2008 Annual Report - The Carlyle Group

to 10 million households. Completel’s corporate customersbenefit from the largest alternative metropolitan fiber accessnetwork and the third-largest DSL network in France.In 2008, the global economic downturn, combinedwith an ailing automobile industry, took a toll on Edscha,a German auto parts manufacturer acquired by CEP in2003. Edscha was forced to file for bankruptcy protectionin February 2009. The company had become illiquiddespite the injection of additional capital and the implementationof a comprehensive cost-reduction program.In the current market, Carlyle Europe Partners hasobserved a slowdown in the pace of investments. Yetthe team believes it should benefit from more attractiveopportunities when the markets recover, especially inview of the fact that only 28% of CEP III’s committedcapital has been invested. Until then, the team remainsfocused on maintaining and enhancing the value of itscurrent portfolio companies.Carlyle Asia PartnersCarlyle Asia Partners, which was established in 1998,advises three funds. Carlyle Asia Partners, L.P., its firstfund, launched in 1999 and had $750 million in committedcapital. Its second fund, Carlyle Asia Partners II,L.P., launched in 2006 at $1.8 billion. And its third fund,Carlyle Asia Partners III, L.P., was launched in 2007.From offices in Hong Kong, Mumbai, Seoul, Shanghai,Singapore and Sydney, Carlyle Asia Partners seeks controland strategic minority investments in Asia (except Japan),including Australia, Greater China, India, South Koreaand Southeast Asia. In addition to traditional buyouts, theteam also seeks long-term partnerships with Asian businesseswith a focus on maintaining brand continuity andmanagement independence in those companies.Asia’s economy began 2008 performing much betterthan the rest of the world, but parts of it deterioratedin the second half. During the fourth quarter, the downturnaccelerated. Throughout the year, Carlyle AsiaPartners carefully monitored the economic situation toascertain the implications for its portfolio companiesand for potential new investment opportunities.As part of the global Carlyle organization, the teambenefited from timely insights from around the world onthe rapidly evolving economic downturn. It approachedthe year with caution, was extremely careful about makingnew investments and focused primarily on helpingits portfolio companies prepare for the changing economicenvironment. Many portfolio companies beganscrutinizing their capital expenditures and other spendingand reviewing cost reduction measures as early asthe middle of the year—when Asia’s economic environmentwas more robust than the rest of the world andtalk of “decoupling” was prevalent.The team’s cautious and prudent approach duringthe economic downturn resulted in two new investmentsin 2008. Carlyle invested in Jiangsu SinorgchemTechnology Company, the largest Chinese supplier of akey chemical additive that helps prevent premature agingof rubber, especially automotive tires. Since its establishmentin 1999, Sinorgchem has achieved rapid growththrough technological innovation. Demand for its productsis driven primarily by the rapid growth of car ownershipin China, which in recent years has become one ofthe top two automotive markets in the world.Bringing in proven senior executives with strongAsian operating experience and a global perspectivehas been a key component of Carlyle’s investment strategyin Asia. To further expand its capabilities, CarlyleAsia Partners made two significant additions to itsteam in 2008. Sunil Kaul joined as a Senior Director andis based in Singapore. Mr. Kaul is focused on expandingCarlyle’s investments in the financial services sectoracross the region. Prior to Carlyle, Mr. Kaul wasPresident of Citibank Japan, capping his 21 years withCitigroup in a number of senior management roles.Devinjit Singh also joined Carlyle Asia Partners, as aManaging Director. Based in Mumbai, Mr. Singh is partof a team of six investment professionals in India. Beforejoining Carlyle, Mr. Singh worked for nearly 20 yearsat Citigroup, most recently as Managing Director andhead of mergers and acquisitions in India.Carlyle Japan PartnersCarlyle formed a Tokyo-based team dedicated to Japanin 2000. The team advises two buyout funds. CarlyleJapan Partners, L.P. is a ¥50 billion investment fund thatlaunched in 2001. Carlyle Japan Partners II, L.P. (CJP II)is a ¥215.6 billion fund that launched in 2006.Each Japanese investment professional within CarlyleJapan Partners understands both the local business cultureand global investing. Carlyle Japan Partners works closelyand cooperatively with portfolio company managementContinued on page 2824 The Carlyle Group 2008