There appears to be a whole lot riding on Carlyle Group’s new chief executive Harvey Schwartz, following what has been a lacklustre capital raising year for the firm.
“Now that Harvey is here, it has also taken away some of that uncertainty about our path forward in the firm and I think that will also have a positive impact on fundraising,” interim chief executive Bill Conway said on the firm’s fourth quarter and full-year 2022 results on Tuesday.
Conway had said on the firm’s third-quarter results call in November that “the uncertainty over the CEO is not impacting fundraising”.
Carlyle confirmed Schwartz in the role on Monday, after a months-long search following the sudden departure of Kewsong Lee in August. Schwartz is the former president and co-chief operating officer of the Goldman Sachs Group and has over three decades of experience working at financial firms.
In his new role, he “will be responsible for setting and executing a strategy that advances and accelerates the diversification plan the firm has successfully pursued, as well as identifying new investment opportunities to further grow and scale the firm, drive sustained performance for fund investors, and create significant shareholder value”, according to a Monday statement.
Under his employment agreement, he will receive an annual base salary of $1 million and will be eligible for an annual bonus of up to $6 million according to a filing with the US Securities and Exchange Commission.
Conway will step down from his interim role once Schwartz assumes them position on 15 February.
Conway also noted during the call that Schwartz was the board’s “first choice”.
“I think it should be pretty obvious why. We were looking for somebody who had a proven track record. We were looking for somebody who had experience building businesses… a record of managing.. and training talent. We are looking for somebody who can relate to people like you in Wall Street and tell our story,” he said in response to an analyst question about the appointment.
Conway also noted that among Schwartz’s tasks will be to increase the firm’s stock price. “Even though we got a great investment track record, that doesn’t show up in our stock price. How’s he going to do that? We have to grow our business… particularly the fee related earnings.”
Carlyle gathered $29.9 billion across strategies in the year to end-December – down 42 percent from full-year 2021 – and $4.9 billion in the fourth quarter. It expects 2023 to be a better fundraising year than 2022, with more vehicles in the market, including its next vintage flagship funds in credit opportunities, secondaries, co-investments and buyout funds. It also anticipates that the overall dollar volume of fundraising in 2023 will be higher than the $30 billion it raised in 2022, Conway said.
Total assets in Carlyle’s global private equity portfolio, which includes corporate PE, real estate and infrastructure and natural resources, increased 1 percent year-on-year to $163 billion. Corporate PE made up 64 percent or $105 billion of that figure.
Private credit, on the other hand, recorded a 99 percent increase in assets year-on-year to $146 billion. This was driven by Carlyle’s acquisitions of Fortitude and CBAM Partners as well as strong fundraising, the firm noted in an earnings statement.
The firm’s assets under management stood at $373 billion as of end-December, up 24 percent from end-2021.