The Carlyle Group. Industrial & Transportation Overview

Transcription

1 The Carlyle Group Industrial & Transportation Overview February 2012

2 Carlyle Overview Carlyle is one of the world s largest and most experienced private equity firms Founded in 1987 $148 billion under management 89 active funds and 52 fund of fund vehicles Four investment disciplines: corporate private equity, real assets, global market strategies, fund of fund solutions Carlyle has a truly global platform with on-the-ground presence in major markets worldwide 33 offices with industrial and transportation transaction experience in Europe, Asia, and North America Offices staffed primarily with nationals with deep local contacts Ability to leverage knowledge of one market into another Increased access for Carlyle portfolio companies to Carlyle s Global Network Relevant industry focus and expertise One of the few private equity firms with a specific focus on the industrial and transportation sector Over $4.1 billion of equity invested in the sector since 2005 Over 50,000 employees currently in industrial portfolio companies Extensive network of strategic relationships and industry contacts Dedicated team of investment professionals Industrial and transportation transactions completed in the Europe, Asia, and U.S. Successful track record of partnering with management teams and families Long history of successful strategic partnerships, corporate divestitures, and take-private transactions Strong focus on value creation for portfolio companies in mid-long term 2

3 Carlyle s s Global Resources More than 1,200 employees in 33 offices around the world U.S. fund families: U.S. Buyout Global Financial Services Buyout U.S. Growth U.S. Equity Opportunity U.S. Real Estate Global Infrastructure Global Energy Renewable Energy Latin America fund families: South America Buyout Emerging Markets Hedge Funds Fund of PE Funds Secondaries Structured Credit Corporate Mezzanine Distressed & Corporate Opportunities Energy Mezzanine Long/Short Credit Hedge Funds Emerging Markets Hedge Funds Fund of PE Funds Secondaries Sub-Saharan Africa fund families: Sub-Saharan Africa Buyout Emerging Markets Hedge Funds Europe fund families: Europe Buyout Europe Growth/Technology Europe Real Estate Distressed & Corporate Opportunities Structured Credit Long/Short Credit Hedge Funds Emerging Markets Hedge Funds Fund of PE Funds Secondaries MENA fund families: MENA Buyout Emerging Markets Hedge Funds Fund of PE Funds Secondaries Asia fund families: Asia Buyout Beijing RMB Partners Japan Buyout Asia Growth Asia Real Estate Long/Short Credit Hedge Funds Emerging Markets Hedge Funds Fund of PE Funds Secondaries Note: As of September 30, Includes acquisition of AlpInvest Partners NV and Emerging Sovereign Group LLC on July 1,

4 Carlyle s s Approach Investment criteria Size agnostic Flexible investment structure Horizon Focused on long term value creation rather than short term goals Average holding period of five years Fundamental understanding of market dynamics Emphasis on value creation Alignment of interests Work with Management to develop detailed business plan focused on long term value creation Support Management in executing business plan through access to in-house and external expertise Align interests of key stakeholders - Management -Company - Carlyle Appropriate corporate governance model to protect interests of all parties 4

5 Carlyle s s Value-Add Leading Industrial franchise with over $4.1bn of equity invested since 2005 Relevant sector and transaction expertise Transactions completed in U.S., Asia and Europe Specialize in divesting companies from large corporations Extensive network of strategic relationships and industry contacts accessible by portfolio companies Superior Financing Expertise Ability to leverage knowledge, relationships and reputation in financing markets to obtain lowest cost of capital for portfolio companies Experience working with capital markets to ensure sufficient access to capital to pursue strategic add-on acquisitions Access to Global Network / Resources Global platform with 33 offices, each staffed with nationals with deep local contacts Invested more than $48bn of equity in 414 private equity transactions Increased access for Carlyle portfolio companies to Carlyle s Global Network 5

6 Case Study Horizon Lines Business Description The largest container shipping company in the United States Acquired from CSX Accounts for over 35% of total marine container shipments from the U.S. mainland to Alaska, Hawaii, Guam and Puerto Rico Operates a total of 17 container vessels and approximately 22,000 cargo containers of varying specification Provides door-to-door and port-to-port container transportation services to shippers in the three major U.S. trade lanes Investment Thesis Significant cost saving opportunities: Working closely with a strategic advisor, Carlyle was able to identify a number of specific, actionable and near-term cost saving opportunities Turnaround in Puerto Rico: Carlyle closely tracked the turn-around of the Puerto Rico market, a market which had historically suffered from over-capacity This insight enabled Carlyle to offer a higher price to the seller while simultaneously obtaining more favorable debt financing High barriers to entry and defensible cash flows: The regulatory barriers to entry in the U.S. shipping industry are formidable as a result of the Jones Act. These barriers foster highly stable rates, capacity and cash flows Transaction Closed in December 2003 Identification of value-creation opportunities enabled Carlyle to offer attractive price Creative transaction structuring enabled Carlyle to address seller s concerns regarding tax and ongoing lease liabilities Carlyle s track record increased seller s confidence with respect to financing and closing the transaction Investment Performance Partnered with management to develop 100-day action plan focused on transition from a CSX subsidiary to a standalone company EBITDA increased from $70 million at acquisition to $100 million within 16 months Debt and preferred stock repaid at accelerated pace Company was sold for approximately 5.0x cost Subsequent to Carlyle sale, company went public on September

7 Case Study Greater China Intermodal Greater China Intermodal Business Description Unique partnership formed by Carlyle, Tiger Investments, the Washington Family, and Seaspan Corporation to acquire more than $5 billion in container, dry bulk, tanker vessels and other shipping assets Lead by industry veterans Gerry Wang and Graham Porter, who together have more than 50 years experience in the shipping industry and a strong track record of success in Asia Transaction On March 14, 2011, Carlyle announced a joint venture with shipping industry experts to collectively invest up to $900 million of equity in shipping assets Carlyle has committed $750M from its US Buyout and Asia Buyout funds (CPV: $570M; CAPIII: $180M) Investment Thesis Compelling opportunity to capitalize on current market dislocation and increasing global demand in the shipping sector Focus on bringing together Asian shipbuilders, lenders and shipping liners New green vessel design expected to stimulate demand in the sector given 15-25% fuel efficiency gains compared to current fleets Stable cash flows and favorable risk adjusted returns resulting from long-term charters to high quality shipping liners First-in-class management team with strong industry experience Investment Performance In July 2011, GCI entered into agreements for the construction of four vessels on long-term charters to leading shipping liner Hanjin New 10,000 TEU Super Saver energy efficient vessels to be built at Yangzijiang,, a leading Chinese shipyard, with delivery dates scheduled through 2014 and early 2015 Vessels will be placed on 10 year charters to Hanjin,, the 9th largest container operator globally and #1 in Korea 7

8 Carlyle s s Team of Advisors Tremendous depth of experience available to portfolio companies and investment professionals Senior Advisor Louis Giuliano Masahiko Uotani Jim Hance William Johnston Tom Rabut Kent Kresa Arthur Levitt Thomas McLarty Charles O. Rossotti David Squier Mary Petrovich Previous Position Chairman, President and CEO of ITT Industries Chairman, Coca-Cola Japan Vice Chairman, Bank of America Chairman of Renal Care Group CEO of United Defense Industries Chairman of Northrop Grumman Corporation Chairman of the Securities and Exchange Commission Chief of Staff to President Clinton Commissioner of the Internal Revenue Service President and CEO of Howmet Corporation CEO, AxleTech International and many others 8

9 Appendix Industrial & Transportation Investments

10 Selected Industrial and Transportation Investments Distinguished history of successfully divesting companies from large corporations Company (HQ Location) Description Investment Date Equity Invested / Revenues Investment Thesis Leading global designer, manufacturer and supplier of automatic transmissions for vehicles and specialty military vehicles. August 2007 $763 million / $2.2 billion Investment in a market leader with a premium brand, leading market share, and technological leadership. Opportunity to increase international presence Speedway, IN Acquired from General Motors. Atlanta, GA Leading distributor of various products for infrastructure and energy, maintenance, repair and improvement, and specialty construction sectors. Acquired from Home Depot. August 2007 $729 million / $12.9 billion Investment in market leader with significant opportunities to improve operating efficiencies and benefit from a rebound in construction-related end markets. Leading manufacturer of industrial hoses and conveyor belts in the United States and internationally. July 2007 $463 million / $1.5 billion Investment in a market leader with a highquality brand, excellent technology, and operational improvement opportunities. Akron, OH Acquired from Goodyear. Park Ridge, NJ Composed of Hertz Rent-A-Car, the world s largest rental car company, and Hertz Equipment Rental Corp., a leading equipment rental business. Acquired from Ford. December 2005 $840 million / $7.5 billion Investment in a company with a premium brand and leading market shares with operational improvement opportunities Largest independent manufacturer, marketer and distributor of carbonated soft drinks and new age beverages in the U.S. May 1998 $150 million / $1.7bn million Opportunity to consolidate bottling distribution channel in partnership with Cadbury. Plano, TX 10

11 Selected Industrial and Transportation Investments Proven ability to work with family-controlled corporations Company (HQ Location) Description Investment Date Equity Invested / Revenues Partnership Beachwood, OH Leading North America manufacturer of welded steel pipe in seven main product lines: structural tubing, standard pipe, electrical conduit, sprinkler pipe, fence pipe, DOM tubing, and fittings & couplings March 2006 $154 million / $713 million Three families owned 100% of the Company and invested a significant amount of their proceeds alongside Carlyle Premier manufacturer of chassis and related products for the recreational vehicle market and specialty truck fleets May 2000 $110 million / $560 million CEO Andrew Taitz owned 50% of the Company and subsequently retained a 25% stake Highland Park, IL One of the largest energy transportation, storage and distribution companies in North America May 2007 $882 million / NA Founder and CEO Richard Kinder owned 21% of the Company and is investing all $2.5 billion of his equity alongside Carlyle and its partners Houston, TX Luxembourg, Luxembourg Manufacturer of light metal, high pressure die castings for the automotive industry April 1999 $198 million / $1 billion Together with the Honsel family which held 25% of the joint acquisition vehicle, Carlyle acquired 100% of the shares in listed Honsel AG. Subsequently, the Company's North American footprint was strengthened through the combination with Amcan, a CEP portfolio company. Valencia, CA A global distributor of aerospace hardware and provider of inventory management services July 2006 $273 million / $304 million Founder and CEO Randy Snyder owned 100% of the Company and invested a significant amount of his proceeds alongside Carlyle 11

12 Selected Industrial and Transportation Investments Other selected investments: Company (HQ Location) Description Investment Date Equity Invested / Revenues Investment Thesis leading producer of inorganic specialty chemicals and engineered glass materials July 2007 $289 million / $1.1 billion Acquire leading US specialty materials producer and combine with leader in European/Asian markets to produce world leader in specialty chemicals Valley Forge, PA Charlotte, NC The nation s largest container shipping company, accounting for over 35% of all U.S. marine container shipments from the US mainland to Alaska, Hawaii/Guam and Puerto Rico February 2003 $80 million / $980 million Investment in a market leader in an industry with high barriers to entry and defensible cash flows. Opportunity to reduce corporate overhead. Insight into turnaround in the Puerto Rico market Troy, MI USA Leading global supplier of planetary axles, brakes, other drivetrain components and aftermarket parts for off-highway and specialty vehicles to the Commercial and Military end markets October 2005 $113 million / $260 million Investment in a high growth potential niche player with strong management. Opportunity to increase high margin military and aftermarket businesses Albion, IL USA Leading designer, manufacturer and distributor of filtration products, fuel and cooling systems, engine management systems and other components to the automotive aftermarket June 2003 $260 million / $1,000 million Investment in a large, "pure-play" aftermarket supplier serving high growth segments. Additional opportunities to improve operational performance through integration of previously decentralized corporate structure Milwaukee, WI Leading manufacturer of highlyengineered mechanical power transmission components. November 2002 $360 million / $722 million Investment in market leader for mechanical power transmission with recurring revenue stream from replacement products. Opportunity to consolidate space and drive operational excellence. 12