Fund focus: Carlyle tackles growth transformation

The Carlyle Group believes it needs to grow as fast as the markets that it invests in. For the firm’s latest Asia buyout fund, Carlyle Asia Partners V (CAP V), that meant first setting a target of $5 billion, already significantly higher than its $3.9 billion predecessor – then blowing past that to close at $6.55 billion. 

“We expect the average size of companies to grow as the scale of the economies grows, which means more and larger transactions as well as more control deals,” says X.D. Yang, chairman of Carlyle Asia ex-Japan and co-head of Asia buyouts. “So we believe the current fund size is ideal given the investment pace of CAP IV and the market environment.”

Yang expects no shortage of opportunities to put the new capital to work, with the aggregate GDP of the Asia ex-Japan currently at $20 trillion and expected to grow faster than the rest of the world. Tackling the economic transformations that accompany this expansion is at the center of Carlyle’s strategy for the new fund.

Consumer and retail, financial services, technology, media and telecom, healthcare, and industrials are core sectors for CAP V. The firm sees control and strategic investment opportunities driven by the rising spending power of Asia’s middle class and youth as well as technology and e-commerce-enabled disruption across sectors. Carlyle wants to be the partner of choice for companies dealing with these changes.

“There are a number of companies with strong business fundamentals and leading domestic market positioning that need operational and strategic expertise and a global perspective,” says Yang. “We’re well positioned to support both business expansion and value-add initiatives, such as mergers and acquisitions, and corporate governance.”

Buyout opportunities are expected to emerge from corporate players and family businesses facing succession issues. The firm also hopes to use Asia’s deepening debt capital and leveraged finance markets to pursue larger investments, and eventually to enhance exit opportunities.

Carlyle will need these resources to address an increasingly competitive market. Several other GPs – such as KKR and Affinity Equity Partners – have raised pan-regional buyout funds in the last year with a significantly higher corpus than previous funds. The likes of Baring Private Equity Asia and PAG Asia Capital are expected to follow. 

As a result, Carlyle is focusing on the benefits it can bring to its portfolio beyond the initial investment. The firm recently expanded its Southeast Asia team to help revive its fortunes in a market where it has long been dormant, while an internet and technology advisor has been added in China.

“Carlyle Asia devotes substantial team resources towards working with portfolio companies to create value, based on local industry specialization, operating expertise and the its global resources,” says Yang. “Our team of investment professionals let us play a critical role in providing strategic advice and support.”   

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