Carlyle Snags $1.1 Billion for Financial Services Deals

Posted Apr 6th 2010 1:40PM by Tom Taulli
Filed under: Competitive Strategy, Private Equity

Even for top private equity firms, it's extremely tough to raise new funds. Investors are changing their allocations and also concerned about future returns. For example, private equity firms raised only $13 billion in Q1, which was the lowest since 2004. The peak came in Q1 of 2008, when the amount was roughly $68 billion.

As a result, private equity firms need to get creative, such as focusing on new markets.

Take a look at the Carlyle Group, which is the second largest private equity fund in the world. The firm was able to raise $1.1 billion to invest in the financial services industry.

Interestingly enough, the fund has already invested in three deals from early funds. The companies include: Bank of N.T. Butterfield and Son, BankUnited Financial and Boston Private Financial Holdings.

However, there are some barriers. Because of FDIC rules, deal-making can get difficult, especially in auctions. Yet, the opportunities are certainly lucrative.

Carlyle has also been building its financial-services team since the middle of 2007. For example, the firm hired Randal Quarles, a former Treasury Department undersecretary for domestic finance. Oh, and the leader of the fund is Olivier Sarkozy, who has an extensive banking background and political ties. After all, he's the half-brother of French President Nicolas Sarkozy.

Tom Taulli advises on business tax preparation and is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.

Tags: Carlyle Group, inthenews, private equity