Last December, when Carlyle Group took over four CLOs previously managed by Mizuho Alternative Investment, it didn’t just get the management contracts; it also acquired equity in these deals.
The prospectus for Carlyle’s IPO, which was filed with the Securities and Exchange Commission on Monday, said the firm acquired $51 million par value of subordinated notes in the four CLOs from affiliates of Mizuho. This transaction was simultaneous with the acquisition of the management contracts of the CLOs, which at the time had total assets of $1.2 billion.
The prospectus details the rest of Carlyle’s CLO businesses, including the $500 million deal it acquired from The Foothill Group last month. Carlyle will be entitled to a management fee equal to 0.5% of assets per annum, as well as an incentive fee if the equity investors in the CLO receive a return greater than 12% per annum, according to the filing.
Asset management and performance fees for other CLOs Carlyle manages are not listed.
The filing also states that in August 2010 Carlyle completed the acquisition of management contracts relating to CLO vehicles previously managed by Stanfield Capital Partners. At acquisition, the 11 CLOs had $4.2 billion in assets.
It’s possible to get a rough idea from the filing of the relative size and importance of Carlyle's CLO business. The firm consolidates a number of funds and related investment entities, including the CLOs, on its combined and consolidated financial statements — collectively these businesses represented approximately 11% of total assets as of June 30 and 8% of fund management fees during the six months ended June 30, according to the filing.
The businesses collectively represented 1% of Carlyle’s performance fees during the first six months of the year.
At June 30, the CLOs (or at least the ones that are consolidated on Carlyle’s balance sheet) held approximately $12 billion of total assets and comprised 90% of the assets of the consolidated funds and 100% of the loans payable of the consolidated funds.