(By Balaseshan) Carlyle Group LP (NASDAQ:CG) has agreed with TCW management to buy asset manager The TCW Group Inc. from France's Societe Generale SA for an undisclosed sum.
As a result of the transaction, TCW management and employees will increase their ownership in the firm to about 40% on a fully diluted basis, better aligning interests with clients.
Equity for the investment will come from two Carlyle investment funds, as well as from TCW management. The funds are Carlyle Global Financial Services Partners L.P., a $1.1 billion financial services fund, and Carlyle Partners V, a $13.7 billion U.S. buyout fund.
New capital targets were imposed on European banks to free up cash to better weather a financial crisis. Societe Generale has been cutting costs and selling assets to free up cash. In 2001, the company purchased a controlling stake in TCW for about $880 million, and subsequently increased its stake to 85%.
David Lippman, previously Group Managing Director and Head of Fixed Income at TCW, Thursday becomes President and CEO of the TCW Group, succeeding Marc Stern. Upon closing of the transaction, Stern, currently Vice Chairman of TCW, will become Chairman of the newly formed TCW Board of Managers.
The transaction is expected to close in the first quarter of 2013. TCW, founded in 1971, is a diversified asset management firm offering U.S. equities and fixed income, international and alternative strategies, with about $130 billion under management.
Powered by strong investment performance, the firm's $42 billion mutual fund franchise has attracted more than $13 billion in net inflows in 2011 and 2012.
CG is trading down 1.40% at $24.00 on Thursday. The stock has been trading between $20.00 and $25.95 for the past 52 weeks.