Carlyle to hit hard-cap for new PE funds

Private equity fundraising for the next generation of funds will account for a third of the $100bn that Carlyle is seeking to raise over the next few years.

Carlyle Group co-founder and co-chief executive officer David Rubenstein expects to hit the hard-cap for all of the firm’s private equity funds coming into market, he noted during the firm's first-quarter earnings call on Wednesday.

The Washington, DC-based firm has been in full fundraising mode as it seeks to raise at least $100 billion in the next four years through its next generation of funds.

As previously reported by Private Equity International, the lineup of new funds coming into market include the firm's seventh US buyout fund, its fifth Asia-focused fund and fifth European fund, although the targets and hard-caps for these funds are unspecified.

“We tried to sequence them because we didn’t want to have so many funds in front of our investors at once,” Rubenstein said during the call. “But there was so much demand that it was not a problem. This is something different than what we’ve seen before; incredible demand across the spectrum from investors for private equity products. I suspect we’ll hit the hard-cap on every one of the funds into market.”

He added that the firm’s private equity segment will pick up its pace of fundraising in late-2017 and accelerate into 2018, as the firm, which manages $162 billion in total assets as of 31 March, is wrapping up the investment period of its existing funds.

Those existing funds include Carlyle Partners VI – which closed on $13 billion in 2013 – and Carlyle Asia Partners IV – which closed that same year on $3.9 billion – both of which are over 70 percent committed and invested, according to Rubenstein. Carlyle Europe Partners IV, which closed on €3.75 billion in 2014, is over 60 percent committed and invested, while Carlyle Global Financial Services Partners II, which raised $1 billion that same year, is over 80 percent deployed, he added.

As these funds wrap up their investment period and the next generation of private equity funds launch, 2017 will mark a transition year for the firm, Carlyle chief financial officer Curtis Buser said during the same call.

“2018 will be a significant year for corporate private equity fund closes,” Rubenstein added. “Private equity will comprise of a bit more than a third of our $100 billion fundraising target [over the next few years].”

Carlyle posted a net economic income of $400.1 million in the first quarter, up from $88.5 million in the same quarter in 2016. Its stock price on NASDAQ was at $17.95, up 55 cents or 3.2 percent from the previous close, at 2:40 p.m. ET after the earnings call.