Carlyle chiefs in $6.5bn private equity swansong

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The Independent Online

Carlyle, the giant US private equity group, is close to completing the money-raising for its $6.5bn (£3.5bn) buyout fund, the largest in history. The Washington-based group is expected to announce that it is closing Carlyle Partners IV to new investors later this month.

Carlyle, the giant US private equity group, is close to completing the money-raising for its $6.5bn (£3.5bn) buyout fund, the largest in history. The Washington-based group is expected to announce that it is closing Carlyle Partners IV to new investors later this month.

The fund is likely to be the swansong for Carlyle's three founding partners, David Rubenstein, William Conway and Daniel D'Aniello. In five years' time, when the next US buyout fund is launched, it will probably not bear their names as the firm plans for the future.

As part of the break with the past, Carlyle has also been severing ties with some of its political heavyweight advisers. Former prime minister John Major stood down as UK chairman last summer, while former US president George HW Bush left the company in 2003 after four years as a senior adviser.

Carlyle began raising money for the new fund in September. According to filings with the Securities and Exchange Commission in the US, within three months it had raised $5bn from institutional investors and wealthy individuals from the US and abroad. Carlyle's last American buyout initiative raised $2.9bn in 2000.

The fund will be used mainly for buying US companies, but it can also invest up to 25 per cent of the proceeds outside the US. Carlyle already holds investments worth more than $12bn in companies spanning most sectors.

It owns the Dr Pepper and Seven Up Bottling Group and in Europe has a 34 per cent stake in the UK defence research company QinetiQ. It also used to own a 40 per cent stake in French newspaper Le Figaro.

The size of Carlyle's new fund is a sign of the booming private equity industry. The depressed stock market has made acquisitions more attractive, while banks' swelling profits make them eager to lend money to finance the deals.

Typically, firms now borrow seven times the annual profits of the acquired company to finance the deal. Previously, they tended to borrow five times' earnings.

This has led to concerns that private equity firms are overstretching themselves and could be sitting on billions of dollars of bad debt.

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