Prolific Fundraiser Carlyle Closes Two Funds

Two down and four to go. That’s the latest score on The Carlyle Group’s goal of raising at least six new funds in what’s turned out to be one of the least amenable fundraising environments ever.

The Washington, D.C.-based firm, which fields an internal team of marketers, announced earlier this month that it closed its Carlyle Asia Partners III fund at $2.55 billion, and its Carlyle Global Financial Services Partners fund at $1.1 billion, both below the firm’s initial fundraising goals.

Meanwhile, according to the Buyouts fundraising database, Carlyle Group is still actively raising at least four other private equity funds—each geared toward a specific geography or industry. Of that group, the three funds with known targets add up to a combined $1.57 billion goal, and the firm has thus far raised about $510 million (about 32 percent) toward that end, as of March 31, our data shows. A spokesman for Carlyle Group could not be reached for comment by press time.

Fundraising for Carlyle Asia Partners III, earmarked for the Asia-Pacific region with the exception of Japan, was a multi-year process, and specifics around the firm’s initial size expectations for the fund are sketchy. A May 28, 2008 regulatory filing with the Securities and Exchange Commission noted that Carlyle Asia Partners III had an “aggregate offering price” of $5 billion, but it is unknown if that figure was intended to serve as a target or a hard cap. Subsequent press reports have noted targets for the vehicle in the range of $3 billion to $3.5 billion.

At the time of the May 2008 filing, the fund had already amassed $1.3 billion from 59 investors, according to the filing. Almost 10 months later, 30 more limited partners had climbed aboard the vehicle, which, according to a March 12, 2009 filing, had grown in size to about $1.9 billion. The final SEC filing before the announcement of the final closing was dated March 15, 2010, at which point the fund had a commitment tally of $2.2 billion from 117 investors.

Limited partners in the new fund include the California Public Employees’ Retirement System and DanCap Bank, a privately owned bank based in Barbados, according to LP documents and Thomson Reuters (publisher of Buyouts). Carlyle Asia Partners II LP, which closed in 2005, reached a total of $1.8 billion and is steward to nine active portfolio companies, according to Carlyle Group’s Web site.

“As one of the few multi-billion dollar PE fund closings globally since the onset of the financial crisis, we are pleased with the level of support from investors, especially in this challenging fundraising environment,” said X.D. Yang, a managing director at Carlyle Group and co-head of Carlyle Asia Partners, in a prepared statement. “We believe that 2010 is shaping up to be a very good year to make investments in Asia as the region bounces back strongly from the global economic crises,” Yang added.

As for Carlyle Global Financial Services Partners, the oldest regulatory filing on that vehicle is dated Oct. 2, 2008, at which point the firm reported zero dollars worth of commitments for its inaugural financial services vehicle. According to Buyouts data, the initial target for that vehicle was $3 billion.

The buyout shop said it had already made three investments in troubled banking companies, consuming about 30 percent of the new fund’s capital. These investments include Bermuda-based N.T. Butterfield & Son, a deal announced in March; BankUnited FSB, announced in May 2009; and Boston Private Financial Holdings Inc., announced in August 2008.

P. Olivier Sarkozy, a managing director at Carlyle and the head of its financial services team, said the firm is unconcerned about efforts in Washington, D.C., and around the world to change the rules governing the financial industry. In fact, the rules could be a boon to investors if lawmakers and regulators require banks to increase their reserves, Sarkozy wrote in an e-mail message. “Financial services companies need significant amounts of additional capital to appropriately reflect the realities of today’s economic environment. As a result we expect a significant number of opportunities to manifest themselves.”

Among the funds Carlyle Group is still raising are Carlyle Asia Growth Real Estate Partners II, a $1 billion-targeted vehicle that had raised $500 million as of March 31, and Carlyle Latin America Real Estate Partners LP, a vehicle that’s raised $10 million on its way to a $75 million goal, according to Buyouts.

Other Carlyle Group vehicles in the market include Carlyle Realty Distressed BMBS Fund III LP, which has raised $22.35 million toward and unknown target, and Carlyle South America Partners LP, which so far has yet to close on any commitments toward its $500 million goal, according to Buyouts.