The Carlyle Group (CG) Bernstein 42nd Annual Strategic Decisions Conference summary

Strategic plan and performance

• Completed the first three years of a six-year overhaul, focusing on leadership, capital management, and operating structure, resulting in record FRE growth from low $800M to $1.2B and margin improvement from 37% to 47%.

• Launched a new three-year plan aiming for $1.2B–$1.9B FRE, $4–$6+ per share, and $200B in fundraising, with all major flagship funds entering the market over the next three years.

• Plan is grounded in current platform capabilities, excluding one-offs, insurance flows, or acquisitions, and is designed for a super cycle of fundraising.

• Geopolitical volatility is seen as a positive for the firm due to its expertise in sectors benefiting from global splintering.

Market outlook and capital deployment

• Geopolitical splintering has increased demand for private capital, especially in sectors like defense, energy, and data, with a high marginal return expected over the next 5–15 years.

• The firm’s focus on durable franchises in aerospace, defense, healthcare, and industrials positions it well for capital deployment, with recent success in raising $5B for a new buyout fund before formal fundraising.

• Outperformed industry in capital return by 500–600 bps on NAV, with current U.S. buyout fund in the first quartile and no challenged assets.

• Strategic expansion includes new verticals and platforms, leveraging deep expertise and deal flow, especially in defense and industrials.

Fundraising, innovation, and LP relations

• Innovative cornerstone investment structure secured $5B at full fees for the next buyout fund, reducing fundraising pressure and serving as a model for industry liquidity solutions.

• Focus remains on fund economics and scalability rather than simply increasing fund size, aiming for optimal deployment and performance.

• LPs value strong capital return (DPI) and consistent performance; leadership changes and sector focus have improved fund outcomes, especially in Japan and Europe.

• AlpInvest’s solutions business is a key growth driver, providing liquidity and portfolio management for GPs and LPs globally.