Have you ever felt the urge to throw in your chips with the big boys, but aren't quite affluent enough to invest with the well-heeled set? Well, worry not. Now, you don't have to be a member of the 1% to invest in certain funds held by private equity firms like the Carlyle Group (NASDAQ:CG) -- but you do have to be within the top 2% of wage earners.
Private equity opening up
The Wall Street Journal notes that, until recently, investors needed to fork over between $5 million and $20 million to become members of the Carlyle elite. But times have changed, and the P/E firm is looking to appeal to a wider audience, which it estimates to be worth around $10 trillion in the aggregate.
That's not chicken feed, and Carlyle isn't the only asset manager to see that lowering the bar a little might be a profitable move. Individuals are being seen in a new, more flattering light since the future of the old-fashioned pension plan is shaky at best.
Peers like KKR (NYSE:KKR) and the Blackstone Group (NYSE:BX) have also added funds with lower barriers to entry. KKR now has a mutual fund that requires a mere $2,500 buy-in minimum, and Blackstone has recently begun allowing individuals to invest in specific hedge funds. Apollo Global Management (NYSE:APO) also offers mutual funds for retail investors in addition to those being offered by KKR and Blackstone.
The Carlyle offering, however, is a buyout fund, and there are other parameters that must be met for admission: Net worth of at least $1 million, exclusive of one's primary residence, or more than $200,000 in income for the two years previous.
Making a comeback
PE firms seem to be making a comeback, and fourth-quarter earnings were outstanding for Apollo, which saw revenue jump almost 80% from the same time the previous year. KKR is no slouch either, and recently reported a huge net income hike due to big gains in investment activities and dividend income. Blackstone's performance fees went through the roof, and though Carlyle's earnings per share number was a tad disappointing, revenues increased by 14% year over year. The firm's founders did fine last year, too -- each of the three took approximately $135 million out of the company last year, despite eschewing a bonus.
Currently, Bank of America Merrill Lynch is the only firm selling the fund, but that may change in the future. So if you've always dreamed of becoming a takeover artist -- and you've got the deep pockets to buy in -- here's your chance. Just don't forget to bring your paystubs.