Tags: Carlyle | Shares | Market | Debut

Carlyle Shares Steady in Stock Market Debut

Thursday, 03 May 2012 01:33 PM

Shares of Carlyle Group LP were little changed on Thursday, in line with a low-key ceremony to mark its stock market debut and one day after the iconic private equity firm had to discount its original IPO price range.

Investors are eyeing Carlyle's IPO to gauge how the stocks of financial institutions as an asset class are valued. Alternative asset managers are the most niche of investment firms, with the complexity of their internal workings weighing on their valuation.

The private equity firm's shares climbed as much as 2 percent as they began their debut on Nasdaq, but eased back to$22.04, up just 0.2 percent, in late morning trading.

"All year we've seen really the only companies that have done well in this market are high-growth technology companies, consumer names that and companies with particularly profitable business models," said Jim Krapfel, an equity analyst with Morningstar.

"With Carlyle, it doesn't fit into any of these three buckets and has issues related to its industry such as opaque business models, limited financial disclosures, risks to higher taxation, greater regulatory oversight and a limited partnership structure that places minority shareholders at a distinct disadvantage."

Carlyle's 30.5-million-share initial public offering was priced at $22 on Wednesday, below its expected price range of $23 to $25 per unit.

Carlyle, which has taken many of its portfolio companies public since its founding in 1987, had marketed the original price range of its IPO as conservative. Its decision to scale back the price further on Wednesday contrasts sharply with the excitement over the Blackstone Group LP 's $4.1-billion IPO five years ago.

But the performance of alternative-asset management stocks has been lackluster since Blackstone first started trading.

Blackstone's shares have tumbled 56 percent since its 2007 trading debut, while Apollo Global Management LLC has declined 32 percent. Oaktree Capital Group LLC, which went public in April, has fallen 6 percent.

Investors often complain that the balance sheets of these firms are too hard to value and that their earnings can rely excessively on carried interest, their cut of their funds' investment profits — which is often both cyclical and volatile.

If Carlyle's shares close up on Thursday, it would be an exception among some of its peers who have also gone public. Shares of Blackstone, KKR & Co. LP and Apollo all closed down on their first trading day.

Carlyle's founders William Conway, Daniel D'Aniello and David Rubenstein stayed behind the cameras on Thursday at the trading opening ceremony at Nasdaq in New York, as representatives from a charity of their choice rang the bell.

Carlyle invited Junior Achievement, the world's largest organization dedicated to teaching financial literacy, work readiness and entrepreneurship to young people, to do the honors.

© 2021 Thomson/Reuters. All rights reserved.

Thursday, 03 May 2012 01:33 PM
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