The Carlyle Group has incurred losses exceeding $100 million on a debt investment in iRobot, the maker of Roomba vacuum robots, as weakening consumer demand and rising competition erode the company’s financial stability. The loss underscores growing risks in private credit exposure to consumer technology firms.
- Carlyle Group recorded a loss exceeding $100 million on a $250 million leveraged loan to iRobot.
- iRobot’s revenue declined over 15% year-over-year in 2024 due to competitive pressures.
- The company reported a net loss of $68 million in Q3 2024 and negative operating cash flow.
- Carlyle has initiated debt restructuring talks with other lenders.
- The outcome reflects broader risks in private credit exposure to consumer technology firms.
- iRobot is exploring strategic alternatives such as asset sales or joint ventures.
The Carlyle Group has taken a significant hit on a debt facility extended to iRobot, recording losses surpassing $100 million as the company faces mounting financial pressure. The investment, structured as a leveraged loan with a principal amount of approximately $250 million, was made in late 2022 to support iRobot’s expansion and product development. Since then, iRobot’s revenue has declined by over 15% year-over-year, driven by saturated markets and increased competition from Chinese manufacturers offering lower-priced alternatives. The deterioration in iRobot’s financial health has led to a downgrade of its credit profile, triggering distress in the private credit market. As of Q3 2024, iRobot reported a net loss of $68 million, with operating cash flow turning negative for the first time in five years. These metrics have forced Carlyle to revalue the loan at a significant discount, resulting in the $100 million-plus write-down. The firm has also begun discussions with other lenders to restructure the debt, potentially extending maturity dates or converting portions into equity. The outcome affects not only Carlyle’s private equity portfolio but also broader investor confidence in leveraged lending to consumer tech firms. Other firms with similar exposures, including certain asset managers and hedge funds, are reassessing their risk models. The situation also raises questions about the valuation of robotics and automation startups that rely heavily on consumer adoption rather than enterprise demand. Carlyle’s loss highlights the vulnerability of private credit investments when underlying companies face rapid market shifts. As iRobot contemplates strategic alternatives—including potential asset sales or joint ventures—investors are closely monitoring how the company navigates its debt obligations and whether it can regain market traction.