Carlyle private equity fundraising slumps behind peers

Rachel Lewis
07 February 2023

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US-headquartered sponsor Carlyle raised just USD 600m for its latest private equity fund in Q4 2022, marking a year-on-year fall of almost two-thirds versus the USD 2bn raised in the same period in 2021.

Carlyle raised a total of USD 8.3bn for its private equity strategy in 2022, tumbling down nearly half from the USD 16bn it raised in 2021, according to its full-year results revealed today.

The drop in fundraising comes at a time of uncertainty over its executive level after CEO Kewsong Lee stepped down with immediate effect in August last year.

To help shore up LP confidence, Carlyle announced on Monday that it had poached the co-COO of Goldman Sachs, Harvey Schwartz, as CEO. He will be responsible for setting and executing a diversification plan that Carlyle has already started to pursue, as well as identifying new investment opportunities.

Carlyle had until March 2023 to complete the fundraise for its eighth flagship fund, which was set to be its largest ever with a target of USD 22bn. In December, the sponsor was forced to ask investors for a five-month extension, according to a report in the Financial Times.

As of December 2021, the GP had raised just USD 14.2bn for the 2021 vintage Carlyle Partners VIII, and has already invested 48% of that capital, according to the financial results.

The slowdown in fundraising has also hit the sponsor's other strategies: with USD 3.4bn raised for private credit in Q4 2022, down from USD 6.6bn in Q4 2022. Its total fundraising in 2022 fell to USD 15.3bn versus USD 17bn in 2021.

Diversifying into alternative investments like credit, away from its traditional buyout arm, had been a core strategy under Lee's management.

The meagre capital commitments leave Carlyle far behind other well-established private equity funds, as KKR raised USD 2.2bn for its private equity funds in the last quarter and USD 18bn across the whole year, according to results also released today.

EQT also managed to double the capital raised across all strategies to EUR 31bn in 2022 and is on track for a 2023 close of EQT X, which has a target of EUR 20bn, having raised over EUR 16bn to-date, as reported.

While its private equity division remains its largest at AUM of USD 163m, growth in the full year was flat. Meanwhile, in spite of fundraising headwinds, the credit division has nearly doubled to USD 146m AUM.