Carlyle At 60% Toward $10B Fund VI Target

The Carlyle Group is 60 percent of the way to its $10 billion target on its latest U.S. buyout fund, Carlyle Partners VI, David Rubenstein, a Carlyle co-CEO and co-founder, said on an earnings call in late February. Funds in general are taking 16 to 17 months to close, he said, and he expects CP VI will likely take that amount of time.”Very few $10 billion funds have closed since the Great Recession,” he said.

Rubenstein said that fundraising remains “a challenge for everyone.” Institutional investors, he said, are at a “tipping point” of wanting to deploy more capital into alternatives. Carlyle also continues to see growing interest from high net worth investors, he said.

Fund VI is coming in lower than the firm’s last U.S. buyout fund, Carlyle Partners V, which collected $13 billion in 2007. The firm has delayed “reaping carried interest” from CP V, which weighed on distributable earnings, the New York Times said.

William Conway, a Carlyle co-CEO, said the firm has invested $11 billion of CP V. Deals include TCW, Hamilton Sundstrand and Getty Images. “We have enormous profit built into that fund so far. The accrued carry on CP V was in excess of $800 million alone,” he said on the call.

Rubenstein said the firm has seen lots of interest for $1 billion funds. In November, Carlyle raised a $1 billion mid-market fund. Carlyle also collected $1.38 billion that month for a new fund focused on energy credit investments. “This is best time I have seen for fundraising in last five years,” Rubenstein said. “It’s not easy and it still takes a long time to get funds done.”

Carlyle will also launch a new fund focused on Japan this year, Rubenstein said. “I don’t know what size it will be,” he said.

Carlyle is one of the most active buyout shops, having bought Getty Images in 2012. It recently closed buys of TCW and DuPont Performance Coatings. Conway, on the call, said he was “stunned” strategics have not been more active in M&A. “It’s a good thing in that strategics don’t compete with us for deals,” he said. “We buy Hamilton Sundstrand … and I wonder ‘Where are the strategics?’ … They’ve not been aggressive acquirers of assets we own.”

Conway later added that many strategics “may be still reeling from 2008 to 2009 situation. We were all looking down into the abyss then.” He expects strategic M&A to increase this year, due to low interest rates and more confidence in the U.S. and China.

Luisa Beltran is a senior writer for peHUB.