Carlyle’s Jenkins details strategy in ‘breakout’ year

Carlyle’s global credit platform is on a roll. Under Mark Jenkins, the firm’s head of global credit, the platform’s assets under management recently nearly doubled to more than $141 billion on a pro forma basis – and all in the space of a few months.

With Carlyle’s latest strategic moves, the credit platform represents approximately 40 percent of the asset manager’s $325 billion of AUM and is poised to experience what Carlyle chief executive officer Kewsong Lee has called a “breakout” year.

Indeed, credit, which is Carlyle’s fastest-growing segment, represents one of the lynchpins of the company’s growth strategy. At its investor day last year, Carlyle set a goal of reaching more than $1.6 billion in distributable earnings and achieving $130 billion in new commitments from limited partners by 2024.

“There are more stakeholders rotating into private credit, which has demonstrated its consistency through cycles,” Jenkins told Private Debt Investor. “With all the volatility we’re having now, it’s something people want in their portfolios.”

Indeed, on its first-quarter earnings call in late April, Lee noted that Carlyle’s direct lending strategies are yielding approximately 9 percent, and the portfolios in its CLO business have a default rate of less than half the industry average. Global Credit’s reported fee-related earnings of $25 million in the first quarter increased 17 percent from Q1 2021.

Small wonder that Carlyle Global Credit has been busily growing its platform with a series of rapid-fire transactions that will help to double the platform’s pro forma fee-related earnings.

This year alone, Carlyle’s credit platform closed a $4.6 billion credit opportunities fund, hitting its hard-cap, and has made three strategic moves to scale up the business. In February, it acquired a $3 billion net lease business from iStar to accelerate its presence in real estate credit. The following month, it became the world’s biggest manager of collateralised loan obligations with its purchase of CBAM Partners’ $15 billion of CLO assets.

In April, it inked an advisory deal with reinsurer Fortitude Re, in which it already holds a majority stake with a Japanese insurance firm. The deal, which will nearly double Global Credit’s annualised fee-earning AUM, included a $2.1 billion equity capital raise to which Carlyle will contribute as much as $150 million.

Jenkins took over the leadership of Carlyle’s credit platform in 2016 after heading up global private investments at Canada Pension Plan Investment Board, where he built the pension’s principal credit investments group. By the end of last year, Global Credit’s AUM had more than doubled in less than four years. Despite the platform’s recent buying spree, Jenkins doesn’t rule out more “inorganic transactions”. But he said “they would have to be well within our strategy and within something we’re looking to scale into”.