Carlyle Group Getting Closer for TCW Deal

Carlyle Group Getting Closer for TCW Deal
By The Carlyle Group (annual report),User:Fairlyoddparents1234 (uploaded result) [Public domain], via Wikimedia Commons

Carlyle Group Getting Closer for TCW Deal

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The asset management firm, Carlyle Group LP (NASDAQ:CG), appears to be moving forward in its acquisition of TCW Group Inc. Sources are reporting that its board of directors will meet on Monday to approve a cash and stock deal.

The transaction will likely value TCW at approximately $700 million, according to Pensions &Investments, with private equity funds from Carlyle to purchase the 65 percent stake of Societe General SA, and the 16 percent stake by the SocGen affiliate, Amundi.

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Should the deal go through, it will represent the largest private equity deal for Carlyle Group LP (NASDAQ:CG) since the worldwide financial crisis.

A new management team will be put in place, and will include numerous Metropolitan West Asset Management LLC executives. They became part of the TCW family at the year’s end in 2009 as TCW announced the acquisition of MetWest, as a replacement to the fired Chief Investment Officer, Jeffrey E. Gundlach.

Other changes could include a restructuring that would slash jobs, and compensation for equity distributions. The job cuts will likely come from MetWest CEO, David Lippman; he’s TCW’s head of fixed income and a group managing director, according to P&I. He will also probably be the new TCW CEO, replacing Marc I. Stern.

As for Stern, he will then probably become the chairman and a TCW representative (one of three) on the TCW board that will include seven members.

What’s next for TCW?

TCW has seen a rise assets under management over the last few years. As of June 30, the number came in at $127.3 billion, but it’s lower than the $140 billion combined, for TCW and MetWest, when Grundlach had been dismissed.

Many industry veterans believe there’s excess at TCW to cut and have speculated that Carlyle Group LP (NASDAQ:CG) could quickly push for this. Some also think that Lippman will steer TCW into the right direction. Tad Rivelle, TCW’s CIO of high-grade fixed income, is also expected to have a role in the changes, reported P&I.

Aside from job cuts and personnel changes, TCW also brings an interesting angle to Carlyle Group LP (NASDAQ:CG). It is the enemy of DoubleLine Capital, as its former CEO Gundlach, is the firm’s CEO and CIO. He has been accused of poaching talent from TCW for his new firm, while accusations have come that Gundlach didn’t receive all of his compensation from TCW.

It also has a financial investment by Carlyle’s rival, Howard Marks’ Oaktree Capital Group LLC (NYSE:OAK).

For this arena, it’s a small world, filled with too many connections and too many job changes.



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