Wednesday, June 13, 2007

Carlyle Flips Another for Huge Returns

The Carlyle Group announced an initial public offering for affiliate Transics N.V., a fleet/transport management solutions company. The politically connected private equity firm purchased 80% of Transics just over a year ago for 5.4 million Euro's.

Today's IPO offered 2.6 million shares at 17.50 apiece for a total take of 46 million Euro's. Carlyle's stake works out to a cool 36.8 million, a profit of over 31 million in one year! Who else wants a 580% return? I bet those Mafia loan sharks are jealous.

Private equity firms also take 20% of profits from asset sales, a cool 6 million Euro's in one pop. The boys on Pennsylvania Avenue must be proud. For those who prefer U.S. Dollars, Carlyle's profit is $41 million and their fee equates to $8.5 million.

Of course their 20% used to be the same rate as the capital gains tax. Bush cut it to 15% and Carlyle's Charles Rossotti testified on Capital Hill of the advantages to cutting it to 8%. On this transaction alone $425,000 less will go into the federal kitty. Does anyone else find it funny that Carlyle deserves 20% but the federal government should get basically a sales tax rate on millions in profits?

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