Evan Vitale

Accounting Professional

Evan Vitale – Blackstone Group to Buy Majority Stake in Service King

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Blackstone Group has agreed to buy a majority stake in Service King Collision Repair Centers from the Carlyle Group with a view to fund the company’s future growth, according to sources familiar with the matter. The Wall Street Journal reported Tuesday the deal values Service King at about $650 million, citing a person familiar with the matter.

Carlyle will recognize a return of nearly four times its initial investment from the sale and will retain a significant minority stake in Service King, whose management will increase its own minority stake as part of the deal, sources said.

Washington, D.C.-based Carlyle acquired a majority stake in Service King in August 2012, with plans to expand the company nationally. At the time, the Richardson, Texas-based company operated 49 collision repair shops in or near Texas’s major cities. The company, which traces its roots to 1976 when its founder Eddie Lennox took out a $10,000 loan and repaired vehicles from his own garage, now operates 177 centers across 20 states.

Blackstone’s investment in the company comes as another private-equity-backed collision repair chain is on the auction block. Palladium Equity Partners LLC has hired an investment bank to sell ABRA Auto Body & Glass, which could fetch $500 million or more, sources familiar with the matter said last month.

The move underscores Blackstone’s pursuit of smaller, high-growth deals as steep market valuations make traditional buyout deals more expensive. As of the end of the second quarter, the firm had $17.7 billion available to spend on private-equity investments.

Evan Vitale – $4 Billion Real Estate Fund Launch

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High risk private equity funds may be coming back into style after a tough few years. Since the financial crisis, firms have run into trouble raising the capital needed for new real-estate funds. However, private equity giants TPG Capital, KKR, and Carlyle Group have demonstrated interest in and taken steps toward launching real-estate focused funds. Carlyle Group is preparing for a multi-billion dollar real-estate fund with plans to raise up to $4 billion. The fund would qualify as the largest property fund since the financial crisis and the burst of the real-estate bubble.

Carlyle is hoping to benefit from a surge in positive publicity from its recent sales of trophy assets at high profits. The firm and its partners reached an agreement late last month to sell the 27-story Manhattan office building at 650 Madison Ave. for $1.3 billion, or about $500 million more than the firm spent buying and fixing up the property.

Carlyle invests in a wide range of asset types, including corporate private equity, debt and energy. Real estate makes up only $13 billion of its total portfolio. Carlyle tends to buy single buildings, less often acquiring large property portfolios as some of its peers such as Blackstone Group or Starwood Capital Group. Source

Carlyle has had seven real-estate focused funds since 1997, the largest of which topped out at $3 billion. The private equity giant, with $176 billion in assets under management, will hope to capitalize on a renewed confidence in the real estate market and the rising prices of homes.