Carlyle offers LPs quick exit route from Asia fund
The Carlyle Group has introduced a liquidity mechanism for its latest Asia buyout fund that facilitates the exit of LPs that want to sell their positions in the vehicle, industry participants tell AVCJ. The private equity firm has used a similar mechanism elsewhere in the world, but this is the first time it has been deployed in Asia.
About half a dozen LPs have agreed to act as liquidity providers and pick up stakes in the fund as they become available. Carlyle is said to be seeking to raise $3.5 billion for Carlyle Asia Partners IV.
"It works better with a large diversified LP base," said a source familiar with the situation. "Many LPs see it as a value-added service, even though they don't invest in the fund with the idea of getting out early."
The general aim is to assuage investors' concerns about entering an illiquid asset class during a time of market volatility. By keeping the process internal, it also removes the time lag, bureaucracy and fees that are features of an intermediated auction.
It was reported earlier this year that Carlyle had attached a liquidity mechanism to Carlyle Partners VI, its latest $10 billion global buyout vehicle that is currently being raised, to facilitate the exit of LPs. Twice a year investors will have the opportunity to sell their positions to a group of secondaries players, including Goldman Sachs, Credit Suisse, Coller Capital, Landmark Partners and Partners Group.
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