Reuters
Reuters
WASHINGTON (Reuters Breakingviews) – Carlyle may be in line for some unwanted political attention. The buyout firm that once employed ex-U.S. President George H.W. Bush worked for years to shed its reputation as a shrewd Beltway operator. Former Co-Chief Executive Glenn Youngkin’s election victory on Tuesday makes him Virginia’s next governor. That gives him presidential potential and puts Carlyle back on the Washington map.
The D.C.-based private equity firm cultivated its image as a Washington heavy hitter during the 1990s and early 2000s. In addition to Bush, it hired ex-Treasury Secretary and Secretary of State James Baker and former Defense Secretary Frank Carlucci. Throughout the 1990s, Carlyle funds, which now have around $280 billion in assets under management, bought defense firms such as United Defense and Vought Aircraft.
Those investments came under scrutiny after the 9/11 attacks. The Bin Laden family, who had money with Carlyle, liquidated their stake following criticism that they would benefit from U.S. spending on wars, according to a 2001 story in the New York Times. The firm’s famous hires retired and it worked to keep a lower profile. Co-founder David Rubenstein, who purchased the last privately-owned copy of the Magna Carta in 2007, told Forbes in 2012 that “we depoliticized the image” though he is still a well-known figure in the nation’s capital.
Youngkin’s victory puts a renewed target on Carlyle. A few months after losing a power struggle https://www.breakingviews.com/considered-view/carlyle-completes-the-first-of-two-bake-offs/?bved=NDE%3D&bvshr=MTg2Nzg1 to lead the private equity firm, the political novice announced his gubernatorial run as the Republican candidate in January. He ended up winning in a state that went for Democratic President Joe Biden by 10 percentage points a year ago.
Though his role at Carlyle was broadly left out of this election, given Virginia’s size, its proximity to Washington, and his upset, a bid for the White House in 2024 isn’t out of the question. That thrusts Carlyle back to a spot it worked hard to get out of. When Senator Mitt Romney, co-founder of rival asset manager Bain, ran for commander in chief in 2012, he was accused along with his firm of slashing jobs and chasing profits at the expense of average Americans. Bain – and private equity – temporarily became household words.
That playbook could be used against Youngkin, and Carlyle still has some sticky investments, such as in China’s ByteDance, owner of TikTok. Carlyle’s efforts to keep its head down may soon be in vain.
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CONTEXT NEWS
– Republican Glenn Youngkin won the Virginia gubernatorial election on Nov. 2, defeating Democrat Terry McAuliffe. Youngkin, who was co-chief executive of Carlyle until he retired in 2020, captured nearly 51% of the vote, according to the Washington Post.
(Editing by Lauren Silva Laughlin, Sharon Lam and Amanda Gomez)
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