PhillyDeals: Carlyle is big in Pa. and looking to get bigger

Gov. Corbett spoke at the 2012 renaming of the Sunoco refinery in South Philly as Philadelphia Energy Solutions, owned by the Carlyle Group.
Gov. Corbett spoke at the 2012 renaming of the Sunoco refinery in South Philly as Philadelphia Energy Solutions, owned by the Carlyle Group. (SHARON GEKOSKI-KIMMEL / File Photo)
Posted: October 21, 2013

Carlyle Group would rank among Pennsylvania's dozen biggest private employers, next to Vanguard Group or Comcast Corp., if all 12,000 full-time workers at the companies that Carlyle owns in the state were counted together.

"We had more, before we sold Dunkin' Donuts and Hertz Rent-a-Car," said Carlyle's David Marchick, the onetime Clinton administration lawyer who is now the McLean, Va.-based buyout firm's global head of external affairs.

Physical therapists at ManorCare nursing homes, railroaders on Philadelphia-area short lines, chemical experts at PQ Corp.'s Chester plant or Malvern headquarters, military-contracting consultants at the Philadelphia and Johnstown offices of Booz Allen Hamilton, drug-test monitors at Pharmaceutical Product Development in King of Prussia, Blue Bell, and Wayne - all these and more work for Carlyle, the $180 billion- asset company that has made founder David Rubenstein a billionaire.

So do more than 800 at Philadelphia Energy Solutions, the South Philly oil refinery Carlyle took over last year after Sunoco shut it down. So will 330 at Axalta Coating Systems, the DuPont Co. car-paint spin-off that Carlyle bought for $5 billion in 2012 and is moving to Philadelphia.

Carlyle has worked to shine its image since the early 2000s, when activists smeared the firm for its military- industrial investments, past ties to the family of Presidents George H.W. Bush and George W. Bush and other Washington insiders, and concerns it would use its connections to crush labor unions.

Since then Carlyle has sharpened its focus on energy, civilian manufacturing, and health-related investments, especially in Pennsylvania and Ohio, union and nonunion companies alike.

Marchick cited four reasons Carlyle was growing in Pennsylvania: the capital needs of the state's powerhouse industries, which the firm expects to make for profitable long-term investments; its pool of skilled workers and professionals, especially around Philadelphia; its proximity to East Coast ports and airports, and New York financiers; and the fact that "your Gov. Corbett and Mayor Nutter have been incredibly open and accessible, and easy to work with."

Friendly elected officials are a help, for example, in raising taxpayer capital like the $25 million Pennsylvania gave Carlyle to reopen the Sunoco complex - money Carlyle says it is matching, $10 to $1.

They are also helpful with the permits and approvals factories and energy plants need to prosper. Says Marchick: "The environment and the tone that politicians take send a strong message."

He says agencies worked quickly to help Carlyle win approvals for $70 million in rail improvements so it could ship western oil to South Philly on old rights-of-way that needed upgrading. "Things have gone pretty well for us in Philadelphia," he added.

Don't high city taxes turn off business? "Low taxes are better than high taxes," he agreed. "But we don't make location decisions based solely on taxes. Ultimately, the most important thing is having the right people."

What's next? Maybe a pipeline down the Delaware River. Maybe a capital-starved specialty- parts maker in need of a buyer. Maybe a new port project. Corbett's aides are "always on the phone" suggesting firms and industries for Carlyle to buy or develop, Marchick said.

Carlyle especially likes energy. "Philadelphia should be a much larger hub for that energy," Marchick said. "It has some of the best infrastructure in the country. It's underutilized."

Of 100 would-be deals brought to Carlyle, "maybe one hits home," Marchick said. With so many proposals and ideas piling up, the firm is bound to buy more here, he concluded.

"We're very opportunistic investors," Marchick said. "We see an angle, we jump on it."



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