Carlyle Group’s new global head of investor relations Nathan Urquhart moved into the spotlight with the private equity giant’s plan to raise at least $130 billion in fresh capital by 2024.
At its Investor Day 2021 this week, Carlyle outlined an ambitious four-year initiative to grow its $246 billion business through fundraising across PE, credit and investment solutions strategies.
About half of the target is tied to the launch of PE flagship offerings, including the successor to Carlyle Partners Fund VII, closed in 2018 at $18.5 billion. Carlyle intends to expand the entire platform by more than 20 percent by focusing on opportunities like growth equity, longer-dated core PE and core-plus real estate, and infrastructure and renewables.
A further $45 billion will be collected by scaling the credit platform, emphasizing liquid, illiquid – direct lending, opportunistic and distressed – and real assets credit. Carlyle sees private debt as having especially strong growth potential in the years ahead due to “incredible market tailwinds,” head of global credit Mark Jenkins said.
Finally, $20 billion will be secured by broadening the range of investment solutions for limited partners. This takes in PE fund investing, co-investing and secondaries, much of it overseen by AlpInvest. The area is another viewed by Carlyle as high growth. In fact, together with credit, these strategies accounted for about 90 percent of the $27 billion raised in 2020.
Urquhart, promoted last November to run Carlyle’s global investor relations strategy and team, will be key to its ability to meet the $130 billion goal.
Benefiting from ‘consolidation’
In his Investor Day presentation, Urquhart said the auspices are good considering the increasingly large sums that LPs are putting to work in private markets. Public pension systems, he noted, have in the past decade expanded their median current allocations by more than 75 percent.
While LP allocations have been going up, however, the number of funds capturing commitments has been going down, Urquhart said. The trend, which he calls “consolidation,” is seeing LPs give more of their capital to fewer general partners – typically established managers with consistent track records. As part of this, LPs are more often picking select GPs to handle multiple strategies.
To reinforce his point, Urquhart cited Preqin data showing the top 20 PE funds holding a 45 percent share of committed capital in 2019, up from 29 percent in 2014.
Carlyle is a beneficiary of asset class consolidation, according to Urquhart’s presentation. This was suggested in the firm’s last multi-year fundraising effort, which targeted $100 billion over 2016-2019 and succeeded in bringing in nearly $110 billion. LPs who joined this and prior campaigns include 65 of the top 100 investors worldwide.
Carlyle has also made inroads across diverse LP relationships, Urquhart said. Commitments from its largest third-party source, public pensions, grew 5.5x over the past nine years, while those from high-net-worth investors grew 2.7x. In the same period, money coming from sovereign wealth funds increased 307 percent.
To implement Carlyle’s four-year fundraising plan, Urquhart will deploy a team of more than 100 professionals operating in North America, Europe, Asia and other regions. They include senior relationship managers with an average tenure of 12 years.
Urquhart was hired by Carlyle in 2019 to head the credit platform’s global investor relations. He previously worked for 11 years at Oz Management, most recently as executive managing director and co-head of global investor relations. Before Oz, he worked for four years in the private fund group of UBS.