EIG Gave In. What Did Carlyle and TCW Give Up?
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Thursday, January 17, 2013

EIG Gave In. What Did Carlyle and TCW Give Up?

After five months of legal battle, yesterday EIG Global Energy Partners dropped its opposition to the sale of TCW [profile] to Carlyle funds and TCW management. Yet TCW had to drop something, too.

Carlyle unveiled its TCW purchase on August 9, with Carlyle Global Financial Services Partners L.P. and Carlyle Partners V slated to buy a combined 60 percent of TCW and the rest destined to be held by TCW management. Later that month EIG, a former TCW unit that spun off in 2009, filed suit to block the deal, as Carlyle competes with EIG by offering energy sector investment funds, too.

In November, a federal judge provisionally blocked the TCW sale for EIG, only to unblock it in December. Also in December, a new twist came to light: Reuters reported that at least a sixth of TCW's profit comes from payments made by EIG.

Now Jessica Toonkel of Reuters reports that, while EIG will no longer fight Carlyle-TCW deal, EIG will also no longer have to pay TCW any fees from future EIG funds. According to the wire service, 33 percent of management fees on EIG's exising funds goes to TCW. Previously, EIG was also supposed to pay 20 percent of any future fund's fees to TCW. No longer.

"With this agreement, the interests of our Fund investors are fully protected and the same professionals will continue to manage the Funds," stated EIG founder Blair Thomas. "This completes our consensul spin-off from TCW, begun two years ago, and we are excited to move forward as a fully independent company."

Carlyle managing director Olivier Sarkozy described the agreement with EIG as "a win for everyone involved." Sarkozy, half brother of a French ex-President and boyfriend of actress and designer Mary-Kate Olsen, leads Carlyle's global financial services group.

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