On March 27, 2018, AkzoNobel announced it would be selling its specialty chemicals business to GIC and The Carlyle Group (CG) for $12.5 billion. The private equity companies are sitting on a substantial amount of cash, raising concerns among market participants and fund investors. From the past few years, these companies have seen substantial fundraising, creating a need for such huge investments. Carlyle raised $43.3 billion in 2017, while Apollo Global Management (APO) saw total inflows of $56.5 billion.
Blackstone’s recent move
In an attempt to make large deployments, Carlyle competitor (XLF) The Blackstone Group (BX), GIC, and the CPPIB (Canada Pension Plan Investment Board) are partnering with Thomson Reuters’s (TRI) Financial & Risk business. Private equity companies are making deployments to use up cash.
AkzoNobel management believes the specialty chemicals business could see growth and improved performance. The business is expected to benefit from Carlyle’s expertise.
Carlyle management also shared favorable views on this investment. Carlyle aims to use its capabilities to build favorable momentum for the business and achieve growth. Tapping growth opportunities could also be beneficial for AkzoNobel stakeholders.