US-based Carlyle Group has raised more than $3b for long-term investments

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Carlyle Group LP has raised more than $3 billion for a new private equity vehicle that will invest in companies for up to twice as long as a conventional fund, people familiar with the matter said.

Washington-based Carlyle, the world’s second-largest private equity manager, has recruited a 14-member investment team for the fund, according to Tyler Zachem, who joined the firm last fall to co-head the group with Carlyle veteran Eliot Merrill. Carlyle Global Partners LP, as the fund is known, has already invested nearly $500 million in two companies, Zachem said.

The move parallels efforts by private equity firms including Blackstone Group LP and CVC Capital Partners to break free of the usual 10-year fund life and put money to work for longer, or even permanently. The fund, which has a lifespan of up to 20 years, will pursue deals that don’t fit the mandate of Carlyle’s flagship private equity fund, which seeks to cash out of individual investments in three to five years.

“There are businesses that need capital longer, to build themselves over an extended period, and family-owned companies that don’t want to go public in years three to five,” Merrill said last week in a phone interview.

“We used to have to have pass on those deals. Now, we can lean in.”

Merrill and Zachem declined to say how much money the fund has raised or how much more Carlylehopes to gather. The two investments they’ve made are in aerospace and media and telecommunications, respectively, they said, declining to comment further.

Broad Sky

Zachem, 50, and three other deal makers joined Carlyle in November from Broad Sky Partners, a buyout boutique he co- founded in 2013 after leaving MidOcean Partners. Their hiring came as Carlylepurchased Broad Sky’s entire investment portfolio, comprising stakes in Apex Parks Group, which operates family-entertainment centers, and Manna Pro Products, an animal- feed company.

The rest of the team was recruited internally. Merrill, 45, a long-time media and telecoms specialist, has been at Carlyle since 2001.

Like Carlyle’s main buyout fund, Carlyle Global Partners will seek to at least double the value of its investments over time, while targeting somewhat lower annual returns. It will charge a lower inventive fee than the 20 percent of gains levied by the main fund.

Much of Carlyle Global Partners’ money has come from pension funds and sovereign wealth funds. It will take minority and majority stakes in companies in the U.S. and abroad. With co-investors, it will be able to lead equity investments of $1 billion or more.

‘Perfect Model’

Carlyle isn’t the only firm vying to escape private equity’s customary time limit. Industry executives such as KKR & Co.’s Henry Kravis have said they hope to invest more in the style of Warren Buffett, whose Berkshire Hathaway Inc. funds buyouts of companies including Kraft Heinz Co. and BNSF Railway Co. with money from its insurance operations and can hold them indefinitely.

Kravis has dubbed Berkshire “the perfect private equity model.”

KKR has amassed a $10 billion cache of assets outside its funds, which it has used to buy stakes in tech startups. Apollo Global Management LLC, Fortress Investment Group LLC and others have created an array of publicly traded vehicles, including real estate investment trusts and commercial lenders, which don’t have to wind down.

In addition to Carlyle, Blackstone is gathering money for a so-called core private equity platform, to invest in lower-risk companies for an extended time. The buyout firm has not said how much it has raised. CVC, Europe’s biggest private equity firm, has set up a fund with a similar strategy.

“It’s a product that I think has great potential for us,” Carlyle co-founder David Rubenstein said about the new fund in an October earnings call. “We only want a limited number of investors in it, and so far, progress has been quite good.”

Carlyle, which oversaw $187.7 billion in private equity, credit and other assets as of Sept. 30, is scheduled to report fourth-quarter earnings on Wednesday.

Active in India

The group has been an active investor in India. Recent deals include investments in Edelweiss Financial Services, PNB Housing Finance Ltd, diagnostics chain Metropolis, and Newgen Knowledge Works Pvt Ltd.

Carlyle’s Asia Buyout Fund exited Housing Development Finance Corp (HDFC) in 2012, with a two-fold return on investment at $840 million. Other profitable exits include IIFL Holdings Ltd., Claris Lifesciences and Elitecore Technologies. Those came during years when other private equity players struggled to make their India investments work.

In January, the firm promoted one of its managing directors, Neeraj Bharadwaj, to partner position, a move it announced in a global press release. He is based in Mumbai, India.

(With inputs from Bloomberg) 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.