Carlyle admits crowded market will delay its PE fundraising timelines

Some 3,801 private equity funds in market are seeking approximately $1.2trn between them, according to PEI data.

Carlyle Group’s chief executive has warned of longer fundraising timelines for the firm’s private equity vehicles, compared with its other strategies.

“[The] changing dynamics mostly related to a crowded private equity fundraising marketplace is affecting the timing of some of our private equity funds in the market,” Kewsong Lee, said during a call accompanying the firm’s first-quarter 2022 earnings on Thursday.

Lee added that it was more “a timing issue than anything else” for private equity vehicles when compared with those for credit, real estate and secondaries.

“With respect to private equity fundraising, these changing dynamics are mostly driven by the record number of funds that are coming back to market much faster than LPs thought, in large part because of the success the private equity asset class has had over the last few years. So this is going to result in longer timeframes to traditional PE fundraising.”

For context, some 3,801 private equity funds in market are seeking approximately $1.2 trillion between them – the largest collective capital raising target PEI has tracked – according to Private Equity International‘s latest quarterly fundraising report.

Carlyle is in market with Carlyle Partners VIII and Carlyle Partners Growth Fund, which have raised $11.5 billion and $1 billion respectively as of end-March, according to earnings materials. The funds are seeking $22 billion and $2 billion respectively, according to PEI data.

Carlyle’s CEO noted the firm is seeing “real demand and real strength” in areas including private credit, real estate, infrastructure, natural resources and investment solutions.

Lee, however, remained positive about the firm’s fundraising prospects given the diversification and breadth of their platform, highlighting the “consistent performance” of its funds and “the historical strength of its partnership with LPs”.

Lee’s comments are in line with Blackstone chief operating officer and president Jon Gray’s words last week, when Gray noted during the firm’s first-quarter earnings call that fundraising momentum and LP appetite for alternatives “has not stopped” even in a period of market uncertainty.

The Carlyle chief also noted that fundraising is just one aspect of its capital formation strategies. The firm added a further $65 billion of assets in the first quarter via a new advisory services agreement with Fortitude Re and the acquisition of collateralised loan obligation manager CBAM.

The firm raised $9.2 billion across strategies during the quarter, more than the $7.2 billion in the first quarter of 2021, with the first close of its fifth Europe technology fund, global credit and real estate credit fundraising as well as the acquisition of Fortitude driving the rise. Fundraising totalled $52.7 billion for the last 12 months, increasing 90 percent year-on-year.

Global private equity, which includes corporate PE, real estate, and infrastructure and natural resources accounted for $3 billion or about one-third of Carlyle’s inflows for the quarter.

Exits in its PE portfolio generated $2.5 billion, driven by its Japan buyout fund and its growth and buyout funds in the US.

Carlyle’s assets under management reached at $325 billion as of end-March, an 8 percent increase on the prior quarter and up 24 percent from a year ago. Dry powder stood at $85 billion as of end-March.

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