Carlyle touts European fund performance

  • Firm raises $7.4 billion in new capital in Q2
  • Europe III appreciated 47 percent in a year
  • To close Asia IV, International Partners in Q3 

All told, Carlyle said on July 30 that it raised $7.4 billion in new capital in the second quarter, up from $6.9 billion in the year-ago period.

The firm’s corporate private equity unit drew in $2.7 billion by additional closings of its Carlyle Global Financial Services Partners II LPCarlyle Asia Partners IV, Carlyle Europe Partners IV LP and the first close on its Carlyle Europe Technology Partners III LP. Carlyle Global Financial Services Partners II raised $1 billion, the firm said on June 23.

Bill Conway, co-CEO, said the “big story” for the quarter was the performance of Carlyle Europe Partners III, which contributed $44 million in realized net performance fees via three realization events. As of June 30, the fund had a total multiple on invested capital of 1.7x and a gross IRR of 17 percent. Carlyle Group closed on 5.4 billion euros for Carlyle Europe Partners III in 2007. That amounts to about $7.2 billion, based on current currency conversion rates.

Conway said the fund struggled early on, with a couple of its initial investments realizing losses. Carlyle also paid high prices for two ”excellent” companies: Applus, an engineering and testing company based in Spain; and Numericable, a French telecommunications company. Applus held an intitial public offering during the quarter.

“When the recession hit, business slowed and multiples contracted,” Conway said. “Since then, however, the fund has recovered and thrived, and those two high-priced investments, Applus and Numericable, have become sources of strength for the fund. Carlyle took steps to enhance these companies during and after the tough times.”

Looking ahead, Carlyle said it expects to hold final closings in the third quarter for Carlyle Asia Partners IV and Carlyle International Energy Partners LP. Both of these are expected to draw commitments exceeding their initial target size. As a point of comparison, Carlyle Asia Partners III raised $2.6 billion in 2007.

The International Energy Fund will mark the largest fundraise of a first-time fund in Carlyle’s history, the firm said. While Carlyle did not provide any specific dollar figures, some of its larger first-generation funds have raised more than $1 billion.

David Rubenstein, Carlyle’s co-CEO, said the “substantial capital” raised during the quarter reflected an overall increase in fundraising and a larger share of the pie held by diversified private equity firms. Both trends are expected to continue.

”The largest, most diversified firms are raising an increasing percentage of the dollars now being invested in alternative strategies,” Rubenstein said.