The Carlyle Group LP (NASDAQ:CG) and Fortress Investment Group LLC (NYSE:FIG) have announced their plans to list their mutual funds towards their quest to ramp up their permanent capital.
While The Carlyle Group LP (NASDAQ:CG) unveiled its plans to launch two publicly listed mutual funds, Fortress Investment Group LLC (NYSE:FIG) would list its existing infrastructure fund.
Carlyle’s new mutual funds
According to Henny Sender of the Financial Times, The Carlyle Group LP (NASDAQ:CG), one of the world’s biggest private equity firms, plans to launch two new mutual funds registered with the Securities and Exchange Commission.
In its filing with the U.S. SEC, Carlyle revealed that while the Carlyle Enhanced Commodity Real Return Fund will primarily look for investments in the commodity sectors as well as in energy and metals, the Carlyle Global Core Allocation Fund will make investments in equities, debt, commodities, real estate and currencies through the use of exchange-traded funds.
The Carlyle Group LP (NASDAQ:CG)’s regulatory filing revealed getting into mutual funds has historically been difficult for private equity companies due to the illiquid nature of the average buyout fund which typically has a life span of 10 years. However, with their diversification into credit and hedge funds which are considered more liquid alternative assets, they have started to grow their investor base instead of focusing only on institutional investors.
In November, Carlyle, the private equity powerhouse, announced its intention to acquire Diversified Global Asset Management Corporation, a Toronto-based investor in hedge funds. The Carlyle Group LP (NASDAQ:CG)’s move was considered an effort to expand from private equity. Until recently, the alternative asset manager hadn’t developed a big presence in other businesses.
Fortress to list existing fund
Fortress Investment Group LLC (NYSE:FIG), which listed itself in February 2007, is listing its existing infrastructure fund, Worldwide Transportation and Infrastructure Fund on the NYSE. Fortress went public before big competitors including Blackstone and KKR followed.
Fortress Investment Group LLC (NYSE:FIG) in its SEC filing disclosed that it aspires to a return of between 15% and 25%, though it gave no indication of price or number of shares it plans to list.
Henny Sender of the Financial Times points out that such listing moves have been in the works for some time as all the major alternative groups seek to grow their assets under management, if only to support their own share prices, which depend in large part on the management fees they glean from such activities.
Their listing initiatives would reduce the need to go on the road to solicit money from major pension funds, sovereign wealth funds and wealthy families every few years. Moreover, with their core business operations inherently volatile, they can hope to smooth their earnings through such listings.