Bloomberg: Buyout Firms Turn into Asset Managers as Takeovers Become Scarce

As takeover targets become scarce, Carlyle Group, KKR (NYSE: KKR) and other buyout specialists are becoming asset managers that run hedge funds and strip malls, according to a report in Bloomberg.

Blackstone Group (NYSE: BX), the largest private-equity firm, earns twice as much from owning office buildings in India, senior communities and other property as it does from buyouts. KKR now owns a stake in a 5,500-mile U.S. pipeline and lends to distressed companies.

The firms have little choice if they want to grow, said the report. But such transformation comes with challenges. Three of the five biggest leveraged-buyout companies have sold shares to the public to finance entry into ventures. Results for investors have been mixed, though.

While KKR has gained 63% since it moved its listing to New York last year, its publicly traded European entity had lost more than half its value since 2006. Blackstone has gained 55% in the past 12 months, but its shares are still 45% lower than the IPO price. Apollo Management (NYSE: APO), which this year moved its listing to the New York Stock Exchange, is down 4.3% since March.