Side Letter: The largest debut fund ever; earnings highlights; hiring diverse

Carlyle goes full C-corp; Glendower's $2.7bn for secondaries; and how to level up on diversity. Here’s today's brief, for our valued subscribers only.

Just happened

Glendower’s grand entrance

Glendower Capital has raised not just the largest first-time secondaries fund but one of the largest first-timers in all of private equity. The firm has collected $2.7 billion for Secondary Opportunities Fund IV, exceeding its $2.5 billion hard-cap, in its first fundraise since spinning out of Deutsche Asset Management in 2017. While some government- and corporate-backed funds have exceeded $3 billion, Glendower’s is the largest debut from an independent, per PEI data. It overtakes the $2.5 billion amassed in April by China-focused DCP Capital, set up by former KKR Asia co-head David Liu.

Carlyle makes the switch

“The benefits we see from the conversion have not gone unnoticed,” said Carlyle co-chief Kewsong Lee (pictured) earlier this year. The firm has now said it will convert to a C-corporation, but taking a slightly different course from peers Apollo Global ManagementBlackstone and KKR: instead of offering dual class shares – effectively keeping the current owners in charge of how the firm is run – it’s instituting a one-share, one-vote structure for all private and public unitholders. Carlyle raised $3.5 billion in new capital across strategies in the second quarter, effectively passing its four-year $100 billion fundraising goal.

Black addresses Epstein question

During the Q&A session of the Q2 earnings call, an analyst asked whether there was any link between Apollo and Jeffrey Epstein, and how the firm is handling the fall-out, particularly in regard to LP concerns. Leon Black took the question, saying the firm takes the issue “extremely seriously”, and reading out the emailed memo sent to Apollo employees. He told those on the call that it is “not affecting our relationship with our investors” and is not impacting the business, but stressed he wants to have an “open dialogue” with Apollo investors with “any specific concerns” and for them to “feel they have total access to us”.

Ares gears up for Fund VI

Meanwhile, Ares Management’s fundraising numbers were dominated by credit strategies yet again, with $5.7 billion of its $7.3 billion flowing toward its debt products. $997 million was raised for PE and $567 million for real estate. The PE fundraising number should be substantially boosted next year, as chief executive Michael Arougheti anticipated the firm would return to market with the sixth vintage of its flagship buyout fund, Ares Corporate Opportunities Fund.


KKR’s credit line creed. The Q&A after KKR’s recent earnings announcement provided a window into the firm’s use of subscription credit facilities, courtesy of CFO Bill Janetshek. In short, as our colleagues at Private Funds CFO lay out, they are used across all KKR funds, cleaned down every six months and LPs get their returns data both inclusive of the facility’s effect and discounting it. Hardcore KKR watchers can read the full transcript here.

How to level up on diversity. Recruiting a diverse investment team is seemingly easier said than done, if private equity industry statistics are anything to go by. If you’re looking for tips on how to promote diversity and inclusion in your firm’s recruitment practices, check out this podcast from our colleagues at Private Funds CFO in with veteran headhunter Will Moynahan on the topic.

How does your pay package stack up? Looking for valuable employee compensation data? PEI is partnering with Holt and MM&K on the 2019 PE/VC compensation survey, due for release later this year. The survey is designed to be filled out by CFOs, directors of human resources or managing general partners on behalf of all the employees of their firm.  Participants receive a free executive summary. All data submitted is, of course, completely confidential and anonymised. For more details on how to participate, contact Dan Gunner at

Dig deeper

Carolina commitments. South Carolina Retirement System has agreed to commit $75 million to TA XIII. Here’s a breakdown of the $31.32 billion US public pension’s total investment portfolio. For more information on South Carolina, as well as more than 6,700 other institutions, check out the PEI database.

He said it

“With all that money being deployed – and remember our funds are up 30-40 percent from prior years… it just takes time for that money deployed in the ground to work its way through the private capital value-creation playbook… The fact that it takes three, four years to generate the value creation in the PE models and then the time it takes to realise thereafter, you can see why it’s actually not that surprising that may be, to use your words, a little bit of a low.”

Kewsong Lee, Carlyle co-chief executive, explains why publicly traded PE firms are in a market low during the firm’s Q2 2019 earnings call.

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Today’s letter was prepared by Toby Mitchenall, Isobel MarkhamRod James and Andrew Hedlund.

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