Carlyle Group IPO Has Investors Worried
A Carlyle Group IPO should catch the attention of the media and many investors. In the past the private equity firm has come under scrutiny from the left because the bin Laden family once owned a stake, ex President George H.W. Bush, and former Secretary of State James Baker also once served as advisors. Politics aside, the Carlyle Group is good at what they do. The L.P. posted an economic net income of over $1 billion in 2010.
But does the past success turn the Carlyle Group IPO into a hot deal ? Probably not. Just look at their peers. Fortress Investment Group (FIG:NYSE), Kohlberg, Kravis and Roberts (KKR:NYSE) and Blackstone Group (BX:NYSE) have not exactly been massive winners. As a matter of fact, KKR is the only one of the three that is actually up from it’s IPO price, and is only up a little less than 20% from it’s debut. Fortress has been an absolute disaster since debuting at $31. Shares of FIG are now below $4. BX is somewhere in between. The Carlyle Group IPO was priced at $35 and is now below $13.
As always with new issues, the demand from institutions and IPO flippers factor heavily into the first day pop or decline. Even though the Carlyle Group IPO is at least a few months away, due to the past performance of the sector, it’s hard to imagine that the Carlyle Group IPO will be any better than flat to up marginally on the first tick, and that’s probably being generous.
Carlyle Group IPO Shaky Investment
So don’t let the sexy Carlyle Group IPO story fool you if you are an IPO investor. Deals like this one are often only taken by institutions to run commissions up for research received. These same institutions often bail quickly and chalk the loss up as a cost of doing business.
Also, keep in mind that management at private equity firms are the brightest of the bright. So sharply reducing the price on a deal to make it attractive to investors is probably not in the game plan.
So be safe, while the Carlyle Group IPO may perform reasonably well like KKR, there will be better new issues to play.
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