Carlyle Group Targets $15 Billion US Buyout Fund as Private Equity Booms

Fund would be the largest ever to focus on the region and comes as rivals raise megafunds.

The Carlyle Group is targeting a $15 billion raise for its next US fund, according to Bloomberg. The fund would be the seventh the firm has raised for the US. It comes as private equity funds are on pace to raise record amounts of funding, even as dry powder—the amount of uninvested capital available—hits record levels.

 

Carlyle’s plans come in the wake of rivals raising large funds of their own. In March, KKR closed a $13.9 billion buyout fund to focus on North America, the largest pool to be raised for the region. In April, Silver Lake raised $15 billion for a global technology buyout, the largest fund of its type. Apollo Global Management, meanwhile, is targeting $23.5 billion for its next global fund in what would be the biggest buyout fund ever raised by a private equity firm, according to Bloomberg.

 

Investors have closed five buyout funds with at least $10 billion this year, raising a total of $67.9 billion for the funds, according to research firm Pitchbook. If Apollo and Carlyle were to meet their targets, the seven funds would have $106.4 billion and top the prior record set by large buyout funds in 2007, according to Pitchbook.

 

A strong performance record is likely drawing investor interest to the new Carlyle fund. Carlyle’s four latest flagship buyout funds have Internal Rates of Return (IRRs) of 8%, 14%, 13%, and 21%, according to Pitchbook.

 

Investors have been piling into private equity—especially large, established funds—based on strong historical performances.

 

“I’ve been doing this for 30 years, and one of my principal jobs at Carlyle has been to help raise the money, and I’ve never seen as good a time as it is now to raise money,” Carlyle co-Chief Executive Officer David Rubenstein said in May at a conference in New York, according to Bloomberg. “I suspect that all the major funds that are being raised by the large private equity firms will be oversubscribed. I suspect that’ll be the case with us.”

 

The fees charged by private equity funds have increased in 2017 as the investor interest gives managers increased negotiating leverage. The competition for deals is mounting, however, with record amounts of capital to be invested.

 

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