The Carlyle Group Inc. · NASDAQ:CG
The Carlyle — Investor Presentation (December 2018)
39 slides from The Carlyle's investor presentation, Dec 4, 2018
Slide 1: The Carlyle Group Unitholder Presentation
The Carlyle Group Unitholder Presentation December 2018
Slide 2: Important Information
Important Information This presentation has been prepared by The Carlyle Group L.P. (together with its affiliates, “Carlyle”) and may only be used for informational purposes only. This presentation may not be referenced, quoted or linked by website, in whole or in part except as agreed to in writing
Slide 3: Carlyle Is A Global Leader In Private Investing
Carlyle Is A Global Leader In Private Investing Total AUM: $212 bn ◌ Available Capital: $81 bn Corporate Real Global Investment Private Equity Assets1 Credit Solutions (CPE) (RA) (GC) (IS) $82 $46 $37 $47 AUM ($bn) • Buyout • Real Estate • Structured Credit • Private Equity Fund Strategies • Growth
Slide 4: Core Business Metrics Robust & Diversified
Core Business Metrics Robust & Diversified Carry Fund Appreciation Net Accrued Performance Revenue (LTM) (as of 9/30/2018) 17% $1.9 billion CPE RA GC IS CPE RA GC IS 16% 17% 10% 20% $1.2bn $570m $34m $93m Invested Capital Realized Proceeds (LTM) (LTM) $18.0 billion $27.1 billion CPE RA GC IS CPE RA
Slide 5: Exceptional Investment Performance Is Our Primary Goal
Exceptional Investment Performance Is Our Primary Goal • Carry Fund Appreciation LTM Carry Fund Appreciation vs outpaced the MSCI ACWI by Major Equity Index Performance 1 ~900 basis points over the LTM 25% • Realized/Partially Realized 20% CPE investments generated a 20% 2.5x MOIC & 27% Gross IRR si
Slide 6: Accrued Carry Growing And Transitioning Towards Current Generation Funds
Accrued Carry Growing And Transitioning Towards Current Generation Funds Net Accrued Performance Revenue Balance ($ billions) Current Generation1 $1.8 $1.9 funds account for more than 60% of $1.8 $1.7 $1.3 the $1.9 billion Net $1.2 $1.1 Accrued Performance Revenue Balance as of September 30, compare
Slide 7: Consistent Realized Proceeds Provide a Steady Engine for Net Realized Performance Revenues
Consistent Realized Proceeds Provide a Steady Engine for Net Realized Performance Revenues Realized Proceeds ($billions) All Carry Funds 29.4 Investment 29.4 29.0 27.1 Solutions 25.3 25.4 26.0 Global Credit Real Assets Corporate Private Equity 2012 2013 2014 2015 2016 2017 LTM Q3 2018 7 Note: Data a
Slide 8: Deployment Has Increased As Our Investment Platform Has Grown
Deployment Has Increased As Our Investment Platform Has Grown Invested Capital ($ billions) All Carry Funds $22.0 Investment $17.9 $18.0 Solutions $14.8 $14.0 Global $12.8 $12.3 Credit Real Assets Corporate Private Equity 2012 2013 2014 2015 2016 2017 LTM Q3 2018 Note: Data as of 9/30/2018. There is
Slide 9: Focused On Improving Fee Related Earnings
Focused On Improving Fee Related Earnings 9
Slide 10: We Are Focused On Improving Fee Related Earnings
We Are Focused On Improving Fee Related Earnings • Quarterly Fee Related Earnings growth accelerated in 2018 as fees activated on our recently raised large flagship funds • Fund scaling has allowed us to leverage our expense base and drive higher Fee Related Earnings and FRE margins • Diversifying i
Slide 11: Fee Related Earnings and Margins Are Trending Up
Fee Related Earnings and Margins Are Trending Up Fee Related Earnings FRE & Margin Trends growth accelerated over 30% the last few quarters as we $100 activated fees on our largest 25% buyout funds Fee Related Earnings ($mm) $80 20% FRE of $89 million in Q3 FRE Margin (%) 2018 compared to a run- $60
Slide 12: FRE Growth Supported By A Growing Carry Fund Investment Platform
FRE Growth Supported By A Growing Carry Fund Investment Platform Fund Commitments for Major CPE/RA/GC Carry Funds ~ 30%+ +40% $49 bn $35 bn 1 2 Prior Generation Current Generation Next Generation 3 Note: Data as of 9/30/2018. Reflects Management’s views as of 11/29/2018. Please see “Important Inform
Slide 13: Continuing Momentum and Scale in Global Credit
Continuing Momentum and Scale in Global Credit Global Credit has~$240 million in annual Global Credit run-rate management fees, up 27% YoY AUM: $37 billion Continue to build out capabilities to manage larger amounts of capital Fortitude relationship is expected to help Loans & Global Credit de
Slide 14: On Track To Exceed Our Fundraising Target of $100 Billion By YE 2019
On Track To Exceed Our Fundraising Target of $100 Billion By YE 2019 2016-19 Gross Fundraising Target: ~$100 billion Raised $83 billion towards goal from 2016 to Q3 2018 IS CPE GC Strong partnerships with more RA than 1,925 global investors from 90 countries Gross Fundraising Since Q1 2016 Exp
Slide 15: Fundraising Strength Driving Fee Earning AUM Higher
Fundraising Strength Driving Fee Earning AUM Higher $175 Fee-Earning AUM Substantially all (99%) ($ billions) of current Fee Earning $147 $150 AUM locked up in long term fund structures and not $125 $115 IS $100 subject to quarterly GC redemption $75 $11 billion in Pending $50 RA Fee-Earning AUM wil
Slide 16: Carlyle Is Delivering Attractive Financial Performance
Carlyle Is Delivering Attractive Financial Performance 16
Slide 17: Carlyle Is Delivering Attractive Financial Performance
Carlyle Is Delivering Attractive Financial Performance ($mm or $per unit) 2016 2017 YTD 2018 3Q18 Management Fee Revenue $1,086 $1,081 $971 $355 Fee Related Earnings 1 $33 $192 $175 $89 Economic Income 1 $306 $1,269 $552 $111 Distributable Earnings 1 $652 $670 $463 $210 Distribution Per Common Unit
Slide 18: Strong Balance Sheet With Growing Value Per Unit
Strong Balance Sheet With Growing Value Per Unit Key Balance Sheet Items 1 Key Balance Sheet Items 9/30/2018 ($ in billions, except per adjusted unit amounts) ($ billions) $8.37 / unit Cash, Cash Equivalents and Corporate $3.0 Treasury Investments 2 $1.5 $7.14 / unit Net Net accrued performance fees
Slide 19: We Are Tracking Well Against Our Main Focus Areas
Well Are Tracking Well Against Our Main Focus Areas Investment performance continues to be strong: LTM carry fund appreciation of 17% Investment platform scaling significantly and we remain on track for $100 billion in new capital raised by 2019 Gaining traction on building a premier global credit b
Slide 20: Segment Summaries
SEGMENT SUMMARIES 20
Slide 21: Corporate Private Equity: Platform Continues to Scale While Maintaining Superior Long Term Performance
Corporate Private Equity: Platform Continues to Scale While Maintaining Superior Long Term Performance Total AUM ($bn) Fee-Earning AUM ($bn) Key Points $82 $73 $65 $63 $51 $56 Superior, diversified track record $40 $41 $36 $36 • 2.5X MOIC on realized and partially realized investments • Experience
Slide 22: Real Assets: Growing Real Estate Platform & Opportunities in Natural Resources, Power and Infrastructure
Real Assets: Growing Real Estate Platform & Opportunities in Natural Resources, Power and Infrastructure Total AUM ($bn) Fee-Earning AUM ($bn) Key Points $42 $43 $46 $38 $34 $28 $31 $28 $32 $32 US Real Estate business delivering strong performance • Strong performance and substantial 2014 2015 201
Slide 23: Global Credit: Significant Growth Potential as We Build a Larger Diversified Credit Platform
Global Credit: Significant Growth Potential as We Build a Larger Diversified Credit Platform Total AUM 1 ($bn) Fee-Earning AUM 1 ($bn) Key Points $37 $35 $29 $33 $37 $34 $31 Focused on enhancing and scaling credit $27 $30 $24 platform • Private credit accelerating as an asset class • New credit te
Slide 24: Investment Solutions: Successful Fundraising Efforts & Consistent Strong Performance
Investment Solutions: Successful Fundraising Efforts & Consistent Strong Performance Support Future Upside Potential Total AUM ($bn) Fee-Earning AUM ($bn) Key Points $51 $47 $46 $43 $46 $33 AlpInvest has great investment $30 $29 $28 $27 performance with performance fee upside • 12% net IRR & 1.6x
Slide 25: Appendix
APPENDIX 25
Slide 26: Fortitude Group Holdings Transaction Highlights
Fortitude Group Holdings Transaction Highlights Transaction signed on July 31, 2018 and closed in Q4 2018 Acquired a 19.9% interest in Fortitude Group Holdings (from AIG), which was previously known as DSA Re Carlyle to become the preferred alternative asset manager for Fortitude, with Fortitu
Slide 27: Apollo Aviation Group (AAG) Transaction Highlights
Apollo Aviation Group (AAG) Transaction Highlights Transaction announced on October 15, 2018 and expected to close by the end of January 2019 Carlyle will acquire 100% of AAG Global commercial aviation investment and servicing firm with $5.6 billion of AUM, including 243 aircraft owned, managed
Slide 28: CPE Portfolio Company Earnings Growth Drives Value Creation
CPE Portfolio Company Earnings Growth Drives Value Creation Drivers of Value Creation 1 (% of Value Created) Equity Total Value Invested EBITDA Debt Multiple Fund Growth Paydown Expansion US Buyout 2 64% 23% 13% Asia Buyout 3 71% 13% 16% Europe Buyout 4 58% 14% 28% 1) Includes both realized & unreal
Slide 29: CPE's Proven, Disciplined Investment Process Drives Consistent Returns
CPE’s Proven, Disciplined Investment Process Drives Consistent Returns $20 184 Deals Median MOIC: 2.2X Average MOIC: 2.7X $16 $12 Gross Profit ($ bn) $8 $4 $0 <1.0 1 -2 2-3 3-4 4-5 5-6 6-7 7-8 8 -9 9 - 10 10+ ($4) Multiple of Invested Capital Note: Data as of 9/30/2018. Represents realized and parti
Slide 30: Exceptional Fund Performance Is Our Top Priority
Exceptional Fund Performance Is Our Top Priority, and Many Of Our Largest Fund Families Have Consistently Delivered Carlyle Fund Family Inception Year Committed Capital (bn) Gross IRR Net IRR Total MOIC Carlyle Partners IV (U.S.) 2004 $7.9 16% 13% 2.4x Carlyle Partners V (U.S.) 2007 $13.7 18% 14% 2.
Slide 31: Carlyle's Private Equity Funds Have Historically Performed Well During Various Investment Cycles
Carlyle’s Private Equity Funds Have Historically Performed Well During Various Investment Cycles Total Investments Realized/Partially Realized Investing Fund Period MOIC Gross IRR MOIC Gross IRR Carlyle Partners IV 2004 – 2007 2.4X 16% 2.4X 16% Carlyle Partners V 2007 – 2012 2.1X 18% 2.6X 25% Carlyl
Slide 32: Performance Revenue Accrual Likely to Exceed Near Term Realizations
Performance Revenue Accrual Likely to Exceed Near Term Realizations as Investing Generation of Funds Continue to Accrue Carry Net Performance Revenues (EI) Net Realized Performance Revenues (DE) $2,500 Net Accrued Performance Revenue Balance $2,000 $1,500 EI > DE DE > EI EI > DE $1,000 $500 $0 2012
Slide 33: Record Amount of Remaining Fair Value Supports Further Growth In Performance Revenue
Record Amount of Remaining Fair Value Supports Further Growth In Performance Revenue Remaining Fair Value CPE/RA/GC Carry Funds ($ billions) $80 CPE RA GC $73 $70 $66 $60 $50 $40 $30 $20 $10 $0 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 N
Slide 34: Breadth of Fundraising Resources and Capabilities Drive New Investor Relationships
Breadth of Fundraising Resources and Capabilities Drive New Investor Relationships • More than 1,925 fund investors from 90 countries 2010 2013 2018 • More than 280 new fund investors over the past 3 years have committed $8.0 billion ~1,300 1,600+ 1,925+ Investors Investors Investors • 65% of fund i
Slide 35: Diverse Investment Activity Across Carry Funds And Credit
Diverse Investment Activity Across Carry Funds And Credit Despite Competitive Global Markets LTM Total Investment Activity ($ billions) Carry Fund Deployment: $18.0 Credit Investment Activity (Non-Carry Fund): $6.9 Middle Market $7.0 $2.1 Lending Originations $1.2 Other CPE $5.2 $0.9 Europe Buyout $
Slide 36: Investments Remain Diversified Across Age With Majority of Investments Held Privately
Investments Remain Diversified Across Age With Majority of Investments Held Privately Remaining Fair Value of CPE/RA/GC Carry Fund Portfolio1 - $73 billion 12% “Aging” of carry fund portfolio remains 0-2 39% years Public diversified with 29% of Remaining Fair Value 2-4 years in investments made 31%
Slide 37: Summary Financial Results
Summary Financial Results Quarterly Annual Pre-tax Segment Measures ($ millions) 4Q17 1Q18 2Q18 3Q18 2014 2015 2016 2017 2018 YTD Segment Revenues Management, Portfolio Advisory & Transaction Fees 305 294 335 363 1,303 1,223 1,134 1,125 992 Performance Revenues 616 317 470 225 1,708 910 752 2,175 1,
Slide 38: Key Metrics for "The Carlyle Engine"
Key Metrics for “The Carlyle Engine” Quarterly Data Annual Data 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 2013 2014 2015 2016 2017 2018 YTD Total AUM(1) ($ bn) 157.6 161.9 169.8 174.4 195.1 201.5 209.7 212.3 Total AUM(1) ($ bn) 188.8 194.5 182.6 157.6 195.1 212.3 Corporate Private Equity 50.9 53.0 54.
Slide 39: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials Quarterly Annual ($ millions) 3Q17 4Q17 1Q18 2Q18 3Q18 2015 2016 2017 2018 YTD Income (loss) before provision for income taxes $ 166 $ 395 $ 126 $ 253 $ 61 $ 402 $ 45 $ 1,132 $ 439 Adjustments: Equity-based compensation issued in conjunction with the IPO
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