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May 29 (Bloomberg) -- Carlyle Group LP will earn a return of about 80 percent from its $514 million investment in Beats Electronics LLC with the headphone maker’s sale to Apple Inc., a person with knowledge of the matter said.

Carlyle, the world’s second-largest manager of alternative assets such as private equity and property, paid $501 million in October for a 31 percent stake in Beats, according to a quarterly report to clients, a copy of which was obtained by Bloomberg News. The Washington-based firm also invested $13 million for a 5 percent interest in Beats Music, the company’s nascent subscription music-streaming service, the report shows.

Apple, in what would be its biggest-ever acquisition, agreed yesterday to pay $2.6 billion up front for Beats and Beats Music and an additional $400 million that will vest over time. Beats’ major backers also include hip-hop artist-producer Dr. Dre and veteran music industry executive Jimmy Iovine, who co-founded the Santa Monica, California-based company.

Carlyle, led by billionaires David Rubenstein, Bill Conway and Dan D’Aniello, will reap about an 80 percent annual gross internal rate of return in the sale, said the person, who asked not to be identified because the information isn’t public.

The deal is scheduled to close in the quarter ending in September. Christopher Ullman, a Carlyle spokesman, declined to comment on the transaction or on the firm’s return.

Known for its leveraged buyouts of fast-food chain Dunkin’ Brands Group Inc. and government contractor Booz Allen Hamilton Inc., Carlyle oversaw $198.9 billion in assets across 120 funds and 133 fund of funds at the end of March, according to a regulatory filing.

To contact the reporters on this story: David Carey in New York at; Sabrina Willmer in New York at

To contact the editors responsible for this story: Christian Baumgaertel at Josh Friedman

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