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Carlyle Opportunity pool two-thirds invested

  • Fund raised $1.1 billion, closed in 2012
  • Fund leverages Carlyle network, avoids auctions
  • MD Cohen worked as co-managing partner at Pegasus Capital

This November, the fund marks its second anniversary since announcing its final close with $1.1 billion in commitments.

And with a string of deals in the first quarter, it will be roughly two-thirds invested, according to sources familiar with the firm. Carlyle Group could be setting the stage for Carlyle Equity Opportunity Fund II in the not-too-distant future.

Rodney Cohen, managing director and co-head of Carlyle Equity Opportunity Fund, declined to comment on any fundraising efforts. Instead, he talked with Buyouts at the firm’s New York office about how his generalist approach has helped him sift through prospective deals in aerospace, healthcare, energy and  industrial; consumer and retail; telecom and media sectors.

The fund seeks deals with equity payments of $25 million to $150 million and weighs an average of six possibilities on a given week, he said. “My feeling is everything is interesting, until it’s not,” Cohen said.

Through Carlyle Group’s network of executives, deals and funds, Carlyle Equity Opportunity Fund manages to source many potential acquisitions. “We’re not auction guys,” he said.

The approach has helped Carlyle Equity Opportunity Fund announce or close a string of deals this year:

  • Business services and technology provider ECi Software Solutions. The deal closed on March 12; terms were not disclosed.
  • Physical metals and mineral commodity merchant, logistics and trading firm Traxys Management. The deal was announced in March but has yet to close; terms weren’t disclosed.
  • Bonotel Exclusive, a service provider in the hotel and resort industry. The deal closed on Feb. 28 for an undisclosed sum.

“The timing of the three deals closing near to each other was a coincidence,” Cohen said. “They start when they start and they take some time to get to the finish line.”

Cohen said ECi Software Solutions helps provide enterprise resource solutions to small and midsized companies.

“The small business owner needs the same kinds of functionality that firms like SAP and IBM provide, but they can’t spend $500,000—maybe just $10,00 or $50,000—and that’s where ECi Software comes in,” Cohen said.

Bonotel helps hotels manage their inventory  and come up with strategies for maximizing room revenue through relationships with tour operators and other players in the hospitality trade.

On Traxys, Carlyle Group teamed up with affiliates of Louis Bacon, the CEO of hedge fund Moore Capital Management, to buy a majority interest in the firm from Pegasus Capital Advisors, Kelso & Co and Resource Capital Funds. As part of the deal, Traxsys management will increase their ownership share in the company.

Among other deals on Cohen’s radar, Texas-based Service King Collision Repair Centers added on 62 stores from Sterling Collision Centers, bringing its total location count to 170 in 20 states as one of the country’s largest multi-shop operators. Carlyle Equity Opportunity Fund purchased Service King in 2012.

Cohen also spoke fondly of Philadelphia Energy Solutions, a deal from 2012 that preserved 850 jobs at a major refinery that had been scheduled for a possible shutdown. The refinery, which now employs 1,000, has been busy handling crude and other products from the growing shale play area in the Bakken of North Dakota. A large supply of natural gas from the Marcellus shale of Pennsylvania helps keep operating costs in line at the refinery.

Cohen said the fund started out partly as  the brainchild of Carlyle Group Co-CEO Bill Conway, who wanted to keep the firm in the middle market even though its other buyout funds looked at larger deals to match their bigger capital scale.

Cohen, former co-managing partner at Pegasus Capital Advisors, moved over to Carlyle in 2010. Cohen said he joined the firm partly because he enjoyed his lengthy meetings with Conway, who once held an umbrella for him in a torrential downpour to help keep him dry while he waited for a taxi. He also recalled chatting with Dan Akerson, who was a managing director at the firm at the time, as well as well David Rubenstein, co-CEO of Carlyle Group.

Carlyle Equity Opportunity Fund  benefits from the input of these and other executives, as well as opportunities that come up from the firm’s large network of funds and offices around the globe. All told, the fund has invested in nine companies thus far.

(This story has been updated to correct Rodney Cohen’s title at Pegasus Capital Advisors and to clarify the business description of ECi Software.)