Another oil-rich Gulf state has made a grab for Western assets, as the investment arm of the Abu Dhabi government paid $1.35bn (£670m) for a 7.5 per cent stake in Carlyle Group, the private equity firm.
The investment came as Carlyle considers plans to list its shares, either on a public market or on one of the newly created private stock markets controlled by the giant investment banks.
Those plans are believed to have been delayed by the summer's credit crisis, which has made financing for private equity buy-outs much harder to come by, but co-founder David Rubenstein told a New York conference earlier this week that most private equity groups would inevitably be public in a few years.
The sale of a stake to the Abu Dhabi government comes after Carlyle's rival Blackstone sold a $3bn holding to the Chinese government ahead of its stock market listing in the spring. Such pre-flotation sales allow private equity firms to establish a value for the business, as well as providing alternative funds for investment.
Mubadala Development, the emirate's state investment vehicle, will not have any voting power and has been offered its stake at a discount. It has agreed with Carlyle that the company is now valued at $20bn – about six times its value in 2000 when CalPers, the California pension scheme, took a 5.5 per cent stake.
Carlyle has more than $58.5bn invested in more than 500 companies spread across the world – encompassing brands such as Dunkin Donuts and its Hertz rental car business – and is one of the world's three biggest private equity businesses. Rivals envy its political connections, which have helped it concentrate its investments in the defence industry.
The former US president George Bush was a longstanding adviser to the business and his son, George W, was briefly on the board of an ill-fated Carlyle investee company called Caterair, an airline catering company it bought in the early Nineties. In the UK, the former prime minister John Major served as a European ambassador for the company until 2004.
Mubadala's other investments include stakes in Ferrari and the Swiss aircraft maintenance company SR Technics. Abu Dhabi is the capital of the United Arab Emirates and owner of almost 10 per cent of the world's oil reserves, and is using its earnings from the high oil price to buy stakes overseas in order to diversify its income.Reuse content