Carlyle’s second opportunistic credit fund raises $3.46bn, just shy of target

As part of record credit fundraising in the third quarter, Carlyle Group effectively met the $3.5 billion target it set for a second opportunistic offering.

The private equity giant recently filed Form D fundraising documents showing Carlyle Credit Opportunities Fund II and a parallel pool raised nearly $3.46 billion. The placement agents are TCG, Barclays Bank, Arngrimsson Advisors, IBK Securities, Shinhan and GFH Financial Group.

Carlyle, which declined to comment, has not yet announced a final closing, suggesting that Fund II remains in the market. The vehicle’s hard-cap is not known.

The second opportunistic fund played a key role in the $4.7 billion secured by Carlyle’s private credit group in the third quarter. The fresh commitments, reported in the firm’s Q3-2021 earnings, represent the credit platform’s biggest quarterly haul on record. Combined platform inflows this year stand at $10.3 billion, above the $10.1 billion raised during all of 2020.

Fund II, which had amassed $2.5 billion as of June 30, according to a Form 10-Q document, collected the additional $950 million-plus over July-through-October.

Carlyle launched the opportunistic strategy in 2017 to provide bespoke capital solutions to mostly upper mid-market borrowers, both sponsored and non-sponsored, looking for an alternative to traditional debt or private equity. A debut fund was wrapped two years ago at $2.4 billion, ahead of a $2 billion target.

The strategy was designed by Alex Popov, Carlyle’s head of illiquid credit strategies.

Popov joined the firm in 2017 after a long career as a private debt executive with firms like HPS Investment Partners and Oaktree Capital Management. Other senior members of the opportunistic team include Taj Sidhu, hired in 2018 from Sculptor Capital Management, and Andreas Boye, hired last year from HPS.

Working with Mark Jenkins, Carlyle’s head of global credit, Popov built out illiquid credit as part of a massive expansion of the overall platform. Also consisting of direct lending and distressed/special situations, illiquid credit today holds assets managed of $16 billion or roughly one-quarter of the total overseen by the private credit group.

In an April interview with Buyouts, Popov said illiquid strategies, such as direct lending and opportunistic credit, will play an outsized supply role in a post-pandemic market. This, he said, owes in part to the continuing withdrawal of traditional sources of debt, such as banks.

Despite the promise of more opportunities, global private debt fundraising has recently been slow. Activity recovered in the third quarter, however, bringing total capital raised since January to almost $150 billion, up 19 percent year over year, Private Debt Investor reported. A major factor in these results was mega-vehicles.