Secondaries drives Carlyle fundraising in Q1

Funds managed by AlpInvest Partners accounted for nearly 60% of capital raised firm-wide in Q1.

Secondaries was a key driver of fundraising for Carlyle Group in the first quarter.

Funds managed by AlpInvest Partners, classified as investment solutions, raised $4.3 billion in the first three months of the year driven by closings for its latest secondaries programme, according to a quarterly results presentation Thursday. This is out of $7.5 billion raised firm-wide.

A Carlyle spokesman declined to disclose how much the unit’s latest secondaries programme, AlpInvest Secondaries Programme VII, has raised so far.

Speaking on the results call, Carlyle co-chief executive Kewsong Lee said fundraising in investment solutions and credit makes him “still optimistic” about growth in fee earnings for 2020. Fee-related earnings guidance was revised downwards to between $400 million and $450 million from $475 million in the last quarter, and Lee emphasised the high degree of uncertainty.

“Our pending fee-earning assets under management went up to $12.5 billion [during the first quarter], so there is a lot of capital that we haven’t activated fees on yet,” he said.

The firm cited secondaries, credit, distressed and special situations funds as possible beneficiaries of the novel coronavirus crisis, adding that traditional corporate private equity would probably be the last strategy to recover.

Secondaries Investor reported in November that AlpInvest Secondaries Programme VII was coming to market targeting $8 billion. The main vehicle of 2017-vintage Fund VI delivered a net internal rate of return of 11 percent and multiple of 1.2x as of end-March, according to the results presentation.

Carlyle acquired Amsterdam-headquartered AlpInvest in 2011 from Dutch pensions APG and PGGM.

Four of Carlyle Group’s investment funds fell out of carry in the first quarter as the impact of the coronavirus pandemic took its toll. These include the €3.7 billion Carlyle Europe Partners IV and the $3.6 billion Carlyle Global Partners, its long-dated private equity fund.

The Group reported a $612 million loss for the first quarter, compared with a profit of $137 million in the same period last year. It posted a Q1 loss in revenue of $745.7 million, down from positive revenue of nearly $1.1 billion in the equivalent period last year.