Carlyle(CG) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record fee-related earnings (FRE) of $311 million, up 17% year-over-year [6][20] - The FRE margin reached 48%, the highest level in several years [6][19] - Distributable earnings (DE) were at a record$ 455 million [6][19] - Assets under management (AUM) increased to $453 billion, a 6% year-over-year growth [20] Business Line Data and Key Metrics Changes - Carlyle AlpInvest generated record FRE in Q1, nearly double from the previous year, with AUM growing 12% to$ 89 billion [12] - Global Credit's quarterly FRE surpassed $100 million for the first time, a nearly 50% increase from last year [13] - Global Private Equity results were in line with expectations, with significant capital returned to investors [23][24] Market Data and Key Metrics Changes - The company noted strong inflows of$ 50 billion over the past year, including $14 billion in Q1 alone [20] - European private credit deployment increased by 150% year-over-year, reflecting strong demand for private credit solutions [13] Company Strategy and Development Direction - The company is well-positioned to capitalize on new investment opportunities due to its long-term investment horizon and capital-light model [10] - Carlyle is focusing on diversifying its client solutions and enhancing its global wealth strategy [15][24] - The company aims to leverage its brand and platform to drive growth in key areas, particularly in private equity and credit [56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, noting that while there are uncertainties, the long-term trends driving demand for private capital remain strong [10][11] - The company is actively engaging with limited partners (LPs) and remains open for business despite market volatility [34][36] Other Important Information - The company has$ 84 billion of dry powder available for investment [10] - Carlyle's diversified platform allows it to mobilize resources effectively during market volatility [17][24] Q&A Session Summary Question: Impact of trade policy and tariffs on investment activity - Management discussed the cautious optimism among LPs and the need for thoughtful capital deployment in light of trade policy changes [30][34] Question: Corporate private equity franchise outlook - Management indicated no major adjustments to the timing of CP9, driven by deployment pace [38][39] Question: Insurance wins and fundraising guidance - Management clarified that the $40 billion flow guidance includes the recent insurance wins and strong performance in wealth products [46][48] Question: FRE margin and expense outlook - Management expressed satisfaction with the 48% FRE margin and indicated that expenses are well-planned for the year [51][52] Question: Fundraising for AlpInvest and future growth - Management highlighted the strong performance of AlpInvest and the expected continuation of fundraising efforts [55][60] Question: Endowment sector stress and its implications - Management downplayed the potential impact of endowment shifts on private capital allocation, viewing it as isolated [62][64] Question: Inorganic growth opportunities in insurance - Management expressed a preference for organic growth but remains open to accretive acquisitions if they make sense [68][70] Question: Opportunities in Japan - Management noted the dynamic nature of the Japanese market and the company's strong position there [76][78] Question: Capital markets and deployment strategy - Management emphasized a capital-light approach while focusing on execution activity levels across the platform [84][86] Question: Real estate fund updates - Management confirmed that the activation of fees on the real estate fund would lead to growth in management fees in Q2 [90]