2008 Annual Report - The Carlyle Group

Despite last year’s global economic downturn,we successfully exited our investmentin AxleTech International for a sizable returnon equity invested. Since we acquired thecompany in 2005, AxleTech repositioned itselfand achieved significant profitable growth.The company, which manufactures heavydutyaxles and suspension systems, employsapproximately 1,000 workers worldwide.• AxleTech International. We sold this manufacturerof heavy-duty axles and suspension systems for a sizablereturn on our equity investment.• Universidad Latinoamericana. We sold a majoritystake in this private university based in Mexico Cityfor 1.2 times invested equity to Apollo Global, CarlyleGrowth Partners’ joint venture with Apollo Group.• WCI Cable. We sold this provider of terrestrial and submarinefiber optic cable for 3.2 times invested equity.While investment activity slowed in 2008, Carlyleinvestment professionals around the world were busyconducting due diligence and deploying capital inchoice buyout, growth capital, real estate and leveragedfinance opportunities, while avoiding some of the largestdeals that our competitors pursued. In fact, last yearwe deployed $12.6 billion in equity, including $9.7 billionin equity in 117 new corporate and real estate transactionswith an enterprise value of $16 billion.Some highlights:• Booz Allen Hamilton. We purchased this strategy andtechnology consulting firm for $2.54 billion, which wasone of the world’s largest leveraged buyouts in 2008.• Coates Hire. We acquired this Australian equipmentrental company for $1.2 billion.• AES Solar. Our second renewable energy fund committed$500 million over five years to invest in photovoltaicsolar projects around the world.• AvanStrate. We acquired a 51.4% stake in this Japanesemanufacturer of liquid crystal display glass substrate.• Boston Private Financial Holdings. We invested$75 million in this publicly traded wealth managementfirm, the first investment by our new Global FinancialServices group.• Ta l a r i s . We acquired this global provider of cashhandlingtechnology solutions based in the UnitedKingdom (formerly De La Rue Cash Systems) for anenterprise value of £360 million.Additionally, Carlyle’s growth capital and mezzanineteams had an active year. Across Asia, Europeand the United States, a total of 22 new growth capitaland mezzanine transactions were completed for a totalvalue of $1 billion.In 2008 and early 2009, despite the challenges in themarkets, Carlyle raised $19.9 billion in new capital todeploy. This includes final closes on 10 funds, includingCarlyle Partners V, L.P. at $13.7 billion; Carlyle EuropeTechnology Partners II, L.P. at €530 million; CarlyleMENA Partners, L.P. at $500 million; Carlyle EuropeReal Estate Partners III, L.P. at €2.2 billion; CarlyleMezzanine Partners II, L.P. at $553 million; CarlyleStrategic Partners II, L.P. at $1.35 billion; our thirteenthand fourteenth U.S. loan funds at $500 million and$80 million; and two European loan funds at €1.5 billionand €401 million.Since our founding in 1987, Carlyle has made productand geographic expansion a key element of ourbusiness model. Today we have 28 offices in 20 countrieswith approximately 900 professionals managing$85 billion in 64 funds.In 2008 we reaffirmed our nascent commitment toinvesting in Brazil, adding resources and expandingthe team. Brazil is the world’s tenth-largest economyand, we believe, holds significant investment opportunity.Carlyle is one of the few global private equity firmswith a presence in the country. In early 2009, we establisheda relationship with Banco do Brasil to enhanceour ability to source and execute investments in Brazil.That’s the good news. But clearly, 2008 was a roughyear and make no mistake: we were affected by it. Lastyear, three of our buyout portfolio companies filedfor bankruptcy protection or entered administration.Edscha, a German auto parts manufacturer acquiredby Carlyle Europe Partners, L.P. in 2003, sought bankruptcyprotection after succumbing to the combination14 The Carlyle Group 2008