Carlyle IPO runs into familiar problems

May 3, 2012 | By Jim Kim

Carlyle Group's lackluster debut as a public company, even after it had reduced its offering range, was hardly a surprise.

Publicly traded private equity companies have had trouble generating much excitement since they started going public. Oaktree was a recent reminder that these stocks tend to flop in the aftermarket.

Deal Journal notes the others: "Fortress Investment Group had the best first-day pop but has also had the biggest fall since then. The investment firm went public in 2007, with its first day stock climbing 68 percent. But through Wednesday's close the stock is down 80 percent. Blackstone Group gained 13 percent on its first day in June of 2007, but is now down 57 percent from its IPO price. Apollo Global Management fell 4.2 percent on its first day and is now down 33 percent from its pricing."

The fizzle that was the Oaktree IPO didn't really do Carlyle any favors, as it raised all over again the issue of whether limited partners in funds come before shareholders of the management company. Oaktree made all too clear that asset accumulation would never be the top priority of the company. But that led to a sell-off as investors tend to prize the steady revenue that stems from assets.

At Carlyle, assets under management have soared. So you might think that the issue would be inconsequential. But perhaps the issue hangs over all private equity stocks in a generic way. Carlyle argued on its roadshow that it was fundamentally different from the other companies. We'll see if that message takes hold.

For more:
- here's the Deal Journal item