Carlyle To Buy AlpInvest, €32B Fund Of Private Equity Funds

Jan 27 2011 | 1:27pm ET

The Carlyle Group has struck a deal to buy fund of private equity funds giant AlpInvest Partners, it said yesterday.

Carlyle has been in talks with the Dutch firm, which put itself up for sale over the summer, for several months, and last month was reported near a deal. The acquisition, terms of which were not disclosed, boosts Carlyle's assets under management by nearly half at a stroke; AlpInvest has some €32.3 billion in assets itself.

The deal reportedly values AlpInvest at several hundred million dollars. Carlyle will own a majority stake in the firm, but AlpInvest's managers will retain a 40% economic stake and a 50% voting stake.

Buying a major fund of funds has raised concerns about conflicts of interest for Washington, D.C.-based Carlyle, the world's largest private equity firm. But Carlyle said it would institute several measures to ensure that nothing amiss happens.

For one, AlpInvest will be barred from investing in future Carlyle funds, and Carlyle executives will not sit on the firm's investment committees. What's more, the two firms will be barred from sharing information, an important concession, given AlpInvest's investments with many of Carlyle's competitors, including the Blackstone Group, which considered buying AlpInvest itself.

AlpInvest's management team, led by CEO Volkert Doeksen, will retain "complete discretion over all investment decisions," the firms said.

What's more, Carlyle has moved to assuage fears that AlpInvest's biggest investors and current owners, Dutch pension funds APG and PGGM, will not abandon the firm. The two have reportedly committed a further €10 billion to AlpInvest over the next four years.

Carlyle's announcement of the AlpInvest comes less than two months after it agreed to buy a majority stake in hedge fund Claren Road Asset Management.

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