A riches-to-rags story

Probably, you've heard of the Carlyle Group.

The Carlyle Group is one of the premier global private equity groups and focus on opportunities in multiple growth sectors. The Carlyle Group has $81.1 billion under management and is invested in more than 200 companies. The group employs a conservative, proven and disciplined approach to investing (here). The Carlyle group is active in India with investments in Allsec Technologies, Newgen Imaging Systems, HDFC, Great Offshore Limited etc.

Here's the story.

The Carlyle Group listed it's USD 22bn mortgage-backed securities fund on the Amsterdam stock exchange in July 2007 and was listed at USD 19. In less than an year, the stock has plunged over 85% and today lingers at USD 0.44 - making it perhaps the most dramatic casualty in the financial markets.

Shockingly the fund had $31 of debt for every $1 of its own and had hoped to use its massive borrowings to generate higher returns from investments in highly rated mortgage securities. Its strategy was undone by the turmoil in the mortgage markets, dealing a heavy blow to the reputation of Carlyle.

The stock chart is given below :


The latest news filed at the Amsterdam exchange relates to the compulsory liquidation of the scrip (here). Additionally, the company has also filed a preliminary assessment of the company (here).