Carlyle Groups Asian Invasion

1
Carlyle Groups Asian Invasion

• Group Members
• Alex Capiro
• Tuan Hoang
• Hoang Bui

2
Overview

• The Carlyle Group
• Specialization
• Summary
• Issues
• Conclusion

3
The Carlyle Group

• The Carlyle Group is a Washington, D.C. based
  global private equity investment firm with more
  than 75.6 billion of equity capital under
  management
• The firm employs more than 515 investment
  professionals in 21 countries with several
  offices in North America, South America, Europe,
  Asia and Australia its portfolio companies
  employ more than 286,000 people worldwide.
  Carlyle has over 1100 investors in 61 countries.

4
Specialization

• Carlyle deals in the following industries
  Aerospace Defense, Automotive, Consumer
  Retail, Energy Power, Healthcare, Real Estate,
  Technology Business Services,
  Telecommunications Media, and Transportation.
• The Carlyle Group's investments are focused on
  East Asia, Europe and North America, with most
  investment money coming from the United States
  (65), Europe (25), Asia (6), Latin America,
  and the Middle East.
• Defense investments represent about 1 of the
  group's current portfolio this translates, for
  example, into a 33.8 ownership of QinetiQ, the
  UK's recently privatized defense company.

5
Business week article

• The powerful engine behind all these investments
  is Carlyle Group, the politically wired,
  Washington-based private equity partnership. No
  place on earth "has more significant growth
  potential in the private equity industry than
  Asia," says Michael B. Kim, the Seoul-based,
  Korean-American head of Carlyle's Asia buyout
  operation outside Japan.
• Carlyle's biggest investment yet came last
  October, when it put up 60 of the 2.1 billion
  cost of taking over Japanese cell-phone maker DDI
  Pocket, which it just renamed Willcom Inc.
• Carlyle now has a 750 million buyout fund
  focusing on Korea, China, and Taiwan, two
  venture-capital funds totaling 323 million, plus
  a 482 million fund for Japan.
• Kim says Carlyle is exploring a number of new
  Asian deals, with the emphasis on logistics,
  financial services, telecom, and consumer
  industries.

6
Continued

• Carlyle first dipped its toes in Asian waters in
  the wake of the 1997-98 Asian financial crisis,
  buying a controlling stake in Korea's KorAm Bank
  for 450 million. Carlyle's 675 million profit
  on the transaction gave its investors a 250
  return.
• Now, Carlyle leads a growing list of private
  equity firms trying to strike it rich in Asia.
• Carlyle management believes that all business is
  local.
• About 60 of Carlyle's 482 million Japan fund
  was raised through Japanese institutional
  investors, including the Development Bank of
  Japan.
• Most of Carlyle's money is in small, unlisted
  private startups.
• They have since sold down its stake to 2.
• Carlyle says it brings to these tiny companies is
  funding, solid financial oversight, and broad
  management expertise.

7
ISSUES

• The game is completely different in China. There,
  buyouts are rare because almost all listed
  companies are majority-owned by the state
• In both Japan and Korea, there has been a serious
  backlash. In December, Japan's Ministry of
  Finance proposed a 20 tax on capital gains made
  by private-equity firms

8
Continued

• In Korea a new law went into force in December
  that restricts foreign investment in banks and
  allows the establishment of domestic equity funds
  to compete with foreign funds
• But where Carlyle sees itself as an active
  investor and management guru, some politicians
  think private-equity funds are just milking Asia
  for fat payouts.

9
Conclusion

• We believe that the Carlyle Group is taking the
  correct approach on how to enter a foreign market
  (Asia)
• Keeping the team full of highly respected
  Japanese business Men is a good call considering
  that in the business community in Japan, they are
  better accepted by top executives of Japanese
  corporations

10
Questions

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