Based on Glenn Youngkin's account, Virginia and its economy are 'in the ditch'. So much so that he gave up his dream job at Carlyle Group Inc. to get the state back on track.
The Republican nominee for governor is now everywhere on television and the Internet, driving home the opening pitch of his candidacy: 'I have spent the last 30 years building businesses and creating jobs, leading a team of nearly 2,000 people who trusted me to get things done.
Yet people close to the private equity firm have been chafing over the picture Youngkin paints of his investment acumen and circumstances of his departure. In his final decade there, he shepherded several bets and strategies that chalked up losses, and some of them are still being unwound.
After Carlyle's founders gave him the chance at co-running the firm in 2018, he flamed out. In an industry where leadership teams worked together for decades, his co-CEO slowly established dominance, diminishing Youngkin's clout.
Youngkin, 54, exited Carlyle in September and quickly became a name in critical politics, railing against abortion and conservative race theory and vowing to stand up for the Second Amendment and voter security. His take on Virginia's economy is dire, blaming Democrats for raising taxes and overtaxing commerce to fight Covid - 19.
'You know Tucker Carlson, this is why I quit my job last summer, Tucker Carlson told Fox News in May in the interview with Youngkin. I could not really recognize Virginia as my home state.
But at Carlyle the circumstances of his exit aren't really a secret: He retired after a power struggle that left him in charge of more modest business lines. Current and former employees, asking not to be identified discussing internal business, describe a checkered record at odds with his campaign's portrayal.
In the past decade, Youngkin was responsible for troubled forays into hedge funds and energy investments, they said. He also oversaw a push into infrastructure projects that didgged him, as a $2.2 billion fund for clients struggled to make deals.
Former colleagues have been bracing for his run not only to highlight Carlyle's past controversies - akin to what Mitt Romney's presidential run oversaw - but also to spotlight Youngkin and managers it oversaw.
A company spokeswoman declined to comment on this story.
Youngkin sent a list of dealings described in this article to the Bloomberg campaign, which offered a broad response.
'No investment it has been ever made as the key Carlyle Principal, nor have numerous moneys been lost by Glenn Youngkin since 2004, said Devin O'Malley, a campaign spokesman.
'In the race to become Virginia's next governor, there is only one candidate who worked his way up to the top of a company and helped grow it into a hugely successful enterprise which turned good businesses into great businesses, helped create tens of thousands of jobs and funded the retirement pension of police officers, firefighters and teachers, and that candidate is Glenn Youngkin, O'Malley said.
That pitch helped Youngkin rise to the top of Virginia's Republican primary this year, contributing to the top two votes. As the November election approaches, polls show Terry McAuliffe is in a competitive race with his opponent, former Governor Scott.
Democrats have sought to use Youngkin's tenure as Carlyle against him, assailing business practices such as its willingness to invest in China to make the case that his campaign rhetoric doesn't reflect his past. He has tried to minimize the scale of these dealings. Recently, McAuliffe focused on tying Youngkin to former President Donald Trump who lost the state by 10 points in 2020. Trump endorsed Youngkin last month in a news release: 'Glenn has been an incredible success and will truly make Virginia great again.
Boyce Youngkin's success is one measure of how difficult it is to compare him. His net worth stands at more than $500 million, according to the Bloomberg Billionaires Index, which analyzed his earnings after Carlyle's initial public offering in 2012. A filing shows he owns 1.9% of the company's stock. The stake accounts for the bulk of his estimated wealth.
Youngkin couldn't have timed his arrival at Carlyle better: The former college basketball player and Harvard Business School alumnus was still in his 20s when he joined the firm in the mid 90 s. That enabled him to share the collective gains of Carlyle's private equity funds over three decades. In the 17 years before the IPO, it's possible that he amassed much more wealth out of public view.
The firm's founders - Bill Conway, Daniel D'Aniello, David Rubenstein and Dana Rubenstein - created something of an oddity in the Wall Street-centric world of private equity: A Washington-based firm with connections across the political spectrum. Executives have long set aside partisanship in the mutual pursuit of profit. In interviews, colleagues who agreed and disagreed with Youngkin's conservative views shared similar assessments of his tenure.
He wasn't a natural dealmaker, but he was ready to absorb an immense amount of information and speak coherently about it. People close to Youngkin say he was study-oriented, and process-oriented. As he climbed the management ranks, much of his attention was on day-to-day operations.
He typically didn't lead other transactions, such as the acquisition of doughnut giant Dunkin' Brands Group Inc. focusing instead on blockbuster investments and growth initiatives.
One of his biggest deals for Kinder Morgan Inc. was 15 years ago when he handled its participation in the more than $20 billion buyout of pipeline company Carlyle, LLC. The purchase - drawing on a consortium of investment titans assembled by Goldman Sachs Group Inc. - tripled Carlyle's money in half a decade in half a decade
'He was an extremely capable businessman, providing to me as a real adviser a real service." The company founder Rich Kinder said of that age.
Youngkin played a leading role in the preparation for Carlyle's stock listing in 2012, building out internal operations to handle its increased responsibilities as a public company.
In 2014, Youngkin rose to co-chairman, taking the lead on new efforts to expand beyond Carlyle's core private equity franchise. Rivals such as Apollo Global Management Inc. and Blackstone Group in the U.S. already focused aggressively on new business models like real estate and insurance.
As part of Carlyle's expansion, Youngkin oversaw tie-ups with two funding markets.
The more successful is AlpInvest, which manages private equity investments in separately managed accounts. Carlyle's assets under management rose 39% to $61 billion by the end of the first quarter of this year compared with when AlpInvest acquired a position in 2011. It's the key piece of the investment solutions group, a segment contributing a relatively modest stream of earnings - just over 5% of the firm's total last year overall.
The other initiative - buy of hedge fund allocator Diversified Global Asset Management in $49 million - turned into a dud. After about two years, it was closed with assets down more than 30%. Carlyle ended up writing off the holding.
Carlyle also oversaw Youngkin's equivalent to half-billion dollar stake in NGP Energy Capital, a Texas-based investment firm. The initial holding of $393 million was added under Youngkin in 2012 and later increased, giving Carlyle around half of NGP's management fees and an option to take a similar share of performance fees, known as carried interest, on the company's new and future funds.
Carlyle spent $61 million to exercise that option for NGP's 10th fund in 2014, a move that quickly proved costly. By the end of that year, the bet on NGP's prowess had taken a $39 million bite out Carlyle's fees income - enough to executives had to forfeit compensation they were previously awarded. That rankled the firm's insiders.Things didn't improve. NGP's assets decreased by more than $2 billion. By the end of last year, Carlyle had yet to reap carried interest from the NGP funds. Carlyle's first nine funds, before NGP invested, were all generated those fees.
According to Carlyle's founders, the company was having trouble finding a new leadership team to take over as they stepped back. A number of potential candidates - such as prominent JPMorgan Chase Co. executive Michael Cavanagh - came and went.
Youngkin figured into the discussions: He'd grown up inside Carlyle, helped it expand to Europe and was uniquely invested in the firm's operations and culture. Yet the founders recognized they needed someone with strong investment chops to guarantee big returns.
They eventually teamed him with Kewsong Lee, a dominant and sharp trademaker who quickly became more decisive. He took control of the firm's most prominent businesses, including private equity and credit investments. Youngkin left with smaller lines, like European real estate. A number of groups under him disappeared and some long-time employees left to pursue other opportunities.
During his time at the top, he helped Carlyle convert his legal structure to a corporation - move designed to allow more investors, such as mutual funds and exchange traded funds, in the stock.
The funds raised by Carlyle in 2018 struggled to move large deals forward, such as the redesign of Terminal One at the John F. Kennedy Airport in New York City. According to Carlyle, the fund had invested less than $466 million since December of last year, when a new head was made in.
One customer, the Teacher Retirement System of Texas, said it was told the fund had a negative return of 51% at the end of 2020.
That year, Lee confided in colleagues that he felt that he had little option but to leave as co-CEO Youngkin continued to strengthen his grip on the technology giant. When announcing his departure he told employees that he wasn't sure what he would do next.
Carlyle had posted 8% gain during his time at the top when he stepped down September 30. Apollo had advanced 34% in the period and Blackstone and KKR Co. were up 33%.
The decision of Youngkin to run for governor wasn't a surprise to anyone who knows him. Before Carlyle, founders decided to give him a chance as co-CEO, he spent months meeting with advisors and business leaders in Virginia to explore the possibility of entering politics. But he dropped that when he got the promotion.
As the Pandemic took root last year, Youngkin and his wife, Sue, started a nonprofit focused on helping unemployed Virginians find work.Their family lives in a seven-bedroom house purchased for $1.7 million in Great Falls, an affluent suburb near Washington. The couple founded a local church called Holy Trinity. They donated $11 million in property to their personal foundation, which in turn rents to the church for $1 a year according to filings. An additional $11.7 million of all property was donated through the foundation in 2016 and is home to Meadowkirk at Delta Farm, a retreat space 'guided by Christian principles and biblical calls to action to serve. 'Youngkin is expected to spend millions of his own dollars on the governor's race. The election will decide whether he moves into a different mansion or McAuliffe becomes the first governor to be relected since 1974 in a state that doesn't allow consecutive terms.
'Virginia is being tested, Youngkin said in a campaign video as he emphasized his business credentials.