* Shares rose as much as 2 pct, then retreated
* Market reception in line with low-key IPO ceremony
By Greg Roumeliotis and Olivia Oran
May 3 (Reuters) – Shares of Carlyle Group LP were
little changed o n Thursday, in line with a low-key ceremony to
mark its stock market debut and one day after the iconic private
equity firm had to discount its original IPO price range.
Investors are eyeing Carlyle’s IPO to gauge how the stocks
of financial institutions as an asset class are valued.
Alternative asset managers are the most niche of investment
firms, with the complexity of their internal workings weighing
on their valuation.
The private equity firm’s shares climbed as much as 2
percent as they began their debut on Nasdaq, but eased back
to$22.04, up just 0.2 percent, in late morning trading.
“All year we’ve seen really the only companies that have
done well in this market are high-growth technology companies,
consumer names that and companies with particularly profitable
business models,” said Jim Krapfel, an equity analyst with
Morningstar.
“With Carlyle, it doesn’t fit into any of these three
buckets and has issues related to its industry such as opaque
business models, limited financial disclosures, risks to higher
taxation, greater regulatory oversight and a limited partnership
structure that places minority shareholders at a distinct
disadvantage.”
Carlyle’s 30.5-million-share initial public offering was
priced at $22 on Wednesday, below its expected price range of
$23 to $25 per unit.
Carlyle, which has taken many of its portfolio companies
public since its founding in 1987, had marketed the original
price range of its IPO as conservative. Its decision to scale
back the price further on Wednesday contrasts sharply with the
excitement over the Blackstone Group LP ‘s $4.1-billion
IPO five years ago.
But the performance of alternative-asset management stocks
has been lackluster since Blackstone first started trading.
Blackstone’s shares have tumbled 56 percent since its 2007
trading debut, while Apollo Global Management LLC has
declined 32 percent. Oaktree Capital Group LLC, which
went public in April, has fallen 6 percent.
Investors often complain that the balance sheets of these
firms are too hard to value and that their earnings can rely
excessively on carried interest, their cut of their funds’
investment profits – which is often both cyclical and volatile.
If Carlyle’s shares close up on Thursday, it would be an
exception among some of its peers who have also gone public.
Shares of Blackstone, KKR & Co LP and Apollo all closed
down on their first trading day.
Carlyle’s founders William Conway, Daniel D’Aniello and
David Rubenstein stayed behind the cameras on Thursday at the
trading opening ceremony at Nasdaq in New York, as
representatives from a charity of their choice rang the bell.
Carlyle invited Junior Achievement, the world’s largest
organization dedicated to teaching financial literacy, work
readiness and entrepreneurship to young people, to do the
honors.
