Carlyle Group Plans to Raise $4 Billion Asia Fund, People Say

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By Joyce Moullakis

Carlyle Group, the world's second- biggest private-equity firm, plans to raise as much as $4 billion to invest in Asian companies as the credit freeze stalls U.S. and European leveraged buyouts, according to two people with knowledge of the matter.
The firm expects to complete fundraising for Carlyle Asia Partners III by mid-year, said the people, who asked not to be identified because the plans aren't public. Washington-based Carlyle is targeting countries including China, India and Australia, they said.
Carlyle co-founder David Rubenstein is competing with JPMorgan Chase & Co. and Blackstone Group LP for a bigger foothold in Asia, where private-equity deals rose 40 percent to a record $87.8 billion last year, according to the Asian Venture Capital Journal. Developing Asian economies will expand an average 8.6 percent this year, compared with 1.5 percent for the U.S., according to International Monetary Fund estimates.
``We are seeing continued appetite for Asian equities,'' said Toby Nangle, a member of the strategic policy group at Baring Asset Management in London, which manages $55 billion. ``I imagine a buyout firm would tap the same people who are coming to us.''
The fund, Carlyle's third for general Asian investments, will invest across industries in countries outside Japan, according to the people. Chris Ullman, a Carlyle spokesman, declined to comment.
LBO Collapse
Private-equity deals in the U.S. and Western Europe collapsed last year along with the U.S. subprime mortgage market. Transactions announced in the second half fell to $58.9 billion from an record $240 billion in the first six months, according to data compiled by Bloomberg.
Carlyle may find financing hard to arrange as investors avoid all but the safest government debt. Banks are struggling to clear a backlog of about $230 billion of bonds and loans they committed to buyouts, damping their interest in extending more credit. Rubenstein said today it may take as long as three years for sales of the loans that fund LBOs to return to last year's record.
``It won't come back overnight,'' he told the private- equity industry's annual Super Return conference in Munich.
Carlyle and National Hire Ltd. agreed in October to acquire Australia's Coates Hire Ltd. for A$1.7 billion ($1.6 billion), giving them 20 percent of the nation's A$3.8 billion equipment- rental market.
In December, the buyout firm used one of its smaller funds to invest $21 million in DIO F&B Group, a Chinese restaurant chain. That fund has made more than 20 investments in Korea, China, India and Japan, according to Carlyle's Web site.
JPMorgan, Blackstone
JPMorgan, the third-largest U.S. bank. will commit $750 million to private-equity investments in the Asia-Pacific region by taking non-controlling stakes in companies, the firm said Feb. 19. Blackstone, manager of the largest buyout fund, has offices in Mumbai, Hong Kong and Tokyo and last year sold a $3 billion stake in the company to China Investment Corp., a state- controlled firm.
Carlyle expanded in Asia in 1998 after opening regional headquarters in Hong Kong. The buyout firm started its first Asian fund the following year, raising $750 million, while the second vehicle, Carlyle Asia Partners II, attracted $1.8 billion by mid-2006.
To contact the reporters on this story: Joyce Moullakis in London at jmoullakis@bloomberg.net