Earnings call transcript: Carlyle Group reports record Q1 2025 financials

Carlyle Group (CG) announced record financial results for the first quarter of 2025, showcasing significant growth in fee-related earnings and assets under management. The firm reported fee-related earnings of $311 million, a 17% increase year-over-year, and achieved a record distributable earnings of $455 million. Despite strong financial performance, market enthusiasm was tempered by uncertainties in trade policies. According to InvestingPro analysis, Carlyle Group, currently trading at $41.61, appears undervalued based on its Fair Value model, with the stock offering an attractive 3.5% dividend yield.

Key Takeaways

• Carlyle Group achieved a record $311 million in fee-related earnings, up 17% year-over-year.
• Assets under management reached a new high of $453 billion, growing 6% from the previous year.
• The firm saw $50 billion in inflows over the past year, with $14 billion in the first quarter alone.
• Strategic initiatives in capital markets generated $150 million in fees.
• Ongoing concerns about US-China trade relations impacted market optimism.

Company Performance

Carlyle Group’s performance in Q1 2025 was robust, with significant growth across various financial metrics. The company reported a record fee-related earnings margin of 48%, driven by strong transaction fees and successful fundraising efforts. The firm’s diversified platform across geographies and asset classes contributed to its resilience amid market uncertainties. With a market capitalization of $15 billion and impressive revenue growth of 95.78% over the last twelve months, the company maintains a solid financial position. InvestingPro data reveals a FAIR overall Financial Health Score of 2.32, suggesting stable operational performance.

Financial Highlights

• Fee-related earnings: $311 million (+17% YoY)
• Distributable earnings: $455 million
• Assets under management: $453 billion (+6% YoY)
• Inflows: $50 billion over the past year, including $14 billion in Q1

Outlook & Guidance

Carlyle Group has set an ambitious $40 billion fundraising target for 2025, with expectations of 6% growth in fee-related earnings. The firm plans to continue investing in its wealth, credit, and global strategies. It also anticipates potential fundraising for Fund IX in the fourth quarter of 2025 and expects continued growth in the secondary market. Analyst consensus from InvestingPro supports this optimistic outlook, with price targets ranging from $37 to $58 per share. The company’s P/E ratio of 14.5 suggests reasonable valuation relative to its growth prospects. Get access to detailed valuation metrics and 12 additional ProTips about Carlyle Group with an InvestingPro subscription.

Executive Commentary

CEO Harvey Schwartz emphasized the company’s momentum, stating, "We are seeing strong momentum across our key growth areas." He also highlighted Carlyle’s diversification, noting, "Carlyle is much more diversified today than it’s ever been." Schwartz reinforced the firm’s commitment to growth, saying, "We will continue to invest in our growth, leverage our long-term investment horizon."

Risks and Challenges

• Trade policy uncertainties: Ongoing US-China trade relations could impact market conditions and investor sentiment.
• Market saturation: Continued expansion in private markets may face competitive pressures.
• Economic impacts: Second-order effects of trade policies could affect global economic stability.
• Regulatory changes: Potential changes in financial regulations could impact operations.
• Geopolitical tensions: International expansion could be affected by rising geopolitical tensions.

Q&A

During the earnings call, analysts inquired about the impact of trade policies on Carlyle’s operations. The company noted that while first-order effects are contained, it is monitoring potential second-order economic impacts. Questions also focused on the endowment market, with Carlyle reporting no broad-based material changes. The firm’s capital markets strategy remains activity-driven and capital-light, and it continues to see strong opportunities in the Japanese market.

Full transcript - The Carlyle Group LP (CG) Q1 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Carlyle Group First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Daniel Harris, Head of Investor Relations. Please go ahead.

Daniel Harris, Head of Investor Relations, Carlyle Group: Thank you, Daniel. Good morning, and welcome to Carlisle’s first quarter twenty twenty five earnings call. With me on the call this morning is our Chief Executive Officer, Harvey Schwartz and our Chief Financial Officer and Head of Corporate Strategy, John Verdette. Earlier this morning, we issued a press release and a detailed earnings presentation, which is available on our Investor Relations website. This call is being webcast and a replay will be available.

We will refer to certain non GAAP financial measures during today’s call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliation of these measures to GAAP in our earnings release to the extent reasonably available. Any forward looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the Risk Factors section of our annual report on Form 10 ks that could cause actual results to differ materially from those indicated.

Carlyle assumes no obligation to update any forward looking statements at any time. In order to ensure participation by all those on the line, please limit yourself to one question and return to the queue for any additional follow ups. And with that, let me turn the call over to our Chief Executive Officer, Harvey Schwartz.

Harvey Schwartz, Chief Executive Officer, Carlyle Group: Thanks, Dan. Good morning, everyone, and thank you for joining us. I’ll quickly touch on this quarter’s record results and then share my perspective on the macro environment. First quarter performance was quite strong, hitting record levels. Quarter’s highlights include record fee relating earnings of $311,000,000 that’s up 17% year over year record FRE margin, 48% our highest level of distributable earnings in several years at $455,000,000 and record assets under management of $453,000,000,000 Across the board, from margin expansion to FRE growth to investment performance and fundraising, you can really see the strategy coming together as we progress towards our goals for this year and beyond.

Now let me shift and talk about how we’re thinking about the current environment. We entered the year with a very high level of market optimism and very high expectations. The markets were fully risk on. Of course, as we saw, the recently announced trade policies very quickly impacted investor sentiment and risk appetite. With respect to our global portfolio, we think about this in terms of first order effects and knock on impacts.

With respect to first order effects, the effects of the tariffs are contained to a limited number of investments. The majority of our global private equity portfolio is services oriented with 80% of companies based in The U. S. Second order effects on the economy are beginning to emerge, as we’ve seen in some of the recent economic data. But given where we are in terms of the policy implementation, the long term effects of the trade policy are too difficult to forecast at this point.

From a Carlyle perspective, we are exceptionally well positioned to lead in this environment. Our investment horizon and our capital base are long term, and our capital light model affords us the ability to capitalize on compelling new investment opportunities. In a dynamic environment like today, you need experience, scale, brand, and a diversified platform to meet the shifting demands of private capital and serve the needs of our clients. With $84,000,000,000 of dry powder, we are well positioned to be active in this market environment as opportunities emerge. Although we are going through this period of uncertainty, the macro trends driving demand for private capital remain strong and likely will be reinforced over the coming years.

Over the past two decades, the number of public companies in The U. S. Has been cut nearly in half, while the number of private companies has increased by more than fivefold. For investors looking to drive returns and capture the next generation of market growth, private market access has never been more important. These structural shifts are already showing up in Carlyle’s results.

We are seeing strong momentum across our key growth areas and believe the trends reshaping global markets will continue to play to our strengths. Now I’ll touch on our businesses and growth areas that we have been focused on over the past two years. Carlyle Alphemest generated record FRE in the first quarter, nearly double the first quarter last year. AUM in this business grew 12% over the past year to a record $89,000,000,000 The business continues to diversify across client solutions. A good example of this is our latest portfolio finance fund, which held its final close last month at more than $4,000,000,000 more than three times the size of its predecessor.

In Global Credit, quarterly fee related earnings surpassed $100,000,000 for the first time, an increase of nearly 50% from last year. The significant demand for private credit solutions continues to drive inflows, and our investment opportunities continue to expand. Recently, our private credit team has leaned into significant opportunities in European lending, where less competition is leading to strong relative value. European private credit deployment is up 150% year over year. We also had a strong start to the year in insurance, with Fortitude announcing more than 8,000,000,000 in reinsurance transactions.

Fortitude’s annuity reinsurance agreement with Heil Life Insurance Company was their sixth transaction in Japan. Carlyle’s long term track record in Japan, alongside strong investment origination capabilities, have helped Fortitude develop a leading presence in the market. Our pipeline of growth opportunities remains healthy as insurance companies seek to transfer risk and improve capital efficiency. And our strategic initiative to grow capital markets continues to accelerate. Over just the past six months, we generated a record $150,000,000 in fees.

We see substantial opportunity for long term growth in this business, although the near term market environment may slow the pace of activity. Moving on to Global Wealth. As you know, two years ago, we have prioritized this initiative by aggressively adding to the team and leveraging our global brand to drive growth. As a result, evergreen inflows have doubled over the past year. In global private equity, we remain focused on driving value in our portfolio companies and monetizing assets.

We’ve generated $20,000,000,000 of realizations over the last twelve months. In the first quarter, we successfully IPO ed ExaWare Technologies in India. This was the largest ever sponsor backed IPO in India and the largest technology services IPO globally in more than a decade. We also closed a nearly $1,000,000,000 secondary sale of shares of Standard Arrow and a $1,400,000,000 sale of Claro asset. John will touch on this in more detail.

We saw continued appreciation in our two latest vintage U. S. Buyout funds, and the underlying portfolio companies continue to grow EBITDA at double digit rates through the first quarter. The portfolio remains well positioned in the current environment. To close, Carlyle is much more diversified today than it’s ever been.

During these periods of market volatility, the breadth of our platform enables us to mobilize where opportunities present itself. We will continue to invest in our growth, leverage our long term investment horizon and capture value creation opportunities in the private markets. With that, let me now turn the call over to John, who will walk through our results in more detail. Thanks, Harvey.

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Good morning, everyone. As Harvey said, our first quarter results were strong. We delivered record FRE, FRE margin and assets under management. DE of $455,000,000 was a record start to the year. As a management team, we are focused on accelerating long term growth while also achieving our near term goals.

We remain comfortable with our ability to meet our 2025 financial targets, but realize the situation is fluid and the market backdrop is uncertain. We continue to invest in our businesses to better position Carlyle for long term success. We finished the first quarter with $453,000,000,000 of AUM, up 6% year over year. Growth was driven by $50,000,000,000 of inflows over the past year, including $14,000,000,000 in the first quarter alone. We generated record FRE of $311,000,000 in the first quarter, ’17 percent higher than the first quarter last year.

Overall, we saw strong growth in Carlyle Alpenvest and Global Credit, while Global Private Equity was in line with expectations. Transaction fees more than tripled in the quarter compared to the same period last year. The $150,000,000 in transaction fees we generated over the past two quarters is more than any prior year. Carlyle AlpInvest generated $66,000,000 in FRE in the first quarter, nearly double the level from the first quarter of twenty twenty four. Management fee growth of nearly 40% year over year led to a record FRE margin of 58%.

We have good momentum across all areas of Carlyle Alpenvest, with strong inflows into our secondaries platform, portfolio finance and our global wealth strategy. In Global Credit, first quarter revenue of $232,000,000 grew 28% year over year, driven by capital market fees. Global Credit also experienced strong first quarter inflows of $7,500,000,000 The rapid growth of Carlyle Alp Invest and Global Credit has driven these businesses to account for 50% of our firm wide FRE compared to 34% in 2023. In global private equity, results were in line with our expectations given expected step downs in several funds. Management fees should increase in the second second quarter as we recently activated management fees on our latest U.

S. Real estate fund. A highlight in our private equity business is U. S. Buyout, our largest flagship strategy, which continues to perform particularly well.

The last two vintages each appreciated 2% to 3% in the quarter and around 18% over the past year. Along with this appreciation, we also returned significant capital to investors. Across all of our U. S. Buyout strategies, we returned nearly $8,000,000,000 of proceeds to investors over the past year.

More broadly across the Carlyle investment platform, we returned 31,000,000,000 in proceeds, more than 40% higher than the prior twelve month period. This is indicative of the strength of our diversified global investment portfolio and further upside when markets are more active. In our evergreen strategies, we managed $26,000,000,000 in AUM, up 27 over the past year, and we continue to actively invest in our wealth capabilities, with headcount in this area increasing by 100% over the past year. This remains a major driver of long term growth for Carlyle. Wrapping up, while market conditions remain dynamic, Carlyle is built to perform across market cycles.

Our nearly forty year track record, long term capital base and global scale provide a strong foundation for continued growth. We are confident in our ability to deliver attractive results for shareholders while continuing to be a trusted partner to our investors. With that, let me turn the call over to the operator for your questions.

Conference Operator: Our first question comes from Ben Budish with Barclays. Your line is open.

Ben Budish, Analyst, Barclays: Hey, good morning and thanks for taking the question.

Harvey Schwartz, Chief Executive Officer, Carlyle Group: Good morning, Ben. Maybe just starting

Ben Budish, Analyst, Barclays: out with something high level, I mean, you talked a little bit about the macro backdrop. Just given your portfolio is quite global, can you talk a little bit about how you’re viewing the impact of trade policy and tariffs on investment and deployment activity? And how is that maybe feeding into LP discussions? Mentioned in Q1, especially earlier in the year, you had returned a lot of capital. How is that sort of impacting LP discussions more recently?

Sure.

Harvey Schwartz, Chief Executive Officer, Carlyle Group: So I think actually just stepping back for a second, I talked a bit about some of this in my prepared remarks. We obviously came into the year with very, very high expectations. The tariff policy implementation, I think market participants obviously were caught a bit flat footed with the initial announcement. I think subsequent to that, the administration has done a thoughtful job of bringing together how they’re thinking about the broader implementation of the full policy set. I was at Milken earlier this week, and I heard the treasury secretary talk about the three legs of the stool.

And I think that the articulation and the understanding across market participants is really, I think, a much more positive impact on what was initial sentiment reaction. Now more broadly, I would say the discussions with LPs, there’s a sort short term focus that everyone has in the marketplace. And I’ve talked to more CIOs and CEOs in the last couple of weeks and maybe in my entire career. I would say, so obviously, there’s a lot of focus on headlines, expectations day to day, because the market just wants to see where the policy is headed in terms of progress. But I would say broadly speaking, this is not an environment where I would say it’s either a red light or a green light.

I would say it’s different shades of yellow. But the vast majority of the senior folks I’ve spoken in the last several weeks are, I would say, cautiously opportunistic. So very much looking for opportunities to deploy capital In one variant or another, each conversation finishes with, hey, we’re open for business. And that shouldn’t really be surprising when we think about where the S and P is relative to the start of the year and where capital markets are. But I would say that people are deploying capital, but they’re being very, very thoughtful about it.

And the more progress we see on policy implementation, obviously, the more positive reaction will happen in the marketplace. Now the one big question out there that everyone’s focused on, as are we, is where does the dialogue sit with China? Because it is hard for market participants, including us, to see the backdrop in terms of second order effects in the economy. If The US and China, the two largest economies in the world, in some very long sustained trade embargo or trade war, it’s hard to imagine that really being good for the global economic environment. So that’s really the biggest question on people’s minds, and they want to see progress.

Conference Operator: Thank you. Our next question comes from Alex Blostein with Goldman Sachs. Your line is now open.

Alex Blostein, Analyst, Goldman Sachs: Hi, good morning everybody. Thank you for the questions as well. Harry, I wanted to double click into private equity for a second. So very good momentum outside of private equity. Obviously, you talked about AlpInvest and real estate and credit.

All of that is moving along nicely. But given the fact that there’s just so much focus for you and really the industry broadly as well on DPI performance and just the elongated sales cycle we’re seeing in private equity, how are you thinking about the corporate PE franchise for the next twelve to eighteen months? What does it mean for CP9 in terms of both sizing and timing? So

Harvey Schwartz, Chief Executive Officer, Carlyle Group: on timing, I don’t see any major adjustments to us going back into the market on CP9. That will really be driven by our pace of deployment. You saw that we were very active in deploying capital in CP9 last year. I think more importantly for us, the private equity complex, a couple of factors. One, towards the end of this year, beginning of next year, we will be launching our wealth platform.

Analyst: And that will bring in a

Harvey Schwartz, Chief Executive Officer, Carlyle Group: whole separate stream of capital. There’s a lot of appetite for Carlyle on platforms globally across all of our solutions. In terms of the dynamic, I’ll tell you the way we’re thinking about it and the way we’re managing our businesses. Obviously, our teams have done a really good job. And John highlighted US buyout in terms of the portfolio.

And the amount of capital we’ve returned across our private equity complex really makes us a bit of a positive outlier. So we’ve been actively returning capital. I mean, off the top of my head, if I think about the last nine months or so, we took Standard Arrow public. I think it was the third largest IPO of the year in The US. We did Hexaware, which John spoke about in India, which is the largest ever private equity owned company in India, which is Regaku, largest ever private equity owned entity in Japan.

And so our teams have been navigating this market environment, I think, quite thoughtfully. In terms of private equity broadly, I think that the marketplace will continue to see some headwinds. I think that those headwinds, if you have scale like we do and diversification, I think it’s much more easily navigated. But we’re really quite proud of the performance, particularly in our U. S.

Buyout business. I don’t know, John, what would you add?

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Yeah. Look, this is a business we’ve talked a lot about in the past. We made some changes to our U. S. Private equity business.

I would just echo what Harvey said. We’re very happy with the PE performance in our U. S. Buyout business. Again, good appreciation this quarter.

If you look over the last twelve months, around 18% for our two latest vintages. So the performance is tracking to our expectations. And also just what Harvey said, we have been very active on the realization front. And Harvey listed a couple of those. And quite frankly, we even had a realization in our Asia buyout business post Trade Liberation Day.

We sold a big block of the company we owned in India. So we’re continuing to execute, and that’s what we’re focused on.

Conference Operator: Thank you. Our next question comes from Patrick Davitt with Autonomous Research. Your line is open.

Patrick Davitt, Analyst, Autonomous Research: So nice to see you had some chunky insurance wins. But how should we be thinking about those relative to the kind of roughly $40,000,000,000 flow guide you were expecting for the year? Is this counting towards that? Or should we consider it incremental to that? And then more specifically, within that flow track, could you update us on how the wealth product flows are tracking, how the redemption requests are tracking since Liberation Day?

Harvey Schwartz, Chief Executive Officer, Carlyle Group: Yes. So

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: when we put out the $40,000,000,000 ish in the fourth quarter results, we view the $40,000,000,000 as a flow number. So you should assume the 14 tracks to that $40,000,000,000 flow number we put out there. In terms of wealth, I would say we’ve had very, very strong performance. Again, this is an area we have been talking about a lot. We’re very focused on making investments in that space.

Fundraising in the quarter was up 40%. The amount we have in the Evergreen products is up 70% year over year. So, we’re very pleased with the progress we’re seeing in wealth. And again, we only really have two products in the market. That’s C Tech, our credit product, and CAPM, our secondary product.

And if you look at the trajectory of CAPM, it’s really quite impressive in terms of the fundraising. In terms of kind of post trade policy shift, I’d say the data set we’re looking at, it’s limited to April, but we have not seen anything the data that would give us pause. April actually was a good month. So based on what we’re seeing, we feel pretty good.

Conference Operator: Thank you. Next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Brian Bedell, Analyst, Deutsche Bank: Great. Thanks. Good morning, folks. Thanks for taking my question. Maybe just shifting to expenses, very good FRE margin in 1Q.

Seems like it’s tracking a little bit ahead of the run rate expected for the year. So maybe if you can talk, John, a little bit about that run rate. Is this a good run rate for G and A as we move through the year? And should we be expecting any additional expenses related to the retail wealth efforts?

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Yes. So, I would say the 48% FRE margin, we’re very happy with where that margin is. We’ve been very, very we’ve talked a lot about how we don’t see expenses as a way to get that margin higher. We’re much more focused on driving that margin higher via growth. And we’re investing in the business heavily.

As we said on the last earnings call, the 6% FRE growth we gave for 2025 really reflects continued investment in the business. So, the 48% you’re seeing in the quarter reflects heavy investment in the areas we’ve talked about in the past where we see growth coming from. So, I wouldn’t expect that to escalate. I think it’s pretty well planned out throughout the year. In terms of G and A, look, the first quarter number was clearly higher than the first quarter of last year.

I would just say the first quarter last year had some kind of one off positives. So, I don’t

Ben Budish, Analyst, Barclays: think it’s a good reference

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: point. But I’m happy with where G and A is. I think it’s pretty close to a good run rate type number. I kind of think of 100 ish is a good run rate G and A. Again, quarter if you compare first quarter against fourth quarter, fourth quarter is always a bit elevated.

But we’re very pleased with where G and A is. 95 to 100 ish is kind of how I

Daniel Harris, Head of Investor Relations, Carlyle Group: think about a run rate.

Conference Operator: Our next question comes from Brian McKenna with Citizens. So

Harvey Schwartz, Chief Executive Officer, Carlyle Group: AlpenVest has experienced some pretty impressive growth over the past year. And it seems like the business remains well positioned moving forward. But how should we think about related fundraising for the balance of this year? I know CAPM will be in the market. But what else will you be raising capital for?

And then just bigger picture, if I look at AlpInvest FRE, now represents 20% plus of firm wide FRE. So where can this contribution go longer term? So well, I’ll kick off, then I’ll hand it over to John for a bit of the detail. But I would say that one of the initiatives over the past few years was really to better integrate the Alpenvest team into the broader strategy of the firm. So that included obviously driving the CAPM solution through the wealth channel and really leveraging the entire distribution capability of the firm.

And so what you’re really starting to see is the convergence of those strategic efforts plus the great performance by the team. I was just in Amsterdam. We celebrated the twenty fifth anniversary of Alpenvest. And so now this is also an area where LPs globally, regardless of institution, sovereign wealth, or the wealth channel, there’s huge interest in this category. And I would say, I expect that to continue to vary for an extended period of time.

So as we continue to leverage the brand and the platform, I think there’s significant upside from here. But we’re really pleased. And obviously, all this has been done across the entire platform organically.

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Yeah. The only thing I’d add I mean, let’s echo a little bit what Harvey said. We couldn’t be more pleased with how this business is performing. I mean, the organic growth rate numbers are really, really strong. The FRE margin is very impressive.

And look, I think the secondary market as a whole, the market continues to grow at very elevated levels. We think activity levels are going to accelerate given the current market conditions. So we think it’s a really attractive space. I think the thing you need to think about in terms of this business and its ability to have a sustainable long term growth rate is we will wrap up fundraising at some point, probably midyear for a secondary fund. But that fund’s already 57% committed.

So there’s a very clear growth path for this business. We will probably be in the market sometime soon with the next vintage of the fund. So the growth rate is kind of impressive looking back. But also, as you think about this business going forward, I really, really like the growth path.

Conference Operator: Thank you. Our next question comes from Ken Worthington with JPMorgan. Your line is open.

Ken Worthington, Analyst, JPMorgan: Hi, good morning. Thanks for taking the question. We’re seeing some potential for stress in the endowment sector and the financial media is suggesting their position in private markets could decline. I guess maybe first, do you think this is a legitimate topic or might it be overblown? And assuming it’s not overblown, can you talk about this from a risk perspective for Carlyle and future fundraising if endowments slow investments in private markets?

And then the different perspective is, what could this mean for AlpInvest in your secondaries and wealth business given your dry powder and fundraising potential there?

Daniel Harris, Head of Investor Relations, Carlyle Group: I don’t see the

Harvey Schwartz, Chief Executive Officer, Carlyle Group: endowment shift into some of the bigger headline numbers that you’ve seen sort of being broad based or material to the business or to the industry. Obviously, we just spoke about in the prior question, we’re one of the leading providers of capital through our secondaries and co invest platform and Alp Invest. And so this in the short term will certainly be potentially opportunity for us to deploy capital into those flows. We will see all those flows. As you would imagine, there won’t be any flow we don’t see, given the brand and the team.

But I don’t see there’s being a significant overhang in terms of allocation to private capital. I think it’s going to be more isolated. Now that could evolve, but that’s my viewpoint today.

Conference Operator: Thank you. Our next question comes from Mike Brown with Wells Fargo. Your line is open.

Analyst: Great. Thank you for taking my question. So Harvey, there’s headlines that continue to come out about a large life and annuity provider, and they’re considering some strategic alternatives. Would Carlyle consider some inorganic growth in that space? Is that something that’s kind of interesting to you in terms of the opportunity to manage something of that asset size?

And can you just maybe touch on some of the strategic ways you could approach something like that, just given the size and complexity? Would that have to be done via kind of partnership? Maybe how could that work with Fortitude? Any interesting color here would be helpful. Okay.

Harvey Schwartz, Chief Executive Officer, Carlyle Group: Having been here a bit over two years now, I would say initially when I got here, obviously, we were very focused on repositioning the firm on all the strategic initiatives we’ve covered. And we feel really good about the progress we’ve made and the momentum in the franchise. And so but two years ago, I think the notion of doing something inorganic would have been too soon. I would say we’re much more front footed in terms of how we want to think about that. But with respect to our engagement on opportunities broadly, it really is just in the corporate finance math and whether it makes sense.

We feel really good about the breadth of the platform, whether it’s our Alpha Invest, secondaries, co invest, portfolio finance, the credit platform, our CLO business, everything that’s happening in private equity. There’s no gun to our head in terms of having an asset class we need to fill. And all the growth we’ve talked about for the past two years culminating in today, it’s 100% organic, everything the firm has done. So the firm is demonstrating now that we have the power to mobilize organically. Now back to your question, I think with respect to insurance base and obviously, I can’t talk about any specific transactions we look at.

But in insurance base, the Fortitude partnership and our partners in Fortitude have really been fantastic for us in a number of ways. Obviously, the pure benefits of the growth in Fortitude and our capital commitment there and our ability to work with great partners in that business. That’s kind of the narrow definition of why it’s been fantastic. The other reason why it’s been fantastic is because it’s given us really, really great intelligence and asset management capabilities in the insurance space. So working with Fortitude has given us a multiyear advantage in terms of that skill set.

And as you saw last year, as we grow our asset based finance business and the transactions we’ve announced and the partnerships we’ve established. And so as all of this is converged together, it’s also given us a much more multidimensional view on how to think about insurance. I think maybe underneath your question, because I’ll just wrap up with this point is, probably underneath your question is this question of, Okay, capital heavy or capital light. You didn’t express it that way, but I think that’s sort of embedded in your question. And so I’ll tell you the way that we think about it and our board thinks about it is not so much that capital heavy is negative or capital light is positive or vice versa.

I think it’s a bit of a Goldilocks thing. So there’s sort of an optimal point of you want a certain amount of capital, but not too much. But we have a preference for staying capital light. And if we can solve for capital light and I will tell you, when you go through market environments like you saw over the past six weeks, and you can wholly focus on deployment, managing your portfolio, and not have to worry about a heavy balance sheet, you really see the benefits of that. And you can be extraordinarily front footed with your clients.

And so strong bias for capital light. But there, at this point, I would say, any number of ways we could solve for an accretive acquisition if it makes sense for us in any part of the business.

Conference Operator: Our next question comes from Michael Cyprys with Morgan Stanley. I

Daniel Harris, Head of Investor Relations, Carlyle Group0: was hoping maybe you could elaborate upon the opportunity set that you see in Japan across your business, a lot happening there at the micro level across Japan. Just curious if you could speak to some of the opportunities across the buyout business, but then also across Fortitude and on

Ken Worthington, Analyst, JPMorgan: the credit side as well. Thank you.

Harvey Schwartz, Chief Executive Officer, Carlyle Group: Yes. So obviously, the Japanese market has been incredibly dynamic. I’ll be in Japan in a couple of weeks celebrating our twentieth anniversary. I think we’re one of two firms that have actually stayed committed to Japan for that period of time. And the franchise is exceptionally strong, exceptionally strong.

Obviously, they grew their funds significantly in the most recent fundraise last year. And my expectation is that when they’re back in the market in the next couple of years, that fundraise will just continue to grow because the demand for LP interest and the opportunity set only continues to look better, at least right now. In terms of, I think, how do we extend that brand, we’re capable of doing that in a lot of ways. We’ve been on wealth platforms in Japan. Obviously, working with Fortitude to leverage their skill set and our brand has been very, very powerful.

You’ve seen us, as I said in my remarks, our six transactions. So we’re really a leader in the insurance space there. But all of this dates back to the twenty five year history the firm has invested in Japan. I will say the Japanese market is increasingly dynamic for a couple of reasons, which are compelling. One, obviously, is this evolution of companies willing to become more dynamic in terms of their corporate stewardship.

So that’s fantastic for us, again, given our long standing role in the region and our network. But also, there’s a real push to extend asset management capabilities. And so we can play a valuable role there. So we’re super enthusiastic about our position in Japan and the role in the region.

Conference Operator: Thank you. Our next question comes from Bill Katz with TD Cowen. Your line is open.

Ken Worthington, Analyst, JPMorgan: Thank you for taking the question. Good morning, everybody. Maybe for John or yourself, Harvey, you’ve done a very nice job as you highlighted on the transaction line. Could you unpack maybe the difference between sort of regular way leverage to deployment versus where you stand in terms of capital markets? And as you look ahead, how should we think about the flight path for growth off of the first six months last six months of levels?

Thank you.

Harvey Schwartz, Chief Executive Officer, Carlyle Group: So I’ll handle that. Yes. So again, this was a strategic initiative I launched two years ago. The team here was extraordinary in terms of managing the liability side for the balance sheet of the portfolio companies. But there wasn’t a process in place for actually driving value in terms of the capital markets business beyond that.

So we protected the capability set added to it and really restructured the incentive across the firm for driving value through capital markets. Now what we’re not doing is we’re not committing a lot of balance sheets. We’re not taking risk. This is really being driven by the execution activity levels across the platform, whether it’s in private equity, credit, infrastructure. It’s going to be activity driven.

And so quarter to quarter, it’s going to be you’ll see it’ll be around deployment restructurings and things like that, that we do in terms of the portfolio company balance sheets and how we invest capital. But the trajectory here is quite good over the long term. A lot of the businesses weren’t actually enabled or in a position to actually participate in this. And so as we mobilize the firm across this, there’s multiyear growth here. But as John said, the $150,000,000 that we generated just in the last two quarters would have been the best year ever.

And this is not in a high velocity environment, obviously. So hard to put a hard number on it. But again, I think we’re super proud of what the team is doing. But most importantly, we’re not taking any capital risk here. So we’re staying capital light in this model.

Conference Operator: Thank you. Our next question comes from Kyle Voigt with KBW. Your line is open.

Daniel Harris, Head of Investor Relations, Carlyle Group1: Hi, good morning. Thanks for taking my question.

Harvey Schwartz, Chief Executive Officer, Carlyle Group: Hey,

Daniel Harris, Head of Investor Relations, Carlyle Group1: Don. Just a question on real estate. Looks like CRP 10 was activated in April and has $7,500,000,000 committed, so already almost larger than the prior vintage. Just wondering if you could give us an updated view on the sizing for CRP 10. If you could also just tie that into what we could possibly expect for GP segment management fee step up in 2Q versus 1Q as that fund turns on?

Or even an update to the prior comments for the full year GP management fee trajectory in ’twenty five would be helpful.

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Me start with the back end of your question first. In our GP segment, you did see management fees down. That was really driven by we had a step down in two funds, one of which was our real estate fund. That was reflected in the first quarter. April ’1, we activated fees on our current real estate fund.

So you’ll see some growth in the management fees in the second quarter due to that due to us activating the fees on that fund. So we’ll benefit from that and see some growth in the second quarter in terms of management fees. Look, we’re still in the market raising money, so we can’t really comment on ultimate size. I would just say what we said in the past, we expect it to be bigger than the predecessor.

Conference Operator: Thank you. Our next question is a follow-up from Brian Bedell with Deutsche Bank. Your line is open.

Brian Bedell, Analyst, Deutsche Bank: Great. Thanks. Thanks for taking my follow-up. Actually, just wanted to come back on Fund IX. Given you’re 70% committed on Fund VIII, just the thought process around being back in the market for that fund.

Could that be as early as 4Q in terms of a potential fundraising? I guess in your fundraising sort of target for this year or what you’ve outlined, is any consideration of Fund IX within target?

Harvey Schwartz, Chief Executive Officer, Carlyle Group: There’s nothing in Fund IX for that target that we put out earlier this year. And right now, we’re still holding to the fourth quarter kickoff for Fund IX, but we’re not wedded to it. If the environment stays like this, we’ll see how deployment goes in Fund VIII, but we’re very, very focused on the performance of Fund VIII, which as you’ve seen has tracked up quite beautifully. So we’ll see how we go on Fund IX. But it’s going to give or take three to six months, that’s your target zone.

But there’s nothing in the model for Fund IX.

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Yes, there’s no impact to this year for Fund IX. But I would say there’s nothing we’re seeing day to day that would suggest we’re not going to put it in the market when Harvey said. Again, the performance in CP7 and CP8 continues to track ahead of our expectations, and we’ve been very active on realizations. So we feel pretty good about CP9.

Conference Operator: Thank you. Our next question comes from Michael Cyprys with Morgan Stanley. Your line is open.

Daniel Harris, Head of Investor Relations, Carlyle Group0: Thanks for taking the follow-up question. Just wanted to circle back just around the fundraising targets. I think you guys mentioned $40,000,000,000 for the year, 6% after regrowth. Did those include the blocks from Fortitude? I think in the quarter you had $4,000,000,000 and I think there’s maybe another $4,000,000,000 coming in the second quarter.

Just wanted to clarify if that’s embedded in the $40,000,000,000 fundraising, 6% FRB growth for the year.

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Yes, Michael. So when we put out our $40,000,000,000 ish of inflows last year for 2025, that was an inflow number. It would include the flow from Fortitude. So we had $14,000,000,000 in the quarter, which compares to $5,000,000,000 first quarter last year, so almost 3x. And on an LTM basis, we’re at $50,000,000,000 So we feel very good about our fundraising capabilities.

Conference Operator: Thank you. Our next question comes from Patrick Davitt with Autonomous Research. Your line is open.

Patrick Davitt, Analyst, Autonomous Research: Thanks for the follow-up. As you pointed out, I had some bigger realizations from CP7 in 1Q. How should we think about the triggers for that fund to start actually generating cash carry? And more specifically, within that, does IRR need to be higher than 8% before you would feel comfortable doing that?

John Verdette, Chief Financial Officer and Head of Corporate Strategy, Carlyle Group: Yes. I mean, it’s very hard to predict exactly when a carry fund hits carry. I would say we’re certainly well on that path. I mean, the performance in that fund, you’re referring to CP7, continues to improve, and we’ve had a lot of realization activity. And quite frankly, the pipeline of realization activity is heavy in that fund.

So we feel very good. Ultimately, when that fund hits full carry, it’s hard to exactly predict, but it’s probably at some point over the next kind of twelve months.

Conference Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Dan Harris, Head of Investor Relations for closing remarks.

Daniel Harris, Head of Investor Relations, Carlyle Group: Thank you for your time this morning. If you have any follow-up questions, feel free to reach out to Investor Relations after the call, and we look forward to talking to you again next quarter.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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