Firm to get share of revenue for renovating, managing centers
Thomas Heath of The Washington Post writes that the Carlyle Group said Thursday that it has signed a deal with Connecticut to refurbish and run the state’s 23 highway service stops in return for a share of the revenue over the next 35 years.
The District-based private-equity giant and its partners will invest $178 million in the state’s roadside service centers as part of the agreement, which will include putting Subway restaurants as well as Dunkin’ Donuts locations in the centers, according to a Carlyle spokesman. Dunkin’ Brands is owned by Carlyle.
Carlyle, founded in 1987 by David M. Rubenstein, Daniel D’Aniello and William E. Conway Jr., has more than $86 billion under management.
The venture is part of Carlyle’s growing interest in developing partnerships with cash-strapped state and municipal governments to invest in, build and manage projects in exchange for a long-term revenue stream.
Carlyle launched its infrastructure practice in 2006, and the Connecticut deal is that unit’s first public-private partnership. Other Carlyle infrastructure deals include a wastewater treatment company and a freight transfer firm.
Public-private partnerships are generally reliable investments, earning about 15 percent a year, a Carlyle spokesman said. Those returns, however, are generally below the historical average of what private-equity firms earn on their investments.
As part of the deal, the Service Employees International Union, a frequent Carlyle critic, will provide custodial service jobs at the centers. Rubenstein has been a particular target of the SEIU’s attacks on the private-equity industry.
Read more at: The Washington Post