The Carlyle Group has held a $3.6 billion final close on its debut “long-dated” private equity fund, whose terms are understood to include a typical portfolio company hold period of eight to 10 years.
“Carlyle Global Partners (CGP) is complementary to and a natural extension of our established global buyout business,” William Conway, Carlyle’s co-chief executive and chief investment officer, said in a statement.
Carlyle is not the only firm to have broken with the typical 10-year life-span and offer investors a longer time horizon in exchange for lower risk, lower fees and lower returns. The Blackstone Group has indicated that it is speaking to large LPs about a similar structure, while CVC Capital Partners has already started to deploy its $5 billion-plus Strategic Opportunities Fund.
Media reports at the time of the CGP fund’s launch in 2014 suggested the firm was targeting up to $5 billion for the vehicle. A Bloomberg article noted it would charge a 1 percent management fee and 15 percent carried interest.
Carlyle declined to disclose details on the fund’s structure, terms, target or investors beyond its press release announcing the close.
Eliot Merrill and Tyler Zachem, co-heads of the 13-person CGP team located in New York and London, said in the statement the firm had partnered with “a number of longstanding Carlyle investors” on the fund.
In a fourth quarter earnings call in February, Carlyle said the fund had secured $3 billion in commitments from a limited number of well-known institutional investors, and had made $400 million in co-investments. Including co-investment, CGP has the capacity to invest more than $500 million of equity per transaction.
The vehicle “pursues investments with the potential for attractive returns and net asset value appreciation over a longer time horizon than traditional private equity funds”, Carlyle noted. It is both sector- and geography-agnostic, and has “limited need for nearer-term liquidity events”, thereby presenting a differentiated offering to founders and management teams at prospective portfolio companies, Carlyle said.
CGP has now deployed $1.1 billion across four companies including in Global Jet Capital, which provides financing solutions to the corporate and private aircraft market; Content Partners, an aggregator of entertainment and media intellectual property; NEP Group, a provider of outsourced broadcast and live event production services; and German speciality hospital operator Schoen Klinik, a transaction which is expected to close next month.
The firm's latest flagship global buyout fund, the $13 billion, 2013-vintage Carlyle Partners VI, was delivering a 1x return and a net internal rate of return of -0.5 percent as at 31 March 2016, according to the California Public Employees Retirement System, which committed $547 million to the vehicle. CalPERS’ did not commit to the long-term vehicle, according to its website .