Summary of The Carlyle Group (CG) FY Conference Call - May 28, 2025 Company Overview - **Company**: The Carlyle Group (CG) - **CEO**: Harvey Schwartz - **Date of Conference**: May 28, 2025 Key Takeaways from the Conference Call Strategic Growth Initiatives - Carlyle has focused on implementing strategic growth initiatives and operational improvements over the past two years [4][10] - Key areas identified for growth include: - Secondaries business (Carlyle Alp Invest) with a 25-year history and $90 billion in assets [5] - Capital markets, insurance, and credit platforms [5] - Capital markets revenue reached $150 million in a six-month period, surpassing any previous full-year revenue [6] - Potential peak operating environment could yield over $300 million in capital markets revenue [7] Operational Improvements - Fee-Related Earnings (FRE) increased by nearly 40% since the CEO's tenure began, with operating margins up 900 basis points [8] - A complete overhaul of the compensation strategy has aligned interests among LPs, shareholders, and teams [9] - Share repurchase program is over 50% complete [9] Market and Economic Outlook - Concerns about sticky inflation, higher interest rates, and slowing economic growth were acknowledged [11][12] - Current economic conditions are viewed as unique due to a global policy shift, influenced by tariff policies and geopolitical tensions [12][13] - The uncertainty in policy is causing a chilling effect on business decision-making, leading to delayed capital market activities [20][19] - Carlyle's data indicates that while there is uncertainty, EBITDA is growing, and companies are not drastically adjusting hiring [22] Trade Relations and Global Investments - Carlyle has a long-standing commitment to Asia, particularly Japan and China, with positive discussions regarding trade negotiations [31][36] - The firm has a history of successful investments in China and is optimistic about future opportunities [37][38] Realizations and Capital Deployment - Carlyle's platform currently manages $453 billion in assets, with a significant focus on credit insurance [42] - The firm returned approximately €20 billion in capital over the past year, significantly outperforming the industry average [46] - Carlyle's U.S. buyout business is performing well, with the current fund tracking exceptionally [49] Fundraising and Growth Outlook - Carlyle maintains its 2025 guidance of $40 billion in flows and 6% FRE growth, despite recent market volatility [70] - There is a shift in LP conversations towards national security and local investments, with a focus on defense and energy sectors [72][74] Secondaries Business - The secondaries business is growing rapidly, with Carlyle positioned as a dominant player in this space [57][64] - The firm is focusing on providing integrated solutions across various client channels [59][62] Insurance and Reinsurance Opportunities - Carlyle's Fortitude insurance business is seen as a valuable asset, with ongoing opportunities in reinsurance transactions [93][94] - The firm is open to inorganic growth opportunities in the insurance sector, provided they align with strategic goals [98][99] Capital Markets Strategy - Carlyle is restructuring its capital markets team to enhance revenue generation capabilities [102] - The firm aims to leverage its well-developed capital markets team for monetization opportunities [102][104] Additional Insights - Carlyle's competitive advantage lies in its global brand recognition and established track record in various markets [84] - The firm is actively exploring new product offerings and partnerships to meet evolving client needs [90][91] This summary encapsulates the key points discussed during the conference call, highlighting Carlyle's strategic initiatives, market outlook, and operational improvements.

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]