CG - Earnings call transcript Q2 2022 | The Carlyle Group Inc.

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Operator

Good day, and thank you for standing by. Welcome to The Carlyle Group Second Quarter Earnings Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Daniel Harris, Head of Investor Relations. Please go ahead.

Daniel Harris

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

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

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

results. our to Turning

million $X.XXX per our in and our in Lee. For the [Operator Kewsong the quarter, remains balance turn Chief a share. $X.X dividend billion. common revenues $XXX million, common earnings carry We Officer, at of And performance of declared Executive accrued to let with We we Instructions]. generated earnings, over produced and $XXX call $X.XX. second million me with that, of fee-related $XXX distributable share per DE net realized quarterly

Kewsong Lee

us quarter. thank once and Carlyle results delivered everyone, Hello, for again today. the Dan. for strong you joining second Thanks,

strong growth continue the of the around amidst investment and volatility remained performance our business. We the power uncertainty world. and And markets importantly, our in drive earnings to diversify

environment as we At result affect complex economy work globally. and rates in inflation, hard preparing different uncertainty is near of financial which been of for priorities rising strategic the the environment, this Carlyle, continue likely in We're markets. of a have our teams is this a interest to much All term. challenging clear real and the and and

on move capturing manage The set conditions. risk, valuations strength Carlyle and are have of forward. built positions through recalibrating focused as to billion platform, more powder that we we and well-constructed all is deliberately over as our market opportunities assessing resilient firm continuously adapt diversified us We of dry of and into a well $XX up types portfolios

better as a are from positioned and before firm strength. forward than we of different ever today We drive position a

allow about topic Given far, the point top the firm portfolios perform the to environment, before of we'd are discuss this we mind, today. know that we get so me to across exceptionally portfolio to continued questions well. Thus into our like address

will drill focus on second to fund were relative excellence firm's the and outperformance, of into the with while benchmarks investment in carry some are XX%. diversification Curt the aggregate specifics. perspective, down provide appreciating Our X% and supporting public portfolio I'll XX% our Carlyle's various more quarter, platform

Our the Throughout global well-positioned private infrastructure view GPE we is and by segment, X%, overarching and and portfolio and well-constructed that estate driven in resources corporate portfolios. performance private real appreciated in equity. flat strength our equity have natural

by invest differentiated to and value path Our strong and a have growth teams good always for in led been has approach assets that management established companies creation.

we been sectors avoided result, have hit. a hardest the have As that

margins. double-digit as thus top portfolio corporate strong benefiting at are whole, multiples publicly equity from portfolio continues is are a high-quality assets, Our we traded, companies while of importantly, far private continue our contracting. in operating and maintaining the private that for the market the X% even as growing demand line only taken public And rates,

to turning credit our portfolio. Now

pickup closely or from all not balanced seeing are We for monitoring have our focused of nonaccruals, notable At We LPs exposures strong, we positions and and actively managing resilience strategies are performance in most quality manage as better we benefit remains moment, driving yields rates. of the investment duress portfolio. in any portfolios. our credit performance assets and higher are and throughout quality on risk higher our are although of this seen underlying credit credit risk-adjusted very maintaining our our

out talks things to the hand Curt, quarter. about points for important over listen are he I there Before X to as

of and FRE our remains we underappreciated. FRE What First, the years the is have nature our quite focus driving frankly, over change grow growth. on several to done past

on record Just achieve this to in are our goal up understand last we delivered the full XXXX. the that FRE million $XXX and previously year to valuations year, level for instead and from or market XX% the fees our revenue agnostic than we FRE fee more visibility we is greater of important amount a on will invested us stated on vast It's is track asset to capital, FRE, giving quarter, $XXX of of million earn. based committed and

effort is deliberate paying Second, off. to the firm our diversify

earnings mix growth before, on markets. than we areas see we to to more because the business ever have where reshaped is it Our in those continues grow attractive capitalize resilient diversified and our and more private

of of of with contributed first balanced, XX% different throughout more our largest Global DE a the more our share making is fee-earning associated market result, cycles. Credit. predictable now Furthermore, earnings AUM XXXX, half distributable in stream FRE earnings As the

during capital firm's even Third, are changing forward, for efforts powering dynamics fundraising. us formation the

in includes the new capital continue private this credit to even we half the raise solutions total $XX highly This from as the $XX nearly Importantly, impact raised the from for was the up formation as it please quarter how investment the assets with addition under traditional the Fortitude advisory and of billion in the but than billion, global for listen and Fortitude nearly scalable more LPs, of equity management. more global amount capital for transaction we us funds. sets future

strength. from Next, is a the of operating firm position financial

of level We debt. have a nominal net

sustainable $X and accrued investments covered our our us to share more comfortably continue today per is carry positioned than by and to $X help sheet in balance $XX this Add balance in our to value. in billion net billion FRE, grow. over to sheet comprises and dividend Our is over

Finally, against and shape Compared are X stay culture. just priorities, perspective, faster more more our strategic sure and most the our we we focused my to do. and people profitable. is develop make perhaps to on on ago, executing is you Carlyle plan and as would our we My importantly right what CEO delivering diversified, growing from told we job years

to of that, increasing market are a this and earnings period that. We in navigate through and are complexity all believe you, Putting doing well to just we to have Curt. ability shareholder uncertainty confidence With over together, long-term and value. growth deliver we positioned our

Curtis Buser

and you, Thank morning, everyone. Kew, good

accrued and forward revenues; continue As of assets in Kew funds, streams strong our first, our continue on overall earning to of highlighting from between year, power, global closed and increasing investment my to this and significant for fee-related FRE delivered to an start business and had management want our highlighted, net the strong quarter, our performance business third, and we took opportunities we under earnings earnings have distributable to performed and focus level by global second, results income; diversity growth of further platform our and I areas: increasingly strategic and recently performance. X well, have see diverse performance impact major better relative a driven solid step the remarks we and credit record a the performance mix balance transactions. earnings a

half Let's begin by of results discussing a XXXX the important highlighting our first strength second quarter the few of broadly, more metrics. by and

fee-related private were earnings equity. with Global growth quarter, record global First, the year-over-year Credit substantial and million up $XXX a in second in XX%

of earnings earnings management Management stream by revenue. second this the catch-up million than as distributable year. a first organic in for of fee XX% largely first half in half into quarter second an our XX% fee-related our mix $XX earnings in as last from to total $XXX the increased the XXXX. total well up fee with year GP half of closings follow-on the record XX% of earnings are management Included increased in the and strong XX% million XXXX. revenue XX% full fee-related fees, in Digging FRE, higher Distributable and reached results Our fees as first smaller $XXX this margin funds. our improving quarter million from inorganic more of buyout transaction and U.S. almost fee and comprised increased year-over-year, year, quarter contributing of compared XX% fund in performance several growth as and fees with supported XX% well first in associated fee-related half, XX% reflects revenue earnings latest

helped and this Global Credit, in activity. We strong FRE aviation our drive also insurance margins record fees related from fees fees solutions Transaction and transaction benefited largely to catch-up quarter.

these of on fees dependent So the and activity it's important are note to pace future fundraising. investment that

We million $XX revenues the fee-related half and the in also generated $XX in for million quarter the second of performance year. first

margin on closed quarter on X, GP triple a transaction Global to the would construct Plus CBAM, which our April $XX in that's fee-related of FRE XXXX, management in second fees. again revenue notably quarterly the lower the performance nearly last doubled you should million, quarter step-up Global exactly also fee-related transactions, quarter, and transactions performance our a XX%. Fortitude, Credit the level these record which and FRE and estate I will revenues towards to likely revenue a owing fee-related second quarter-over-quarter to of produced. recent mentioned will and relatively fee Global of half fund, March increase real Looking margin credit see be Credit's from likely nearly to high global XXXX. material earnings Credit what Core surged due to closed be XX stable. but that owing last

prior number While to quarter-to-quarter, year this it expect well margins. above vary may remain we

net even mix earnings. DE supports overall effort. for distributable higher further as activity of realized of towards earnings comprised stream a continued Our been of the level pretax first our half a of realization And revenues. FRE the the XX% deliberate has skew production Diversifying FRE continued performance year, to

on complex Moving a is environment. what in

continued appreciation. perform carry with Kew to overall well Our portfolio fund as noted, X%

and higher And has high-quality significant declines supported strong diverse supported an in together markets. by despite portfolio strategies, infrastructure energy active portfolio resources persistent activity, positive valuations. in estate strength was portfolio and global with supported been Our our appreciation and carefully disposition exit investments. construction pricing. with demand real constructed Broad-based natural pipeline public And

of equity saw offset are several in private majority U.S. European-based notably also of partially growth, growth in the our Europe strategy. held which bio We weakness our securities, public strategies, our in by

noted billion. of level yet appreciation also the Kew supported revenues net $X.X earlier, another at performance record As portfolio's accrued

quarter. offset partially over first was more than $XXX the in revenues, million accrual performance in quarter's level realized This by net double the

fund were buyout In Europe and performance and U.S. Asia in produced performance this strategy revenue U.S., drivers realized of real the biggest net first our realized million we nearly Our $XXX net the half year. estate of the quarter. revenue of total,

gives addition, slated next and the our of confidence In the over have investment annual we the several size though of reasonable net The of of portfolio to will revenues conditions us $X that generate net performance billion and next few will year. can diversity the over in quarters an any distributable market several actual our average support level given years, we impact accrued balance earnings. performance realized quality and performance revenues transactions close

I credit platform. close some with on thoughts our global Moving to on, want

handful billion, assets strong a Credit ago. the Solid $XXX the source fundraising significant and under Global strategic management, is investment transformation of drove The fee-earning remarkable. segment recently the this and largest scale to management than level to over years recent year Global performance, provided completed transactions past have Today, of is fee-earning Credit the more our business. under our assets double of transactions

a Our available from is its strength its that assurance and needs scale opportunistic increases as and in flexibility. increasingly to strength market credit it employs strategy moving capital

and of reward have the business, us positioned addition Our and complex earnings to significant increasingly long-term provides management, structured credit which with we portfolio conviction record CBAM have market the strategy. $XX an head leader. is the in into environment, as credit track following in balance a the global They in outperformance, sustainability their assets, assets under with billion risk of the

rapidly they aviation, solid in general be changing their positions account, advisory teams to Fortitude the billion Fortitude results environment. their in as and have and with Broadly, nearly market, estate real excess relationship well as to with larger next quality manage and remains these deploys to credit, funds our $X growing our of considerably positioned distributable are scale direct them of capital. $XX in expect year in years. few of are credit credit, manages and new the And deliver we a diligence billion infrastructure in in our a and portfolios good, significantly posted In businesses we Carlyle these a difficult lending pleased we almost strong we sum, earnings. strategies

well. Our strategic transactions are performing

our Our turn dry focused managing operator their me the teams for portfolios as and on powder to that, With fund on capitalize for substantial performance to over emerge. investors the are deliver we attractive have call let your opportunities questions. to they

Operator

[Operator Instructions].

comes from question Goldman first Our Blostein Sachs. Alexander with

Alexander Blostein

lower obviously, Corporate good for appreciate are the macro economic Kew, facing maybe start and conditions quarter companies public selection impressive Obviously, into light Equity trends I you're within guess the of more in costs I and market. slower I a and particularly portfolio even bit conditions hoping higher multiples Carlyle. Private But comment. was a digging within with to little mark performance very seeing, this

you're that next guys these you the drove So performance private these just and you to of this as environment about monetize curious offsets quarters? you are within that factors exit for the the actually how for quarter? the think how And about thinking thinking some gains, of ability positive to equity couple about

Kewsong Lee

why what I Thanks a portfolio in investing I portfolios. clearly me focused think few more so our to how implies. way really question. But various market, we're your as our right controlling complex well to we're manage answer way namely we and the but our it's I portfolios and respect walking for which our ever. question And my Look, question, can we're a Alex. and Sure, businesses quality, said through with in remarks, best control, think your the diversified let than spend positioned minutes opening on the we

scale. So exit the understand now, in contemplated in business our multiples. to for first Private growth importantly, of world-class of important really appreciate our it's been cases. investment that But we've important several of cases got at virtually all what's all, Corporate a slower Alex, to we've base is dominant And running years investment contraction Equity,

I So types that's been mean these what preparing when environments. say I we've for of

always on growth to to been improvements view our great and we've with fundamental in focused investing create operating a companies Now drive returns.

and why hardest the all we've this don't to of portfolios And vintages. they're So regions, high-flying been got it's generate we've able any all when great put the you together, profitability. diversified that and CPE our really constructed strategies, across avoided we've across sectors, sectors, avoid companies themes hit

it's so the been that I at their you operating operating that all to. maintaining They've XX% that take margins And Corporate year. -- been when portfolio, about a at growing look improvements our Equity portfolio line, has you of referred given referred the top at to, just -- this Private

Great investment respect investing. seen improvements, We exit And contraction valuation great with a to ourselves the have the a being of which companies. value the really And great so part good on your that firm if and from question, offset is operating with ethos. has investment can't coming exit in with starts creation growth pride the we've the multiples markets. good exits you don't have you look, great in

companies, you you. them exit the when good create in sets exits the you for to matter how so market afford and way, with value it's up And a what to just conditions decide fundamental it of and a pick given the you partner

are we're store what this creation. the And of back, who positioned We've has moving I diversified very of heading fundamental but at way performed Thus got in into we're operating step for well as a like So it's because current everyone taking our construction. Corporate we future relatively performance forward, value far, environment. knows Private in well the Equity. the look, and nature scale. portfolio the We're superior

Operator

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

Craig Siegenthaler

Hope everyone is doing well.

were an we on So update looking to fundraising. get

offset strength especially stronger So higher flows given especially in does from the equity pension this with feeling cash how current dominator of crowded how funds by wealth prices? backdrop then energy effect? is the their plans you, new to feel sovereign and much private from U.S. And

Curtis Buser

some just will Craig, kind set I'm little start going and Kew add to bit, and a color. then level of

of our this capital raised that our for really just recall X/X is let's we great billion. came diverse $XX credit, So kind real solutions in infrastructure, business, terms of of were. was year year We estate, so kind raise. renewables, us. XXXX a in where same. of the And

the a We important in expect really amount what which the XX market in environment. have good increasing us billion half, the raised quarter. the in continuing billion again, $XX this first capital, current to we're they're or LPs this entrust the we're an off more $XX strategies is Kew? to in emphasizing of from of And year, seeing And with platform. to diversity is start,

Kewsong Lee

refer us conversation renewables And me about about and the you it. now Thanks, market private half the healthy adjust to coming now, market from challenging or remarks you market. is in of Credit, I Curt. market. of solutions, my our important strategies most Look, to to to for that. to capital Global is Over heard to of that as -- and But and you equity see no where I doubt that dynamics. bit this benefits just platform the We've XX And Curt and diversity demand. could said. and something just our to want it's strong refer it's right let continuing the talk a LPs formation. fundraising challenging more want in got we're of corporate persist of opening infrastructure, the the And segment And broaden the fundraising

quarter, perpetual added Fortitude. capital billion in this Just from $XX we

to capital And drive ways are being think point growth the raise the I there Carlyle. of so multiple we that

the while continue equity expect is which in some $XXX about FE we to of at the breadth diversity fundraising our the a of the especially bit, think strategies. broaden for gives challenges a AUM, markets, now when there formation capital a are are all across lens opportunities, And lot platform us of and of you which billion to a record. our We about private

Operator

Chris question next Oppenheimer. with comes Our from Kotowski

Christoph Kotowski

in equity of first that lower get from what just wanted more is Or coming second funds? a said function or that Is a fees color that? private bit or function a fees of in quarter. I the about coming versus on to second half driving realizations Curt catch-up down the what's half

Curtis Buser

the thanks question. for Chris,

was fee-related I to out So be what specific, performance revenues. called

in to talking I Global just really So estate upon see And performance. about mean well, core+ -- based do This it but in do in constructed, was really done size, Equity estate, it with is nothing I our real continues deployed. particular, terms fund. say, really particular, both real capital CPE should Private cetera. has based it's and attractiveness, generates the has well, fund -- in of on incentive how when we fees what et that essentially to

of amounts half year, ago, years X X of years the in second deployment ago, So then. the lower

bit second of crystallized are expect incentive And half. so the here we fees be to in that going off lower the a little

the that quarter, you in net the though realized think here that's point of earnings strategy. And million about fees there's I accrued of compensation million wanted everybody. even over a And $XX our last to all I call would related current for to out quarter. I $XX that's about time. release, to or that this had of incentive we same itself net so number interestingly, so that on solves like shows back And XX But that tiny Page footnote

strong. flat and So it's essentially

the though have And hard out got in outside And were kind want product And to when really the third the year. We particular in how exactly visibility the dip here to in, so do year, our more segment. fees, Hard of $XXX broadly terms it's you transaction to quarter. probably million feel the for GP respect the that, With fees plays balance to this in they'll that over good yes, key predict predict good that exactly perform on. it focus I I forward. of management catch-up about going of how good we've that FRE of will full come of think, they'll some is quarter. but

Christoph Kotowski

Okay.

not it's raise? So it's do not have fees? just And you a as how reminder, the the base catch-up management fees, long to

Curtis Buser

say based revenues. make There's core play of The confident catch-up fees, fundraising, growth and and management $XX that management our able out. to fees really well fees, impact. that will do and fees of million catch-up XX% to be I'm But the $XXX they're order will management in And on performing fee in up in million, -- sticky. management our incredibly

Operator

with Lee Robert from KBW. comes question next Our

Robert Lee

to of then Should into Maybe marketplace of others? any how there's impacting the to reinsurance would leverage one, very on present the out you XX:X that there's the think capital. billion potentially? something called like -- Fortitude be color we an I what Fortitude in well, there. opportunities with available the just or maybe Could have Number businesses opportunity So about that things first environment, different that maybe what's translate to kind that and be than more And current asset? assume X $X read you that is would helpful. altering one, there

Kewsong Lee

thanks why we Robert, the you this? the then to second question. of Why the first one. question, Curt, do try the tackle I'll for tackle part don't don't

Curtis Buser

Yes.

Rob, So you think right. it got I

up And to capital if that grow it going a XXx into billion excess use continue translates to on size to its you're picked from XXx metric. $X right, nearly got to standpoint. that business. does important They've really Fortitude's You an that, of

as in to think is we've position I previously the So business great years. handful Fortitude said, next double of over its

X without double well they're a the next years, else the to over somewhere say I'd whole doing So really lot positioned business.

Kewsong Lee

me Yes. add to just let that. And on Robert,

shape. And to So capital, platform capital future incredible at which out, very happy are are how you billion in pointed about got first, and $X Curt growth. with performing And exceptionally as is mentioned rightly Fortitude moment. double-digit we support got that it's is developed. the base Reserves is It's great ROE well. excess

through result, our leads be respect and rates, the volatility going and us future as because of platform. to Carlyle believe actually current benefits our to aligned pressure reinsurance Because does environment sell effectively. are sources transactions more volatility it liabilities, to capital legacy with investment there's growth, manage know, on And like of Fortitude. areas grows, to as puts deal companies activity. their arrangement, into to that that a are to grows, divest higher portfolios they be you As to inclined insurance what much strategic more of folks to is or and Fortitude going advisory's consumptive capital the more want With Fortitude as enter

is So at very the our moment, busy, pipeline very robust.

Japan. the Prudential, You've seen deals via predictable announce acquisition. things us with grow but lots And I in there of several These as out to are Fortitude me to coming capital leads continue out going other month-to-month are that of has real to years, Fortitude next quarter-to-quarter, of the T&D up excess with years look via in see also you're momentum to areas for come. this scalable scaling over to the believe us but and not types reinsurance, or growth

Robert Lee

FRE guided have follow-up, maybe $XXX update guys million you your you And think of us thoughts that's just I year. goal? this Curt, your as level that, still comfort a quick to reasonable for a maybe on around Great. Can

Curtis Buser

very remarks, Yes. is confirmed the I with that million. in his well. prepared And business performing we again, $XXX mean Kew and the feel comfortable

think us. good expectation a a target good I And and that's so for

Operator

question from JPMorgan. Ken comes Our next with Worthington

Kenneth Worthington

valuations, the growth strategy? public the alternative for asset private And been market buyers come public your ultimately, think, manager a for had between of changed inorganic down inorganic a valuations Have I arbitrage growth. arbitrage, XXXX for your managers growth what narrowed. Kew, for that environment executing inorganic given the opportunity market there valuations? market then private presenting second public on is asset questions today maybe and conditions? half outlook couple here And market for of with a into part 'XX nice and market Has of alternative gap

Kewsong Lee

Great.

development your Let can is and to on question, give the thoughtfully then me -- our very Corporate growth, platform. strategically color and which is of important in Curt continue jump to the very absolutely question. step back. fulsome maybe some take inorganic respect as first as me a and part let With take one we done element that well diversify

You've seen and done do far. this, success thus to has it been us great

and or be very going or it. environment we're to quota on. We're going doing timetable where However, we measured perspective our And no you type carefully also what environment and very out seeing of to it is in to opportunities, told a do platform. budget we this the build And has disciplined want that to may very are from I've be There bring, we're but deliberate. about create of theme that areas represent likely would But that credit would to in likely the infrastructure growth our most the most and platform. appreciated solutions and be for continued our our areas bigger the though needs is the strategies, markets, criteria move over things strategic more time are where that us. needle we're big highly adjacencies, capital-oriented, FRE ideally can intensive, perpetual looking for for scalable, big be

bill. we're extent willing I no to that imminent be would Curt? I the looking quota that pressure time want something Yes, we So the talk But move about. forward that fits anything criteria like of types these forward. to said, are to or

Curtis Buser

a the what own comes and our that are in possible acquisition really see lacking still Ken, the standpoint, portfolio, looking from thanks asset high. in attributes demands good value for lower under And those down to are and And alts to pressure about and are inorganically. quality Thanks. of quality now. that assets, here get And obviously things those you're more at from an build a really valuation really similar we of to we're From Yes. valuation question. the talking opportunities us thoughtful continuing it kind perspective,

does they those on for kind like than We How and if -- FRE things they great to trajectory. own? growth they in missing? can they think infrastructure looking lower their margins. is like their and an that missing in what that of Are their about deficient execute amount we're all to if are their are And And we it scaled with cetera? get to We technology, if ability have in at, on they're et so terms they lower things. ask like lots of these you look? Or execute? execute of ability a what's see Or can they and great things this things, have a that

often some we'll And pointed supplement look, whole So scale. own the kind then process as our So buyer I between out, that analysis? advantage kind only things is, it's but possess at seller. we of a question and discovery of can of mean that on continuous the attributes. look it's you get in the and look, -- an arbitrage it

Operator

Michael next Morgan question comes Stanley. Our from Cyprys with

Michael Cyprys

your the to early wanted just commentary the some a just of some fundraising backdrop for on to commentary raising come equity. just challenging for I more back private in maybe here, around on call

Just the own that that as half? see first see net and for year and the quarter, Carlyle's given $XXX the it at tougher backdrop all? outlook realization how outlook an Does then curious portfolio just raising just the realizations macro that in potentially in terms impacting your the Private you magnitude but comments just how in compared strong Equity appreciation And in impact of to half of into the the generated you the here, second curious impacting million to have on Corporate there you timing?

Kewsong Lee

the to and want don't second? the Mike, we do first part, take try I'll you this? it's Why take Kew. Curt,

Curtis Buser

Sure.

good as we Michael, there's year. So momentum this on start again, fundraising,

different strategies For things XX a already I've said all multitude $XX very having good on raised, fronts. billion the of success and

in private otherwise as same taking and going of that's that the raising the some they has not maybe world in those result absolutely the changed, particular amounts to And in traditional of strategies. general environment. around longer right different a equity You're in have fundamentally some would raises

like I I what of and All said, our like like still our play. still still momentum. that I doing, we're

Kewsong Lee

this the -- look, we the general quarters out lots one lead to I one diversified several how ago, M&A exits, ago, the signed $X.X question And year. And big would our significantly. keep play Yes. X to carry it place that it on quarters mind are to we've your mean the of close realizations quarters were environment it equity of markets, think as And for capital in would with you up accrued had billion state now. of several transactions drop second of is. is, broad is, in today, down continued that how got portfolio rest respect how to there But that

reason just and comfort that to number size is that performance also which what I But billion was timing sight, to the take -- question. and give worth the of said and will comments, a that. be his comfortable and vague that to year-to-year, why about us in market line realized net reaffirm breadth for I say Curt, want conditions fairly state earlier portfolio Alex's lot $X of or of I'd then So it us our whatnot. gives one, fees and gives of

then referred the the you these for assets and We have private reflects nature to investment markets plans at of creation constructed the far do I our challenging out, that valuation Private and portfolios are way portfolio, a sales the course, sense the companies that and contraction differentiated which ways, great year, point our by believe we the improvements, the just with in of companies want operating of driven the for and which, our creation. to, approach Because quality you've this portfolio, we and in have not prices, driven we leverage feel good the great growth very assets. expansion. of that to about exit outcomes. IRRs -- good ethos, very and been our nature Thus XX% market have companies in of are growth these operating fundamental things multiple good leads investment quality Corporate to multiple of despite of have the fundamental in out gives the value been Carlyle's is and This by real value of pick improvements. historically, we what -- always by Equity

out construction think of about Curt pretty of And substantial we So very of we good feel net $X.X the to billion and good quality we pretty terms our and carry. date confident this up, term, portfolio. construction. good can what are which keep our about billion if realized portfolio The accrued fees coming I longer in year is in realizations of $X breadth good said, performance indicate a

Curtis Buser

the actually think half first today, bet crystal add of saying half. but second portfolio. perfect it will lot We've activity, quarter. year, on mean, level but got lot discussions, a we've the is to I here in the a have the be sitting a think half And Not of second just of is I Kew better same the heard been you than that, the ball, last carrier about my good in the here half exits. than what was And don't good And I from half. seeing a stronger course, of to to I was first the Mike. so the second perspective, exits a confidence pipeline production and

Michael Cyprys

helpful. Great. That's super

pipeline, net I So I'm lot realized hit you year $X of in carry hearing be on confidence the if the carry? the guess surprised billion -- the portfolio, a would the you this receivable.

Curtis Buser

Look, the the I going I half better half. portfolio told that be kind second first think to -- incredibly of set mean, up. than the well you I is is

always a So -- Sure. well? possible. little? Can really we can we do it That's miss

hard it's So to number. exact give an you

Operator

Glenn ISI. question next Evercore from Our comes with Schorr

Glenn Schorr

we've this been a just came but out, talking obviously, So about year. for

morning. So consumer management a it know what and to it questions like talked who's deal, a, Like your higher does question portfolios? does assuming pay alone people for sure I'm carrier now, interest most is stocks would already issuing you. got think from good for of ton for Two-parter, then this clean right the mean what interest. if on past, goes shareholder? when your be taxes hear part a through? for And it anything, not of it for mean, a in we've I I'm the seems carried energy about struck they I is the I quick importantly,

Curtis Buser

last to Glenn, on night. out thanks kind this mean, Look, just go still long for There's it. the came a question. news of way I

All of yet. the aren't details

on rates, kinds the Our all people comment to changes just it. at got of in it with tax of premature provision. not corporate of to different our already that's at affect generally, on world, over look, full kind and it, play. And we're -- expect, corporate tax fully researching kind of our people us teams looking C-corp it's how all a And subject loaded terms in doesn't a we local really taxation it but our are tax, like would for you

Glenn Schorr

years. -- know also want talked to I it's we've for know a came Maybe out, I about I but it

shareholders that getting the cost? Or matter is the to No the the one getting carried over. and I'm what rules shareholder know think That's are, employee paid on hook I carried? what is public thing. want for higher interest that a

Curtis Buser

taxed corporate the our I fully -- is carry Yes. side. on already we're mean, already

rates not gains paying we're rate on ordinary essentially -- of loaded it's kind weren't it capital So carry. -- aren't -- income tax fully a our

Glenn Schorr

the leads or loans circumstances I'm that good hung they as some just other appreciate coincides wider inventory. wanted these fully lot to you that that. see the too. bad a for out quickie all a And the on to your big banks, cover to the Is It Last I what to there. mean That's just does stopped. holding that bid marks There's that, hung that monetization? I They're still deployment with on of in point is deals, us lot far you? took so asks. and leverage get Is you? across. any curious things incorporated of music there of comments forget

Kewsong Lee

I'll Kew. it's question. handle Glenn, that

you is backlog bigger. I if that entire the bit, at which really guess X a important great after market appreciate the what's today now, that back comparable all billion number and I is my with $XX back crisis. perspective or financial important a hung to, right of great remembering of step compare to compares it's the $XXX system. to And the the think I that what But in billion, right crisis loans Xx finance think think maybe is the we're back is situation But and in. leveraged time financial put current happened go what take the probably in best there's to set to

amount not of smaller, they're market but capitalized, of banks, at our only total is our partners on top well bigger. they're absolute is So that And view much banks much If my all our well is the the that, run. and

than backlog doubt and going that headache it now to at before there trying time. It off happen have to yes, time it's and is So out, matter books. of that's issue move a activity GFC. their this they're the a no a clears I just is And resumes. was hopefully, smaller today much in

Operator

next question Hone Bank with Montreal. Rufus comes Our of from

Rufus Hone

into the quarters? new you also And you the I And for update coming the us And whether provide see you the dislocation seeing the could how was for do potential an you're activity and upside solutions business. in potential opportunities on that translates on there can update hoping products? solutions in fundraising markets pipeline in business? developing

Curtis Buser

and Kew in. start, maybe add me let Rufus, will

things the Lots there. So happening. we solutions business, look, good and bullish of remain optimistic

stair-step As I to couple still is there's of a in a said, quarter, of probably little keep It things mind. last a bit business.

grows it's cycles funds it come -- as of in little back So more stair-step. to bit market, a

has is bit business that hurt in little a in it one improving quarter more the made euros a business FX. denominated terms where margin. we're It -- terms its that Second, of real of bit got lot like. most a of places exposed this little of probably of FX It's performance progress the in because and to and

that hurt potential there of the trajectory good. some that. as space products on the new and a us But And they're focused There's to also dollar so of is a they're very advantage it's strengthens, on. little bit white overall that add much taking

that, looking take forward to -- simply a the think market I me And And lot that's out. will time mean But secondary growth. of in And now some gives really for it some business play long-term this it's confidence great of where then I'll that last, it. so can time a that to say go. I

player. little well. by still hear little They're great bit take to play that a data it of well-known and very has their continuing performance of I and aided knowledge FX, strong remains they're happening of It job. Their of market is helps what's quarter but bit good. advantage -- Their a so the fabulous. a AlpInvest very knowledge And done a is in very here aided us. and the

So especially we're well long set for the term. there, up

Kewsong Lee

necessity a mentioned this few is help to I for of effect runs LPs previous Yes. a want questions, really to these optimize, somebody to the denominator what their our string that have to of and on add, question, our the right that Curt, that portfolios all into sweet LPs you large spot the reconstruct and much alternatives leads than LPs do. AlpInvest don't designed tailor to the very do volatility, other that if need, of together

our co-investment secondaries, secular broad large you're So strategies, volatility, for the benefit levels. all market as it's of LPs with is years swings the I to to to several it's whether their well tinker very that trend this it's contractions to more need think, all the AlpInvest strategies, platform. take our leader that, continue asset whether at multiple a of positioned single whether and of seeing, AlpInvest And advantage going is this portfolio optimize and

Operator

We have from a of follow-up question the Blostein. Alexander line

Alexander Blostein

some from going the described and FRE Carlyle's go of to for obviously, it's hear, I wanted big $XXX the year, dynamics get about back algorithm for the really this as deals to you of benefit year, million fundraising. to XXXX. kind this growth nice the you're to the think obviously, But of from reaffirmation beyond FRE and for you the FRE annualization flagship of

of how and think dynamics? framework But growth how beyond tailwinds I besides I you of of about it's understand you guys some would about FRE early. curious these don't annualization a guidance XXXX? to kind full these just So for that have to expect will help. as But think out.

Curtis Buser

add I'll in and start Alex, here. Kew may

done in think several years, terms the earnings. tripled of business, especially fee-related and over So last well than we've last over the the you look, X more years. growing really about FRE we've taken We've if

be which say it. $XX that we'll that XX% those trillion our grow about would reading or CAGR that as CAGR. I and a diversity, imply can over products. would up the strength Big I really a markets markets to go from the If of it But up do tailwinds. of more especially been everything in remain us where end that kind like how year last been and we'll year. we over period. experienced, XX% If better, our you what those about double time focused plays. right mean all we've how about what of do, size XX, we And market If we we're performance X we've we've of all benefit XX% from on all do about over the There's and business. But new balance will time, shape things can we'll to that's do. growing we use to and -- sets private and I the about with picture. I over be to terms and At a things see sheet our brand, able really determined up X the there years, happens, think our math, that that X

Kewsong Lee

that give to Yes, Alex, avenues and time. growth it over scale to continue few can give earnings the let we us me that growth platforms ties and drive you a thoughts, many have diversified meaningful fact into platform create deliberately and our to

Corporate I along. It's back, continue step got It obviously, motor And just doubt a want I've all to across taking remind cuts have just business. scale. global to that in Private business industries. So dominant world-class a will Equity no we you,

we remind It's to credit has that, in fastest-growing equity. It platform class great part like from we continue more In And you, white than to we space business. aviation want and great opportunistic in we've within our started help, more addition doubled organically success And inorganic had areas our by growing. is since infrastructure which the estate credit, supplemented scratch. some business. bought strategy, it. we've credit real a just we've even now built of see And to with credit, our asset now private it than a scalable

of that as credit believe to to tailwinds, So since continue away secular that still credit and from income great our see private traditional platform system. I've continue we allocate especially, especially from solutions LPs the private real into public of is a inroads has we noticed, banking credit fixed

countries transition, secular rebuilt. whether that set also are investment the but and to business have from digital have energy infrastructure, now which dollars to believe major business, to renewables benefit have the world I is third around infrastructure, the infrastructure, our infrastructure that to of really be it's improving hard The will up tailwinds significant we go going

infrastructure of talking be resilience industrial required significant energy the and You level capital a our about support in of that's creation are on transition complex. to amounts going regional in

to about in Then growth is money of a So industry-leading infrastructure. talked just AlpInvest lot be we an business. there's a solutions going of our lot and platform.

earlier We excess portfolio $XX grows, It's forget, As nicely to to to the their AlpInvest activity talked of alt already. up even set about to up we'll capital markets and we as really need bottom assets our is Fortitude, to our with across scale billion That going And LPs our set help got grow. management line. more deal incremental which, there's continue be to industry our then pick just a business capital. drop for fees continues don't platform, have solutions. up

done before grow couple which and moving creates of past have So It more has few that ways is over areas very the a much up even -- resilient talk years. all the obviously, about It been that's more inorganic and we've platform. by it, been And of past forward. but a select we set over have much additive. successful which initiatives, to diversified base, of earnings we in selective development lots corporate years

platform and with diversified for to forward. driving growth, our moving way doing marry this priorities what you the marry picture keep positioned against you execute if like firm So industry of thoughts, where Curt's going. the And that kind we've up is bigger a then if been to set I we're strategic

Operator

follow-up the a Siegenthaler. question have from line of We Craig

Craig Siegenthaler

I'm your resilient fee you in terms a quality given just the risk economic decline I'm frame severe fees you deferrals the an of U.S. credit on But Global if work? curious a recession? in in help is managed assuming can management Credit we how that not us commentary your this issue have business. enter CLO might And your

Curtis Buser

the the that challenging space, terms how gives times. exceptionally now for lot has player us The the is active thanks these opportunity and incredibly portfolio strength. CLO Craig, team for a of the question. in And Look, of the been portfolio position largest to we're well and in positioned.

all buys was that in And with industries here goal exposure of commodity the second platform that across to reducing sells had or and the the billion costs pricing $X about traded higher and they little quarter. power. So

kind it that it all well we waters. rough of really about for making positioned So was some potential sure

good. As really a result, the metrics look risk

industry of have quality from CCCs of well a really perspective. the rating on averages are basic well the the index. below scored all in quality portfolios exposures The and indexes are Our and

be the kind Our averages. below underlying But market the cushion overcollateralization test Look, defaults continue expect strong. we that. in increase some in to of is

not positioned. we shutting So the the feel in long terms portfolio heard be, like of positioned The to hence the our you've as is expect well we in it any really really off. and currently that well of so, there's fees sub as And which confidence risk remains tone.

Operator

question-and-answer now I'd That session. like remarks. for call the to today's turn back closing concludes

Daniel Harris

what listening for everyone, you, is on day. know Thank very busy Yes. I a

you. Thank other Otherwise, to talking fall. feel any Investor have forward follow-up you again you the questions, to If look reach in to Relations. free we out with

Operator

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

You disconnect. now may

The Carlyle Group Inc. (CG) 28 Jul 222022 Q2 Earnings call transcript