Carlyle Group’s private equity unit bucked the trend in Q2 and posted realizations that both beat Street expectations and many of its peers. The firm’s year-to-date distributions now total $6 billion, with an additional $4 billion expected once signed deals close.
“While the corporate private equity market broadly has faced criticism for low levels of capital returned to investors, we’ve defied that trend,” chief executive Harvey Schwartz told the earnings call.
Over the past twelve months, Carlyle’s buyout vehicles have sent back almost $15 billion—17 percent of cost and, he added, “3x the industry average.” He called the result “a really impressive achievement for our teams and fantastic for our investors” that “differentiates us in the marketplace compared to other firms.”
Across the platform, this year’s proceeds have topped $33 billion and are up nearly 40 percent year over year; global private equity strategies provided 64 percent of that total.
The pace is “approaching levels not seen since 2022,” chief financial officer John Redett said. Distributable earnings from the private equity segment rose more than 16 percent to $232 million, buoyed by exits of Forgital, NSM Insurance and StandardAero.
The performance is a welcome boost for Schwartz, who inherited a firm on unsteady footing when he took the role in 2023, and who has faced his own ups and downs through his tenure.
The timing is especially beneficial in the context of Carlyle’s fundraising efforts. The firm is preparing to launch its latest flagship buyout fund, Carlyle Partners IX, likely in the fourth quarter (pending performance of fund VIII). Newfound liquidity for existing limited partners should make it easier to secure new commitments.
Existing funds Carlyle Partners VII and VIII appreciated 3–4 percent in the quarter and 17–20 percent over the past year. The current flagship is posting a 21 percent gross and 10 percent net IRR.
It “is not going to be our best fund,” Redett conceded, but “what we’ve done is quite extraordinary” versus two years ago.
In July, Redett was promoted to co-president, alongside Mark Jenkins and Jeff Nedelman, and will take charge of Carlyle’s $165 billion global private equity platform and the upcoming raise.
Beyond buyout, Carlyle’s credit and secondaries strategies are now the main drivers of fee growth (mirroring similar trends at many peers). They drew $13.4 billion of commitments in the quarter—beating the $10.5 billion analysts expected—and lifted firm-wide AUM to $465 billion. Fee-related earnings rose 18 percent to $323 million, helped by a greater than 50 percent revenue jump at secondaries arm AlpInvest.