Carlyle Raises A New $13 Billion War Chest For U.S. Buyouts

By Mani
Updated on

Global alternative asset manager The Carlyle Group LP (NASDAQ:CG) today announced the final close of a $13 billion fund for leveraged buyouts in the U.S.

The new fund would invest in corporate buyouts and strategic minority investments across six industries.

First fund since 2008

Carlyle Group LP (NASDAQ:CG)’s new Carlyle Partners VI is the first such fund since 2008. Over 269 investors from 43 countries committed capital to the fund. Carlyle’s team began fundraising in late 2011 with a $10 billion target.

The alternative asset manager’s previous U.S. buyout fund was the $13.7 billion Carlyle Partners V which closed at the end of 2008. Some of the notable investments in that fund included Axalta Coating Systems, formerly DuPont Performance Coatings, Beats Electronics LLC, Booz Allen Hamilton Inc and Pharmaceutical Product Development Inc. (PPD).

Significantly, Carlyle Group LP (NASDAQ:CG) and its employees and advisors committed $1 billion to the new fund.

William Alden of Dealbook points out big investors, known as limited partners, continue to repose faith in Carlyle Group LP (NASDAQ:CG)’s ability to deliver outsize returns.

Carlyle set to harvest earlier investments

Recently, Carlyle Group LP (NASDAQ:CG) reported lower than expected third quarter profits. Its economic net income, which includes unrealized gains, fell 11% to $195 million. However, revenues rose 3.4% to $888.1 million, well above the consensus estimate of $616 million.

It has been observed Carlyle Group LP (NASDAQ:CG) clearly failed to take advantage of favorable market conditions to exit investments, while its competitors The Blackstone Group L.P. (NYSE:BX) and KKR & Co. L.P. (NYSE:KKR) took advantage of the opportunity and reported much higher earnings.

However, as William Alden of Dealbook points out, even as Carlyle raises new money, Carlyle is preparing to harvest some of its earlier investments. During the recent conference call to discuss third-quarter earnings, Carlyle Group LP (NASDAQ:CG)’s co-chief executive David M. Rubenstein indicated the firm has been working on a number of exits that are likely to produce healthy performance fees in the near term.

Carlyle’s investment in Beats Electronics

Carlyle Group LP (NASDAQ:CG) is best known for its buyouts, and it recently made a minority investment in Beats Electronics, which makes colorful, expensive headphones.

The U.S. buyout group is part of Carlyle Group LP (NASDAQ:CG)’s Corporate Private Equity segment, the oldest and largest of the firm’s four business segments, with Assets Under Management of $62 billion as of September 30, 2013. Peter Clare, Managing Director and co-head of the U.S. buyout group indicated growth drives most of the firm’s value creation as they build the capabilities necessary to find and accelerate real growth.

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