Capital raised across strategies by the Carlyle Group stood at $6 billion from July to September, down from $9.8 billion in the second quarter.
Senior executives at the firm largely attribute this to congestion in the market, although this is coincident with the sudden departure of the firm’s former chief executive Kewsong Lee in August.
“The short answer would be no, in terms of the impact of the CEO change on fundraising,” said Bill Conway, co-founder, interim chief executive and co-chairman of Carlyle, on a call accompanying the firm’s third-quarter financial results on Tuesday in response to an analyst’s question about whether the leadership change was a factor in decreased inflows.
“I’ve been on the road a lot myself, talking to investors,” Conway added. “But I think I don’t see any long-term damage at all in this… And I think the investors in our funds, they like seeing somebody at the top who they know understands exactly what they are trying to accomplish.”
Carlyle CFO Curtis Buser noted that the drop in capital raised in Q3 is due to “the aggregate dynamics that are affecting a lot of the private equity players, not just us.”
He said: “The denominator effect, the congestion in the market, etc… We’re falling prey to that like others are. But our diversification and other products – whether that’s energy, natural resources, credit, solutions – the experience is very different based on that. Performance, industry and sector matter a whole lot.”
The firm disclosed in August the abrupt exit of Lee less than five years after he and former co-chief Glenn Youngkin – who left in 2020 to pursue a political career – were handed the reins by founders David Rubenstein, Bill Conway and Daniel D’Aniello.
Conway said on the call that the search for Carlyle’s CEO continues, with no additional information to share at present.
The Washington-based firm has gathered $25 billion in the year to September across strategies, up 37 percent from the same period in 2021. Fundraising in the third quarter was by driven by follow-on closings on its eighth US buyout fund and fifth Europe technology fund, as well as the closing of its three latest US collateralized loan obligation funds and latest Europe CLO, according to the earnings statement.
Carlyle’s global PE segment, which includes corporate PE, real estate, infrastructure and natural resources, had $164 billion of assets as of quarter-end. This was down 2 percent from the prior quarter, as exits and foreign exchange translations offset moderate portfolio appreciation and fundraising in the latest vintages of its Europe tech and US buyout funds.
The firm had gathered $14 billion for CP VIII as of end-September and is set to continue fundraising until 2023, said Peter Clare, Carlyle CIO for corporate private equity, on the call.
Bright spots
Speaking on the broader environment, Conway noted that headwinds including geopolitical uncertainty, rising interest rates and high inflation are unlikely to be resolved in the short term.
Macro volatility is, however, creating investment opportunities for the firm’s global credit and global investment solutions units.
AUM of Carlyle’s global credit segment reached $141 billion as of end-September, soaring 93 percent compared with the prior period. The increase was driven by its strategic advisory services agreement with insurer Fortitude and fundraising across the platform.
Global investment solutions, meanwhile, recorded $63 billion of AUM as of quarter-end. It expects to be back in the market next year with several strategies, Ruulke Bagijn, head of the global investment solutions unit, said during the call.
Carlyle’s total AUM stood at $369 billion as of end-September, up 23 percent year-to-date.
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