Carlyle closes leveraged finance business in Asia

Private equity firm The Carlyle Group has shut down its Asia leveraged finance group and retrenched seven bankers, including managing director and group head Eric Mason.

Carlyle set up a dedicated group, Carlyle Asia leveraged finance (CALF), in mid-2007 and poached Eric Mason from J.P. Morgan to head the effort. Mason was co-head of syndicated and leveraged finance for the US investment bank based in Hong Kong. He had more than 15 years of experience in Asia and is generally considered one of the pioneers in the leveraged finance market in the region.

Carlyle manages $91.5 billion of assets across 66 funds and eight of its 33 global offices are located in Asia. CALF was an early mover in the leveraged finance space, created to address the opportunities Asia provided for diversification of funding sources beyond the bank market and intended to complement CarlyleÆs leveraged finance teams in the United States and Europe.

"In light of the current global turmoil and the serious dislocation of the credit capital markets, the CALF team and the firm have collectively decided to discontinue the operations of CALF,ö says Carlyle Asia spokesperson Dorothy Lee. ôWe remain committed to Asia and will always look for value investment opportunities in the region."

In an interview with FinanceAsia in September 2007 (available in our archives), Mason expressed optimism about the opportunities in Asia despite the prevailing US subprime situation and liquidity down-cycle.

Indeed, CALF has built up a team through a string of hires over the past 18 months.

In August 2007 Carlyle poached three more bankers as vice-presidents, two of whom came from J.P. Morgan's syndicated and leveraged finance team in Asia: Ryoko Kondo, who had experience in leveraged debt structures for private equity transactions mainly in Japan, joined the firm's Tokyo office; and Agnes Kong, who focuses on origination of financial sponsor-related leveraged buyout financing and has expertise from across the Greater China region, joined in Hong Kong.

The third vice-president, Rahul Gupta, joined Carlyle from UBS where he was a director in Asian fixed-income research, but he too had previously worked at J.P. Morgan. Gupta had experience in leveraged finance structuring and high-yield credit research. He departed CALF some time ago.

Other members of CALF who are affected by the closure include Neville Chan, a VP based in Hong Kong who was earlier financial controller at Citadel Investment Group, associate Nelson Yuan and director David Balint.

Balint was CALFÆs most recent appointment in July of this year. He was hired as a director based in Sydney to manage CarlyleÆs investment strategy in Australia and New Zealand. He joined from Australia & New Zealand Banking Group (ANZ), where he was a director of the leveraged and acquisition business.

ôAdding a senior executive based in Sydney to work with our investment professionals in Tokyo and Hong Kong also reaffirms the teamÆs commitment to maintaining a strong local presence in its core markets,ö Mason said in a written statement at the time of Balint's hire, while emphasising that the appointment underscored CarlyleÆs continued confidence about investment opportunities in leveraged finance in the Asia-Pacific region.

Carlyle's move follows on the heels of layoffs at a number of global banks and underscores how quickly the situation in Asia has deteriorated as a result of the meltdown in Western markets.