Tuesday, December 1, 2009

A Carlyle Group Mystery

Rohin Dharmakumar reports for Forbes India:
For reasons that remain shrouded in mystery, in July 2005 the Carlyle Group, a global private equity firm, sold its 16 percent stake in the education services company, Educomp, back to founder Shantanu Prakash. Incredibly, Carlyle made the sale at a loss of roughly 94 percent on the USD2.1 million (Rs 1,087 lakh) it had paid to acquire the shares in June 2000.

While 94 percent is a really bad “haircut” — an investing term describing the reduction in the value of a security — it paled in contrast to what Carlyle had given up in the future. Less than six months after Carlyle’s exit, Prakash took Educomp through an IPO. The shares Carlyle sold back to him in 2005 for Rs 60 lakh are today worth roughly Rs 300 crore. Prakash’s total shareholding in Educomp is valued at over Rs 700 crore.
What did Prakash have on Carlyle? Carlyle doesn't back away from deals this way.

1 comment:

  1. For the rest of the Carlyle Asia Venture Partners I fund (which includes Educomp):


    Three of the firms are listed as current investments.