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Thursday, August 09, 2012

Carlyle Buys TCW

Reported by Neil Anderson, Managing Editor

If you're looking for the story, "Vanguard Pulls Half a Trillion of Mandates," please forgive us for the detour. Click here to get to the right story.

The TCW [profile] sale to Carlyle is now official. Today the Carlyle Group confirmed that, together with TCW's management, it is buying the $130-billion AUM, Los Angles-based asset manager from French bank Societe Generale and putting former MetWest chief and current fixed income chief David Lippman into the president and CEO seat. TCW has $42 billion in mutual fund assets.

The deal may not come as a surprise to fundsters. Rumors of a TCW sale go back to November, if not earlier. In June two other private equity shops reportedly dropped out of the auction, leaving Carlyle as the last bidder standing. Since then, Carlyle has repeatedly been mentioned as a the backer of a reported $1 billion deal for TCW.

Yet pricing and terms for the deal were not disclosed, though Carlyle's money comes courtesy of two of its funds, the $1.1-billion Carlyle Global Financial Services Partners L.P. financial services fund and the $13.7-billion Carlyle Partners V U.S. buyout fund, who will own a combined 60 percent of TCW. The TCW team will boost their stake in the mutual fund shop to 40 percent as part of the deal, which is slated to close in Q1 2013.

Lippman, who joined TCW two years ago after it bought out his rival firm, MetWest, succeeds Marc Stern. Stern, in turn, will take TCW founder Robert Day's place as chairman. Lippman took his new post, and Stern will switch from vice chairman to chairman when the deal closes next year. Day will remain an adviser to TCW and continue to serve as chairman and CEO of TCW trust company subsidiary Trust Company of the West.

The deal comes three months after Carlyle IPOed. Its market cap is now over $1 billion, up nearly 10 percent since its shares' debut on the NASDAQ in May. As of March 31, Carlyle managed $156 billion in 94 funds and 63 funds-of-funds.

Morgan Stanley advised TCW deal, while J.P. Morgan worked with SocGen, and Bank of America Merrill Lynch and Sandler O'Neill & Partners worked with Carlyle.

A source close to the deal confirmed that there are no other planned changes on the table for TCW's employees, who currently number about 550.

Check back for more details as this story develops.

Company Press Release

The Carlyle Group and TCW Management to Acquire Asset Manager TCW Group from Société Générale


August 09, 2012

David Lippman Named President and CEO of The TCW Group

Emerges as Independent Firm With Increased Employee Ownership, Better Aligning Interests with Clients

Washington, DC and Los Angeles, CA – Global alternative asset manager The Carlyle Group (NASDAQ: CG) and the management of The TCW Group, an asset management firm, today announced a definitive agreement to acquire TCW from Société Générale. As a result of the transaction, TCW management and employees will increase their ownership in the firm to approximately 40% on a fully diluted basis, better aligning interests with clients. Financial terms of the transaction, which is expected to close in the first quarter of 2013, were not disclosed.

Equity for the investment will come from two Carlyle investment funds, as well as from TCW management. The funds are Carlyle Global Financial Services Partners L.P., a $1.1 billion financial services fund, and Carlyle Partners V, a $13.7 billion U.S. buyout fund.

Founded in 1971, TCW is a diversified asset management firm offering U.S. equities and fixed income, international and alternative strategies, with approximately $130 billion under management. Powered by strong investment performance, the firm’s $42 billion mutual fund franchise has attracted more than $13 billion in net inflows in 2011 and 2012.

David Lippman, previously Group Managing Director and Head of Fixed Income at TCW, today becomes President and CEO of the TCW Group, succeeding Marc I. Stern. Upon closing of the transaction, Mr. Stern, currently Vice Chairman of TCW, will become Chairman of the newly formed TCW Board of Managers.

Marc Stern said, “This major milestone in the evolution of TCW enhances our long-term position in the competitive asset management business. I am particularly pleased that we will materially increase employee ownership in TCW – a transformative change that will even more closely align our interests with those of our clients. We are putting in place a strong new management team led by David Lippman, a decisive and effective leader who has been instrumental in both the integration of MetWest and TCW and in the growth of our fixed income and mutual fund businesses.”

David Lippman said, “This is an exciting moment for TCW’s talented and dedicated employees, as we look to the future as an independent firm united in our focus on serving our clients. TCW is well positioned today to achieve our clients’ investment objectives because of the vision and efforts of our founder Robert Day and the leadership of Marc Stern. Robert’s commitment to independent, research-driven investment management remains at the core of our mission. Marc has dedicated his 22-year TCW career to building and growing the firm. Marc’s stewardship has enabled us to realize consistently strong returns for clients, growth in assets under management and, now with this transaction, significant employee ownership of the firm.”

Olivier Sarkozy, Carlyle Managing Director and Head of the Financial Services team, said, “TCW is a premier global asset manager that will become even stronger as a free-standing company with increased employee ownership. TCW’s team of investment professionals has consistently out-performed across a broad range of strategies. The firm has enviable institutional relationships, a world-class distribution network, and a vibrant and fast-growing mutual fund complex. We look forward to working with the TCW management team to capitalize on the firm’s successes to create additional growth opportunities.”

With this investment, Carlyle Global Financial Services Partners has made 12 investments since 2008.

* * * * *


The TCW Group:
• M&A: Morgan Stanley
• Legal: Debevoise & Plimpton LLP

The Carlyle Group:
• M&A: BofA Merrill Lynch, Sandler O’Neill + Partners, L.P.
• Financing: J.P. Morgan Securities LLC, BofA Merrill Lynch, Morgan Stanley
• Legal: Simpson Thacher & Bartlett LLP

Société Générale
• M&A: J.P. Morgan Securities LLC

* * * * *


The Carlyle Group:
Liz Gill, +1 (202) 729-5385

The TCW Group:
Peter Viles, +1 (213) 244-0509

* * * * *

About TCW Group
Founded in 1971, The TCW Group, Inc. develops and manages a broad range of innovative, value-added investment products that strive to enhance and protect clients’ wealth. The firm has approximately $130 billion in assets under management, including $42 billion in mutual funds under the MetWest and TCW Fund families. TCW clients include many of the largest corporate and public pension plans, financial institutions, endowments and foundations in the U.S., as well as a substantial number of foreign investors and high net worth individuals. For more information, please refer to www.tcw.com.

About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $156 billion of assets under management in 94 funds and 63 fund of fund vehicles as of March 31, 2012. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Fund of Funds Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has developed expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, technology & business services, telecommunications & media and transportation. The Carlyle Group employs approximately 1,300 people in 32 offices across six continents.

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