Carlyle said to be shopping TCW around – exclusive

Carlyle Group is talking to potential buyers about selling just three years after buying the $185bn fixed-income manager from Société Générale.

The Carlyle Group is talking to potential buyers about selling its majority stake in TCW, sources familiar with the matter have told PDI.

Two sources suggested Asian insurers could be in the mix, although it is unclear whether Carlyle has involved an investment bank in a potential sale process or which suitors might make a run for TCW.

Carlyle bought 60 percent of the fixed-income manager in 2013 from Société Générale with money from two in-house private equity funds – Carlyle Global Financial Services Partners and Carlyle Partners V. The funds are nearing the end of their investment period and the sale of the TCW stake would allow Carlyle to return gains to LPs, according to sources.

The alternative investment firm could also be tempted to cash in on the success of TCW, which has seen its assets grow from $127 billion when the deal was signed in August 2012 to $185 billion today. TCW employees own the remaining 40 percent stake.

The Los Angeles-headquartered firm manages institutional and retail fixed-income strategies, but has been expanding into equities and alternatives. In 2012, TCW bought a direct-lending group from Regiment Capital Advisors, which is now managing about $2 billion in a private fund and a non-traded business development company based in Boston.

People familiar with Carlyle and TCW say the potential sale could be linked to competition between some of the firms’ strategies. Carlyle also runs a mid-market lending business within its Global Market Strategies unit and its Carlyle GMS Finance BDC.

Carlyle could yet re-purchase the manager with money from new private equity funds, say people familiar with the process. However, a balance sheet purchase is less likely given the fall in Carlyle’s share price from about $35 when the deal closed in February 2013 to $17 as of Monday.

Spokesmen for TCW and Carlyle declined to comment.

TCW was acquired by Société Générale in 2001. TCW’s assets rose from $80 billion to $147 billion between 2001 and 2007, but declined after the 2008 financial crisis. The firm was also involved in a legal battle after the departure of Jeff Gundlach, its bond portfolio manager in 2010. Gundlach took many former TCW employees with him when he started his own fixed-income shop called DoubleLine Capital, which is now 20 percent-owned by Oaktree Capital Management. TCW and Gundlach settled in 2011.

TCW has since rebuilt its business and picked up many of the mandates that PIMCO, another large West Coast bond manager, was losing, given its own reputational problems, according to Institutional Investor.