Carlyle set to drop IPO price Carlyle was set to drop the price of its initial public offering on Wednesday, as its bankers responded to continued weak appetite for the stock of private equity groups. The Washington, DC, based group is expected to begin trading on Nasdaq on Thursday. The original price range of $23 to $25 per common unit is likely to be dropped to $22 to $23, according to a person familiar with the situation. While the offering is oversubscribed at the initial price range, the decision to pitch it lower is in order to secure a stable base of large institutional investors, the person added. A lower price would also help support better trading after Carlyle's market debut. Pricing below the range would follow a disappointing listing for smaller competitor Oaktree, which raised 25 per cent less than initially sought in its $387m IPO last month. The group has a market capitalisation of $1.2bn. Los Angeles-based Oaktree sold 9m shares at $43 each, down from a planned 11.3m shares at $43 to $46 per share. Carlyle, which has $147bn under management to Oaktree's $82bn, is now expected to have an initial market capitalisation approaching $7bn. The group, renowned for its political connections, has built a diversified global business with 89 different funds designed to give it a broad base of fee income. Investors now have a larger selection of listed alternative asset management businesses to consider, For instance, Blackstone, the largest by assets under management, offers several different investment strategies, while KKR has concentrated on private equity. However, chastened investors have revised expectations for private equity since the first round of listings that began five years ago. Carlyle's market capitalisation will also be far less than the $18bn valuation agreed in 2007 when it sold a 7.5 per cent stake to Mubadala Development, an Abu Dhabi-based sovereign wealth fund. Listed alternative managers have struggled to win investors over to a sector where financial statements are complicated by accounting for corporate reorganisations which took place prior to listing. Potential investors have also been sceptical of the sustainability of performance fees, and unwilling to ascribe much value to unrealised "carry" - a company's share of the investment returns from private equity portfolios managed for investors such as pension funds. "Investors are ascribing minimal value to carry-related earnings," said Bill Katz, analyst for Citigroup in recent report. He argues that, based purely on the cash distributions that are paid out to investors each quarter, investors assume next to no future growth in dividends, and a fall in the typical returns from alternative investments.