Carlyle raising record capital from Asia

Carlyle’s funds are attracting more capital than ever before from emerging markets as sovereign wealth funds increase exposure to the US and Europe.

The Carlyle Group is raising record capital from Asia and the Middle East due to “large sovereign wealth funds” increasing commitments outside the region, co-chief executive officer David Rubenstein said on a recent earnings conference call.

“We are raising more money from emerging markets than we have ever raised before,” Rubenstein said. “In fact, we are doubling the amount of money we're raising from the emerging markets probably for our US buyout funds.”

We are seeing a real pickup in the money that we're raising from the emerging markets, particularly Asia and the Middle East, and I don't think that will abate anytime soon even if the emerging market growth rates should go down a bit

David Rubenstein, Carlyle co-founder

Carlyle’s overall fundraising pace is the “strongest it has been since 2008”, he said. The firm raised a total of $6.9 billion during the second quarter and $19.7 billion during the past 12 months. No data on Asia capital commitments was disclosed.

“We are seeing a real pickup in the money that we're raising from the emerging markets, particularly Asia and the Middle East, and I don't think that will abate anytime soon even if the emerging market growth rates should go down a bit.”

“My point is that a lot of the emerging market countries are investing money not necessarily in their emerging markets. They're investing money outside.”

Private Equity International reported earlier that the Korean National Pension Service, the world’s fourth-largest pension fund, and Temasek, Singapore’s $161 billion SWF opened overseas offices in the last 12 months. China Investment Corporation, China’s $575 billion SWF, which invests only overseas, is among the PRC investors deploying offshore capital.

Another topic addressed by Carlyle officials was the firm’s expectation of slowing growth in emerging markets as interest rates start to rise. 

“I think it could affect the currencies, the equity markets, the debt markets of the emerging market countries,” said William Conway, Carlyle co-CEO, who was also on the call.

China in particular has an uphill task and slowing GDP growth will continue. “China is not as strong as it was,” Conway said. “They're going through their transition from an investment-driven, export-led economy to a consumer economy, and frankly, that is a very tough transition for them to do.”

China is not as strong as it was. They're  going through their transition from an investment-driven, export-led economy to a consumer economy, and frankly, that is a very tough transition for them to do

Carlyle co-CEO Bill Conway

“If the consumer is 25 percent or 35 percent of the Chinese market and somebody thinks that growth is going to offset the drop or the slowing down in the investment side of the economy — it's very tough mathematically for the consumer to grow fast enough to fill that hole.” 

Carlyle sees take private opportunities in China. “We have some advantages that the local players don't have,” Conway said. “We're actually able to find some opportunities in China in the public market…We could find companies that maybe shouldn't have been public or the public market didn't appreciate, buy them, hopefully make them better and then exit down the road.”