Carlyle makes $4.5b first close on Asia buyout fund

The GP said in its third-quarter earnings call that the first close for Carlyle Asia Partners V came on October 30, which is consistent with guidance investor relations executives gave to LPs in July. The firm closed its previous pan-regional vehicle at $3.9 billion in 2014 after more than two years of fundraising.

The jump in fund size is a familiar theme among Asian pan-regional players. KKR closed its third Asia vehicle in May at $9.3 billion, a significant uptick from the $6 billion raised for Fund II. Meanwhile, Affinity Equity Partners is expected to raise at least $5 billion for its fifth fund, up from $3.8 billion last time around, and Baring Private Equity Asia is preparing to return to market with its seventh vehicle, having indicated to LPs it may target around $6 billion, compared to $3.98 billion for Fund VI.

The Blackstone Group and Permira are also in the market with their debut Asia vehicles, reportedly seeking $3 billion and at least $1 billion, respectively. In addition, TPG Capital is looking to raise up to $4.5 billion for its seventh pan-regional vehicle.

Carlyle manages Asia growth funds and dedicated Japan buyout funds in addition to its flagship pan-regional vehicles. The firm is currently looking to raise $1 billion for its latest growth fund, while the third Japan vehicle closed at just under $1 billion in 2015. The new Asia buyout fund will have the option to invest alongside the Japan vehicle in certain deals, allowing Carlyle to take on larger transactions.

“In terms of places around the world that I think we find particularly attractive, I would say we find Japan, particularly attractive. I think that the market there is, generally it has been tremendously underpenetrated for private equity, today it is becoming more welcoming to private equity and we’ve got a big deep team there,” William Conway, the firm’s co-CEO, said on the earnings call.

As of September, Carlyle Asia Partners IV had achieved a multiple of 1.5x and a net IRR of 17%, and was more than 75% deployed. Its predecessor, which closed at $2.55 billion in 2010, was on course for a 1.8x multiple and a net IRR of 12%.

Asia-based transactions closed during the third quarter included Australia-based iNova Pharmaceuticals, which was joint $930 million deal with Pacific Equity Partners, and the McDonald’s franchise for China and Hong Kong. Carlyle, CITIC Capital and the Hong Kong-listed unit of CITIC Group paid $2.1 billion for the master franchise rights, with Carlyle taking a 28% stake in the business.

Since the start of September, the GP has also agreed two exits in Asia, neither of which was mentioned in the earnings call. Carlyle reduced its stake in Tsubaki Nakashima – a Japanese industrial equipment supplier it acquired in 2011 and took public in 2015 – from about 47% to 2.4% for an undisclosed sum and also sold its 46% stake in Australia’s Coates Hire to Seven Group Holdings in a deal worth A$517 million ($418 million).

Carlyle said it raised $7 billion globally during the third quarter, bringing its year-to-date total to $18.5 billion. The firm then exceeded the third-quarter figure in October alone. With a first close on its latest US buyout fund expected in the next three months, Conway said the GP was well on its way to meeting its 2017 fundraising target across all strategies of $100 billion.

Last week, Carlyle announced that its three co-founders – Conway, David Rubenstein, and Daniel D’Aniello – would scale back their involvement in the firm from January 1. Kewsong Lee and Glenn Youngkin will become co-CEOs, with Conway and Rubenstein moving to executive chairmanships, while D’Aniello switches from chairman to chairman emeritus. Conway will remain CIO but share those duties with Peter Clare.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Fundraising
• Buyout
• GPs
• Asia
• The Carlyle Group