Retail success: CPG Carlyle fund tops $550 mln from individuals

The fund totaled about $551 million in assets under management and was invested mostly in secondary fund stakes and money-market funds, as of Dec. 31, 2014, up from $410.7 million on June 30 and $180 million at the end of 2013, according to March public filings, the most recent available. It’s not clear how much of that total is due to funds raised, and how much is from investment gains.

For individuals investing in CPG Carlyle Private Equity Fund, the biggest piece of each dollar in the fund is currently comprised of secondary fund holdings, which account for about 58 percent of the fund. Buying fund stakes in the secondary market may help smooth out the typical J-curve in private equity funds.

The fund’s $53.7 million stake in Carlyle Global Financial Services Partners ranks as the largest single holding. The pool dates back to 2008 when it drew in $1.1 billion in the months after the collapse of Lehman Brothers and fell short of its $5 billion target.The fund’s secondary portfolio carried a total fair market value of $321.7 million as of Dec. 31, up about 1.15x from the $278.8 million cost of the portfolio, according to a filing. Carlyle has right of first refusal on sales by existing LPs, according to a person with knowledge of the fund.

Its second-largest holding is $42 million of Carlyle Infrastructure Partners, a $1.2 billion fund raised in 2006, followed by $33.3 million for Newport Global Opportunities Fund.

Spokesmen for both the Carlyle Group and Central Park Group declined to comment.

PE for everyone

The gains in the fund come as private equity firms continue to work on products to appeal to wealthy individuals. Carlyle Co-CEO David Rubenstein has called for greater access to the asset class for individuals, including the hope that mom-and-pop investors will one day have the option to set aside part of their 401(k) account for private equity investments.

Along with overseas sovereign wealth funds, individual investors offer a gigantic source of new capital, Rubenstein said on Feb. 11. “I wouldn’t diminish individual investors,” Rubenstein said. “Other firms like ours are focusing, as we are, on high-net-worth individuals with various retail platforms and fundraising efforts, and I expect you’ll see a lot more coming in from individual investors through various means.”

While it’s open only to accredited investors – typically with at least $1 million in net worth not including the value of their primary home – CPG Carlyle Private Equity Fund is aimed at a broader population than the institutional LPs that usually participate in private equity funds.

Under its agreement with Central Park Group, the fund allows investors in the fund to withdraw some money on a quarterly basis after two years. A board managing the fund will have the power to set boundaries on total withdrawals, according to a filing. Bank of America Merrill Lynch and other institutions help market the fund to individuals, according to a report.

Founded in 2006, Central Park Group is led by Gregory Brousseau and Mitchell Tanzman and aims to serve the “growing demand” for alternative investments among high-net-worth and smaller institutional investors, according to the firm’s website. Brousseau was co-head of UBS Financial Services Alternative Investment Group and a member of the firm’s operating committee. Tanzman also worked at UBS, as well as Oppenheimer & Co.

The fund has surged in size even as Carlyle Group moves to liquidate two mutual funds: Carlyle Core Allocation Fund, which disclosed $53 million in assets; and the Carlyle Enhanced Commodity Real Return Fund, a commodity pool with no assets disclosed because it had yet to accept money, according to Reuters.

Carlyle also runs a private business development company (BDC) called Carlyle GMS Finance Inc, which totaled $338 million in net assets at the end of 2014, up from $186 million at the end of 2013.

CPG Carlyle Private Equity Fund Largest Holdings
Fund name	Type	Fair value $ mln
Carlyle Global Financial Services Partners	Secondary Investment	$53.70
Carlyle Infrastructure Partners	Secondary Investment	$42
Newport Global Opportunities Fund, L.P	Secondary Investment	$33.30
Carlyle Partners V	Secondary Investment	$29.40
Carlyle Asia Growth Partners IV	Secondary Investment	$21.20
Carlyle Asia Partners III	Secondary Investment	$19.50
Carlyle Asia Partners IV	Primary fund investment	$9.20
Source: CPG Carlyle Private Equity Fund

CPG Carlyle Private Equity Fund
		Percentage	Fair value $mln
Investment funds		65.50%	$361.10
	Co-investments	1.70%	$9.40
	Primary investments	4.90%	$27
	Secondary	58.40%	$321.70
Short-term investments		40.60%	$223.80
	Money market funds	37%	$203.80
Total*			$551.20
Data as of Dec. 31, 2014
*Includes other line items not included.
Source: Public filings