Carlyle Spawns Thriving PE Industry in D.C.

Alumni of Carlyle Group have seeded a growing presence of smaller PE operations and ancillary services in the Washington, D.C., area.

"More than a dozen former Carlyle employees have left to start their own investment firms or to push into other start-ups around Washington," reports the Washington Post. "Carlyle and its offspring have turned Washington into a thriving investment community that operates one notch below the nation's traditional money centers."

The offspring include PE firms such as Thayer Capital, Halifax Group and Relativity Capital; Federal Capital Partners, a real estate equity firm; and Ventureouse Group, which funds technology and telecommunications start-ups. Other PE firms in the area employ Carlyle alumni as partners or managing directors. Many focus on government-related sectors such as aerospace, defense, telecommunications and information technology, according to the Post.

While smaller than the $71.4 billion Carlyle Group, some of the offspring are sizable entities in their own right. Thayer Capital, founded in 1991 by former Carlyle senior advisor and longtime GOP activist Frederic V. Malek, reportedly has billions under management.

Besides propelling demand for investment talent within the D.C. area, the Carlyle alums' firms create secondary demand for "legions of attorneys and accountants who have nested in Washington to serve the dealmakers," the Post says.

"Global law firm Latham & Watkins has added many lawyers to its Washington practice to serve Carlyle and its offspring. Ernst & Young and PricewaterhouseCoopers have both scaled up to serve the private-equity firms here. The effect is even felt at places such as BMW of Arlington, a favored car dealership for the Carlyle crowd," the paper says.