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Carlyle doubled its fundraising in the second quarter to more than $12bn, as chief executive Harvey Schwartz attempts a turnaround of the US private equity giant.
The bulk of the fundraising was for the group’s latest Japan buyout fund, as well as its real estate and credit businesses. Carlyle set a goal at the start of the year to raise $40bn in 2024, which it is close to halfway to achieving.
Schwartz said in a statement that the group had made “significant progress” compared with a year ago as the “environment continues to improve”. Carlyle reached a record $435bn in assets under management and reported $273mn in fee-based earnings, narrowly ahead of analysts’ estimates.
However, the group’s earnings release came as a sell-off gripped global markets on Monday, potentially upending the upbeat narrative on Wall Street.
While there was “a lot of red on the screens”, it was too early to make conclusions on whether the intraday declines in the markets would have a long-term impact, Schwartz said during a call with investors.
“If we were having this call last Tuesday, none of these questions would be in the mix about the current market environment,” he said. “I think all of us have to be a little bit careful not to overreact to a market adjustment.”
Private capital executives had been turning increasingly positive about a revival in dealmaking after a two-year-long downturn.
Earnings from Ares, Apollo, Blackstone and KKR last week showed that the rival investment firms had deployed more than $160bn between them in the second quarter as they increased activity in preparation for the US Federal Reserve beginning to cut interest rates.
KKR also reported last week that it had accelerated fundraising in the second quarter, attracting $32.4bn in the three months to the end of June as it seeks to expand its infrastructure, credit and insurance businesses.
But Monday’s sharp falls in global stock markets threaten to change the conditions for dealmakers once again.
Carlyle chief financial officer John Redett said on Monday that the firm’s executives were “long-term investors, not as focused on day-to-day market volatility or market gyrations”.
“But if we’re in an extended period of a down market, I don’t know what happens but I think it’s probably less positive than where we sit today”, he added.
Carlyle also announced on Monday that it was selling one of the largest portfolios of natural gas power plants in the US for $3bn — a fresh sign of a comeback for deals.
However, those deals have not yet returned in full force. The group’s distributable earnings for the quarter — the metric favoured by analysts as a proxy for cash flow — were $343mn, around 11 per cent lower than the same period last year.
The year-on-year drop highlights the battle Schwartz has faced in reviving the buyout giant at a time when dealmaking has been slow.
He took the reins more than a year ago after a fumbled succession plan between the firm’s three billionaire founders.
While the group’s shares have recovered from a low of around $27 last year to almost $50 last week, the gains since the start of this year were largely obliterated by Monday’s sharp downturn.
By mid-morning in New York, a fall of more than 6 per cent on the day left them around 3 per cent higher for the year to date, at $41.47.
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