Carlyle Holds Investors Meeting Amid Market Turmoil

The Carlyle Group opened its annual investors conference on Monday with some words of wisdom from Chairman Louis V. Gerstner, who urged the 1,000 attendees to take a long view on investing.

Since 1973, there have been 268 financial crises around the world, Gerstner reminded the audience. He is the former chief executive of IBM.

"Leaders get stronger," Gerstner said, according to one person who was present at the event, which was closed to the public. "Pretenders fade away."

Gerstner's remarks lasted 15 minutes. The next speaker was Carlyle co-founder and managing director William E. Conway, who chairs the firm's investment committees. Carlyle is one of the world's largest private equity firms, with $76 billion under management, and is based in Washington.

Conway started with a thorough explanation of Carlyle Capital, a publicly traded European affiliate that has been squeezed by recent credit market turmoil. He also brought several slides with him, which went up on the screen.

Carlyle Capital, which was launched this summer and trades on the Euronext exchange, is based on the island of Guernsey in the English Channel. It uses borrowed money to invest in AAA-rated mortgage-backed securities. Those holdings have been battered by the latest mortgage-market upheaval, and the subsidiary has been forced to sell assets to keep up with margin calls from its creditors.

The subsidiary's difficulties posed enough risk to the parent firm's brand that the Carlyle Group stepped in twice to make loans available to Carlyle Capital.

"We've never had a fund lose money, and we don't intend for this fund to lose either," Conway told the audience.

Carlyle is concerned about the damage that Carlyle Capital could do to the company's reputation for earning 26 percent a year for investors, net of fees.

Conway was followed by co-founders Daniel A. D'Aniello and David M. Rubenstein, who also made presentations.

The audience included wealthy individuals, pension fund representatives and investors from overseas.
The conference concluded Wednesday morning.
-- Thomas Heath

By Mike Shepard  |  September 12, 2007; 6:55 PM ET  | Category:  Carlyle , Private Equity
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