Rubenstein Said to Tell Investors Carlyle Is a Discount

Carlyle Group LP (CG) co-founder David Rubenstein told investors he agreed to seek an initial public offering at a discount to rivals, to prove that shares in private-equity firms can rise, according to a person present at the meeting.

Rubenstein, speaking yesterday at a meeting in New York where the founders were trying to win over prospective shareholders for the company’s planned IPO next month, said investors come first at Carlyle and the firm considers shareholders investors as well, said the person, who asked not to be named because the information was private.

Christopher Ullman, a Carlyle spokesman, declined to comment.

Carlyle, the world’s second-biggest buyout firm by assets under management, is seeking to raise as much as $762.5 million in its IPO, valuing the firm at as much as $7.6 billion, about half the $14.9 billion market capitalization of Blackstone Group LP (BX), the biggest private-equity company, and below the $9.6 billion value of KKR & Co. (KKR) Washington-based Carlyle, which has considered an IPO since at least 2007, is the last of the three firms to go public.

Most of the biggest firms have lost money for shareholders. Blackstone, which sold stock just before the financial crisis froze credit markets in 2007, has declined more than half from its IPO price of $31, falling 1.3 percent yesterday to $13.20. Oaktree Capital Group LLC (OAK), which went public at $43 a share this month, has since lost 8.5 percent to $39.35.

Carlyle’s Pitch

Apollo Global Management LLC (APO), which went public in March of last year, has declined 30 percent. Leon Black, the firm’s chief executive officer, said earlier this year that Apollo had a “miserable” timing for its initial public offering as Europe’s sovereign-debt crisis fueled market volatility.

Carlyle is seeking a valuation of about 10 times after-tax distributable earnings, Rubenstein said. That’s about a third lower than the typical multiple for competitors, he said.

The firm, which is offering 30.5 million shares at $23 to $25 each, was trying to convince analysts as recently as last year that it’s worth at least as much as Blackstone, a person briefed on the matter said at the time.

Carlyle’s founders are traveling from Montreal to Milan in a 14-day world tour to pitch potential investors on the firm’s IPO. Rubenstein, William Conway and Daniel D’Aniello are each leading teams of Carlyle’s top executives, according to a copy of the roadshow schedule obtained by Bloomberg News.

“By many measures, we are the largest and most diversified alternative-asset manager in the world with 1,300 professionals in 33 offices on six continents,” D’Aniello said in a video of its pre-IPO marketing presentation posted on RetailRoadShow.com. “We live and invest in both developed and developing markets and, in both, local market presence really matters.”

Carlyle is scheduled to price its IPO on May 2, according to data compiled by Bloomberg.

To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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