AMSTERDAM |
AMSTERDAM (Reuters) – Private equity firm Carlyle Group CYL.UL said it would buy Dutch-based private equity fund of funds AlpInvest Partners, Europe’s largest, to bulk up its product menu and attract more money from investors.
The deal would make Carlyle the world’s largest private equity firm by assets under management, ahead of Blackstone (BX.N), and provide a springboard for AlpInvest to expand internationally.
Financial details of the deal were not disclosed.
“We can say to our own investors we have an array of products, not just our own funds, but we have AlpInvest funds,” David Rubenstein, Carlyle’s co-founder and managing director, told Reuters on Wednesday at a news conference in Amsterdam.
“A number of investors around the world have said sometimes they don’t want to invest in our funds directly, they would like to go in a fund of funds, and asked who do we recommend … and now we have somebody to recommend.”
Rubenstein, who trained as a lawyer and worked in the White House during the Carter administration, co-founded Carlyle in 1987.
Carlyle competes against mammoth rivals which at times have grabbed more of the limelight, such as Blackstone Group and Kohlberg Kravis Roberts Co (KKR.N).
Large private equity houses have been broadening their menu of services to cater to large institutional investors who increasingly want to deal with just one asset manager for all their investments.
“Private equity houses, particularly those which are listed or will be listed, want to have a broad alternatives platform,” said a person familiar with the situation.
“They want to do private equity, they want to do hedge (funds), they want to do fund of funds, fund of hedge funds — they want to offer the whole gamut of alternative products to their institutions.”
As a fund of funds, AlpInvest invests in other private equity funds, including those run by Blackstone, Bain Capital and KKR, rather than directly in companies and assets.
Such access had sparked industry concerns about possible conflicts of interest if Carlyle were to gain control of AlpInvest.
Rubenstein said that to avoid such conflicts, AlpInvest will no longer be allowed to invest in Carlyle funds, and there will be an “information firewall” between the two to prevent Carlyle from accessing information on its rivals.
Speaking on the sidelines of a Dow Jones conference in New York, AlpInvest partner Tjarko Hektor said that to avoid conflicts of interest, there would be no exchange of information on underlying investments.
“It has been an extremely crucial part for us in this whole transaction,” Hektor said. “The arrangements that have been agreed have been watertight.”