CG - Earnings call transcript Q3 2020 | The Carlyle Group Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Carlyle Group Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to your host today, Mr. Harris. Daniel ahead. go please Sir,

Daniel Harris

our you, will Ludy. quarter call to third webcast, Lee; and is This Curt call is available Good earnings call. on morning, being and Kewsong XXXX Officer, the a Chief welcome Financial With Officer, our Buser. replay Carlyle’s and Executive Thank Chief be me today website. on our

as should financial a not in generally to refer today’s during will as prepared measures – for certain from substitute non-GAAP or considered measures accordance be accepted These We in accounting isolation measures call. with principles.

statements reconciliations identified measures reliance based Any and undue of not available to indicated. could in on expectations; management We those of this that presentation, have inherent other is on earnings today section future our guarantee morning, time. GAAP Form filings, Annual should release. Earlier not provided no and assumes current statements investor we statements do Carlyle are materially website. made our uncertainties, involve these including These and the to be and in risks Factors placed differ any performance, relations at Risk forward-looking them. obligation to any also a detailed release XX-K earnings Report our and forward-looking SEC which press update results on from issued actual cause those on

of per share million earnings $XXX and common distributable fee-related with generated in the third quarter, DE $XXX we For million in earnings, $X.XX.

then Officer, the turn over share. for ensure on call yourself With our the the have follow-ups. question to limit Lee. declared dividend those me return Chief all to let queue We participation today, by per to quarterly Executive call additional $X.XX and To Kewsong a any that, of please common one

Kewsong Lee

underscore people and everyone, and results safe, families Carlyle’s are as your performance year. our and you The of today. global hard joining morning, hope and track financial third current platform our doing of work on adapt call position quarter puts we thank and our of well. this dedication in environment. the attractive healthy Good We us strength the our and for perform resilience you deliver to

create for higher value over investors, sets shareholders fund our several the believe earnings for distributable the next to on behalf continues our stage which portfolio Our of we years.

this like All firm, on long-term to points senior of team’s growth. with the accelerating combined momentum. strategic I’d underpinning four the on momentum, Carlyle our focus touch of for positions our direction important

we more our done year, expenses. while First, fund focused than scaling up platforms, have this managing are our basis FRE We’ve come. continue over to carefully margins and more operating leverage points XXX increased drive FRE. years helped three has on focus drive largest margins this We growing by This capture than growth as basis and FRE in X,XXX intend years. the the to benefits our past and scale points of the we on

despite our fundraising conditions. Second, continues to be challenging successful

funds expected attractive of approximately $X Carlyle Fortitude to the raised XXXX. this private partners equity flagship we’ve funds entrust comes Most credit been $XX to our the year, capital us of same capital. permanent-like solutions, of positively with centerpiece it’s will because over are end have insurance or this fundraising. Fortitude, capital, despite period to have billion we of carry committed investment in And from new funds, The limited the into our businesses our capital quarter. building last global are recurring, raised several the $XX billion the raised the having past not and that year which in noting Year-to-date, Our $X.X Fortitude and billion By continue new worth years. in capital invest we versus nature of the billion of for third with more rotated impact continues of more strategy, of any market. from

portfolio The is performing third our is point investment well.

well, fund equity strength private and X% business X% overall leading the Our as in third carry way our global up in the our with particular with appreciated quarter, portfolios. platform Asia

in of perform level, U.S. our Estate trading a global repositioning virtually at due credit all the very direct quarter, resulting Our a well, are And X% continue construction, executing hard-hit teams exposure substantially in and retail to up hotel Real collecting fees our recovered portfolios. these within as disciplined portfolio high funds no to office, to now CLOs extremely with and thoughtful result the active, sectors. and

also exposure Let to facing the quickly cyclical secular sector, highlight pressure is our which as energy issues. me well as

to of ring-fenced our sector has sector-focused a purposely exposure and to have private limited very industry few funds, this a been and portfolios be as energy-specific private equity to exposure in investment much investments. structured Our result, credit

of remain a our result our we our activity of fund, largest to $X.X value new stages our billion up creation we quarter, the private accelerate. point And funds, monetizing realizations have and earnings quarter, accelerating strong Partners is It’s in grew that of all billion, across of that our public originate by businesses. is for we funds growth filling environmental our throughout I’d are investments. while the carry carry builds accrued activity like line as of and sight of VI. years, balance performance we revenues several realization new the platform to As conditions confidence and significant permitting. as Carlyle our turned fourth up worth the to next We net The pipelines picking the this and in our increasing invested capital holdings to maturing activity some our for over use increase early last as noting on $X make

strongest area, show we’re continues industry investments and remains activity healthcare, platform. Growth key and resilience. a financial like to in services. pillar; Our business are our pleased sectors private the especially largest It strong with our equity very in and consumer technology, this

also be to reach continues global competitive a Our differentiator.

the this or through large, announced larger and that we buyout to complex carve-out a assessing than in more traditionally drive we billion morning XXXX. investments been for and have Flender, has electrical teams closed volume opportunities been technology, in mechanical more are announcement of from and have muted, And We quite Korea. busy is have carve-outs. notably new India China, Asia, $X.X global our industry’s And while And €X active like in agreed a Siemens this take-privates leader the billion. acquire demonstrated in

Global capital. good opportunistic deal flow transitional need Lastly, we’re mid-cap in growing as Credit, funds, seeing in private have for credit a companies our

the Before environment. few to economic asset be handing based recovery it and comments to class on Curt, on over uneven The industry sector. continues region, a

ways, becoming is dispersion As outcomes the different progresses apparent. of recovery in

from but to we the nature of and like we changing the the the market way conditions recovery. impact of Capital have been to travel fits-and-starts energy, volatility acceleration new and Some struggle. expect growth, Disruptions COVID robust leisure modifying of seen continued equity live work, other accelerating are sectors while persist accommodative trends and to have and behavior. issuance, sectors given and retail, debt

from day, While through uncertainty help platform what our geopolitical no sector expertise and sets care deep environment. global doubt health us policy, issues and exists is navigate of us apart will industry the this the and regulatory and

classes, our attractive aggressive be new well as opportunities regions, investment industry We asset and strategies manage we to circumspect positioned portfolio; seek and sectors. existing appropriately selectively and are across very

Buser, final thoughts. Chief to the call offer I’ll and over Curt Let me hand Officer, Financial some our then and come stop and back

Curt Buser

few on distributable and on observations Thanks, good with of will begin morning, based I earnings growth strong Then with fund will I Kew, a current results. expected wrap a our in our up review everyone. performance. our

third carry and third momentum Real As Investment quarter Global of quarter buyout billion last the XX% fund, Assets our a performance XX% year-to-date; funds. our accrued quarter Solutions quarter, Credit. are on invested at and strong fund Asia indicated appreciation year-to-date. of which the strong Private our appreciated performance Corporate in in a in net in X% this in quarter accrued as with one-quarter XX% in strong in funds and fund of up revenue, by which X% well XX% driven also the Both Kew on U.S. is fully was in quarter, from strength as carry of $X performance Equity, fourth fund, mentioned, continued with build these many appreciated Kew sixth the growth which standard our This as The most nearly position. of appreciation increase X% to buyout is reporting and the visible X%, up was reached the basis. in largely lag the year-to-date its X% end

the Ireland carry Partners ramp In in With We performance regard of expect few to be saw that VI realizing over these strong funds, revenues. of direction, we next Real including important in our confident in our U.S. together a others, first an quarter, for with be the Estate time. third realization the several fund years. with continue Carlyle both step and significant performance continued net to we revenues, growth will funds, drivers

We been of partners. any as cautious We how the is preferred take and risk return cash we limited to capital future to buffer we invested, fund value the when between returned hurdle time whether valuation clawback. are the fully look a typically at and fair fund’s and first its carry minimize look our much has

demonstrates with XX% Our than carry future which recapture fund, also on continue Once on in to could we decision our fund higher our carry funds revenue on we to are in carry a turn meaningful monetize their maturity. on unforeseen they first to we performance carry less contractual that performance rates turn accrued two of expect some realizations in exits. share, carry future. later typically initiate fund with And confidence at two a the begin realize exits, absent to are in these funds near The and realized of several just events. which

a and of million earnings with Current to margin going repositioning full a from Global be ago, that XXXX, $XXX doubling also doubled to in on and with time result through includes XX% margin FRE me to of fee-related year-to-date XX% a is underlying a year-to-date in year-to-date appropriate let where that the portfolio and million, Global $XXX roughly positive a from in credit change XXXX. improvement of million, as up with of deferred impact investment the with the earnings of subordinated over from period, and story It’s in material though on margin in margin. fees year-to-date effort increasing Credit Solutions, from the have we look similar $XX results has to $XX third year. has prior its for to margins All true fully fees to recoveries XX% Credit ahead million CLO improvement continue third same and a for to of expect of are XXXX year, our of quarter quarter ago, third million year in all in line commented each in million in some Investment a the $XXX of fees, the that we $X On in previously culminated and third the basis the forward. drivers million this previously I a you XX% markets. The same has year recovery. FRE success. the key benefited quarter much in in and quarter have base current absent collect compared this $XX nearly recovered; first year-to-date faster-than-expected million touch $XX with Fee-related Now current million, the FRE revenues quarter call FRE business. it business revenues in quarter cost recovery $XXX remain revenue subordinated this portfolios million our strong together To $XXX year the our $XX walk XX% period. fundraising the were intend in our year. now build CLO quarter the a Fee basis, subordinated lower achieved financial out on clear: million the the growth its continued supported the business in of These third and as on includes a were last forward, now businesses we in as to

ago. G&A expense million $XX in us materially continues help XX% million our in for margin in to the conference to third quarter; cycle. was expenditures million year-to-date, and to to expense periods, compensation will compensation these X% $XX $XXX Travel to track and next relative carefully low prior the than XXXX. year G&A compared quarters. level. prior $XX year the lower a and across quarter manage several continue and pace Cash higher and approximately below was compensation running Equity-based remain the and is structure, expect higher million FRE depressed third we the We $XXX the for was drive million costs remained year-to-date year-to-date overall which the

to activity many levels these savings environment. of will current costs believe capitalize pandemic, as from but on we permanent as return we this prove increase post learnings will Some be

to though I this year Looking result slightly of high we full the or recoveries our expect aforementioned of $XXX forward, end the range XXXX for XXXX, guidance above prior be fee-related quarter. will the earnings includes reiterate first that expense million at in

over of with that earnings third prior practice, the declare In million in sum, per pleased then year-to-date strong third fee with for Distributable year, was increasing we I’ve for let period. optimistic FRE, $XXX increasingly of million quarterly million compared bringing final but DE per rebound past $XXX in as earnings last evaluating are year. turn with $XXX to confident dividend are for the to earnings, million, beginning our in we revenues $X.XX Kew year subsequent the year-to-date. performance sustainability $XXX our million year-to-date some realized back performance about will outlook the $X.XX all realizations of and and process we million modest in $X.XX it of growing the currently for we in share revenue were for years. that, consistent share and approaching the durability are and for us you a We $XXX in quarter $XX generated to and further over the said, and And With opportunity are we next Net remained quarter quarter at we me coming our XXXX next thoughts. share. year-to-date years. the distributable and the

Kewsong Lee

Curt. Thanks,

delivering Carlyle third quarter The demonstrates that is attractive results.

people way evolving accelerate our business them are proud operate to world all undoubtedly growth very and environment different very I’m to a to of We what and hard years dedication, in focused for the to of come. the the and stakeholders. commitment thank their are around in our adapting be on our we of work want will all our

the questions. look With excited team more are to firm, of and now forward is leadership all Our about in you take with of direction broadly XXXX. this that, your ready strategic the to we discussing we

Operator

of Our Glenn Instructions] Evercore. [Operator question comes first line from from Schorr the

Your line is open.

Glenn Schorr

Hi, very thanks much.

anything curious So XX% and I think with some your fundraising – Thanks. that of had side the XX% committed. biggest sectors on Can next buyouts, outlook the next I has of you for on we credit. good the the between round the in just the talk growth mean fundraising and about timing changed if of for range cycle? XX%, versus big I’m super

Curt Buser

thanks Glenn, well. momentum that appropriately Look, to it’s seems you Curt. going pointed actually Hey, really out for the be question.

a things tell. done. deals still get We’re forward excited the and will really we our coming are And pipelines that that, with about that can say that think to early tad I too but

that around me you XXXX, going right big now see you’re variety products We’re to of going funds but market, credit. to growth are tell most solutions short-term of the a multiyear year, of beginning of next give a let continue analysis, our few we’re in And you especially some global to kind also here other market then as speak. but the and at well-positioned, to just our full funds the have investment coming we in importantly that we’ll of the

as comment at we beginning good shape more next the year. of at kick in this and to we’re point, So off

Glenn Schorr

that. Okay, appreciate

Operator

you. Thank

from question from Worthington comes next Our the of Ken JPMorgan. line

open. is line Your

Ken Worthington

dividends, harvesting the would you U.S.? higher corporate Hi, corporate making and back U.S. influence good capital potential gains the And potential a about potential investments Thank about a tax rate the and tax play the tax a and corporate into higher you. think tax rate dividend here and for seem rate would for higher way Does much to the the in the investments morning. business? between There dividend you for the and capital for for think wealthy. rate capital be the way wealthy the buybacks into much higher allocation

Kewsong Lee

appreciate details really do going say limited it’s the topic, too Kew. worth interests it And the of Hey we not early given that Look, there’s it’s in Ken, but this lot suffice a to know, all but to speculating work it’s comment. just on.

prepared are. but time, thinking whatever been investors. implications, environments, the of outcomes long will for all through is the the scenario markets, through We’re long-term We’ve around types in changes Look, bottom regardless we’re working that here I’m all administration and planning, changes a line. and successfully be firm tax policy. of – the confident

Now other and there a two more bit maybe make, granular. little bit maybe the points one little I’d are other a broader

generate class track relative asset LPs outperformance First, environment. suggests tax assets regardless our the history alternative and of record for of

important the in demand we’re and relative regardless mind in for because, day, So tailwinds performance we of what potential tax provide and ought the generating to any keep of is end to to at this do the changes continue policy. alpha

when finally, remember, to chose or true was corporation. up-C corporation, path the to a a opposed a and Carlyle C hybrid an C please as converted Second corp, become we to C

and is public our we easier means real class one makes alignment, of reminder, distinctions. don’t vote. changes that whatever structure corp shares, much It’s changes. tax it simple. structure share, have a means our the also of C one as through simplicity understand As shareholder It one manage the future private to or This current shareholders really very taxes,

All you. like same are shareholders of owning us the just shares

Ken Worthington

great. Thank you Sounds much. very

Curt Buser

Curt. it’s Ken,

implemented add proposals not tax as a comment, annual $X.XX your of that just of do on the that quarter; fixed Ken, changing $X.XX, quick me a one Let question. We onto dividend. dividend fixed dividend any see

we as continue We’re and The do to will increase when grow. we question real with is, that. come that confident dividend our

Ken Worthington

very Awesome. Thank much. you

Operator

comes of from Bank Carrier line America. Our of Mike next the question of

open. is line Your

Dean Stephan

funds, some accrued investment Stephan update this Mike stake, Carlyle moved like on Dean Carrier. you funds fee It funds stake Thank you. think forward. has in moving could versus about potential and XQ, prior a the generation Carlyle’s these maybe these carry in funds of revenue wondering is solution the for into us higher performance guys, where financial performance looks we so potential timing should if performance of impact how on Hey

Curt Buser

proud right. I’m up came here they’ve observation. Solutions team Great the and and been The our quarter, Look, in funds back up. you’re really performing. carry were Investment of Accrued how current X%

across that’s so blend. Now whole the and a portfolio there’s

waterfalls, good last are us, we’re XX%; to – of XX% really much as performing time. of These There’s their about going is year, FRE. XX% is there at that us versus strong of that the in $XXX million what really a European-style entitled continued then the with at and over Solutions to are a It’s come going about see pieces FRE to higher just terms enable in This end basis. So some ramp. our is business net also acquisition, well. continue but fundraising what ramp to small, doubled excited I’m to FRE of that all carry. piece we’re That’s accrued a net Investment and plus it’s the to for on

thanks your question. for So

Dean Stephan

Thanks.

Operator

the comes of Our next from Gerry line question O’Hara from Jefferies.

is line Your open.

Gerry O’Hara

trajectory? Solutions. Great. especially it still taking within up and I could actually of go, year-to-date little relatively they a Thank help those Thanks FRE Credit morning. if my you Appreciate continue Investment as ramp, businesses, year-over-year, growth innings guess, us Global this that relates to with but are can questions that kind that especially you. on where And to picking early perhaps just FRE frame the perhaps pickup, two and for bit margin

Curt Buser

the much need call and We really mean you’re – so business greater. that, be continue right. We’ve from, we’ve mid-XXs. grow Look, mid-teens, I to with to gone thanks. I’m Gerry, it, our progress credit should pleased made. they’ve –

That’s to to So the good years. be for that grow overall going margins. watch Investment will thing. over to next for a really improve and our same growth Solutions, driver continue several FRE

from bigger it been upward perform trajectory, be sector, industry have AUM will and I of in margin be much a from adding also analyses. total Solutions can to, products opposed And a that will other to FRE, say, as good as FRE. driver within to margin. as see there a Investment As kind also of base improvement better you – its Credit continues per will see being as of that we’ve just se. driver

Gerry O’Hara

Great. Thank you.

Operator

the Suisse. from our And of from Credit question Craig next line comes Siegenthaler

open. is line Your

Craig Siegenthaler

well. Hey, are Good Curt. Morning Kew, Hope you doing both

Curt Buser

you? How morning. Good are

Craig Siegenthaler

the So I are if question. number into two normalizes two-parter, G&A but sub could another first the down CLO deferrals? really nine in future of G&A improving XXXX. can backdrop, XXXX could of some and sneak FRE fee one, I appreciate a as there both with roughly macro T&E woods I’d it, just have XXXX during And and months investments? given we Where And XX% is the head is first also be out

Curt Buser

this think your have We question seen And do back really a and benefit about then slowed are, that I’m really economy, We’ve CLO comes we really year. a comes remarks. On subordinated think and then will broadly, about question, taking about big asking said well obviously as Great. of it Thanks. G&A, sort seen you’re We’ve advantage CLOs, downturn going really had they’ve fees, you’re done will on repositioned. pretty a we’ve have that really I perform next really but Look, new is big successful M&A the of is our agency the in G&A in really what’s my from CLOs second good now credit in those which down. feeling issued markets, a downgrades all recaptured real to market hard They’ve we really CLO the If worked well. real got the expenses if is so how the right. right where opening really of be And happened accelerates, it. you into the been is business our through see also also real some I challenge, team. We’ve here if economy and rating we’ve pickup year. that and new What formation. really CLOs.

travel, the first things that costs quarter costs, of the even we professional got of costs, the down, out fees, analysis, take are it’s kind can so is but absent down. the you’ve of things in number but litigation also and And to conference that improvement. we cetera portion, of think et are very permanently There’s of recovery a a that, litigation good benefit. obviously that also other some Now that

and the changing a we way are I permanent live work, quote lot and could to We Kew, think that savings. be of

to amounts, lot going this be but it a some you’re we’ll can that good exact a you very permanent. part in So see of and can through our tell and The forward. recovery, save think think also I of expense time, of we but really this we’re well working manage that going lines

Craig Siegenthaler

Great, thank you.

Operator

question And from of next Michael Cyprys from Stanley. line comes our Morgan the

open. is line Your

Michael Cyprys

And in What sort the of attribution that how you’ve you’re morning. taking what evolving the strategies? and investment drivers you hold of on operational so good existing I’d putting new outlook be to see bit terms both that hear that the work the question. ground that today forth of on done here. periods some Hey, a returns in for terms underwriting is versus investments are your also may of maybe improvements, versus past? you in then investments returns on latest curious to your key just and in across to different profile Thanks have leverage of the updated return longer the

Kewsong Lee

aspect being certain a that, of And very-high-growth low see doing lot the prices if truly seeing Mike, build that are interest and businesses you these a but low sectors, look, starting midst say are in And competition. we good with can of what materialize quite behind to prices this do this thanks sectors, justified, expansion. said deal of a have little others industrial types having value have more of those and little activity cetera, also this, very a question. traditional to as rates like disruption, seeing is returns discount as we’re that But built, and industries in the would et Having growth that, COVID. We’re of announced left and main are environment, rates. well still given are, we underwriting but the a challenging to said that rates all for the can dislocation have which dispersion – mean, more for bit it what’s why we’re high that frankly, low really see are right? yields, we I bit real moving into certain are happening not it. forward: businesses multiple regions more morning, I driver of relates to investment You because

We’re pretty low. given for cost not and underwriting right is to capital financial more leverage high is that pretty now of quantum benefit

our top with improving an alpha them, is the improving our over So term. this we’re partners And why real making to partner by driver of is what be in efficiency. teams our asset these capital do. class margins, That’s like all what the going the to long better, businesses by driven about. That’s is increasing growing line, platform positioned perfectly we help our management execute against and

our on of helping procurement to our platform, start then expertise market experts, capital you you corporate our top this of that global expertise; with when our great So and add industry from drive all can experts, resources management all and capital about our our our human companies portfolio why see teams, feel experts, performance. grow, and positioning you good pretty our digital teams continue we to

So Mike, been it’s our It’s competitive it’s hard. always competitive, industry. in yes, but

with to do of making businesses it’s our and long-term driving creating working growing these So management old-fashioned work and in a better. value partnership teams the perspective, fundamental about all with

Curt Buser

– our that, also because you about asked onto our just me let add portfolio. And Mike, current

everybody, XX months. that results So an business, just last appreciation remind this QX. quarter, big to in XX% our Private XX% appreciation Equity, X% in over And Corporate that’s appreciation after the

well very is from business that doing performance So a perspective.

Michael Cyprys

the had willing specifics any I for returns, in though, you Great. if terms to that of Thanks targeted share. don’t color. you’re know

Kewsong Lee

deal able the in depends and to growth-y on to very flow very, higher with the the returns and push on stretch deal, return that more there is recurring fee we’re and ourselves risks, we’re target thesis of underlying generative The be underwriting a plan right? more risk of to. more in are bit The and like the nature cash the the business price. the clearly, rates the and Those going streams,

we’re funds return total major to In to in a shooting in for, capital X high of average. the on And teens we that we’re what terms on our times private generate IRRs funds. still for MOIC our equity underwrite shooting still our basis – are in on

portfolio And but risk of all return sectors construction. only it’s really variety industry really portfolio you’re a And that, Now assemble a about thesis, a when variety all you profiles. do is consistently wide generating is is still want seeing of equity wide way high-teens to not portfolio returns striving types and assemble That’s what you with to what shooting accomplish different of on we’re to different a well that the today. for type we’re and what business. think gross what our we’re basis given we’re continue of the we private that, for in a on that –

Michael Cyprys

you thank much. Great, very

Operator

Our Beatty next question from comes from Adam UBS. of line the

line is Your open.

Adam Beatty

the credit Good far, to have of the some impact. just of future. probably right lines taking good Kind the wanted trend ask morning for of given and portfolio I thank there. about you upward the mentioned is flows bifurcation business in along of construction, and question. could the the just been now the so the but Rating tick uncertainties? some book given up muted, You and actions pandemic positioned How

to insurance get wanted maybe outlook interaction channel. the on the there and with just the So your thoughts

Kewsong Lee

that we industry. a CLO one in a strategies. a our has hard of "credit" it’s on of you tell platform mean, have wide I can monolithically business, wide I Adam. in we’re the comment the leaders range array to Great, given – because

experience. and has that default with than sector have historically across – team returns And We full all industry generating average great coverage generated loss industries. lower is

monitoring And which a right in activity issues we’ve business is in more seeing And side to capital. transitional more in and mid-cap them are on for the the tremendous of actually equation light – we’re so very come land continue the is being uncertainty lot a to seeking constructing distressed credit, provide what’s right available and liquidity sort in grow private secure of we next light companies, finally ways market. made are sometime liquidity more the opportunities, is the the business, economy. mid-cap are interested Lending on build. opportunities companies our there recently our distressed to what of during our view, that helping of returns to has limited of that to small that they’re like that say, be sector, seeing about when extended especially, day a that the let a The the of continue one there And that’s we able side, but credit the I’d interesting day. harder, some of side. in Infrastructure year. through be to portfolios area really many markets the the Direct amount direct but from private actionable partners has me to interesting opportunity going time the looking is of always yields done that the volatility what said also to the launched, as in interesting with real now. that, will volatile And as a carefully. need confident and runways is loans, Fed of let Look, seeing affords respect opportunity that the which risk-adjusted environment. to for bridge the in and as suspicion we’re not now pipelines for thinking many has jump volatility companies as transitional our that very some to as having is credit they And it team our me of distressed And has trying benefiting looking in happening jobs fact we’re and really the is segment opportunities to we’re

credit, So a comment seeing. really it’s on snapshot a but bit you our what different generically hard broadly if I on – speaking, to color given you down and think just I’ve we’re strategies break of

Adam Beatty

very – interesting sorry. Go That’s ahead.

Curt Buser

in space. aggregate the this to if credit were all – strong you but do together, If it, momentum you Adam there’s of kind take really

look XX% you the two $XX it’s about the up business you at AUM years. That’s more last numbers, the in last this $XX XX% than doubling I’ve years. If year-over-year and, similarly, of already two up over XX% is and billion. in XX% up year-over-year, told the Fee-earning FRE. AUM That’s billion.

both and So all recognized way said what of AUM fundraisings in in growing. is being our Kew just the is

Adam Beatty

much, both. Perfect. you Excellent. Thank very

Operator

line next from of Alex from Blostein comes Goldman Sachs. the Our question

is Your line open.

Daniel Jacoby

for is filling Hi, Alex. Daniel question. Good morning. Thanks for This Jacoby in taking our

of better FRE in something down is see also I and I for closer to there that you’re fourth it like quarter that $XXX $XXX looks some million there’s implication XXXX upside, about $XXX kind room or math room two here quarter. on correctly, obviously million doing been the the the we’ve like for some of better which or kind Just a my to where come prior guidance, – if versus I’m of looks is guiding but the it to million in like see quarters

you quarter you’re help about at – to of running us range million of just kind projecting the for of the of kind can the from kind outcomes So were bridge that you $XXX per where quarter? at, fourth

Curt Buser

observation. Dan, great

Let me some you clarity. give

million noticed, that just you in the That CLO recapture. includes as of here the of $XXX million we quarter. in million The year-to-date, does $XX million Just earnings $X first the and include – the did fee-related QX. $XXX

to put above So million pointing $XXX million. is is us you which out. was $XXX I $XXX that and $XXX million, million at the puts what going

you to now will in right that. So run highlighting tell have million range. though, if core I we’re and we’re right what’s – And now you – real expecting that thanks really this, question, grow $XXX And $XXX rate. think you the million for is I to that that but that

down coming $X buyout, its we $XXX the when fund, that in product the of for fees million, you kind out October Japan activates on billion million lot $X.X back puts a online. so of the to have here X. level, example, you but back a quarter And fourth

lot in well. growth. going that, contribute in with and really Solutions that in And see line the kind other to so top credit will things have And Investment that of growth we’re plan, to coupled of and as together we a the FRE

gives that hopefully, So some color. you

Daniel Jacoby

Yes, it. you. Thank makes that Got sense.

Operator

the comes from line of Next question Robert Lee KBW. from

open. is line Your

Robert Lee

us Thanks, morning Re. to a on early where Like, know sense think and trying I’m little just – contributing. I that Fortitude maybe next – now doing us how maybe it’s the everyone well. maybe just how of can it’s if It’s I Great. right contributions about bit, but we everyone. can get or stands, days, its is that of hope coming kind update year update a you flowing in good curious it’s so. through

Kewsong Lee

are it differentiation, point And product we recognized diversified of obviously, three and business is versus so and to with very two got like from approaches to source monoline of it’s up dealing It’s reason consumer The ways, book over is employees, pleased to Kew. annuities. that you capital the out more terms P&C insurer. originate end AIG. now and carved industry. legacy as running. with And in in with things Fortitude efficiency. include of a we’re progress liabilities, where And acquiring contributing great companies, is important looking service Look, like our differentiated and, employees it’s the And it’s close dedicated at BXB way approach, our It’s got trying completely that’s to standalone such fully in a thus a great know, It’s those to or originating It’s acquire growth, as in a as XXX been it’s book with team. diversified It’s Robert. its an really because organic Fortitude then I far. is liabilities, and life. operational. as real our of Fortitude. both out fully platform Sure, to reinsuring originate and legacy It’s policies. the terms management other provides trying to we growth if global of opposed in single new opposed And respect of to organization you Carlyle a in

First, our investment nicely. balance is growing sheet quite

gone. close right investment of pleased balance and return on quite is to Fortitude equity, generating so our now has with types how sheet mid-teens we’re

fees assets has Second, do revenue as capital, equity, capital real for smattering is as we time. and Carlyle extent generate over limited we the do credit that are I rotated already mentioned come into we we’ve $X for everything fee-related funds, able finally, by this do of to billion And then private to come. So that our assets for earn over raise over in pretty those in and nature, we sticky products; funds partners. And a that been more right? which as to vehicles from expect we managing. wide us have And $X carry more raise we our Fortitude, my from as money, those well billion creating commentary, obviously, of

So from benefits there Carlyle are three ways Fortitude. that

we that quite large, billions we via growing excited platform about And is acquisition. forward, think Fortitude as of The are are available. liabilities dollars space Looking Carlyle. trillions grows, of and will this benefit legacy that

Robert Lee

for Thanks question. taking you. my Thank Great.

Operator

next Chris Our line Kotowski Oppenheimer. question comes of from from the

Your open. line is

Chris Kotowski

world guess your that very kind flagship thoughts you. the And that’s really about – get in way fund and and guess curious. then current so it I impacted I just real one has the becomes remaining it I’m that is significant how Good And and made you the fund. sense curious investing a to disrupted curious for by business I’m successor about COVID your has thank And on roughly How just half guess in COVID. fund? start to also half? I’m kind the Yes. has think the of I invested, estate time when raising of morning been existing

in world? has have different changed and the with – LPs? things Just they discussions dynamics new real estate, looking this Are the in for the

Kewsong Lee

which a $X.X me eighth a Estate a I in as back. let in as And to the hit the years there portfolio subsectors ourselves exposure try very three have U.S. ago, pulled result, CRP to of in well. level, billion they estate Okay, were, seeing portfolio and and disruption broader And up despite to real why, explains Real and disciplined proud but constructed way. of And a very performance. investing demographic you having the at two, to virtually fund. looking a make of and sense tell we for Look, trends, office, our huge is set disciplined the on CPI, market, construction. basis. we’re think sectors our to currently is pride investments in starting quite questions granular team which We bunch It’s being high make and at points. approach their perform real they our a that, in continues on very hotel got you’re compliment to this exceptionally capital. about consistently of lot all we’re retail pleased and, fund the team no within Their risk-reward VIII are they this That estate

distinguish in forward, are their end driven. They markets and and seeing they’re markets they’re going what to and on be based their to making demographic and trying sticking how cyclical with trends. on investments consumer at end And secular them to looking between very they’re behavior, Looking strategy. approach, industrial and asset-by-asset positioning it informs actually

we’re platform say all look, the or get but to I exactly great don’t and they’re to with start So could approach, how respect speak job behind team a fundraising the and we’re market. team. to estate their They’ve approach future go, volumes the into in about we they optimistic pleased want done U.S. real suffice The with exactly with terms when think of this disciplined results it the going where portfolio to very construction. this

Chris Kotowski

me. Okay. Thank you. That is it for

Operator

questions this turn now at the for call Mr. further showing Harris And to over closing no I Daniel time. I’m will remarks.

Daniel Harris

thank And call you, to this our morning. listening everyone, for Ludy. you, Thank

reach you to look next speaking we any call. free the follow-ups, with quarter. to after additional to have you If feel forward out investor relations And

Operator

today’s And this Thank you call. ladies and gentlemen, conference for concludes participating.

disconnect. Have now may day. wonderful a You

The Carlyle Group Inc. (CG) 30 Oct 202020 Q3 Earnings call transcript