completed its acquisition of Sundyne from BC Partners Advisors LP and The Carlyle Group (see Pump Industry Analyst, January 2020).

Private equity firm to acquire Sundyne

Sundyne is being acquired by private equity firm Warburg Pincus from BC Partners Advisors LP and The Carlyle Group.

At Nouryon, the transformation begins

Enter the headquarters of Nouryon, the former chemical business of AkzoNobel, in downtown Amsterdam, and you wouldn’t notice any changes since it was sold to the investment firms the Carlyle Group and GIC for $11.6 billion a little less than a year ago. Nouryon and AkzoNobel still cohabit the same AkzoNobel-branded building. Former colleagues from both companies continue to eat in a shared canteen and take coffee together in the ground-floor, open-plan art gallery. Go beyond the electronic entry doors on floors occupied by Nouryon, though, and change is in the air. Nouryon has an eye on acquisitions worth $1 billion or even more. CEO Charles W. Shaver is also looking to sell some of Nouryon’s commodity businesses as part of a new approach to drive up profits and sales by 4–5% annually. The slowing global economy means that achieving such targets will not be a cakewalk. In a hint

Ingersoll-Rand closes acquisition of Precision Flow Systems

Ingersoll-Rand plc has completed its US$1.45 billion acquisition of Precision Flow Systems from funds advised by BC Partners Advisors LP and The Carlyle Group (see Pump Industry Analyst , February 2019).

Ingersoll-Rand to acquire Accudyne Industries' Precision Flow Systems

Ingersoll-Rand plc has made a binding offer to acquire Precision Flow Systems (PFS) from funds advised by BC Partners Advisors LP and The Carlyle Group in a US$1.45 billion deal.

AkzoNobel chemicals becomes Nouryon

AkzoNobel’s former chemical business has become an independent company named Nouryon under its new venture capital owner, the Carlyle Group, which acquired it for $11.6 billion. The new name is a nod to Jan Nourij, a cofounder of the 19th-century Dutch milling firm that became a founding company of AkzoNobel. Nouryon makes products such as chlorine, caustic soda, polymer additives, surfactants, and water treatment chemicals. The business recorded sales in 2017 of $6.2 billion and pretax profits of $850 million. The firm’s headquarters are in Amsterdam. Nouryon’s new CEO, Charles W. Shaver, was until recently CEO of U.S. coatings firm Axalta. He says he has no immediate plans to make major changes at Nouryon. The aim is to retain all 21 of the firm’s product lines and grow annual profits and sales by 4–5%, up from the current level of about 2%. This growth would occur through a combination of

AkzoNobel Closes Sale of Specialty Chemicals to The Carlyle Group, GIC

AkzoNobel Closes Sale of Specialty Chemicals to The Carlyle Group, GIC

The Carlyle Group, GIC Name Shaver CEO for AkzoNobel Specialty Chemicals

The Carlyle Group, GIC Name Shaver CEO for AkzoNobel Specialty Chemicals

Air Liquide sues Carlyle

Air Liquide has filed a lawsuit alleging that the Carlyle Group, a private equity firm, hired a senior Air Liquide executive as part of a scheme to get its hands on confidential business information. That information could give Carlyle the upper hand in acquiring Praxair and Linde industrial gas assets being auctioned as part of the $70 billion merger of the two gases giants, announced in December 2016. Japanese industrial gas maker Taiyo Nippon Sanso agreed on July 5 to buy Praxair’s European gas business for nearly $6 billion. Taiyo, which is not now active in Europe, would get a business with annual sales of $1.5 billion, 2,500 employees, and operations in 12 countries. Carlyle and other suitors are still in the running for U.S. gas assets. Both sales are intended to quell antitrust concerns. The deal with Taiyo brings Praxair and Linde a step closer to tying the knot

AkzoNobel to upgrade chlorine in Rotterdam

AkzoNobel will install a second chlorine line at its plant in Rotterdam. The company will also make other upgrades at the site, including the installation of technology that allows it to adjust chlorine output in line with variations in electricity supplies, such as a surge of power from wind turbines. The company expects to bring the new line onstream by 2021. AkzoNobel is selling its chemical business later this year to two investment firms, the Carlyle Group and GIC, for $12.5 billion.

AkzoNobel Sells Specialty Chemicals to The Carlyle Group, GIC for €10.1 Billion

AkzoNobel Sells Specialty Chemicals to The Carlyle Group, GIC for €10.1 Billion

AkzoNobel finds buyer for chemical business

AkzoNobel has agreed to sell its chemical business to the Carlyle Group, a private equity firm, and its partner, the Singapore-based investment firm GIC, for $12.5 billion. The business, which makes products including chlorine, caustic soda, polymer additives, surfactants, and water treatment chemicals, recorded sales in 2017 of $6.2 billion and pretax profits of $850 million. The parties expect to close the deal by year-end. The divestment will leave AkzoNobel as a coatings producer with sales of almost $12 billion and pretax profits of $1.1 billion. After paying separation and other costs, AkzoNobel expects to receive net proceeds of about $9.3 billion, most of which it will return to shareholders. Analysts at the equity research firm Jefferies expect AkzoNobel to keep about $1.2 billion to make acquisitions or other investments. The new owners of the chemical business say they are looking to expand it. “We are committed to growing the

Valuing Late-Stage Companies and Leveraged Buyouts

This note replaces Valuation of Late-Stage Companies and (UVA-F-1639).This note focuses on the valuation of late-stage companies with a particular emphasis on leveraged buyouts (LBOs). In contrast to venture capital, where firms are typically at an early stage of development, late-stage investments involve more-established businesses that have an ability to take on higher levels of debt to augment investor returns. The note provides a description of LBOs, an overview of the commonly used sources of financing and the metrics used to assess LBO capital structures, a discussion of the value drivers of buyouts, and a step-by-step example of an LBO analysis. This note takes the perspective of private equity (PE) investors and assumes some basic familiarity with the structure of PE investing. Their approach is compared to other discounted cash flow valuation methods based on the weighted-average cost of capital or adjusted present value. Excerpt UVA-F-1846 Aug. 23, 2018 Valuing Late-Stage Companies and Leveraged Buyouts This note focuses on the valuation of late-stage companies with a particular emphasis on leveraged buyouts (LBOs). Late-stage investments can arise in situations involving growth equity, turnarounds, mezzanine investments, and distressed debt. In contrast to venture capital, where firms are typically at an early stage of development, late-stage investments involve more-established businesses that have an ability to take on higher levels of leverage to augment investor returns. This note takes the perspective of a private equity (PE) investor and assumes some basic familiarity with the structure of PE investing. It provides a basic overview of the primary sources of financing, the metrics used to gauge LBO capital structures, and a step-by-step example of an LBO analysis. What is an LBO? An LBO is the purchase of a firm by an outside individual, another firm, or the incumbent management using large amounts of debt to finance the purchase. The target firm for an LBO can be a freestanding private or public company or a division of a company. Most often, LBOs are undertaken by PE firms that specialize in these transactions (e.g., Blackstone, Carlyle Group, and KKR). PE firms that specialize in LBOs are often referred to as sponsors, because they in effect sponsor or propose the deal. Unlike strategic buyers, who often have assets or expertise to combine with the target firm, sponsors are typically financial buyers whose expertise lies in arranging the financing and incentives for management to perform in a highly leveraged transaction (HLT). That said, sponsors must also have a keen eye to identify opportunities for business development and operating improvements. . . .

What do venture capital and private equity firms do? Some current and historical examples

ABSTRACTThe venture capital and private equity investment fields are not as well understood as other sectors of the financial industry, especially those focused on publicly traded instruments, such as stocks and bonds. To help business librarians understand venture capital and private equity firms, this article looks at how these businesses invest. By briefly examining investments by three venture capitalists and three private equity firms, readers can begin to understand the methods and aims of those investors. This article describes investments by venture capital leaders Georges Doriot of American Research and Development, William J. Casey, and Tom Perkins of Kleiner Perkins. It also describes some of the criteria applied by those venture capitalists to select firms in which to invest: how they evaluated companies and the executives who ran them. The article also looks at three private equity firms, Warburg Pincus, Tribeca Asset Management, and the Carlyle Group, companies those PE firms purchased, and factors that made those acquisitions profitable.