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Carlyle eyes first closes on three buyout funds

The firm hopes to raise around $25bn for its flagship US, Europe and Asia vehicles.

Carlyle Group hopes to hold first closes on three buyout funds, which are targeting a total of $25 billion, by the end of the first half of 2018, co-founder and co-chief executive David Rubenstein said on Wednesday.

A source familiar with the fundraises told Private Equity International the Washington DC-headquartered firm aims to hold a first close on Carlyle Partners VII, which is targeting $15 billion, and Carlyle Asia Partners V, which is targeting $5.5 billion, in the second half of this year. The firm expects to hold a first close on Carlyle Europe Partners V, which is seeking north of €3.5 billion, in the first half of next year.

The majority of limited partners are expected to come from Carlyle’s existing investor base, Rubenstein said in a second quarter earnings call. The firm attracted around $320 million from 30 new institutional investors in the second quarter, co-founder William Conway added.

“We are seeing strong investor interest in virtually all of our funds, in fact we're signalling to our fund investors that they should commit early to each of these funds as we expect demand to far outpace capacity in many of them,” Rubenstein said. “We have not historically done one-and-done closings on these large buyout funds, but there's no doubt that there's enormous amounts of interest in it. And I don't think the fundraising for either of those funds will be very elongated compared to what we've had in the past.”

Carlyle’s fourth flagship European fund, a €3.8 billion 2014-vintage which includes commitments from California Public Employees’ Retirement System and Michigan State Treasury, is at least 82 percent invested, PEI reported last month. The $13 billion CP VI and $3.8 billion CAP IV had deployed $9.3 billion and $2.3 billion respectively as of 30 June, according to the firm’s second quarter results.

The firm realised around $2.7 billion of corporate private equity proceeds during the second quarter, Conway said. Notable exits included the sale of Multi Packaging Solutions by CEP III and Crystal Orange Hotels in China by CAP III, according to the results.

“We remain vigilant given that today's relatively high valuations are anchored on very low nominal interest rates,” Conway added. “We do expect that nominal rates of return in a world of low or even negative real interest rates are likely to be lower on new investments compared to most investments of the past decade.”

The firm’s existing corporate private equity buyout funds appreciated 8 percent over the second quarter, according to its results. Carlyle managed $54.3 billion of corporate private equity assets as of 30 June.