Carlyle closes flagship Fund VIII under target amid industry slump

After two years of fundraising, Carlyle Group held a final close on its eighth flagship fund on around $14.8 billion in August, below its initial $22 billion goal and less than the firm raised for its prior main private equity fund.

The final tally, while not surprising given that Carlyle publicly announced its lower ambitions for the fund during a May earnings call, stands as a stark example of the pain many GPs are experiencing in today’s fundraising environment.

While a handful of top-performing managers are able to meet or beat their targets, most GPs – including the largest shops in the industry – have found fundraising as challenging as the period after the global financial crisis.

Apollo Global Management closed its 10th flagship fund on $20 billion, under its $25 billion target and less than the prior flagship pool, which closed in 2017 on $24.7 billion, Buyouts previously reported. Blackstone and TPG both dialed back their expectations from their original targets on their flagship pools.

“Distributions in the asset class are way down, LPs have less to redeploy, many LPs are upside down with the denominator effect … when that happens, capital gets allocated to core relationships, re-ups with best and most favorite groups they don’t want to lose,” a limited partner told Buyouts in a recent interview.

North American private equity fundraising continued to decline in the first three quarters, reaching $390 billion at the end of September, down 11 percent from a year earlier, according to Buyouts data. Even more telling, around 554 funds closed in the first three quarters, down 43 percent year-over-year.

Carlyle confirmed it closed the fund in August, along with its debut growth pool, for a total of around $16.1 billion for the firm’s integrated US buyout and growth platform. Fund VIII had deployed around $6.8 billion as of August, according to the firm’s second quarter earnings report. The pool was generating a 1.1x multiple as of the same date.

Carlyle launched fundraising on the pool in 2021 and received extensions to continue to try and attract capital from LPs beyond its contractual marketing deadline. The firm also ran a tender offer process on its third fund that included a shot of fresh capital into Fund VIII to help boost fundraising, Buyouts previously reported.

The firm indicated during its first-quarter earnings call in May that it was revising its expectations for its corporate private equity funds. Carlyle closed the prior flagship, Fund VII, on $18.5 billion in 2018. Fund VII was producing a 1.4x multiple and an 8 percent net internal rate of return as of August, according to the second quarter earnings report.

Corporate private equity is led by Brian Bernasek and Sandra Horbach.