Carlyle Group Inc. current report, 03 June 2013

Full document

Business Context and Reporting Period

Company: The Carlyle Group L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: June 3, 2013
Event: Announcement of an agreement in principle to acquire the remaining non-controlling interest in AlpInvest Partners B.V.

Key Financial Metrics and Transaction Details

This filing details a specific transaction rather than periodic financial results. Key metrics related to the transaction include:

  • Target Interest: Approximately 40% equity interest in AlpInvest Partners B.V. (AlpInvest).
  • Consideration:
    • Approximately 2,828,499 newly issued common units (subject to adjustment).
    • Approximately €4.0 million in cash.
  • Unit Adjustment Range: The number of units issued will not exceed 2,969,924 or be less than 2,687,074, based on exchange rates and market value prior to closing.
  • Expected Closing: On or about July 1, 2013.

Material Changes and Financial Impact

Consolidation Impact:

  • Pre-Transaction: The Solutions segment reflects only a 60% interest in AlpInvest's operations, while consolidated statements reflect 100% of operations with a 40% non-controlling interest.
  • Post-Transaction: Both the Solutions segment and consolidated financial results will reflect 100% of AlpInvest's operations.

Accretion Estimate:

  • The transaction is expected to be immediately accretive to distributable earnings per common unit.
  • Pro forma estimate: If completed on January 1, 2013, fee-related earnings for the Solutions segment would have increased by approximately $4 million for the three months ended March 31, 2013.

Outlook, Risks, and Management Commentary

Management Commentary:

  • The transaction is primarily equity-based to align the interests of AlpInvest management holders with Carlyle.
  • AlpInvest's management team will retain independent investment authority.
  • Existing carried interest allocation arrangements with historical owners and management will remain unaffected.

Risks and Contingencies:

  • The transaction is subject to the execution of a definitive agreement.
  • Closing is contingent upon the satisfaction or waiver of customary closing conditions.
  • Issued common units are subject to vesting, minimum retained ownership requirements, and transfer restrictions.

Investor Verification Checklist

  • Verify the execution of the definitive agreement and satisfaction of closing conditions prior to the expected July 1, 2013 closing date.
  • Monitor the final number of common units issued, which is subject to fluctuation based on exchange rates and market value.
  • Review the impact on non-controlling interest elimination in future quarterly reports.
  • Confirm that the vesting and transfer restrictions on the newly issued units align with long-term retention goals.