Carlyle’s second opportunistic pool nabs $2.5bn amid record credit fundraising

Carlyle has since January raised $40bn across its strategies, including private debt, up 124% year over year.

Carlyle’s private credit group, which is looking to amass $80 billion-plus in assets over the next four years, saw robust fundraising in the third quarter, bringing in $4.7 billion.

The fresh commitments, reported in Carlyle’s Q3-2021 earnings statement, 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 secured in all of 2020.

Carlyle in its report attributed third-quarter results to diverse credit-oriented activity in the market that included the launch of four new collateralized loan obligation vehicles and more capital going into separately managed accounts.

Another major factor, the report said, was fundraising by Carlyle’s second opportunistic credit offering, unveiled last year with a target of $3.5 billion.

Carlyle Credit Opportunities Fund II, earmarked for bespoke capital solutions to sponsored and non-sponsored mid-market borrowers, had as of June 30 collected $2.5 billion, according to a Form 10-Q document. Additional amounts obtained over July-to-September likely put the pool in sight of the target.

Fund II is already running ahead of its predecessor, wrapped up in 2019 at $2.4 billion.

The fund’s momentum was highlighted in the third-quarter report by CFO Curtis Buser. Commenting on the $40 billion raised in total by Carlyle since January – up 124 percent year over year – he noted the role played by the second opportunistic offering, which he described as “coming stronger.”

Private debt push

Carlyle has made expansion of its private credit group a top priority. As part of this, the firm in 2016 hired Mark Jenkins, who previously led global private investments at Canada Pension Plan Investment Board, as head of global credit.

Jenkins last year told Buyouts that Carlyle’s objective was to turn a narrowly focused credit unit into an integrated, multi-strategy business able to invest worldwide.

Among the new capabilities introduced was an opportunistic strategy. Carlyle in 2017 recruited Alex Popov from HPS Investment Partners to lead illiquid credit and design the strategy. The initiative was advanced by the hires of Sculptor Capital Management’s Taj Sidhu and HPS’ Andreas Boye.

Because of Carlyle’s credit push, the platform’s asset base is now “more than two times larger than it was less than four years ago,” CEO Kewsong Lee said in the Q3-2021 report. Assets rose to $66 billion at the end of September, up 19 percent year to date.

Private debt as an asset class has strong tailwinds, Carlyle said when it this year announced an overall fundraising target of $130 billion. Popov reinforced the point in a Buyouts interview, saying strategies like opportunistic credit will have a key supply role in a post-pandemic market.

Lee added to this in Carlyle’s report. He said credit opportunities, which are benefiting from a continuing shift “away from traditional fixed income,” could gain more traction from “the potential for increased market volatility or higher interest rates.”