Mubadala in line to benefit from Carlyle IPO

Abu Dhabi fund will get discount on price and may get seat on US private equity giant's board

UAE-based Mubadala is likely to be one of the main benefactors in IPO announced by US-based Carlyle Group

UAE-based Mubadala is likely to be one of the main benefactors in IPO announced by US-based Carlyle Group

UAE-based Mubadala Development Company is likely to be one of the main benefactors in the initial public offering (IPO) announced on Tuesday by US-based private equity company Carlyle Group.

The Washington-based firm filed for an IPO on Tuesday, a long-awaited move to catch up with rivals Blackstone, KKR and Apollo.

While the volatility of global markets means an offering is unlikely until the first half of 2012, the Abu Dhabi-owned investment fund Mubadala, which bought a 7.5 percent stake in 2007, is likely to be one of the benefactors of the move.

Mubadala, which in December invested a further $500m in Carlyle, could see its stake in the firm rise to as high 19.9 percent and is rumoured to be in line for a seat on the buyout firm’s board if the IPO is successful.

However, it could be a difficult road ahead: the US IPO market has struggled as concerns about Europe's debt crisis and a weak recovery in the US have made markets volatile. A number of deals were withdrawn last month.

"There is going to be pricing pressure for this deal, given the weak demand for financial IPOs and the performance of the listed companies," said Josef Schuster, founder of Chicago-based IPO research and investment house IPOX Schuster.

The market conditions and the poor performance of other listed private equity companies like Blackstone Group and Apollo Global Management, and the complex listing of Kohlberg Kravis Roberts & Co, may also damp investor appetite.

Carlyle's filing, with the US Securities and Exchange Commission, lists an offering size of $100m, but that may be a placeholder amount. Sources said in June the offering could be as large as $1bn.

Under the terms of the filing, Mubadala will be able to avail of a 7.5 percent discount on the IPO price when the flotation is initiated early next year.

A spokesperson from Mubadala told Arabian Business it was “not in a position to provide any comment during Carlyle’s registration process” and declined to comment on speculation regarding a seat on the firm’s board, the timing of the IPO or how much of a stake Mubadala will seek.

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