[CTRL] Carlyle Group cashing in again on IPO

[William Shannon]

http://www.marketwatch.com/news/story.asp?print=1&guid=%7B2E2F45DA-05FC-4D34-828B-03FB3A59F543%7D&siteid=myyahoo Carlyle Group cashing in again on IPO Commentary: U.S. Marine Repair is latest offering By Steve Gelsi, CBS.MarketWatch.com Last Update: 1:17 AM ET March 17, 2002 NEW YORK (CBS.MW) - Conspiracy theories abound on the Internet. And the involvement of the Carlyle Group in yet another military contractor IPO should provide some good fodder, not to mention tales of insider deals that rival the payoffs from the dot-com era. Chaired by former Regean administration defense secretary Frank Carlucci, The Carlyle Group is a $13 billion private equity firm based just a few blocks away from the White House on Pennsylvania Avenue in Washington. Founded in 1987 by two executives hailing from MCI, Marriott and a corporate merger attorney, it's attracted the most high-ranking officials in Washington on their way out of jobs in the Oval Office or elsewhere in the upper echelon of government. Principals include former British Prime Minister John Major, former secretary of state, James A. Baker III, not to mention former chairman of the Securities and Exchange Commission, Arthur Levitt. Former President George Bush holds the official title of senior advisor to the Carlyle Asia Advisory Board and gives speeches at events. Eyeing companies for investment, the Carlyle Group has taken part in several IPOs over the years including VarsityBooks.com, orthodontic firm Align Technology and high speed Internet firm NorthPoint Communications. In October of 1997, The Carlyle Group purchased a majority stake in United Defense Industries (UDI: news, chart, profile) in the midst of a slowdown in U.S. military spending following the end of the Cold War. After Sept. 11, President George W. Bush proposed huge increases in military spending now pending before Congress. The languishing defense sector has heated up and with it military-flavored IPOs have surfaced from several players including Tuesday's Anteon International (ANT: news, chart, profile), Integrated Defense Technologies (IDE: news, chart, profile), ManTech International (MANT: news, chart, profile) and upcoming information technology specialist Veridian. The $400 million United Defense Industries IPO was the first to debut in the latest salvo of weapons debutantes. When the maker of military vehicles went public in December, Carlucci owned 40,000 shares at an average strike price of $4.71, according to the company's IPO filings. The IPO debuted at $19 per share and has since risen to more than $27 per share. Carlucci is showing a tidy paper profit of $892,000 on his stake in United Defense Industries - pretty respectable. Granted, there are lockup periods governing when insiders can sell their shares, but in this time of post dot-com meltdowns and a barren IPO landscape, it's amazing to see that such big profits are still possible. On Wednesday, Carlyle filed a $160 million IPO for U.S. Marine Repair, a Norfolk, Va. specialist in maintaining and refurbishing Navy ships. Although the IPO market may soon tire of all these military deals, this one should do fairly well and provide another nice payday for The Carlyle Group. With access to folks like Secretary of Defense Donald Rumsfeld and Vice President Dick Cheney, Carlyle seems to have the defense game rigged as one of the biggest military contractors in the country. Sure it's just good business to buy low and sell high, but the Carlyle Group seems to be a bit too well connected. The company practically evokes classic conspiracy theories about a shadow government run by entities like the Rockefeller-founded Trilateral Commission of the 1970s, or the bizarre gatherings of wealthy white men dressed in robes at California's Bohemian Grove. The tales continue with the annual Bilderberg conference or the World Economic Forum at Davos -- events where the world's elite gather to ponder the direction of Western Civilization. While it's illegal for former government officials to lobby directly for private firms, there's nothing on the books right now to keep ex-officials from helping to raise money for investment ventures sponsored by companies like the Carlyle Group. The debate over apparent conflicts of interest will likely continue, but in the meantime, such companies are providing a nice payday for outgoing government officials on many fronts, including the IPO market.