The Carlyle GroupThe Carlyle Group

Headquarters: Washington, D.C.

 

The Company

Founded in 1987, The Carlyle Group, with $71 billion in assets currently under management,has historically been known as the most politically connected private equity firm, capitalizing on its connections— George Bush Sr. and Jr., Frank Carlucci, John Major, and James Baker III previously served as advisers— to raise funds and secure government contracts. After controversy surrounding its political ties, Carlyle reduced its exposure to companies reliant on government contracts, particularly defense contracts, and focused on diversifying its portfolio. Carlyle has also evolved from a specialist in deals under $1 billion to become “a big game hunter,” cutting a number of multibillion-dollar club deals with fellow top-five private equity firms since 2005. Carlyle is currently raising a $15 billion U.S. buyouts fund, nearly double its last fund.

Carlyle invests in a wide range of industries, including aerospace and defense, automotive and transportation, consumer and retail, energy and power, health care, industrial, real estate, technology and business services, and telecommunications and media. Either alone or as part of club deals, Carlyle has bought out such well-known companies as Loews Cinemas and Dunkin’ Brands (Dunkin’ Donuts and Baskin Robbins). At present, Carlyle’s portfolio includes approximately 140 companies which in turn employ more than 200,000 workers and have $68 billion in sales.

If Carlyle’s portfolio constituted one publicly traded corporation, it would hold spot No. 21 in the Fortune 500.

The Moneymakers

Carlyle’s key decision-makers are its three founding partners—David Rubenstein, Daniel D’Aniello, and William Conway—and the company’s chairman, Louis V. Gerstner Jr.

D'Aniello (l), Rubenstein (r).David Rubenstein: Co-founder Rubenstein is former deputy domestic policy adviser to the Carter administration. Rubenstein’s current net worth is estimated at more than $2.5 billion, though he has said that he himself has lost track of it due to the volume of investments he has through the firm. Rubenstein’s properties include a Georgian-style Bethesda, Md., home valued at $1.7 million, a 10,000-square-foot chalet in Beaver Creek, Colo., and a compound in Nantucket, Mass., large enough to accommodate 30 overnight guests.

William E. Conway: Prior to co-founding the Carlyle Group, he worked at MCI, where he became senior vice president and chief financial officer. According to the trade journal The Deal, “Conway green-lights or kills every one of Carlyle’s prospective LBO and venture investments throughout the world.” Like Rubenstein, his current net worth is estimated at more than $2.5 billion. In 1999, Conway purchased a 17,000-square-foot mansion built on a seven-acre expanse with a view of the Potomac River. In 2005, he sold the property for $24.5 million.

Daniel A. D’Aniello: Prior to founding Carlyle, D’Aniello was a vice president at the Marriott Corp. Press accounts also indicate that D'Aniello runs most of the day-to-day operations of Carlyle. His current net worth is estimated at more than $2.5 billion. 

Louis V. Gerstner Jr.: Gerstner, the former CEO of IBM, was brought in as chairman in 2003 as part of an effort to shift Carlyle’s reputation as “the CIA of the business world” and to help the company build an organization that will outlast its founders. According to D’Aniello, Gerstner is “one phone call away from every chief executive officer in the United States.”  In 2003, Forbes calculated Gerstner’s net worth at $600 million. Gerstner’s home in Greenwich, Conn., is valued at $12.2 million.

Printing Money

In December, 2005 Carlyle along with Clayton, Dubilier & Rice, and Merrill Lynch bought out Hertz from the Ford Motor Co. Carlyle contributed approximately $750 million in equity. In June 2006, the sponsors paid themselves a special dividend of $1 billion, and in November 2006, less than one year after buying the company, they took it public, while retaining a two-thirds stake in the company. For its $750 million investment, Carlyle received proceeds totaling more than $400 million, while its remaining stake was worth $1.3 billion at the time of the IPO. That adds up to a return of 128 percent in less than one year’s time.