Private equity firms are no strangers to layoffs when it comes to cutting costs, but those job cuts are usually restricted to the firm's portfolio companies. But as a measure of just how hard the credit crisis is hitting buyout shops, the Carlyle Group reportedly is cutting back and closing offices in Eastern Europe and Asia.
Continue reading below
The Financial News reports that Carlyle is giving pink slips to 17
employees as the firm scales back its comittment to emerging markets.
The 10 employees -- including managing directors Ryszard Wojtkowski and
Janusz Guy as well as directors Aleksander Kacprzyk and Piotr Nocen --
at the firm's Warsaw office are all expected to leave. The closure
comes 16 months after Carlyle boasted of big expansion plans for making
investments in Poland, the Czech Republic, Hungary, Slovakia,
Romania, Bulgaria, Slovenia, Lithuania, Latvia and Estonia using the
Warsaw office.
Also going is Carlyle's dedicated Asia Leveraged Finance Group, which
employed seven in Hong Kong, Tokyo and Sydney. Among the
casualties are group head Eric Mason and the recently hired David
Balint.
The cutbacks may deliver a jolt to staffers at other private equity
firms since most of the industry is expected to vastly scale back their
operations after years of global expansion fueled by easy debt. However,
since the credit crunch hit in the summer of 2007, dealflow has dried
up, and the LBO deal machine has slowed dramatically. Sentiment by the
limited partners that fund buyout shops has become so negative that
investors have been selling their commitments for as little as 30% of
their original value,
according to the Financial Times.
At a conference last week, private equity veteran Guy Hands, the CEO of Terra
Firma Capital Partners,
predicted some serious pain ahead for the
so-called "masters of the universe," including severely reduced fundraising and IRRs that plummet into negative territory. With profits gone, the industry will be slashing headcount, and "those who remain will be paid substantially less," he said. -
George White See Financial News storySee Financial Times storySee Dealscape post on Guy Hands
