Home > News > Asset Allocation > Carlyle Group Targets $15 Billion US Buyout Fund as Private Equity Booms
Asset Allocation

Carlyle Group Targets $15 Billion US Buyout Fund as Private Equity Booms

Fund would be the largest ever to focus on the region and comes as rivals raise megafunds.

By Vishesh Kumar

The Carlyle Group is targeting a $15 billion raise for its next US fund, according to Bloomberg. The fund would be the seventh the firm has raised for the US. It comes as private equity funds are on pace to raise record amounts of funding, even as dry powder—the amount of uninvested capital available—hits record levels.

Carlyle’s plans come in the wake of rivals raising large funds of their own. In March, KKR closed a $13.9 billion buyout fund to focus on North America, the largest pool to be raised for the region. In April, Silver Lake raised $15 billion for a global technology buyout, the largest fund of its type. Apollo Global Management, meanwhile, is targeting $23.5 billion for its next global fund in what would be the biggest buyout fund ever raised by a private equity firm, according to Bloomberg.

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Investors have closed five buyout funds with at least $10 billion this year, raising a total of $67.9 billion for the funds, according to research firm Pitchbook. If Apollo and Carlyle were to meet their targets, the seven funds would have $106.4 billion and top the prior record set by large buyout funds in 2007, according to Pitchbook.

A strong performance record is likely drawing investor interest to the new Carlyle fund. Carlyle’s four latest flagship buyout funds have Internal Rates of Return (IRRs) of 8%, 14%, 13%, and 21%, according to Pitchbook.

Investors have been piling into private equity—especially large, established funds—based on strong historical performances.

“I’ve been doing this for 30 years, and one of my principal jobs at Carlyle has been to help raise the money, and I’ve never seen as good a time as it is now to raise money,” Carlyle co-Chief Executive Officer David Rubenstein said in May at a conference in New York, according to Bloomberg. “I suspect that all the major funds that are being raised by the large private equity firms will be oversubscribed. I suspect that’ll be the case with us.”

The fees charged by private equity funds have increased in 2017 as the investor interest gives managers increased negotiating leverage. The competition for deals is mounting, however, with record amounts of capital to be invested.

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Home > News > Asset Allocation > Rhode Island’s Pension Fund Outperforms Benchmark with 11.6% Return
Asset Allocation

Rhode Island’s Pension Fund Outperforms Benchmark with 11.6% Return

Plan earns $851 million in fiscal 2017.

By Christine Giordano

The $8 billion Rhode Island pension fund generated an 11.62% return for the fiscal year ending on June 30.  The plan outperformed its benchmark by 28 basis points and earned $851 million over the 2017 fiscal year.

“Our Back to Basics investment approach is improving investments returns for the fund,” Rhode Island  Treasurer Seth Magaziner said in a press release. “My office will continue to work on strengthening retirement security for our public employees.”

Magaziner last September introduced the Back to Basics plan last September, which partly focuses on reducing the fund’s hedge fund allocation by more than $500 million over the next two years, and reallocating this capital to more traditional asset classes. As of the end of June, the plan’s equity hedge fund allocation and real return hedge fund allocation were 5.2% and 4.2%, respectively, according to internal documents compared to last year’s allocation of 7.7% and 6.6%, respectively. 

Back to Basics also focuses on growth and income strategies, which consist of low-fee index funds and strategies to protect the pension system against market risks such as inflation and volatility.

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The plan also slightly outperformed its benchmark over the 10-year period ending on June 30, with a 4.4% return compared to the portfolio benchmark yielding 4.3%. Further, the plan lowered its overall assumed rate of return to 7%  from 7.5% earlier this year.

Other recent changes within the plan included the hiring of  Alec Stais as CIO in May. Stais, a former Goldman Sachs managing director, oversees the day-to-day administration of the treasury’s investment office.

 

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