Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to the Carlyle Group Fourth Quarter 2022 Earnings Conference 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

Kevin. you, Thank welcome and Fourth XXXX Quarter Good to Call. Earnings morning, Carlyle's Financial morning the Bill Interim Chief on me is Conway; Curt call our Co-Founder, With and this our Buser. Officer Chief and Officer, Executive is our on call be website. being replay a This will and available webcast,

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

GAAP provided in earnings reconciliation the of reasonably have to extent measures We to our these release available.

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

Earlier website. the earnings Relations presentation, and of hand this also results, and to a over begin Investor is our a detailed issued our available on going a morning, quick which to then with discussion release Bill. call I'm press we

million growth. strategic XX% quarter, expanded organic growth transactions generated XX% share. margin fourth $XXX year earnings last or year compared million several Fee-related full FRE earnings in $X.XX XX% deliver to and to earnings fee-related increased combined $XXX of the another year. For we of substantial and XXXX per million $XXX XXXX and in distributable from for to Strong the

a and earnings FRE, XXXX income. a We entered realized earnings XXXX capital net or realized generated good $X.X share in distributable revenue with from position. in investment strong in We performance $X.XX of balance billion per

in in share. billion $X We our sheet, of balance carry investments $X.X and $X.X billion in over billion total, $XX net cash, accrued firm on have per

S&P and from help confidence we strategies, nothing deliver minus A additional that to Fitch our growth. our ratings. against can debt revolver, of pursue improved to The us both $X our to and billion gives drawn inorganic, strength continue growth to and continue have We ratings sheet FRE organic both balance

per sheet $X.XX years. delivered and with XX% combination of The year, QX. sustainable per Directors $X.XXX per growth This quarterly strength dividend our the allowed of our of and balance share. in higher up of share common fixed to begin our increase X% year-over-year past another We to dividend FRE a will X an increase Board in over dividend approve

turn Officer And the with Bill call let Chief our me to over Executive Conway. Interim that, and Co-Founder,

William Conway

am and the you, Fourth Quarter Thank for to us call Dan. and morning, Results. on Good today. joining to I discuss pleased you Year everyone, Carlyle's thank Full be

challenging well, heard, stakeholders capture opportunities The operating market is I the you've strong in firm and our have to to despite and continue Carlyle results XXXX. our ability platform tremendous to investment grow in to confidence As delivered environment. our

thoughts of on want to strong morning: the X general and about of our financial Carlyle outcome CEO XXXX our topics the I talk this performance some in selection, outlook.

the incredibly Carlyle are we new join First, Harvey pleased February will Schwartz on as XX. that CEO

a As And for Carlyle. of which for committee incredibly the was you this search search serve, I new CEO. Board, important all a know, the an drove on and decision robust exhaustive

as Board its Harvey phase of forward move process, competitive and next thorough was chosen Carlyle the to right a in leader unanimously Following by the growth.

in businesses He ability and competitive and with businesses. organizational widely the a experience manage invest with to a seasoned to business a financial wide high-performing, leadership and record proven leading and structure support operator a talent range a demonstrated institution. is is global of in builder respected developing these Harvey develop and a significant highly of

continue to Harvey to capture brings skill to there future, grow to opportunity. sustainable transform over the long and this to deliver Carlyle look and we perform set tremendous experience results term. As Carlyle, the and to fully is the opportunity

As the identify CEO, drive and investment scale to and that has he set as and in will plan introducing firm am to Harvey's performance the the execute very further as new growth. well pursued opportunities successfully to accelerates in a forward the future. confident I advances you strategy and business, look deliver leadership diversification him near

discuss on results Moving into but in to Curt on, like XXXX dive touch notable our I wanted points. more a results. I'd detail, will few our to

grow exit our and that we environment. As to earnings despite an record we in is volatile of billion earned earnings fee-related strategic a and XXXX, $XXX generated mentioned, XXXX, our mix demonstrates diversify $X.X in earnings of million Dan over which FRE focus increase off, XX% paying distributable

delivered investment across attractive portfolio. that our We were returns

Our deliver and to differentiator fund that investment I appreciated the our performance carry across the down markets key positions while is cycles. and as market last portfolio management portfolio teams construction risk public year, superior XX% about quarter, And this we believe were aggregate that the in relative said XX%. matter,

Turning outlook. to our

worth and we opportunities, As well core, will money XXXX, that that the business confident building off on At focus positioned and money and are making strong foundation Harvey strong then believe our firm capture foundation. more. the we've to this of are we raising enter investing its we invested involves in new and money growth

doubt certain on me with some challenging new the Let others. fundraising. No than remains begin areas raising for capital pronounced backdrop thoughts more headwinds with in

rapidly market debt an we and reduced effect entering on investors denominator equity ability and Early However, of unexpected greatly foot make last is most the what commitments. for back public faced interest from their year. LP today's to change XXXX. different prices, in new sharp environment sentiment and had year, With deteriorating the

seen still on have further gradual past Over interest until week, rate the in volatility. a handle least of they at few changes. months, last we've magnitude the that Investors a better reduction market believe

demand for relationships across global globe many strong longstanding see Carlyle's is of most strategies and X sophisticated segments. a around our continue addition, largest we investment investors and the to In benefit, with our the

diversify, Investment and resources of to roughly areas important has real that X/X from estate. it's note platform fundraising natural continued Global and our year Solutions, last Our Credit, came as such to Global

equity see significant private face our While platform. raising capital may corporate opportunities across continue headwinds, to we

We and than secondaries, including will we strategies capital funds funds opportunities, XXXX, flagship buyout co-investments XXXX did and in credit next our more across have in raising vintage the globe.

anticipate we that be the fundraising We billion will our in dollar volume in of $XX XXXX. XXXX overall higher than raised

feel been of world past the the few teams with months, power speaking the Over and our in investors platform. I've and our confident around

Our market cycles. investors partnership, our perform and across our portfolios reach that global value our diverse to construct ability

forward we think that about firm, also also and it Now on as a here, have that some is Harvey path has uncertainty positive will impact taken a away our fundraising.

private businesses. today's Regarding capital spread Recently, expectations conditions new to is asset strategies, capital but pronounced been of market between this there's and has see spread evidence than starting in equity sellers, buyers across most we development. development, all that been in and are opportunities -- across narrowing. which wider-than-average of more impacted classes spread a The create other pricing our we capital are has to global invest

to activity capital pace poised As of debt deal is equity markets to reopen, continue accelerate. the and

solution $XX a strategies. good investment billion We billion improving environment. with in in and across XXXX powder in credit with further equity, balance capitalize deployed for well capital on dry $XX positioned to And record we are an a

beyond behalf on to in XXXX find of to investors. opportunities and new ample investments make fund expect our We

team for underwrote their an portfolios CLO our environment business solutions strategy, credit deal our across marketplace. capital we lending and loan for In new while the improving trading the provide presents to billion better the environment. in addition, global billion of unique In CLOs opportunity expected direct issued economic CLOs also new our $XX position the to to XXXX, $X.X activity X

we positioned as Overall, XXXX momentum. capitalize to need alongside investors And create he our XXXX strong all CEO Carlyle, to the we this our position well positioned this and firm's fund and bolster co-investments momentum for year for our With shareholders. leadership most Harvey on as Carlyle is was confident financial that are need secondaries our and team, liquidity and investors' for entered value build business. solid with on a strength and metrics to across well persists, we're and will new

hand financial to the Buser, that, call to over Curt Chief our Officer, me in detail. Financial With more discuss results let our

Curtis Buser

attractive good of and many start things begin performance well mentioned Bill, in We year. this everyone. our I positioned emphasize all are to Carlyle good are by reiterating that And position deliver strong morning, finds believe want as economic to portfolios for volatility. we the we expect long-term investment stakeholders. Thanks, our Bill to in and weather shape itself

And in produced earned share power over XXXX. robust FRE been earnings, XX%. We've focused per per share remain in just XXXX, our years, We $X in DE in displaying years. it significant XX% X X on We past robust the grew and $X.XX CAGR distributable now firm. fee-related in by earnings growing a cash our of past has a earnings the the over

mix earnings to overall have solutions capital our grown as credit, Our continues markets we and capabilities. insurance, diversify

not in global is our or Our performance growth platform. strong fee-related growth fee Rather, us to driven top driving by broad-based fund led strategy. a earnings our across single line

Top in across our for investment following: and first, capital and traditional global XX% line driven growing segments. high-performing our raising X fee XXXX each revenue of -- strategies growth each segment was was the by

been growing of fee-generating out to infrastructure insurance, have which name adding fee new advisory our just streams Second, inorganic CBAM, and scale business transactions opportunistic our Fortitude. we and organically new credit, to building pool the year. capital significantly earnings, with each throughout markets as few, actively further And such revenue with CLO like our credit, our businesses a third, added of to agreement

basis platform margin has revenues to the our over than of our as more scaled FRE bottom XXXX, XX% in to years. XXX past and of line full helped FRE increase compared drop line we margin doubled nearly our an have efforts the These more XXXX. expanded top to X points year

and in We the development have while private wealth across capabilities, concurrently investing new product this channel. distribution done notably enhanced

will to the half grow in in quarter expect of FRE XXXX. continue second FRE the first in likely increasing to XXXX the similar be to of before year. QX We

range remain we to better in industry. private the line longer grow ability capital or our addition, confident term, highly the across In mid- the well the to than market into in FRE double-digit trends over

our by we produce Consistent growth fund investors. in attractive fee-related earnings investment is supported the for returns

concerns assumptions delivered global higher valuation teams models and with public outperformed discount Our recession. appreciation elevated that investment even benchmarks rate about our again and cap in increasingly

fund methodology downward X% across valuations of comparables are a portfolio and public input assets driver an private publicly to our during market year. generally at traded important was our carry only our year-end, While were of valuation the

Of of level of half second underlying this XXXX. most performance, continued reflect important which, asset growth earnings, course, growth in and any in is in the to investment though revenues general, valuation slowed the driver generally

and experience. owes the Our sectors in deploying we to deep performance expertise capital on strong also our industry where have focus

funds Our XX% estate XXXX. real appreciated during

& Our in net which year XX%, good indicated a were with Infrastructure strong Natural the $X billion another Corporate in realized I X%. a target funds Private realized billion in and funds proceeds $XX most Equity up previously would be very year, Resource appreciated what years. About We revenue. performance for produced

increased more billion. realized year-over-year $X accrued realizations. on X% And net general, to ended our continue compared to annual to strong average offset billion net carry fair than XXXX. we generate expect year-end forward, year carry in $X more to carry $XXX portfolio than billion In solid with in Looking funds, carry. the up XX% appreciation A in value we

as uncertainty or slowed on amenable lower it past than they ground, while and rates was XXXX when ago. to sellers realized buyers income few performance capital markets year in months be considerably were are could elevated middle available for just as Industry-wide continue funding where favorable factors Though evaluation market year, in in markets years less search the activity. activity depending and were a diminishes the

and slower. has Carlyle new For been investment realization specifically, also activity

Thus, across start for realized expect transaction deployment expectations quarter performance over XXXX and our performance lower over be the If then and activity our next income increase. rates few realizations. or And so both will will months, the we to industry for revenues X. a the also revenue next higher and muted transaction improve

earnings net the another with earnings some increase thoughts to strong accrued on across turn $X.X Estate, of carry similar had now $XX billion levels which was Equity global $XXX me Natural and year positions after capital periods. business each of more to distributable Infrastructure Real proceeds, billion in segments. billion carry to to Let of continue XX%. deliver than Strong equity $XX Global private of helped Private quick realizations. generally Resources appreciation up net to future realized attractive of fee-related million invested

Top as margins both Global resulted Credit fastest-growing to strategic earnings points as X,XXX $XXX increasing by it remains line nearly in impact growth and XXXX, in well million, transactions. than doubling activity from and more fee-related XX%. benefited earnings fee basis fee-related revenues our the XX% segment, from to positive organic grew

of performance Strong realized investment various net revenue. strategies $XX million performance across produced

Our in an new position strategies XX% XXXX, managed in inflows assets credit interval active while expect net in and to fund growth. in billion. We grew dividend delivered $X attractive $XX billion year than performance additional more with yield, strategies have further capital Credit a for Global which for across to should XX XXXX, fundraising Credit raised continued Global we

benefit In Fortitude remain incremental addition, helping advisory evaluate opportunities, help we which revenues. from focused us on growth new would

than of fundraising vintages attract Investment $XX XXXX, but Global to growth later positioned see in in capital. we Solutions, we this XXXX XXXX, strategies to products, co-investment was secondary as well million lower our including see our and And expect in new earnings segment strategies. next begin are these in growth as in Fee-related we for flagship

$XXX revenues addition, performance, to over well accrued and positioned with net fund carry time. increase In in strong million very are performance-related

we our deploy sum, delivered for in see In to what and XXXX. opportunity think are into be investment a investment and capital XXXX for strong we what well likely attractive will be We will performance more fund environment stakeholders a in positioned tremendous investors. portfolio our great for

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

Operator

[Operator Instructions].

Glenn first Our from with comes ISI. question Schorr Evercore

Glenn Schorr

margin for a years, first. the expansion, I So been for board growth, Look, maybe couple of direction the diversification. of for investors of on have getting Bill, FRE last think lot travel Carlyle

bit most a went pause had then, or Harvey. for all on these about a want you to the investors we is? to if Harvey and I X we co-founders that is We and it to to what So are curious through the strategy do he little found the Maybe And process months. could X because that is more what's to talk know, why So like, importantly, you here that. important just board? talk relative strategy

William Conway

Sure. the thank for you And Glenn. question,

were us. had First pretty excited for there and collaborative record. recruiting tell people were join the Harvey had and a to that developing for skills. who of a of Street We had in first and of were and experience all, He looking am range could skills. I a record and somebody for I is should lot building of who businesses. it somebody was to somebody think like all he those somebody track you were relate really training in people be We and our wide our managing who who looking obvious Wall who And talent working aren't looking environment. very going We frankly, why. -- and looking for story, is choice, a We have proven

happy want on it around And see people, to is think we and I We that really really not to was office. him. person. floors, Harvey, York he fantastic. record to he people and was He so they me, they used were We track had about rather were they rid see to they see lot there. set. obviously get just have happy skill heard him and work and but who to much and him; his people to excited his of who Goldman, for talking went see were In I happy walking found Yesterday, and to all and a were New were him our we the them, of

-- he record He So is, was why is we Harvey. anybody Harvey clear to and better me track than I pretty that get any who couldn't think he's and what fantastic. that was his

set. to ways, the that? show investment grow track have increase he here business. all, we've that to record some though we how doesn't grow I business, stock got Even great our we that is a first have -- have path business, we we the our to is to up are -- we do have to want of he in think want stock We price, have grow do? we price. to -- going our our we Well, to Now what's in

great of the the got and yet had fee-related and of to with financial crisis he well the assets Goldman risky a other Particularly situations opportunity. that were was at the having experiences. deal time he's a but earnings, and talking parts of great that set like, during as about business Remember,

be the he's here. way, -- his dramatic but right the don't that's changes of can I staying help to including be be that the will Harvey. to company. So him I am I solution. everything and part see the it in up strategy, do if And going He's basic how I'm tell going of successful I CEO of the to you to can't happy out

Glenn Schorr

track so Maybe comments I'm that. with agree totally question. one long numbers I about interested Well, just the bid-ask improving with dynamic. record him, your in

lot You have to in said. performance $XX accrued your stock is or a price, you net revenue, which so like relative

So revenue, $X billion of Resources. Natural Infrastructure the another up you and realized but $X performance basically billion in back on you picked

could -- more what improving again. half like a you near-term-ish Just second curious the talked that Is bid-ask what expand think So is on a wheels bid it get a to dynamic dynamic? takes the thing? Or about on little you bit that moving hopefully you thing?

William Conway

ago. gap. course, so that think on a to were it real you companies what their That they worth both there in see mentioned -- were "Well, of remarks credit. And pay And what prices I that my of the prices but in been own, we applies been equities, it's anymore." there's the I've kind a also of it that value those the don't that sellers businesses to the we're talking And is. is question want is buyers year of about or say, X worth

been recently credit credit or double it's digits. year looked For of spread where a have now in was or all price X.X%, there the the ago example, and might we X% and at a deal

disparities So valuation. are still there certainly some in

lots However, billions able I I has be getting it getting adjust where not buzz should that deals of be. deals the kinds deals it Glenn. environments. do it and someone are It's equity private to today. well in This to it's We're to Those and being to rapidly. And think be better, know -- is of ring it's I'd and advantage going slowly. as that that deals Private function of is equity is the able say of the types debt to better something impossible we're not do going giant see of going different that we doing and environments that in now. to billion and billion $XX credit. require those And evolve will of that to not -- almost $XX to too

But Buyers gradually I both gradually market and sides. on the together. sellers it's And is healing. coming think

able just to are Americas, than in than the the and the they're think the it's price I just have dropping to what be lower think settle to just saying, willing going equity, And we sellers for probably to first. I buyers not everywhere. in are maybe -- to be prices think second we're price across board. the a well, it's pay. private I going that's not thought. And More half It's in going to be down

Operator

from with Katz comes question Suisse. Bill Next Credit

William Katz

Mr. Congrats on Schwartz. adding

guys. So for a question you,

in with be the the some private think business if XXXX. business? asset mentioned equity could better free between flagship on on rest that emphasis that of where you gathering versus 'XX and stand You the was bifurcate you I maybe the that unpack of bit you portfolios sort corporate wondering solutions little can a than in

Curtis Buser

question. Thanks Bill, I'll add might Bill it's for and start then in. your Curt.

Bill from between most across our a $XX did back proud in It had about noticeably what billion really it and challenges 'XX actually prior year. XXXX think been recently, better years. 'XX, portfolio. deployment any in And deployment in here I'm So up. it than pick deployed some what the of going and the we we that's that, We was talked standpoint. all of to was

equity. Global you really of 'XX of of was Credit outside in private corporate deployment other the saw The and because what proud was of much coming private platform diversification across even aspects more and out equity I

of so really that And was good. all

leads So for piece us sets a up deployment into the us a from perspective fundraising That good place really was good. and fundraising. well

And portfolios how first kind think, the how so of it's you performing because foremost then are is the think fundraising. and about and thing, I

things from for fundraising couple So mind. high-level you standpoint, a to in a of keep

us raise to capital. performing up And are go seek really nicely portfolios to as I Our well. this, we think, more sets

in market said, Second, expect to as Bill this. more and than more to XXXX in XXXX, raise we support have we'll the we did in products

thing we at I number would third year, said The raise standpoint, a the of beginning mind over want to we in X $XXX-plus the billion keep XXXX, you is, in from years.

this last X raised billion through year. we've So years in, year, $XX transactions. we $XX added And billion billion, $XX billion $XX strategic

And CAGR AUM you in So fee-earning billion that's years. the X XX-plus that X XX%, earnings, see $XXX of new last just in our over up years. fee-related

And really well. in credit so growth solutions that that's really we've of business. seen And done lot a in our and

Now obviously, in space, there. have in some congestion reasons we a still the number optimism of have, but that funds, there's to buyout

less there's global ago. think I was said, year Bill a as today markets it than uncertainty about First, the

Second, be here early of it's public the year, to seem markets early. but in still days improving

Third, 'XX. we're in

to hope may forward new that, some to Harvey certain our last, there So that's And we lot And linger with that taking appointment that in of of reason away the set have carries excited. uncertainty investors Schwartz, we allocations be situations. a for investors. a and of

look, previous But similar that reiterate our to buyout be funds think vintages. that I'll will I their in size

earnings. very XXXX it a overall that of year from fundraising and kind this was the so better I about excited our think perspective that in than I'm and, helping confident in firm. And in focus us be on driving growth again, in And our a fee-related will

William Conway

stick follow-up, Curt. a just maybe with And you, Okay.

up the of the then FRE might to business, be in up wondering be the the to ring-fence yet given you business. drive just with 'XX, business? just think sort incremental the FRE business, still of sort of we 'XX you about Mr. I of Schwartz, a FRE the up Because of just if Can determined And that. over able notion sort triangulating to grow margins grow strategy So margins? and lot grow grow should need hear you how how

Curtis Buser

confident we're to Bill, I grow going 'XX. said that earnings fee-related look, in we're

the really think I I a is invest past, to rate remarks. that's set nicely. and But thereafter, continuing said things be little in fee-related little up to good I why environment, will challenging quarter a think There's we I this and first as in flat, my are -- our think might ability really of a than, this are be lower growth earnings. but feeling the say, about total grow

I helping think will new his opportunity experience profitability with to helping on, good careful be imprint on a situations the things. Harvey coming to past be I put want in will thoughts But give improve companies and bring him this. and the his addition also team, to to

so much terms in in specificity to I begin to but how a 'XX. we're of really give cautious well want be set little up I guidance, And

Operator

Our with next question comes from Goldman Alexander Blostein Sachs.

Alexander Blostein

out the is of still It you about Maybe expect confident you biggest strategies products little talking the bit? to FRE from ramp are about XXXX as like kind and guys that fundraising some discussion you you into ago, feel bit that slightly a slower. you Can And contributors mix key from be Obviously, that follow the the couple what overall the question. of to of growth, be targets equity you're think just ramp? little that on might highlighted the pretty you up business about years private laid Bill's to the sounds prior a different. that but expand

Curtis Buser

Alex, it's Curt.

can and then add. Bill start me Let

continues. product billion really past $XX have last, year. about did credit than going that feeling this the look, market in how So good about more It's to

Our out opportunistic fund money. credit raising is there

CLO the room. a But a talked Our in we've because year business reasons think all little of it's weight always I probably the will about. start slower heavy the

then secondaries in year. the we'll products that solutions bring business, a got things and our new this to our couple market co-investment And we've and products of

private again, going space. then a And XXXX. solutions that the market from really in nice we're products of to where were look, the in Think to in really business so equity. have in way more private increase more being And in kind they equity, of product as

buyout equity will market either will funds, market. private be that So perspective. will the fundraising be the in other or There's a number Asia, of Europe, a U.S., from in products begin in

know, too, do is so And to you I that, have better. think, Bill, to anything don't if well positioned I add.

William Conway

Yes.

to confine solutions pretty growing be -- don't any want or a of I big my a his imagine I fund are also this I any way to way. future think things to big I to solution is year. don't in growing Harvey area and better. a be different going comments be going ability want the way in funds a that limit done to could different

So I'm But private hesitant noncorporate little equity do too. the specific a demand to there, that too I think get on the this. funds, is

I was that used example a question. before I prior when answering credit

and spreads are will can and little the opportunity is any that a Sometimes the investors those little easier do in wider his to equity, when it's a is money by answer But funds. confine more I a way tougher to the raise be my the great great, to want raising in the ability Harvey made funds credit job. don't because limit

Alexander Blostein

-- Harvey is when We'll for tuned right. All it. stay on. Got

William Conway

you. Thank

You know you Do Harvey? know Harvey?

Alexander Blostein

met yes. have I Harvey,

William Conway

I guy know Okay. weigh Sachs might Goldman in just or didn't person whether he Good. what another -- I a and not is. great

Alexander Blostein

expand My you as you kind well. of new growth And some quick remarks a follow-up that bit growth for that can well. help Can on you well? something was around prepared some highlighted your the mentioned guys you of in within initiatives think, Curt, as That's expedite I that, Fortitude. as

Curtis Buser

Alex. Sure,

Fortitude off of $XX look, way that. of AUM. $XX The got set billion, all we've has billion up we fee So of the arrangement, services

-- I our funds. into or X about say, invested committed $X they've should addition, billion In about

also has on $X.X hard billion positions that about working very of been nicely capital, continue them of pipeline, $X.X that. have active planned. grow, all to So working really to as excess billion to which They

we to said can occur. We've But to -- fully on able to kind that because expect be And of more Fortitude very we be before you. double be fully how sure when expect we say will Carlyle. for we'll to remain those able be that to them that, size benefit to and to have that that fronts, mention in continue to optimistic about that of

William Conway

partners that that I'd in in you X also institutional with or business. us has and grow have have partners are been are tell Fortitude. who they X -- us And Fortitude fabulous helping we fellow that shareholders business

For than partners business said, -- otherwise of at have. those expect that to lot a we still but we capital the got as us, least. invested, it great less years to And thanks do is have few Curt double we would, we next we over

Operator

from Davitt with comes question Patrick next Autonomous Our Research.

Patrick Davitt

more some maybe on XQ then get I more can bad see of we Are maybe broadly? -- year, I this the back with as to thoughts And And LPs? update a line? the kind you wanted that, it more on in chunky as starting when in the PE time about see conversations the Could issues. early in us people to through fundraising of specific a funds? flagship could us of fair that you bit say step into more you know closings update lens it it's maybe on is little CP -- but tone think is those line large for all get PE the to

Curtis Buser

of our investors. on but me we this minds out this, Patrick, great LP the Look, figure try really to others about always have read trying relations I'm detail. into sensitive or start let in with to

to has looking, terms performance billion in And of organic capital lot already things $XXX our well, and in I doing. things. think think I at a to continue litany done look we're been years, portfolio of went through can I that terms the just pleased of continue fantastic of constructed. in do we and what well X what past as with of formation that they're we'll growing we've A

tone think you it's a the tone, I lot And look, and but fund difficult in different to of to like. individual So as in be situations of reasons the is related we 'XX. places. good, optimistic given the kind specific to still there's And be got start

you know anything to don't I add Bill, So that? have if to

William Conway

No to this Curt. give specifics more time, at

Sorry.

Operator

from comes with question JPMorgan. next Worthington Our Kenneth

Kenneth Worthington

in Maybe markets first, private investing energy.

energy? better environment in this to seems your funds, with with to energy community these As franchise energy what environment? ability what more more in more to how in you invest pension the reluctant mesh further a energy like traditional come mean your fund market back start for that And of does grow constructive seems does to

Curtis Buser

the do we're mean, well energy optimistic think I Ken, on that I platforms. said.

fund and but are market good NGP about opportunities. got expecting They've that. on I partners colleagues specifically excited a out of that, now. Our their at don't want comment in to things the

now, there's number power lot renewables all they're in good the based business, energy energy, on products, all their our opportunity of LPs of you're give in not right. our but different us Our a have platform But market. different platform, Right a but international perspectives. constituencies

after The existing kind going from but limited existing of than nice at that new that good have a different the uptick we're which we generally, in time. investors experience seeing is a different, opportunity product, or is the it's present

William Conway

investors returns certain as a and uncorrelated other I all in group market, are well. too, of returns to with its that think appeals the And pretty available the

Kenneth Worthington

Okay.

grow? other? do does do think here can just those each you as -- So you you X the sort -- business trends offset are of stay it Or

Curtis Buser

needs are the really significant. Look,

of lot that a has played out. think I

about everything, And chance definitively. the so and felt really it's really now, call forward a to better a that performance too of lot different feel lot years think, are it of look, good. aspects, Right Ken, more where than say, sector ago lot really, I a X on a whole heck those I that early, whole But difficult.

Kenneth Worthington

I it? What drove equity quarter. year? see a comp snap that then we fell next back And of during assume the sort bunch And

Curtis Buser

like any a individual mistake. things Yes. at quarter That's -- this of is business, looking lot in a look,

quarter light it. our got quarter. in little third anything fourth occurs a always over The Essentially, time. of new February. in fourth longer to tranche quarter a some look you had a is things at You because haven't the big bit a And unusual granted of in that completed period it you've vesting

there fourth units quarter quarter, for prior in year. So that a low the didn't folks had fully some we been is accrued the that plus naturally some had senior performance

So the a was little fourth bit quarter light.

have that also significant make number next and some ensure really in both sure retention people and an have February, then in just XXXX. equity-based well reward to and that uptick comp in key a on see I performed will our big -- in going and year of bringing Harvey, also to people we've grants increase comp to think our do you're equity-based a XXXX, our in made

Operator

McKenna comes next with Brian question from Securities. Our JMP

Brian Mckenna

Great.

XXXX, the the level can I'm realizations you pretty So backdrop shift resilient your to might think then to case been of back have tough billion assuming portfolio are get despite realizations And that in no for expectation answer, today? tough curious material in what again? be $X parts backdrop? Do base the but active you most what's monetizing you it

Curtis Buser

a of And as $XXX fine-tune my also a period. about realized ball it until And shows the to can in great I question. of and net A what policy kind happening, in power crystal that ago, we quarter it's of carry fourth single off quarter. predict like year best of always not as Brian, So impossible million strong the XXXX, earned I only occur to very realization like in was a it was can. this forecast

So balance sitting net of carry the $X we're today billion on here sheet. accrued with

Our of XX% billion fair a of $XXX is underlying ago. up year value portfolio from

So is our drive the well for LPs realizations to continue for interest positioned incredibly and us. carried to portfolio significant

going second that, of look, be timing year. exact half of Now it's the to

actually up it there's midsized the the of more really quarters Now transaction. we mind, it a will speak in close transaction, couple a And transactions stuff that me some good keep and often actually back sign in is the of news gives But a as big year. smaller, drive of to will the you be that lot occurring half takes confidence.

far transaction the year say, level today lower ago. is announced a so of And than

half the of And so back therefore, the going year. it's be to

Kenneth Worthington

just VII, or a to Helpful. total basis. the gross with returns net And then X% CP on respect of XX% fund

So how marks? to then And you investments are mature if realized back you unrealized thinking prior it markup about on time? returns what's historically, look average the the to relative continues fund for this over as

Curtis Buser

have terms would in fundraising. this. stuff give in that complicated of careful -- like funds and be I let forward on a call thinking. we some are is me So you very high-level To specifics But talking about

as continue current all and really, their position to which in carry. optimistic do, of are predecessor I'm where exceptionally of our to generally with just terms similar respect did same funds, generation funds as in said, perform the I the And this First, fund vintage will well. funds and buyout

we So and I in we think they're deep good it's we the we're understand whether where of well industry have tend set up or our assets for is diversified. estate to this. our where real in And construction, equity in. private we this to and value success. tools figure to driving hey, revenue we kind profitability, else. creation turns of add comes than sell generally not generally in everybody It's from it out turn around credit, And or knowledge, macro where keep experience in operating And smarter and to what earnings. boy, because invest very we're mind, high. portfolio buy environment the most not, how low We It's add can that's driving revenue, to business bring --

Operator

question comes Hone BMO. next Our with Rufus from

Rufus Hone

the you you into growth? Or of in I the is double-digit get I rate on give to And come when to organically? some better inorganic mentioned trajectory. can of the us back double growth you could remarks. anticipate growth around wanted do to think comments that getting guess made a prepared digits FRE sense you you you the dependent

Curtis Buser

ever -- QX in fees, fee would essentially, levels. downward depends a from possible 'XX, was while revenues. the and on definitely if in get we'll that, which Rufus, lower kind fast really 'XX say, of it be transaction fee-related fees you there big and upon and Transaction can and help. put is over it came down we a activity and but thanks. earnings. on organically double-digit look QX, can the Transaction And XXXX I in up business Look, detail that get where side down growing peaked our on very QX, best it's year pressure on was of came it's

remain in help. back first quarter they're that -- I as they up, a the be think it's then And or like going will pick to big so.

mind, fees there's credit we a keep off addition, on number later business In will things in of think also of year. generally capital. invested the turn our that in generates And

lot a XXXX, and in the in that. it business as that benefit of So capital raised money we raise of deploys, we as get

And so lag a generation, built-in particular, and in fundraising there's fee that business. between in

gives that color. hopefully, you So some

Daniel Harris

as remarks, we private well. and And as distribution. product during I in Rufus, said add, we that, invest that's in platform we new And that's noted to continue channel and the would just development our across the wealth

Curt us inorganic of to, that show help things mentioned. in drive new opportunities all over just organic the up that that course, should things and addition are growth those So time

Operator

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

Craig Siegenthaler

And you we naming just on a want to congratulate top-notch CEO.

William Conway

you. Thank

Craig Siegenthaler

with So for start funds PE we the update fundraising on to starting wanted CPA. with an flagship

think to X. LPs annual a I before were than are how there reset see out allocations wait when that their of wanted into a to XXXX playing month large XXXX? more number want we're they to deployment now is that I until just committed this

Curtis Buser

in terms than too really on we're said, going more can of don't did to year I remain really think it's fund, raise but to talk out. this And turn about early our given last we optimistic we as Craig, like where and a fundraising details all I money of year.

Craig Siegenthaler

long-term realizations to just about the Asia to down can cycle enough as of help raise trajectory. Got the this, kind not dynamic you can wrap into And I risk the to my is talk but A us you this on X and say net a that know there's growth us will follow-up. with X business offset insurance start the and private for for up 'XX? cycle, And really in and the comes growth you big it I when of decelerate capital with ton think FRE solutions this generate? exit potential framing your can super it. question your credit you Europe and And to year really fundraising

Curtis Buser

optimistic. very Craig, I am So

with start Let's solutions. just

was successful business double It up Solutions think, that in it in million fee-related earnings, the everything growth can pre so doubled it in in or expecting about $XX again. million. business or I see stair-stepped X 'XX, It $XX $XX had I very so a won't million that fundraise We're and -- years, for 'XX, and to in doubling but double. 'XX now that $XX earnings. essentially initially or in for to million was averaging do. 'XX fee-related I'm does

product exposure had that build zero of to real markets which, 'XX. we really things. with by going out both hung drive, there. of And we business of hopefully, again deals won't bad we credit the we my back It's progress to some way, We're continuing But our or our can doubling very can business kind us that's in I bullish be the some what think in that on do. can sheet on of capital And time. really of take terms think make another that off balance kind business,

in and really really, in of team of how proud our and terms operated capital markets So way. they've very a operated smart

bullish do. We and look, credit just as it talked credit of number opportunistic strength the of a is And products. the And new is can business, well across rest what Fortitude going structured about strong. and as our very don't which forget the

our for Look And little look, real good business right private the -- things news buyout of great back of we'll kind of up So still be buyout, there's it's one we set progress with doing a outside in to some and what kind done a lot traditional I actually we're always best. there. credit and in that is what remain bit places, of which amongst of can think well do of -- in in equity. interested think

in a infrastructure, kind nice lift. can a think time, of got It just further has in call out picture add in take really -- early but And upside but just I It there. upside record. growth what lift then kind phenomenal think estate real and too some much track a And of estate. nice the real it's It's happen you energy. to can you to see will

team I so forward. going looking the collectively things and lots think great a And of platform, we what can do across as to forward

Daniel Harris

term going for we've referenced this we've as less meaning some the cycle, think term less as super you of add whether been open-ended every year. we Curt lot and years you in products. several things on to to I to pursue that diversification has strategy quite raise continued opportunistic conviction every at mentioned that's able outside amounts of over Fortitude Craig, funds. we for if going the we're to see our number But And platform to across of ago, be that large we very closed-end the way raised in grow which us or confidence a we're funds significantly in Yes, then raise on and what opportunities capital, FRE you different significant capital time. look a us. And of or business, credit gives time, that had all substantial

FRE deliver this hopeful, And over and just past look forward, the process. of to able remarks, an we results It's to And we're going great XX% that we too. said what we've X grown reiterate prepared be because CAGR at we our lot not years, accident. during and we're confidence have very as to that's of a

Operator

Cyprys Our next Michael question Morgan Stanley. from comes from

Michael Cyprys

When changes, predecessor across of the in recycling evolving size, discounts are fees, to are slate all sort sort newer if any, seeing provisions, of funds funds? reimbursement what look of commentary management economics on up you those just the overall for some relative hoping be the of step-downs, meeting LPs. back have what with fundraising might To on extent able pricing you LPs? just comment Maybe discussions for pieces, expenses, in on I the road How you was of guys fees as the with are circling pricing to trends. your to come out you and marketplace?

Curtis Buser

we're always access one are seeing case remains it's the we kind on or road and the still which co-investment the I of to people. anything other that case, as -- like. the Michael, the is the think to don't It's was way stuff talking significant Curt. that

really go to we're that's more talking so where and And as the really LPs of fundraising. discussions

Michael Cyprys

that, able pressures, labor are you just the And growth portfolio to EBITDA revenue, that, to bit be you're little can sort seeing, the any How portfolio you helpful, is inflationary trends, adapting maybe a maybe company there. the And performance, follow-up What just quantify conditions? around that side, more of would Maybe a to margin too. give if on of backdrop? commentary of trends. just tight

Curtis Buser

year The first Look, the rate nicely was growing. really of portfolio of second particular. half the of decreased in half year, growth but still the grew

say, over Corporate Equity, So to average particularly XX%, 'XX Private growing, I on the over was about EBITDA portfolio. want speaking, broadly

And so to optimistic continue of can around do. what that kind

is, businesses, but pressure that of us. strong news of enabled -- generally the continued the we're to we've power occur, that pricing way portfolios, And pricing in continues that the the that many be in good seen to Across works and we then kind good that constructed will say of how against shape. I power how terms saw and inflationary

bad businesses, flowing real estate again, not in is So cash areas. the

nothing hotel or almost or office in So retail.

our of construction inclusive good So equity, again, very private both real across estate.

Operator

comes Jefferies. Our from next with question O'Hara Gerry

Gerald O'Hara

growth and But sense the But perhaps, next XX clearly We've covered initiatives little here pretty business. fair could morning. going XX saw this months? a investing Obviously, just as lot kind of G&A Curt, to maybe on in to year-over-year. a base look of meaningful in if on think a touching amount a us you the the how give about step-up of ground that expense we side of to

Curtis Buser

that XX% respect that look pretty a the you. I'll in the we where very very focused G&A, XX% margin. Yes, it's cash however Thanks, our investing it. deploy on to investing -- great FRE But on get to that it Look, it over future. to if I Gerry, and development, from in costs around new managing grow we're and FRE on if you can respect means we're QX, on And a investing with product for really the know the question, much good hear basis focused prior a and and year, versus With business, annual year take for flat. where at quarterly expenditures, I I I managing up. generate actually and that's to QX basis, distribution can think an excess in outcome in

'XX investments There to it of that and that us that, enable we're things retail in 'XX, long-term will FRE. so like and benefit for 'XX 'XX, things matter are really clearly what less in making private growth, does to terms wealth

Operator

comes Brian Bank. next Our Deutsche Bedell, from question

Brian Bedell

asked you just targets actually I in Investor to back But want answered Day well. and been questions Most my that to to the have as 'XX. laid -- come out of

You're that get already given conviction that way a rather Harvey tracking new which focus, ahead you -- rather on on to potential its XXXX. be I is going might Or of growth? those But reaching investments you're around the your guess exception XX% targets terms of the with level? for just wanted target towards of and decision of like you said, making just be to you'd in that more FRE FRE,

Curtis Buser

'XX. we incredibly And set Brian, has of achieved swapped good out 'XX We've in FRE, what outcome for million a billion $XXX that fee. and entire question. of look, 'XX, an million perspective of 'XX $XXX target $X.X in for of $X.X and carry 'XX, I'm proud already billion of team the pretax because Carlyle from

$XXX million about So margins. more FRE past year, at FRE FRE than dollars in about this I care up, and I much care XX% dollars growth

Look, margin generate is a tool dollars. to FRE

'XX. is creating more create for margin. I tool one by to which the on get get 'XX 'XX, can 'XX we margin will it. I we Look, by will to do it. XX% dollars, going to of you're And can size to to XX%, is pressure think from we be of set we that target probably cause FRE And get to do flattish But so -- grew I then think, whatever it, more XXXX. can right, number. a 'XX, however, to I'm still XX%

it's 'XX, tell. do in that FRE time we reason can't And no to dollars. there's 'XX So about but again, growing will look,

way, And the going so what in right if to I can get I'm the FRE dollars going do. that's

Brian Bedell

clear. one. just loud then one And last maybe That's and

Or that in less ballast headwind a your in the industry was of it really -- the private a Just and other and headwinds much I the in side. could was of much not confidence just that you on the to overall of LPs what to how a -- and about Board anyway, to if hearing is from talked related and leadership? just characterize franchise? you're now obviously guess terms fundraising you headwinds Maybe lot Harvey investors so the on equity having the

William Conway

didn't Europe CEO, say, I This didn't with named Asia because at the in and discussions and is delayed to there who that and who know about us to was permanent think said committed. people didn't -- a think the some couldn't and wanted do in In perhaps didn't have be I was it's point Japan. were was Harvey it There hadn't the to decision and going see don't I Interim time. who investors, and investors before my didn't I would have I Bill. I invest the we with CEO, to because was that any CEO. we they anybody they any and been want But I

think I now CEO -- we didn't do didn't because is happens they when they the may what have the we'll and have CEO, see named. it

much fund care I do CEO of most their CEO they think than is is. a is the far about the the more the -- factor deals about they And market. than much, who investors, individual bigger fund of CEO and the the performance the care

the Harvey, a he's going fabulous, terms the excited in I market, be I'm of about fundraising. factor although think, important to very is So I PE in growth think more and

Operator

Adam question from Next UBS. Beatty with comes

Adam Beatty

seeing. fund not the you kind question. one It's just liquidity but LP fundraising environment, necessarily what X specific, mentioned needs. you're Just got of about parts Number one,

And of driving are those, New I'm Year, in How what you've terms in getting is it kind with last to else? three the better of LP or slower whether the year financing effect. realigning something or number far worse? LPs what's budgets or two, that? along big of theme Number years So denominator was and is it's that past tighter seen monetization around curious or past similar reopening

Curtis Buser

Bill can questions difficult and of and to the these it's I'll across Look, types Curt. then different it's generalize start add always investor everyone. classes all Adam, in.

I to deployed capital that as just of of really due liquidity in for than faster come this. the very So address general that number very were and back caveat attempt across have needs a seriously to everyone invested industry funds expectations. some take and quickly fact needs the greater LP

are liquidity equity East, as buyout capital of needs all. particular, there in down parts then that of not I talking we're that are about mean, particular, some where And slowing investors, think in general, as the I with don't world, markets in on places. needs other the has the necessarily those Middle some in just as apparent put

year denominator with early effect, On potential green changes that, some look, resetting. the some of in the in there were terms shoots

I they're it. think the that, that and back how will each investor again, But get viewing comes better the to it individual type over of course year.

also, think generally industry and think I to that, proven investors seek will all This is play I yield. yield. assets place again, that out. And be are a done has it's going well so seeking just alternative to And better. And great

so access about to this. And getting all more it's them

But an LPs own And to it then they year, investment And the again, in an again, new has impact in with committees. certain yes, quantifying their is on, terms yes, on broader basis, of their how work really for impact a and allocations some. tough that of kind do.

going Bill if don't I to anything? know So is add

William Conway

of in by to terms Well, going is it be. can't I what the break down impact I would say, category

be an year. last LP the to I think it liquidity Carlyle. better was than that think it's going for creates do opportunity I

of pointed liquidity Curt not so the or have secondaries, primary out, the others. opportunity primaries, their there, solutions for be reason, both in opportunity in in ways, of but lot LPs perhaps going world, as in portfolio either there's think about of big I business $XX some to a need parts And co-investment, as reposition some a We much billion. of offsetting some some

Operator

showing like remarks. to not closing questions call the further I'm I'd this for turn And time. back ready Daniel for over at any to Harris

Daniel Harris

feel free after any Should talking follow-up for quarter. Thank call, Thank any look Relations with time. you the Investor next morning. questions at you again reach We you to this interest all to forward time out have to your you. and

Operator

conclude this Ladies today's presentation. and does gentlemen,

disconnect, now have wonderful day. may and a You

The Carlyle Group Inc. (CG) 7 Feb 232022 Q4 Earnings call transcript