Carlyle eyes $10bn close this year

The Carlyle Group is “highly confident” the firm will reach its $10 billion target for Carlyle Partners VI later this year, co-chief executive officer David Rubenstein said during an earnings call Thursday, adding that the investment period for the fund begins on 1 June.

Carlyle continued its aggressive pace of investing and fundraising during the first quarter of the year, raising a total of $4.9 billion, with $1.4 billion for private equity, and deploying $2.5 billion, of which $1.9 billion went into private equity deals. 

However, both Rubenstein and co-CEO Bill Conway said the firm expects an overall slowdown of activity in the middle of 2013. 

“While we still expect investments in 2013 to exceed 2012’s $8 billion, we expect, based on our current pipelines, that the middle half of the year will be slower than the first quarter run rate,” Conway said. “In Europe, we anticipated that the economy would have bottomed by now. Instead, it continues to contract. In the US, growth continues at roughly the same rate observed since 2010.”

Despite the forecast of muted growth in both Europe and the US, Carlyle anticipates another year of strong investment performance and fundraising. 

“We currently have 13 new or follow-on funds in the market and will introduce additional offerings this year,” Rubenstein said, adding that the firm has held additional closings for its Carlyle Asia Partners IV this year, targeting $3.5 billion, and is expecting to hold a first close this year on its latest European buyout fund.

While predicting another strong year of returns, Rubenstein also echoed Conway’s expectations of a late 2013 pick-up in activity following a mid-year lull.

“Based on the projected timeline for our current pipeline we expect that our investment pace, realisations and realised performance fees, while strong, may be weighted toward the end of 2013,” Rubenstein said. 

Carlyle generated $18.7 billion of carry fund realisations in 2012, as the firm’s carry funds together returned 14 percent during the year. 

During the first quarter of 2013, Carlyle’s carry funds appreciated by 7 percent. First quarter economic net income – a measure of earnings that includes realised and unrealised investments – was $394 million, nearly identical to the $392 million during the same period in 2012. 

One year after becoming a public company, Carlyle continues to branch out into new markets.

“We continue to press forward on our agenda to offer Carlyle’s investment products to a new and expanded set of

high net-worth investors,” Rubenstein said. “From a product standpoint, we are pleased with the recent launches of Central Park Group’s Carlyle Private Equity Fund…and we have substantially broadened our feeder fund network. We expect that this network will provide an increasing share of our newly raised funds.”

While Rubenstein said fundraising was still “not a walk in the park”, the firm has seen increasing overall demand, especially from individual investors.

Carlyle also recently announced the formation of an in-house energy team that will pursue a broad range of energy investments in Europe, Africa, Asia and Latin America. 

“With that team, we now have an array of energy investment platforms across the firm and believe we are well positioned not only to take advantage of the energy revolution in the US but also energy opportunities around the world,” Conway said. “This array of funds and investment teams position Carlyle to be a significant private equity and debt investor in the global energy revolution now unfolding.”

Carlyle’s $176.3 billion of assets under management are split between $55.1 billion in corporate private equity, $47.8 million in fund of funds, $40.3 billion in real assets and $33.1 billion in global market strategies.