Although many of private equity’s premier firms have gone public in the last few years, don’t count on Clayton Dubilier & Rice to follow suit.
“Running a public company is not necessarily an easy thing to do. The government has a way of, if you use the public markets, wanting to regulate your business. I think also, being a public company doesn’t really fit with my concept of what this business is about as we conduct it. So it’s really never going to happen for us,” said CD&R co-founder Joseph Rice at the Columbia Business School Private Equity & Venture Capital Conference.
CD&R, which raised $5 billion on its 2008 fund, will not be joining peers The Blackstone Group, Kohlberg Kravis Roberts, Oaktree Capital Management and The Carlyle Group, all of which have either gone public or are in the process of going public. Carlyle co-founder David Rubenstein, who was on the panel with Rice, declined to comment on his firm’s decision to file for a public offering.
“There’s a 500 page document that answers that question better than I could, and gets me in considerably less trouble than anything I say,” Rubenstein said, referring to IPO registration filing with the US Securities and Exchange Commission.
While CD&R is frequently cited as one of the industry’s premier firms, Rice indicated that the firm’s dedication to the private equity model would not generate the steady stream of income public investors typically crave.
“David’s been very careful to construct a business that has attributes that public investors want to see, which is a steady stream of income,” he said. “David’s constructed, in my mind, the ultimate diversified business.”
Rice founded CD&R along with William Dubilier and Eugene Clayton in 1978. The firm has raised eight flagship funds and has invested more than $15 billion since inception.
While other veteran firms have diversified their investment strategies over time, CD&R has remained true to private investment. In August, CD&R joined AXA Private Equity and Caisse de dépôt et placement du Québec to close on the €2.1 billion acquisition of French multi-technical services company SPIE from PAI Partners.
Carlyle, on the other hand, has been building toward a public filing, acquiring a variety of businesses that expanded the firm beyond its core private equity business.
In June, Carlyle bought a 55 percent stake in emerging markets equities firm Emerging Sovereign Group. Last year, Carlyle acquired Dutch fund of funds AlpInvest from Dutch pension funds PPMG and APG. The firm also acquired minority stakes in Australian online foreign exchange payments company OzForex in 2010, and financed the North Carolina community banking merger between FNB United and Bank of Granite.
The firm filed its S-1 in September and is expected to public at some point this year. Carlyle hopes to raise $100 million in its float, which is being underwritten by JP Morgan, Citi Group and Credit Suisse.