AlpInvest generates 30% net IRR on Fund V

The firm's fifth secondaries vehicle launched in 2011 and raised $4.8bn.

The Carlyle Group’s fund of funds arm AlpInvest has generated a 30 percent net internal rate of return on its most recent secondaries fund, according to the publicly-listed firm’s third-quarter earnings report.

Main Fund V – Secondary Investments launched in 2011 and initially raised $4.2 billion. The secondaries programme has since grown to $4.8 billion, according to the report. The fund has deployed roughly $1.8 billion, having invested about $1.74 billion as of May. It is generating a 1.4x multiple of invested capital, as of 30 September.

AlpInvest is part of Carlyle’s solutions group, which also includes hedge fund platform Diversified Global Asset Management, and Metropolitan Real Estate Equity Management. During the third quarter, the latter held a first close on its real estate secondaries and co-investment fund, Carlyle co-founder David Rubenstein said during the firm’s earnings conference call.

The solutions group had $17.6 billion of dry powder during the quarter, a portion of which is from AlpInvest Main Fund V – Fund Investments. The $6.5 billion fund of funds was raised in 2012 and has only deployed $974.7 million. It is generating a net IRR of -10 percent. Carlyle’s total dry powder for the period is $56.4 billion.

The group also generated economic net loss – a measure of earnings that includes realised and unrealised investments – of $5 million during the second quarter, compared to an economic net income of $25 million during the same period last year. The loss was largely driven by negative performance fees from an AlpInvest co-investment and secondaries fund moving below its carry threshold, according to the report.

“Solutions’ performance remains good on a longer-term basis,” Carlyle chief accounting officer Curt Buser said on the call.

The group’s assets under management increased 12 percent during the third quarter to $54.3 billion year-on-year. However, assets decreased 4.2 percent quarter-over-quarter due to a foreign exchange translation loss, Carlyle explained on the call.

Carlyle’s total assets under management grew 9 percent to $202.6 billion.