Carlyle deploys billions in tough market

Listed private equity firm The Carlyle Group continued investing at an aggressive pace during the second quarter despite “significant volatility in the global equity markets and continued uncertainty in Europe”, co-chief executive officer David Rubenstein said in a statement.

Carlyle invested $1.4 billion in 82 investments during Q2 and has committed to invest an additional $1.6 billion in six transactions that are expected to close in the coming months. The firm has invested a total of $7.9 billion during the last 12 months.

“We have made some of our best investments during uncertain times,” Carlyle co-CEO William Conway said in the statement, “and our recent investments reflect the choice opportunities we see today.”

We have made some of our best investments during uncertain times William Conway, Co-CEO, The Carlyle Group

Last month, Carlyle acquired industrial pump and compressor manufacturer Hamilton Sundstrand Industrial alongside BC Partners for $3.46 billion, reportedly fighting off a rival bid from TPG Capital. The deal, one of the largest this year, used debt provided by six banks and proved that lending appetite exists even for multi-billion dollar deals.

Carlyle’s active pace of investment last quarter coincided with a strong three months of fundraising that saw the firm collect $3.9 billion, a reflection of “the expected pick-up in fundraising as our sixth US buyout fund began to close on new commitments”, Rubenstein said in the statement. Carlyle Partners VI has collected at least $2 billion toward a $10 billion target, according to data provider PrivateEquityConnect.

Carlyle has raised a total of $6 billion this year and is currently in market with a number of funds, including its Carlyle Asia Partners IV fund targeting $3.5 billion, the Carlyle Global Financial Services Partners Fund II, which has a $1.1 billion target; a global distressed/turnaround vehicle targeting $1.5 billion and a US growth capital fund targeting $1 billion. Earlier this year, the firm also launched a Sub-Saharan Africa Fund targeting $500 million and a Peru-focused fund targeting $125 million.

In general, the private portfolio was relatively flat

While Carlyle’s existing carry funds generated $3 billion of realisations during the second quarter, the firm’s carry fund portfolio took a 2 percent loss in Q2, as economic net income – a measure of earnings that includes realised and unrealised investments – decreased by $59 million.

“In general, the private portfolio was relatively flat,” the firm said.

Carlyle’s carry funds – which comprise roughly half of its total assets – include vehicles that Carlyle advises as well as its buyout funds, growth capital funds, real asset funds and distressed debt and mezzanine funds but excludes structured credit funds, hedge funds and fund of funds vehicles.

Carlyle’s distributable earnings during the second quarter stood at $115 million, up 29 percent year over year, while distributable earnings during the past 12 months were $785 million, a 39 percent increase compared to the previous 12-month period.

Carlyle’s $156.2 billion of assets under management are split between $52.5 billion in corporate private equity, $44.6 million in fund of funds, $30 billion in real assets and $29 billion in global market strategies.