2008 Annual Report - The Carlyle Group

the company now has offices in New York and LosAngeles. Recently, The Mill has diversified from itscore advertising business into television and distributionof content. In 2008, The Mill successfully completeda significant project in the Middle East and isfocusing on further developing opportunities in theregion, as well as in other parts of the world.By tapping into Carlyle’s global network, theteam facilitates introductions to potential customersand partners in an effort to increase opportunities forgrowth and value creation.The team is currently taking a patient, long-termview of potential investments. With financing in limitedsupply, many companies are looking to privateequity to fund their growth. Carlyle is adhering to aconservative approach and is examining opportunitiescarefully, believing that certain private equity investmentsmade during periods of economic difficultyhave the potential to outperform.In 2008, Carlyle successfully closed its thirdEurope-focused technology fund, Carlyle EuropeTechnology Partners II, L.P. (CETP II) with €530 millionin commitments, exceeding its initial target of €500 million.Carlyle targets investments between €25 millionand €200 million in technology companies that havethe potential to become global leaders in the firm’s coreindustries, in which Carlyle has a depth of expertise.CETP II made its first investment, with the acquisitionof Gardner Group in 2008. Headquartered in theUnited Kingdom, Gardner supplies metallic aerostructuredetails, equipment and engine components to theglobal aviation industry.The team also advises Carlyle Europe TechnologyPartners, L.P. (CETP), which launched in 2005 with€222 million in commitments. In 2008, CETP madetwo new investments, in Arsys Internet and KCS.net.Based in Spain, Arsys Internet provides Web site hosting,domain name registration and related servicesfor small and medium-sized enterprises. KCS.net isa rapidly growing, profitable vendor of Microsoftbasedenterprise resource planning and related consultingservices.In addition, the team advises a third fund, CarlyleEurope Venture Partners, L.P., with €553 million incommitments that launched in 2000.Carlyle Asia Growth PartnersCarlyle has assembled one of the largest growth capitalteams in Asia. Carlyle Asia Growth Partners, whichwas established in 2000, targets private high-growthcompanies with strong local management teams andleading market positions in China, India, Japan andSouth Korea.While not immune to the current macroeconomicenvironment, Carlyle Asia Growth Partners believesthat its investment discipline and experience are generatingpositive results. Carlyle generally does not useleverage or financial engineering in its Asia growthcapital investments, and its investment criteria andstrategy have resulted in investments in private companies—mostlyin China and India—that are growingmuch faster than the gross domestic product growthrates in those economies. Because Carlyle focuses oncompanies that are still expanding from a small foundation,they are relatively less affected by a macroeconomicslowdown.Carlyle Asia Growth Partners advises four funds:Carlyle Asia Venture Partners I, L.P., launched in2000 with $159 million in commitments; Carlyle AsiaVenture Partners II, L.P., launched in 2001 with $164 millionin commitments; Carlyle Asia Growth Partners III,L.P. (CAGP III), launched in 2006 with $680 million incommitments; and Carlyle Asia Growth Partners IV,L.P. (CAGP IV), launched in 2008.During 2008, Carlyle’s growth capital investmentsacross Asia totaled $228 million in aggregate equity in 13new and follow-on investments. CAGP III made investmentsin two new companies, both in China: HaoYueEducation Group, a private higher education serviceprovider, and China Forestry Holdings Group, a privateforestry plantation operator. In late 2008, CAGP IVmade its first investment, in Shenzhen Ellassay ApparelCompany, a fashion goods company in China.In addition, two CAGP III portfolio companieshad successful initial public offerings, both on the MainBoard of the Stock Exchange of Hong Kong. HongHuaGroup Holding, one of the largest land-based oil rigmanufacturers in the world, raised approximately$409 million. Xtep (China) Company, one of the largestfashion sportswear companies in China, raisedapproximately $285 million.38 The Carlyle Group 2008