Carlyle Group, the US private equity group, has sold a 7.5 per cent stake to the Government of Abu Dhabi for $1.35 billion (£670 million), the latest global buyout firm to bolster its coffers with sovereign cash.

As part of the deal, Mubadala Development Company, which invests on behalf of the Abu Dhabi Government, has also committed $500 million to an investment fund managed by Carlyle, believed to be its next US buyout fund which is being raised at present.

Mubadala’s investment in the US buyout group comes after the Chinese Government acquired a 10 per cent stake in Blackstone Group for $3 billion this year, alongside the buyout group’s initial public offering.

Carlyle and Mubadala said the stake was granted at a 10 per cent discount to their agreed $20 billion valuation of Carlyle. It is the second such outside investment in Carlyle; CalPERS, the California Public Employees’ Retirement System, acquired a 5.5 per cent stake in the American firm in 2000.

David Rubenstein, Carlyle’s co-founder said: “Mubadala is among the most sophisticated investors in the world and we are honoured to have them as long-term partners. These resources, like the earlier investment by CalPERS, will add to Carlyle’s capital base, strategically expand our business and be used for additional investments.”

Khaldoon Al Mubarak, the Mubadala chief executive, said that its investment in Carlyle, its first in a private equity group, was a “tremendous fit” for the company. He said the two groups would work together across the Middle East and North Africa where there were “immense opportunities” for investment in the coming years.

The investment comes as private equity firms face their toughest period yet as banks and investors flee the sector in the wake of the sub-prime mortgage crisis in America. Mega-deals, which have characterised the mergers and acquisitions boom so far this year, are off the table, and industry watchers believe that private equity can muster enough debt for bids of only $1 billion or below until the backlog of unsyndicated deals is cleared.

Carlyle was itself rumoured to be considering an IPO. Mr Rubenstein said that he still expected most of the large private equity firms to go public within five years. “In our case, we haven’t decided what to do yet,” he said. “But this investment today gives us some new options.”

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