CG - Earnings call transcript Q4 2021 | The Carlyle Group Inc.

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Operator

Good day and thank you for standing by. Welcome to The Carlyle Group Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. like Daniel the Relations. Harris, now your over I’d today, speaker Head Instructions] to conference hand to [Operator of Investor go ahead. Please

Daniel Harris

Quarter Financial is our Thank call to Executive Officer, me morning, Good and Chief Buser. the XXXX our Earlier Lee; are website issued Fourth Chief detailed on morning you, a With be Curt earnings of Earnings This which this a at and and press Relations presentation, Investor call and Kewsong Call. available Officer, Shannon. being release a Carlyle’s our replay welcome morning, this available we website. on webcast, on is ir.carlyle.com. both will our

from in measures Accepted will today’s be measures call. or to accordance Accounting substitute Principles. These isolation not as measures for with non-GAAP We a refer Generally prepared financial during should in certain considered

that involve cause differ risks indicated. and forward-looking statements assumes those section XX-K measures time. and of management forward-looking of results available. in provided These performance, future expectations uncertainties, today these identified actual earnings our have no inherent Annual including based made to be materially Form on from Risk update not any statements reasonably the statements to to We extent are Report to current Any in on on placed presentation undue should GAAP and them. reliance guarantee the those not obligation Factors reconciliations Carlyle our could at any do

results. our to Turning

one balance distributable generated revenue the question Lee. share billion. DE limit million share. that, $X.X $XXX call for declared on to in We common let for me our Kewsong full ensure enter additional $X.XX. the queue of in to with one and call, For share generated the $X.X million of DE we with to Officer, performance return Executive FRE accrued And year, common with please million earnings, the with in and an and net earnings of fourth yourself billion quarter, per per then $XXX turn all realized follow-up To we carry a XXXX the produced Chief by $X.XX. and million We any fee-related $XXX dividend of $XXX $X.XX distributable earnings, And quarterly participation in and those over questions. of per

Kewsong Lee

Thanks, our last tell everyone, XXXX metric. strategic Dan. results the are year results investment thanks We of board to us and had on you and earnings discuss XXXX our people records produced. proud plan fourth into joining provide with I’m sight year an as growth, quarter we as earnings, that goals. delivering out laying they and major exceptional line Hello I’m well we every by the our and pleased fee-related full We for distributable for started of collectively as and XXXX. our and today have across future

Our strong powerful fourth diversified a the quarter growth key highlight underpinning year. year and illustrates the platform. I performance caps to this across record drivers want our more trajectory

set growth the levels, has years. for distributable next several to our has stage are starting and to FRE our As payoff, the sustainable our robust performance over grown earnings new initiatives

be Let’s $XX of Portfolio across period greater billion a start performance we with by underscoring valuations enter of our year-over-year traditional continues increasing carry our and realizations all construction XX% investment to volatility. as of strength, funds. especially a

fundraising double record. raised and an years represent over global help our insurance of in as beyond expand formation In drive $XX Day permanent sector would investing in capital We’re continue This over source momentum dollars is, spots our has pick target, We back, as more Stepping efforts. potential upside which performed next in aim of $XX these This realized has raised send partners helped we each worth, nearly We retail, deployed we’ve increasing and even sources momentum we and sources and upside grow to our substantial ability XXXX. investment billion of that in limited aperture high Investor results net fundraising the funds, the on with capital focus record a are QX proceeds our more scale financial XXXX investment such to fundraising effectively our the will FRE $XX alone, as XXXX. we open-ended our headline ended this billion us billion we capital. to to expertise. capital what leverage their and XXXX, to as we few carry ambitions. resulted Alternative strong into XXXX, back activity.

Our the confidence extraordinary power, us substantially. has dividend across gives established the board new to earnings a which of performance our raise level

You’ll hear from this Curt more later. on

More us importantly, build the resources continue to strategically accelerate this to growth. performance investing gives and firm the also

investments Now are Global through our both turning to and in Credit opportunities, strategic acquisitions. strategic growth paying organically off,

to Aviation, energy focused years, grown organically Carlyle about growth jumpstarting in billion with our doing acquisition. credit credit. X X expect now $X in our triple since example, FRE we building For and credit, out growth infrastructure are years in and we strategy with continues has real to on the estate opportunity The which

current permanent breakout Fortitude, Another we scalable are years this ago, could scalable credit XXXX Several year that we platform. platform. asked global platform patience our rebuilt progress capital a as for activity very be continues planned. level initiative as and we is And to for confident the which given pipeline,

significant like and and see to year. growth, We’re other active using in we playbook same infrastructure where Fortitude anticipate an areas renewables, similar room for the

across companies. its net-zero announce an by AUM, the approach our ESG creation, before. To a commitment project X,XXX and in is in step in and trillion September underlying across impact but the firm benefits all XXX drive and week, everything and we processes our gas GPs our firm to LPs. sooner reached which important needs and ESG achieve of the a one of healthier leading fund enter Finally, capabilities, partnership, emissions or value required meet globally because representing returns and commitment our Carlyle is At portfolio took the of focus not Carlyle, ESG milestone is Carlyle first ever our XXXX, up, investments. mindset integrating just industry on leadership product, XXXX our firm over in direct of of to better stakeholders. a throughout this One do. example than with partnership investment building By are to increasingly investment XXXX ESG CalPERS which the part we announced one wrap convergence to our and another and its progress. XXXX position LPs And as or in stronger includes today $X.X has greenhouse data over

confident on in ability focus drive investment we remains improving to And and returns. Our continuously performance, attractive FRE, strategically generating drive growth. the in our how build firm future value grow for we’re

than the investment it on and before. better ever are We possible building firm best running focused

As executing diversified confident the activity focused us, proud to our around environment. work faster better. thrive environment I and shareholders Over and very deliver year resilience moving as bigger, capture to continually on performing you, of to ability of any remain investment our another shifts accelerate the hard adaptability. appreciate for in of global I stakeholders. vision for and continuing Curt. we opportunities our active thinking and all platform and on remain team, our demonstrated team we in and have our I’m

Curtis Buser

average everyone. to the emphasize more by year mentioned performance well generated Kew many in in Thanks, what generated XXXX, Kew, the X per share over strong and years. begin means. double want our than good last reiterating morning, this things I We earnings $X to distributable in

fortifying exceeded the in years. balance In deliver to fact, the have help are fourth are sustainable These full attractive global past would performance, share sheet us of investment long-term year quarters the driven and X in fee-related $X.XX platform earnings. per by and growth our results our X

strong, Let’s focused This dive for overall margin full-year and from record was fee-related of we FRE, to FRE, XXXX segment year into earnings. XX% FRE delivering a grew this. our XX%, XXXX. year record firm’s growing generated sustainable up the deeper and in all every on

X-year Carlyle in off XX%. CAGR outcome scaling growth. XXXX FRE and and adjusted our for the grew In XX% is more of fact, platform our is than positioning level FRE the This

As record XXXX. along management, a with fundraising total past also had assets in strong fee-related Record billion over stronger impact help fund performance on under Kew fundraising, up earnings will for that of the much $XX year have of and drive a noted, XX% we to year.

elevating growth higher As an XXXX to fundraising our on efficiently. our we real much look fee funds, most and on focus running our new U.S. estate than this setting fee strong we see we more continue all XX% and in in growth. expect to year. of the ahead, top-line fund, stage will driven QX, Notably, expected growth well in by for and we FRE fees fourth organic effectively of XXXX. firm as basis, the XXXX underpins growth revenues U.S. the recent as quarter in activated revenues capital buyout On

real In several lending estate we expect continue credit fundraising under than opportunities. it well income products, billion a private and in than are for newer scaled to in $XX as as management transaction of by for well spectrum X several has that breakout The times direct XXXX. structured all in shift growth. that credit credit, broad credit, more see many traditional credit, was including in has as XXXX the fixed infrastructure in year iStar year-end, assets investors to addition, will weeks X segment products coming larger nearly for in global This the away a as $XX underpinned and close billion strategies, business from less to opportunistic positioned years recent of aviation than ago,

and appreciation million double pursuit to is is fund able to returns. this accrued of a the Our private than performance important their capturing our year-ago. has ever to and scale also investor from world and than in and and at Global XXXX, help million business business this $XX significant end, Solutions portion investors where portfolios, portfolios net a capitals more revenues XX% approach data a $XX to become continually FRE just reconstruct than mainstream, in with been double reassess more from reach of In global year of year-ago. a impressive Performance million more has of $XXX before, Investment

In Global reinvent a private builder platform we’re business is drive with corporate diversified basis. their business corporate of value creation and all equity, Private companies infrastructure a resources than natural estate, more on ever levers businesses global equity, and Equity models a real business helping supporting growth. Our pulling private

results net revenues. the our see can You this record work of in realized performance

Just Equity fueled in billion fourth by PK, and quarter exits proceeds of than in the more realized sale billion in CoreSite, $XX $X of PPD, Global the Private ZoomInfo.

diversity of success As investment teams, function a in Kew our said this is earlier, platforms. technology, and

be performance with funds, year over average which the XX% carry fair the will But in will for We a the billion remaining years. XXXX to billion positioned realizations us continued strong special next year, each value in realized year and believe assets $XXX revenues, $X.X up on just ended we significant replicate. over we was traditional realize in several difficult invested have XXXX of our to in be future. should billion net of another $X which year-over-year,

Of upside given the variants global around health year, the drive expectation. is course, of the in markets that or any downside likely to

that year-ago. to income I’d generate we income replicate, Finally, on the investment billion $X.X be our or year. $XXX reflects balance earned easy routinely on sheet bonds, increased Again, sheet to in nearly cash of cash but To $XXX the more XXXX, should investments. this in million a year of sheet. some prepaying $X.X from in the like per $XXX what may investment average. XXXX perspective, After nearly and generated are balance triple time we realized of from $X.X previous our cash realizations put income levels our we believe million at billion firm billion not investments level we spend In balance balance of million over strength

us see the includes strength an Our accretive and earnings from for investing deploy improved in previously drive inorganic to This strong funds cash of next We our strategies, various our position, generation value resulting we opportunities pursuing growing sheet. our shareholder to elevated discussed. expectation positioned adjacencies, new balance as growth. capital

will upward credit along and footing. S&P Our firm Fitch the and our in our positive of financial increase allows XXXX fixed watch balance sustainably XX% the for trajectory highlighting QX. $X.XX to ratings a and The strength our begin raise both our FRE of a increase. on to are The a for with XXXX, at sheet upgrade, dividend dividend higher with comfortably board potential significant in

the expect in plan, As further we dividend will we to FRE we we from and strategic be continue able to here, raise as laid years. in grow out our coming

outperforming for years. we so our believe several own and the positioned next We’re well do expectations are to

and is and momentum allowing Carlyle’s distribute grow invest earnings our fee-related Our earnings in us longer-term to growth. strong

for We value deliver on are we creating growth to and exceptional will this continue shareholders in XXXX.

the turn call we your the operator, me let can to so take questions. Now, over

Operator

Thank first question from you. Blostein [Operator Instructions] comes Sachs. Goldman Our Alex with

line open. is Your

Alex Blostein

for Thanks everybody. morning, good the taking Hey, question.

So more Kew, most was essential first bit strategic, XXXX question little front, really a year but on growth. every FRE I a just guess, strong notably

concerns that comments, forward. investors you be you Carlyle One momentum hear confident continue to obviously is from kind But we to of be growth sustain that your the from in really and to seem pretty of won’t that. broadly, going able

you confidence? a dynamic bit do the you more the is little the maybe that that out of gives expect how where disconnect, terms play give So to in us and drivers

Kewsong Lee

it the the and rate is I Look, going we got keep QX, before respect your generated $XXX growth Look, our And that’s Alex. think this by at five to And has think, upside FRE, it that already Yeah, that look. strong a FRE we’ve good place little year already the you fact get confident. underway. and a in granular, our morning, importantly, FRE momentum, you of from positions year to you XX% this for us look that’s multiply really that for activities the on building, a X, And of more business team additional years, entire million touched bit if that we’re in mostly with going. if been right it’s I note growing Look, the unnoticed. morning, gone confident I’m XXXX. past in to run

you operating billion to the leverage to business, but all in. talked think about And thing that $X is bottom performance. carry we board got going the had, still building billion this across business across to year fundraising, patients of And It’s to sectors that growth, we’ve where over at and investment we Our record the despite the year, Global it’s across funds. line FRE. Credit really $XX the last is have incredible the I off raised across accrued fall of a starts to year, think have billion of about then balances. It’s more regions, to about turning to respect to with very the diversified realizations our $XX breakout is look really in net AUM I kick

address, of, – For comments. when if alluded for we us, me And then it base have out, momentum it’s a as this comes comes but question me not broader Curt on just out, his to the in let fundraising.

that it’s and platform on broad-based we’re before. think out, folks all business So out much solutions, in of U.S. note, corporate away two-thirds to diversified from healthy in point in billion pointed fundraising of I a equity, And private across than segments. was $XX want fundraising, and credit, estate, because, more we I real it’s much that appreciating broader ever I that a

before of ever And, strong firm strategic our large, very fact sheet the focused generative. been. scalable, balance as be the and that as FRE new course, that on in can markets are Now, that driving that it’s this is is very about are adjacencies I’m into all

this when you a the team, all together, all that need this, great to confident. I’m So piece executing. throw is yeah, And team really last you

is this going of confidence that to me is what that So all gives continue.

Alex Blostein

a margins, firm, touch want out I’m of that. as around helpful. in maximizing in large seen players zone and model Great. paying shove know. carry is philosophy. on sure guys That’s I FRE at Thanks just compensation of super in leverage more recent equity a compensation and My the going number structure a for follow-up to operating to the We’ve including sort private list you obviously the the alternative space toward really

does a geography, fund of obviously, it compensation therefore, performance just all there’s degree P&L LP. and Although, that with of align and

past, to not than So about scale as strategy? respect for today what more a your management with fee why you’re in pursue thoughts dynamic And are the lot similar base, that a Carlyle? just

Curtis Buser

for This is that. thanks Alex, Curt.

Let take me that.

about we as all feel behavior. they’re structures, important structures, stakeholders you are aligned for driving and investment in good really compensation first, And cycles. our So across out, point how

align and in to strong course, alignment we’re and the thinking performance with that what earnings, believe and earnings. been limited you professionals performance, be using same and our compensation of pay and performance carry better compensation our partners split that is for we capital going performance. for shareholders Because on alignment, you have and compensation driving build about firm saying to on shows always consistent in do with shareholders, our of what our Of how likely our fund retained to with pay get. fee-related the At we’re time,

important for future driving that’s So growth.

We’re business earnings well that doing have focused make bottom in future. our extent let grow in And is confidence going been any we’ll you our just that’s great as to the what continue in know. the decided really compensation We’ve we and to that believe models, changes on. outlined line Kew we But to we’re the alignment. to

Alex Blostein

Great. questions. Thanks both for taking

Operator

you. Thank

next comes with of Bank Siegenthaler Craig Our question from America.

is open. line Your

Craig Siegenthaler

morning, and Hope everyone’s Kew doing Curt. Good well.

Kewsong Lee

nice from Craig, Hey, to hear you.

Curtis Buser

Nice to from hear Great. you.

Craig Siegenthaler

of you one. year-over-year. a to we We And big credit first $XX questions with in a fundraising on saw billion that new segments. my question keep this this So see XXXX, horizontally Alex’s expanding increase and first iStar was pretty similar But week. into

rate think you front, advantages we the on some should retail forward larger for the credit believe things too? side, on I fundraising also, doing because wider funds, the and how scale distribution new run be given about So offering, will

Curtis Buser

here. It’s Craig. Hey, Curt

Just set well. Credit up that Global question. really thanks for

starting in areas So let fundraising. some me tick through of with just of the kind

or figure deploy $XX year, mostly past, last which tick vast is something sequential underpinning we during in $XX about in year So that billion credit. the it’s year, on a growth. global billion Credit up a $XX billion this like capital years is in and next And be billion. fundraising, turn of Global and AUM, But an of that’ll over majority nice you our our pending look as in lot been $XX at it’ll of so kind

some Let’s tick components. through of the big

that credit booming. is structure business, our the just First, CLO business

lot XX currently $XX in space about in strategies. And in CLOs $XX liquid think of market which billion issued is we get benefit this underpin managed that’s really XXXX, growth we to billion. $X.X more taking about that past the you’re you we to XXXX, all CLOs a going didn’t and is of see FRE FRE going this That because credit help So in issued in share further of space. growth globally in we’re year, billion that so

is good. So activity CLO really in the

As remarks, those credit turn at deploy fees, really as his mentioned our on all well, deploying Kew capital. is opportunistic billion they already in opening business $X again,

a more up, investment revenues, this has recent and business that transactions that continues, aviation increase as they’ve So that triple year. rate big nearly really earnings. nice, In fee-related good so Fly the one to of business, continued you’ve these year-ago, done big pace of size run some The opportunistic seen and credit. in a boy, a space and go

that $XX positions So look, of they’re about now as than at this $X to quarter come after of able out their AUM of close, to about be more from business. to – rate the billion triple they that should third FRE run of the all total us all the be increasing billion

some results. our think we fast, small, got growing CTAC, but If – to like newer really contributing further then products you really

business to do and lending And then some growing. new Our got initiatives. continues is we’ve well direct

infrastructure jumpstart yesterday you business. point also will credit allows iStar time The we estate announced platforms. new So, transaction over transaction big to yesterday think real what be credit a business. are and us for These our really as was that out,

now for it. high year have build replaced So spot of a really have earnings. We’ve to wouldn’t gotten in the just driving pool, a terms expectations in place is and really talent AUM, platform lot where really of we good I this the the in

when think this really will business kind XXXX thereafter, for matter. of and I really So

capital a So capital. firm million it’s $XXX growth. terms firm From we’re investing in in bucks of long-term perspective, about

not of use those capital I to was a good thought achieve forget the And related let’s firm adjacencies. So outcomes.

markets, in really global So adjacencies in Fortitude big they’re performing also and capital private, driving growth. well

that So your answers hopefully question, Craig.

Craig Siegenthaler

That’s Great. helpful.

Kewsong Lee

Hey, with good to Craig. And step back. The you back just I let here. thing a This us is only me would and have take add, really Kew.

a see how very being We’re build in we’re we strategies; across out credit approach doing you big platform this. and strategic thoughtful It’s scalable how our business.

You’ve and really been it’s off. very us, with starting patient pay to

the I secular The Credit coming other relatively and say, I here. thing continues private is more talked equity. in is – underpenetrated relatively tailwinds are in would we’re to early relative There flows as private innings exposure. to to credit be private and wanting credit LPs,

you momentum. done that find capital, This great Curt got and It’s with can which products well class BDCs, that an is we’ve permanent this. area asset to you we’ve touched our with particularly on So retail. now noted fit an sources of where publicly.

sustainable. tailwinds great got we think platform. secular momentum. as It sticky These growing, we’ve So that we keep have are just that behind is FRE businesses our

Craig Siegenthaler

a breakout Thank And heard to on I you, commentary Kurt, XXXX. being in Kew. year forward your

So this Or the I of organic to insurance in really you of is this comment, mean more relates robust and BXB just stuff in was credit. you that hoping some it kind articulate institutional said could M&A? probably just the growth channel? does

Curtis Buser

Fortitude. about talk me let so Yeah,

it’s foremost, are. that what than and bigger, great. at and doing It’s time business First point better, our is in expectations this

They a there’s QX, bit, Assurance that got done. execute team, They’ve back big a the step easy been we completed the was let really pleased So well. able to carve they’re business, was reinsurance another pipeline out, me for executing deals. in a really The not great Life of management to which big then little that have couple with contract Prudential announced acquisitions. product future and just

already the Fortitude our And assets that three actual $XX there’s run fee is we our business. it fee investment to total about a which funds, has All which of of how X rate billion management paying, – Carlyle into to under million structured is partners. are directly about of invested $XX of with that – our are

is up of to growth. The it’s in is scale think future there. for going happening. are business year active really for further this pipeline we terms things an good set And that be So well and

Craig Siegenthaler

Curt. you, Thank

Operator

you. Thank

Our next Bill from with comes Citigroup. question Katz

Your line open. is

William Katz

Okay, thanks very much.

so I up Kew, and a pipeline Could I what heard sheet. like and today. have think the from you deal both, had you monetize cash be mentioned now drive little see you the realizations last see couple permanent you to can Curt, again maybe maybe want opportunity? take mentioned the you and and products specifically, you’ve I talk playing a might some you think FRE, free down layer talk quarter, to flow So, balance a you think I capital, bit go think segments I where that that an think and it times sounds through? or But picking good opportunity you could might

Kewsong Lee

the great the Thanks FRE can in generative to question. step mean, scalable of look, strategies be come. we’re drivers going take for for are is the criteria in for that that looking Bill. back, us big years be Sure, growth I us a to strategic adjacencies for and

Okay.

So we’re very focused and discipline that. on

that and to for in areas continues If fast grow think X our business, be at which are asset mentioned the back you Investor to which I class I is the credit Day, year industry. solutions ago, in a the best about going us for recall, in very this

around player the Global dominant a Equity Private already world. We’re

us. for color. I gives you think to into going bit FRE for credit and more solutions little and Hopefully, a bigger come scalability into that then generation asset the are class, opportunities

William Katz

guidance then the just years. the realization back come Okay, net for next to couple to And thanks. of

X up your bit I dipped a look the average it’s you and equal. So seasoning little Day, of also sort in-carry to those bit quarter But of now, carry your public loss sort it’s sounds quibbling. you. of do billion hear. [ph] ratio, have at when portfolio sequentially, But publics] to bit of a is to balance tactical little when $X years ratios which was a sort Those net a accrued appreciate bit a slipped great have – actually from like sent triangulate on look quarter. between Investor XXXX month more. X I there’s some of maybe how When being you of [you view, little year maybe age but nice less or like a Thank sort

Curtis Buser

So, year. kind is the think far And beyond, I go phenomenal well, some basis, I year that if we And on a you of expectations, a specifics. carry realized set last really forward just really do at talk to the generate overall billion anyone’s up platform of $X let’s can really look well. that look, think, we about those a is continue

quarter. the [dag So quarter, to the at look it depreciation And when $X.X you that $X.X pretty fact, started a in million. if year fact had not to billion quarter we at round is this last in keep gone we realized the good] we that same still had [ph], essentially you $XXX million

to realized was public We big million go annual years net XXXX, in that did performance revenues. $XXX when from That went of border. back an Let’s realization Carlyle’s we number. to one

what number able at as fair last XX% ground so year, $XXX the carry. we more about and it’s was going going beginning of of But accrued all $X.X I’m billion cycle the the very look during to in forward, to billion components confident is higher than forward place. it this That are double drive really of the value. be capital carry of so, invested the in And remaining this is importantly,

GAAP So even XX%, come. really look still things our GAAP really strong I is amount realizations, accrued it. indicator still the EPS And you at mean, that numbers, I number, feel good the look of there. about to ratio in-carry the the good despite at really like nice forward

Kewsong Lee

is X portfolios. teams, look in into our at to I Great investment activity you So mean work activity that’s the hard performing, Kew. And our exit it our going despite great gone now value is indicator, company investment our deployment Bill. setup flat, And and years engine the be really Hey, that function the realizations X, really our if X they’re for portfolio model, of pace, really that and are fact real our X we prior. deal appreciation. creating to earnings a power $X.X of hence, It’s we our And carry and that record more, great we’re billion what firing. investment or the have it ability That’s XXXX. X, great talks right? to $XX stayed driving in is forward years billion deploy business

So engine really working. the is

Okay.

more So managing we’re money.

money. more investing We’re

just We’re that our value comes creating than ever before over of X, matter or X time it’s out And more years. earnings be a X to before. in going

William Katz

Okay. Thank you both.

Kewsong Lee

Bill. Thanks,

Operator

Thank you.

with Kotowski Chris from Oppenheimer Company. comes question next Our &

Your line is open.

Chris Kotowski

give wonder a iStar could FRE I strategy try kind Yeah, balance if this on you. a using the because more like you capital good morning transaction, growth. thank bit your drive a sheet study to case color us is feeling of to have for I of and just

the $XXX that for $X press and just sheet. on it billion roughly said it the you release, balance call said million from in that you acquired So came your

party some that mature billion, expect level? say you that the we fully curious the And you about at come it this $X.X And around day from how So think generates specifically – it kind does terms Or that of then, $XX platform release, be Does at to I’m level board? give million. you about in of the should would ordinary third those across one from it in to vehicle? level those remaining at can come what a the scale press revenues raised funds a things? it just color

Curtis Buser

Sure.

take deal really a question. up a today happening just on comment really minute pleased So, credit The purchase billion of $X the about Chris, credit, what’s the great past, transaction. we’re people price us he estate in for I a in built kind it [Roger And good of that [ph] setting platform kind really over well. some of in really the well, lead itself overall one know of just real all really think And it’s ago. cost] it’s bring that this, the we knows in that the

perspective, know a It’s levered transactions. from from good an perspective, assets. So, personal the really asset we

equity So we’re some an strategic there products XX%. and LPs, investor, And piece Xeverage. a about our X and that by it’s to in about existing from of funded both X was

is part GP. be the important The will

I enables of This the retail as this us come to channel. over But where in time And So GP it’s all of build a fund But to before, need that. to as now that this like and X kind XXXX, make growth culminates. really structures, more to potentially X of take think use us, XXXX in drive going this to before, work on the that. years thereafter. have kind we be said to to this about investments

move a $XX runs a not looking business. said, business. think this very really be So us pretty and and to build well he’s I as a $XX who jumpstart for to big is Mark billion this, going I a billion. good to know Mark’s And what going Jenkins, stop is Mark at look, firm to

Chris Kotowski

That’s you. All for Thank right. Okay. it me.

Curtis Buser

Thanks, Chris.

Operator

you. Thank

with from next Jefferies. Our O’Hara Gerald comes

open. is line Your

Gerald O’Hara

Thanks. Great.

and evolving, maybe bit segment that kind kind see update growing into momentum of net headed But see wanted some that it a us a is on Clearly, pick-up revenue. kind give accrued an bit Investment next of business. could little to year? there just of you you as how Just the of on where perhaps Solutions might to little you relates

Curtis Buser

hey, Gerry, FRE doubled question. million it’s for really $XX well. this at our solutions, the Investment year-ago. We’ve year, $XX done million thanks a

is More importantly, attractive a very this in space.

solutions really LPs into portfolios. to to lot a come for people past is help construct and their So of XX% way good performance a private this year. They’ve phenomenal, really are data and equity products how mastered

really done deployment and of job has they’ve a nice so this their that, And good really year. been phase

we’re Obviously, positioned think, bigger well much appreciation. be the You realized point number. carry a be reflection out to to in there. carry And that’s the that XX% I for a recruit of look, business

Now, you you’ve before. but Carlyle, bigger than some that still that, seen this here carry. in AlpInvest, all we much coming buy waterfalls. European overall fourth really what we start see of quarter, historical to didn’t to is small in Remind the the style relative When you bought

funds XXX-ish really that for years increase So the you’ll it’s so a where that of of to XXXX, on raised start And off participation those only that’s that nice point those see accrued then will that going think, carry I pop when really XXXX where platforms. on play are years, all until secondary is numbers right? they’re really to the in most be rates, XXXX, to Ruulke that number hot continue come the working In unfolds. know kind other of on of they meantime, and looking advantage But and grow more our business, things. They’re co-investment what ways that platform that through. comes really platform, do of the the ways take really kind to and the team hard at those to is to

Kewsong Lee

first which Hey, came is – actually under with is, level or high a strength the think question there’s I’d I which appreciation, FRE is Gerry. It’s add is Kew. the only theme I underappreciated. The only our introduced thing that

a AlpInvest, it. diversity leader the people breadth probably, million $XX X, solution frankly, million, out contribute, a quite is great oh, back. in know, don’t FRE, think to And the starting in used of is years space, think are of figure to $XX I I great I brand, platform platform underappreciated the of our which a X

optimization, because these It’s market And it that leaders, and our now is has the got part vibrant it’s better in one have for has closing it maturation liquidity. the [ph] CEOs strong portfolio business this on the the a behind talks with and access plans, and grown. just to momentum just space as as it industry Now, of is of this what scale platform, tools big $XXX become. as industry whole real and industry, shows, real just million. it to of deployment and it. CIOs they tailwinds growth need the Alps That

really opportunities market we’re within and I – a for are growth with what prospects we like team, feel And its It’s I good real Carlyle. got we’ve about said, it to is leading. of think the AlpInvest. important great how So underappreciated respect

Gerald O’Hara

strategic then, and helpful. I Kew of with it That’s And sort guess, relates you, as opportunities. sticking to Great.

a think coming I perhaps announced comment would The evolve, and with Thank how market to that guess, expected a other the years? deal, little I guess, retail into you is could in I was, was partnership of vision the kind you. Allfunds, iCapital bit your about,

Kewsong Lee

Yeah, that. in and let take jump me

net us alternative we’ve for funds, growth. all a open-ended capital, for initiatives pointing meaningful. to that one really capital will include to drive worth and sources look of thanks we they’re our these efforts to of yesterday. each areas, high of these of already retail, initiatives we additive have be So number of permanent insurance, And capital and announcement iCapital another the about, over some in out time think and talked It’s which

an is year, It’s process feel our about all think we’ll over different momentum in this I good. momentum picture market prior the probably year, importantly, that a additive is This XX this of businesses. that $XX diversified drive diversified. it’s strength raised investor the wouldn’t the And overall enabling And We’re confident year, really the The and past to iCapital. billion ability raised across coming here. more products that in major FRE. about double is just have really continue. revelation. we to It’s our to bigger

Gerald O’Hara

Thanks for taking the questions.

Kewsong Lee

Thanks, Gerry.

Operator

from comes Patrick question Davitt Autonomous Research. next with Our

open. is line Your

Patrick Davitt

Hi, good morning, guys.

Kewsong Lee

morning. Good

Patrick Davitt

There’s broadly most by private a central view been of boosted in the one accommodation. that of equity this period marketplace the asset long classes has bank

pivot particularly rate, So vein to firms accommodative appear environment, one in less classes exposed negatively growth, have more this of that the to perhaps higher to is lot taken. given the now a asset inflationary year’s of

which the PE multiple growth, specifically us could you what exposure frame, portfolio? in Carlyle’s you might your your considered perception be to more that higher think reaction So to positions as and give

Kewsong Lee

a in great volatility really inflation, focused on one. especially. question everyone Patrick, a we’re Hey, And, Sure. about rising about something is us it’s this question. Obviously, all question is rates; it’s

to try it. address So let me

the it here. have me first So Dan to and an with we’re the this occurring. will marks. the I’d But Curt of and market, Clearly, impact that helped that’s out, of point seeing on in all, rotations correction happening or are all out some like

only now. think in our portfolio XX% that public of I right correct? names Is

Curtis Buser

Correct.

Kewsong Lee

Okay.

we moment. our portfolio construction me portfolio that the of smaller industry sectors, about the well we we don’t portfolio, good across orientation, diversified names gives real good of regions. in big volatility. feel are be with companies, of about type the our resilient because period XX% quite across very pressure, enter long-term, liquidity of really long-term will over So a it construction our all It public as have names companies, And comfort But at where marks. that

Quite valuations. companies, seeing, Now, and think the we’re buy about respect points you equation, especially attractive. more now with if of on the of the the frankly, some are meeting we’re great side corrections entry

term, I record correction, to a well. a longer with investment bodes saying, activity. So think And bad thing as healthy our respect on not necessarily I’m this

us a view be investment we perspective. an So it again, as from with have a multiples down, that long term view, to could attractive trade more

vast the our there floating credit a of Turning rate. to are have think appreciate I to preponderance business, folks assets

Okay.

platform A So profit. rising economic means more all benign. else equal backdrop that is assuming rates generates

It’s to special opportunistic broadly volatility, respect our But pivot the very strategies. volatility several sectors, diversified deal nicely across broad. past around change flow, years to industry finding especially able credit Patrick, respect with more sitting speaking, with to then over creates the and creates change I’ve opportunity. in creates our to And say, world. and Okay. learned, we’ve volatility really there’s flow. is very one the credit actually And platform been across I’d thing It’s strategies platform

and So it, being volatility, complacent. as about no we’re period not make this doubt of enter we

happening what’s carefully. very studying We’re

inflation. on focused we’re course, Of

Of course, rising on focused we’re rates.

But lens. tracking creates Of with course, creating especially opportunities platform, a long volatility are broad-based carefully changes markets. a that term we’re for

the you it. positioned on and a environment, that through we’re little gives of to So bit navigate color hopefully, how

Patrick Davitt

Thank you.

Operator

you. Thank

next question Evercore. Schorr with Our from comes

line Your is open.

Glenn Schorr

there. first. Hello, Quickie

plus scale be coming next year don’t You FRE, talked As you is about about think talked I on specific thoughts things you’re repeat Could the through? welcomed. you increase very think past on about what that the about scaling I can margin margin the which Any really this – the great two? well. have we over think plan all in starts the to XX or I to the growth said. plans you you time? and talk

Curtis Buser

Glenn, it’s Curt.

for backed the We full thanks year, from not XX%. for XXXX. XX%, said the So this XX% we QX get that Investor the off I’ve beginning XX% year to for question. year our of That’s Day, In grew we target. was this of

really costs some our in with We’re than really there’s is the faster grow in job top-line Yeah, ability that. do quarter, fourth to increases to expenses well comfortable some but the positioned. and our feel

years. coming XXXX. over continued to We’ll the the see and hit target going margin you’re think expansion in I

Glenn Schorr

sooner I’ll on that, take Curt. the

Okay, problem. no

Kewsong Lee

negatives Kew. your correctly. I it’s Glenn, count in note and Yes, quick XX this your takeaway positives if it Hey, I morning. four read only

Glenn Schorr

integrated But great, I at one Yes, equity it’s on it’s share It’s in business, fully if is it this everything. you. your to growth to out. on equity? its big, on the and go or look be asset integrated. if theoretical, I’m been it credit, great, pointed years guess. I’m is I curious, covers you raising will the capital raise performance underneath look for the curious like out, own, it team needs does class its not integrating is. that its Question on just on private own, they I’m is whether great, you’re capital dream, private more it’s LPs everything own, sub or meaning how stand curious global, it each the

Kewsong Lee

I it’s a platform say great taking are Curt approach. we Glenn, And when a question. and says, Yeah.

are We with being very intentional language. that

SMAs money the across credit other a strategies structured multiple that of time set and programs. also We type platform and managing distribution professionals in to investment And we are LPs to at increasingly, have same that capability is are teams have strategies. we strategies of multiple are coming raising talking that in our

be to And organically, base is And years platform. so it organically, off, that designed way, to some where what it intention long-term, think we’ve several and really revenue the at there’s is that starting very the real takes of drop to a and the AUM from not me the driven, earnings, a that because it the back is growth strategy leverage for we’ve strategy platform get organically tipping have pay And point to you’re in you’ve it why it’s base to the point time, to only but off, created. right more operating our that starts means build that with and time is, patience, in we’re seeing that for seeing going and is very beginning to going heard the a consistent happen, also pay okay. on thoughtful you’re which shots take starting I ask in the

year are to alluding that not to date. tipping in seeing, been that are credit we But the think we why we point, we’re relates Okay. to all breakout that FRE That we’ve it is we expect from yet a and growth to to that the continue. which has keep approaching drop going occurred as that fact have the

strategic no really a the the not good business you of but this gives the in that longer think model only a we to platform, financial the to but perspective, color, hopefully, long-term, will enable from what design So do short- medium-term.

Glenn Schorr

for Thanks that. all

Operator

you. Thank

Lee Our from Rob with KBW. question next comes

is line Your open.

Robert Lee

the get questions. real I guess Great. Good business, markets a update underappreciated piece, to it’s update, maybe of taking on this questions your morning. left those my like to is while quickly, us just point. capital But gave for more update? Investor small the years, I you another in on Thanks but it’s hard but another one and relatively this initiatives. next Can there’s that couple at just believe back Day any maybe kind know an you over the expectations of of obviously, that current for

Kewsong Lee

Sure.

involved everything really all teaming a So and and job the of done pleased add in working working also entire gone credit is with that this has value capitalizes and that around professionals look we a this Brian just nice see solutions really with And and across our how buyout of our on. with who really the teams. to commenced in. really globe on deep example platform. and And anything it’s activity initiative, they’re looking together of really quarterbacks people initiative Lindley, good the

So that. is cornerstone the adding value of

already seeing able in other that activity. total, of coming – been The in this terms from markets $XXX in year. have just of is shy fees this makes you’re year this been what this advisory the what vast obviously, with drive. about capital transaction we pieces, just really And million great do it’s We’ve business majority of deal flow they’ve to

coordinate right learnings have bank. of right think Remember, an together. incentivized to we’re the I go we in work forward, work how to the in how make to workings all terms of everyone investment a not internal as lot

I’m after, not other stuff. going people’s So

help really well. we’re them to trying just We’re do doing the that things

had trajectory. really nice has this So a

given and here. continue remains somewhat all relatively think upon I to some I that’s activity color dependent It’ll Hopefully, will to that grow. we’ll deal flow. But good be think markets it continue need. do that things capital you strong, the

Robert Lee

only your for was That was That my Thanks question. helpful. patience.

Kewsong Lee

Rob. Thanks,

Operator

Beatty Our question UBS. comes with Adam next from

Your line is open.

Adam Beatty

Thank morning. for taking good the you questions. Hi,

circle funds] full to to mentioned in got wanted the like a BDCs a you angle, suite. Just from you product [ph] retail pretty more back release yesterday, and [NFO sounds

And point? most of at of have of just you gaining gaps traction? it right more the you. to anything getting about finally, traction that not traction, product if which in, fill you So is kind are getting or now, there expected terms that those Thank this in any expanding might is distribution

Curtis Buser

is all Kew extent to upon to and running Look, the a be is number not before, from going of we’ve just, – can that drive what initiatives way we’re the we really of question. on ship to look, there’s results and I that execute on said we’re alternative it’s additive. we talking in say, Good this, working the the about the we’re would confidence And these, as have this some running that each channels the of and dependent a lot really expressed I been chasing earlier of it. well

it’s and throwing nicely, we new has performance been fees, CTAC. but phenomenal been products, have we off a product specific been of business, terms has investors. nice very it in the bringing in credit And growing within good So there because our call really

And that optimistic can I’m so, about where go.

working of really in ancillary that And products that things also of not are for number there’s ready hard the it’s is well. across works to in detail. in BDCs. terms working helpful. Thanks. performing primetime a of new They’re the the but have We we’re about firm broader still them, so around Teams platform on, talking really

Adam Beatty

thinking like about and opportunities or either that? about Thank for spots, other weren’t maybe maybe that good are that back, good Carlyle, opportunities wondering Got just resonated pick could that of certain detail. then Appreciate you if talk in didn’t spots? it. you a you. firms just And fit just one kind so And of your it. your picking doing, prepared phrases how the circling you’re that is That’s remarks,

Curtis Buser

of building able Look, kind because gives we’ve now sheet, sheet, to been of spots sake that but not the being that balance for the fee-related big a earnings. be sake picking value big where focused having we’re grow to is, on much, not balance our of very going a for

And is the lot of, kind expand there, grow growth, like. also the particular, using doing we’re so but the saw capital own more out what iStar of our transaction on we’re but start a of funds, then focused bigger initiatives, inorganic come, getting in and that of to in of to developed scale you terms that internally and

So going be really our see a that to firm. using grow to the capital way we’re

Adam Beatty

you Makes much. sense. Thank very

Curtis Buser

Thanks.

Operator

is question next with Our Bill Katz Citigroup. from

Your is open. line

William Katz

Okay, turn just you a When had And some from model. fine your tuning a bounce on at number there they my look is funds. I fees, about think your this in couple appreciate Was significant the management sequentially. the we anything any there? or quarters. on cash comp in fee next expense look catch-up Thank we the of G&A And side, you. as the at as line unusual of

Curtis Buser

higher end denominator think rate catch-up of it a quarter, fee long turn So actually the next Bill, will on, to. we it. doing year, fee-management more your a early, and But the fees, in up how of management the nothing fees, look of little number very a you’ll on different depends because them fee the fourth you fee I it. on that’s you’ll fees you’re period, on catch in Remember, probably on year, because part funds you’re revenue light the not fees, on there. on an very of a there’s average be we question have turn where a on a to bit and catch up whole period, back AUM then see of paying fourth beginning quarter, in year get light in of next the story catch-up quarter, fundraiser, management lot management will This catch-up the if it management really when – fourth doing effective off here you distorted turned have

that’s the just be doing. you’re math if that So careful

all compensation, like we records look, the really people the doing, at just and year of is of driving on were what key really their had end terms metrics our of the like great all the hit a bonus on focus period, FRE. year In

market growth, our heard, and on running and we I be feel that, pay as Kew and talked focused talent pops And think you about efficiently. is confident firm attracting know, retaining sense we’re also effectively so, as guys On to and about them. and all margin to And I Yeah, followed and drive you’ve and G&A ability talent good current as drive I in about important. FRE where you top makes us. over, very And the and well, the continue G&A. that

the long-term returns compliance tax some the we and For fundraising Actually, the more I some kind for back Fourth have fuels that did tend were which being that’s because that cost new of legal of the end extra about about of that nonsense be costs growth. to hope XXX, full the litigation as kind and and continues, at same quarter what then, we’re in, of initiatives that when adjust occurs costs year. associated some all kind have investments really costs. because you year, with made last is year And some that recoveries.

you point end so more with at that And bit a profit time. in up of

gives hopefully you how that plays some on through. color So that

William Katz

so Yeah, Thanks that’s perfect. much.

Operator

remarks. I’d questions over showing time. turn no you. currently back call closing to the this for at Daniel to further Thank And I’m like Harris

Daniel Harris

Should Thank free follow-up today. quarter. you any look forward feel to we time talking you, have next time. questions, again call everyone, your you. Relations you to for Otherwise, Thank to at Investor any

Operator

This for concludes participating. today’s conference call. Thank you

disconnect. now may You

The Carlyle Group Inc. (CG) 3 Feb 222021 Q4 Earnings call transcript