Carlyle plans infra credit launch this year

The Carlyle Group is planning to expand its global lending business into infrastructure this year, executives on the firm’s earnings call said on Wednesday.

As PDI‘s sister title, Infrastructure Investor reported, launching an infrastructure credit strategy is a “particular area of focus” for the Washington, DC-based firm, Kewsong Lee, Carlyle’s co-chief executive, said. “We have some teams that we have put in place, and we’re starting to think about how we’re going to bring that strategy to our LPs this year,” he said.

A spokeswoman for Carlyle declined to comment beyond what was mentioned in the earnings call. It appears the firm has not yet filed regulatory documents with the US Securities and Exchange Commission to raise a new fund.

The firm has been preparing for this moment at least since last May when it hired former BlackRock infrastructure debt chief Erik Savi. It also hired Gareth Jones as a principal in its infrastructure credit group. Savi and Jones previously worked together at Merrill Lynch.

For more than a decade, Carlyle has invested a series of funds targeting assets in the energy, power and renewable energy sectors. The firm is currently investing Carlyle Power Partners II, which closed in April 2016 and is generating net returns of 7 percent and 1.3x money on invested capital, according to Carlyle’s annual report. CPP II has around $400 million of capital left to deploy.

In July 2019, the firm closed its Global Infrastructure Opportunity Fund on $2.2 billion, short of its $2.5 billion target. That fund is targeting investments in transport and logistics, energy and power, and water infrastructure as well as the agricultural sector. Announced investments from Carlyle’s GIOF include the modernisation of Terminal One at New York’s JFK International Airport; the Lone Star Ports Harbor Island Crude Export Terminal in Texas; and Crimson Midstream Holdings, a provider of crude oil transportation and storage services in California, Louisiana and off the Gulf of Mexico.

Carlyle has also built out a global credit platform managing $49 billion in assets. The most recent fund to close, in July 2019, is the $2.4 billion Carlyle Credit Opportunity Fund.