The Carlyle Group Inc. · NASDAQ:CG
The Carlyle — Deutsche Bank Global Financial Services Conference 2022
37 slides from The Carlyle's conference presentation, June 2022
Slide 1: Deutsche Bank Global Financial Services Conference
Deutsche Bank Global Financial Services Conference June 2022 1
Slide 2: Important Information
Important Information This presentation has been prepared by The Carlyle Group Inc. (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: We Are A Leading Global Investment Firm
We Are GLOBAL PRIVATE EQUITY $169BN A Leading Corporate Private Equity Real Estate Infrastructure & Natural Resources Global Investment GLOBAL CREDIT Liquid Credit Illiquid Credit $141BN Firm Real Assets Credit Insurance $375BN GLOBAL INVESTMENT SOLUTIONS Primary Secondaries $65BN TOTAL AUM
Slide 4: Carlyle Is An Underappreciated Growth Story
Carlyle Is An Underappreciated Growth Story OPERATING IN A DELIVERING ATTRACTIVE DRIVING ORGANIC AND GROWTH INDUSTRY GROWTH INORGANIC EXPANSION VISIBLE PATH TO INCREASED AND REMAIN ATTRACTIVELY SUSTAINABLE MIX OF VALUED EARNINGS 4
Slide 5: Operating in a Growth Industry
1 Operating in a Growth Industry TRADE SECRET & STRICTLY CONFIDENTIAL 5
Slide 6: Secular Tailwinds in Our Biggest Business Strategies
Secular Tailwinds in Our Biggest Business Strategies OUR BIGGEST STRATEGIES POISED PRIVATE MARKETS GROWTH TO CONTINUE FOR THE MOST GROWTH ASSETS UNDER MANAGEMENT ($TN): AUM CAGR: 2021-2026 TOTAL PRIVATE MARKETS1 TOTAL PRIVATE MARKETS2 $21 18% 17% 17% 16% +15% CAGR $10 $8 7% $7 $6 5% 2018 2019 2020 2
Slide 7: Investment Outperformance Drives Positive Asset Flows
Investment Outperformance Drives Positive Asset Flows PRIVATE EQUITY ANNUALIZED RETURNS PRIVATE CREDIT ANNUALIZED RETURNS 16.8% 2.6% 14.6% 9.8% 9.9% 9.1% 12.5% 4.6% 3.0% 5.5% 6.6% 4.8% 14.2% 9.5% 10.0% 4.3% 4.4% 3.3% 10 years 15 years 20 years 10 years 15 years 20 years 1 1 2, 4 Public Market Equiva
Slide 8: Delivering Attractive Growth
2 Delivering Attractive Growth TRADE SECRET & STRICTLY CONFIDENTIAL 8
Slide 9: Our AUM Has Grown Rapidly and Is Increasingly Diversified
Our AUM Has GROWN Rapidly and Is Increasingly DIVERSIFIED Global Credit has more than doubled its impact and is our largest source of AUM 4/1/2022 12/31/2017 PRO FORMA FOR FORTITUDE Inv Sol Inv Sol 17% 24% Corp PE 30% Corp PE 38% $195BN 17% CAGR $375BN Global Credit Real Estate 18% Global Credit 8%
Slide 10: Platform Growth Driving Strong Fee Related Earnings
Platform Growth Driving Strong Fee Related Earnings FEE RELATED EARNINGS ($MN) STRATEGIC FOCUS ON GROWING FRE 33% CAGR / $652 • Increasing sustainable FRE a main driver More Than 3X to create shareholder value $598 • FRE more than tripled in the past three $453 years, with a CAGR ~33% since 2017 • F
Slide 11: Record Capital Deployment Driving Record Level of Invested Capital
Record Capital Deployment Driving Record Level of Invested Capital CARRY FUND INVESTED CAPITAL ($BN) REMAINING FAIR VALUE ($BN) TRADITIONAL CARRY FUNDS ONLY 1 TRADITIONAL CARRY FUNDS ONLY 1 $34 $135 $124 $87 $21 $18 $71 $60 $14 2012-2014 Avg 2015-2017 Avg 2018-2020 Avg 2021 2015 2017 2019 2021 1Q 20
Slide 12: Strong Investment Performance Driving Performance Revenues
Strong Investment Performance Driving Performance Revenues NET ACCRUED PERFORMANCE REVENUES ($BN) NET REALIZED PERFORMANCE REVENUES ($MN) $4.3 $1,530 $3.9 $1.7 $1.7 $636 $656 $1.3 $243 2015 2017 2019 2021 1Q 2022 2012-2014 Avg 2015-2017 Avg 2018-2020 Avg 2021 12
Slide 13: High Performing Platform Delivering Significantly Higher Earnings
High Performing Platform Delivering Significantly Higher Earnings DISTRIBUTABLE EARNINGS PER SHARE EARNINGS SCALING ALONGSIDE PLATFORM > 2X VS RECENT $5.01 • Carlyle generated over $2.2 billion in 20% effective DE tax rate pre-tax Distributable Earnings in 2021, nearly triple the average level of th
Slide 14: Driving Organic & Inorganic Expansion
3 Driving Organic & Inorganic Expansion TRADE SECRET & STRICTLY CONFIDENTIAL 14
Slide 15: Delivering On Our Strategic Plan To Drive Long Term Shareholder Value
Delivering On Our Strategic Plan To Drive Long Term Shareholder Value WE LAUNCHED OUR STRATEGIC PLAN IN FEBRUARY 2021 1 2 3 ACCELERATE CAPITALIZE ON INSTITUTIONALIZE SCOPE & SCALE NEW OPPORTUNITIES THE FIRM OF INVESTMENT THROUGH PLATFORM ADJACENCIES 15
Slide 16: Attractive Organic Scaling & New Strategy Growth
Attractive Organic Scaling & New Strategy Growth RAPIDLY SCALING OUR BIGGEST ORGANICALLY BUILDING NEW BUSINESSES FUND STRATEGIES TOTAL AUM ($BN) $8 Prior Latest Fully % $8 Vintage Raised Vintage Change $7 Global Buyout (U.S., Europe, $22BN $34BN +56% 2013-2014 2018-2020 Asia & Japan) $3 U.S. Real $3
Slide 17: Strategic Transactions Driving Substantial Accretive Growth
Strategic Transactions Driving Substantial Accretive Growth $1.2BN $65BN $120MN BALANCE SHEET INCREMENTAL FE AUM INCREMENTAL FRE INVESTMENT ON A RUN RATE BASIS Fortitude CBAM iStar Building upon our Building Real Estate Scaling Insurance Solutions leading CLO strategy Credit capabilities The financi
Slide 18: Insurance Solutions Strategy Poised for Future Growth
Insurance Solutions Strategy Poised for Future Growth We created Fortitude in 2018 and aggressively expanded its capabilities. This year, we made transformational changes to further align with Fortitude and drive growth SIGNIFICANT EARNINGS GROWTH & STRONG STAKEHOLDER ALIGNMENT DIVERSIFICATION • AUM
Slide 19: Visible Path to Increased & Sustainable Mix of Earnings
4 Visible Path to Increased & Sustainable Mix of Earnings TRADE SECRET & STRICTLY CONFIDENTIAL 19
Slide 20: FRE Is Poised to Hit a New Level of Sustained Growth
FRE Is Poised to Hit a New Level of Sustained Growth FEE RELATED EARNINGS ($MN) PATH TO FRE GROWTH $850 • Solid Fundraising Momentum +42% • $9BN in Q1, $53BN LTM • Accretive Acquisitions $598 • $120MN run rate FRE • Expect continued growth in 2023 • FRE margins continue to march towards goal of 40%+
Slide 21: Record Accrued Carry Supports Projected $1BN+ Average Realized Performance Revenue
Record Accrued Carry Supports Projected $1BN+ Average Realized Performance Revenue NET ACCRUED PERFORMANCE AVERAGE NET REALIZED PATH TO PERFORMANCE REVENUES ($BN) PERFORMANCE REVENUES ($BN) REVENUE GROWTH $1.0 $4.3 • Net realized performance ~25% accrual revenue growth supported by realized higher a
Slide 22: Building An Increasingly Sustainable Earnings Mix
Building An Increasingly Sustainable Earnings Mix FEE RELATED EARNINGS & DISTRIBUTABLE EARNINGS INCREASINGLY BALANCED ($MN) EARNINGS MIX • Focused on improving the mix $2,244 ■ FEE RELATED of earnings EARNINGS • More balance from higher & more sustainable FRE • Perpetual capital 20% of total $758 AU
Slide 23: Remain Attractively Valued
5 Remain Attractively Valued TRADE SECRET & STRICTLY CONFIDENTIAL 23
Slide 24: Growing Fast and Attractively Valued
Growing Fast and Attractively Valued FRE GROWTH EARNINGS GROWTH ACCRUED CARRY VALUATION 25% 22% 32% 8x 2016-2021 2016-2021 CAGR of Net accrued carry to Current Price to CAGR DE/Share market cap 2023 DE/share Peers: 28% Peers: 22% Peers: 6% Peers: 13x Note: Peers include Apollo, Ares, Blackstone & KK
Slide 25: Traditional Carry Funds Have Significant Embedded Shareholder Value
Traditional Carry Funds Have Significant Embedded Shareholder Value Fair Value + Dry Powder ($BN) Hypothetical NRPR (in $BN) $14BN $198 $5 $63 Equivalent to current market $135 $9 capitalization (pre-tax) As of 3/31/2022 2.0x invested capital Fair Value of Capital Available Capital There is no assur
Slide 26: Carlyle
CARLYLE
Slide 27: Appendix
Appendix TRADE SECRET & STRICTLY CONFIDENTIAL 27
Slide 28: U.S. GAAP Statement of Operations
U.S. GAAP Statement of Operations1 (Dollars in millions, except per share amounts) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LTM 1Q'22 REVENUES Fund management fees $ 977.6 $ 984.6 $ 1,166.3 $ 1,085.2 $ 1,076.1 $ 1,026.9 $ 1,272.0 $ 1,476.2 $ 1,486.0 $ 1,667.5 $ 1,737.0 Incentive fees 40.0 1
Slide 29: Distributable Earnings and Fee Related Earnings
Distributable Earnings and Fee Related Earnings (Dollars in millions) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LTM 1Q'22 SEGMENT REVENUES Fund management fees $ 943.2 $ 1,054.7 $ 1,229.3 $ 1,197.9 $ 1,085.8 $ 1,081.0 $ 1,337.2 $ 1,537.8 $ 1,523.1 $ 1,654.6 $ 1,726.0 Transaction and portfoli
Slide 30: Reconciliation of GAAP to Total Segment Information
Reconciliation of GAAP to Total Segment Information (Dollars in millions) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LTM 1Q'22 INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES $ 2,439.9 $ 1,444.0 $ 991.9 $ 402.2 $ 45.3 $ 1,132.3 $ 360.2 $ 1,233.4 $ 580.0 $ 4,027.5 $ 3,605.9 Adjustments: Partne
Slide 31: Reconciliation of GAAP to Total Segment Information
Reconciliation of GAAP to Total Segment Information Total Total Total Reportable Consolidated Reconciling Carlyle Reportable Consolidated Reconciling Carlyle Reportable Consolidated Reconciling Carlyle (Dollars in millions) Segments Funds Items Consolidated1 Segments Funds Items Consolidated1 Segmen
Slide 32: Reconciliation of GAAP to Total Segment Information
Reconciliation of GAAP to Total Segment Information Total Total Total Carlyle Reconciling Reportable Carlyle Reconciling Reportable Carlyle Reconciling Reportable (Dollars in millions) Consolidated Items1 Segments Consolidated Items1 Segments Consolidated Items1 Segments For the Year Ended December
Slide 33: Reconciliation of GAAP to Total Segment Information
Reconciliation of GAAP to Total Segment Information (Dollars in millions) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 LTM 1Q'22 REVENUE RECONCILING ITEMS Unrealized performance revenues $ 126.9 $ 1,164.7 $ 384.2 $ (525.1) $ (464.1) $ 1,089.5 $ (42.7) $ 267.8 $ 1,031.0 $ 3,155.6 $ 2,232.6 Unrea
Slide 34: Reconciliation of Investments and Accrued Performance Allocations
Reconciliation of Investments and Accrued Performance Allocations RECONCILIATION OF TOTAL INVESTMENTS RECONCILIATION OF ATTRIBUTABLE TO THE CARLYLE GROUP INC. ACCRUED PERFORMANCE ALLOCATIONS (Dollars in millions) 03/31/22 (Dollars in millions) 03/31/22 ACCRUED PERFORMANCE ALLOCATIONS, NET OF ACCRUED
Slide 35: Definitions
Definitions Distributable Earnings (“DE”) Distributable Earnings, or “DE”, is a key performance benchmark used in our industry and is evaluated regularly by management in making resource deployment and compensation decisions, and in assessing the performance of our three segments. We also use DE in
Slide 36: Endnotes
Endnotes PAGE 28: U.S. GAAP STATEMENT OF OPERATIONS 1. On January 1, 2020, The Carlyle Group L.P. (the "Partnership") completed its conversion from a Delaware limited partnership to a Delaware corporation, The Carlyle Group Inc. Information reported for periods prior to the Conversion on January 1,
Slide 37: Endnotes
Endnotes PAGE 31: RECONCILIATION OF TOTAL SEGMENTS TO INCOME BEFORE PROVISION FOR INCOME TAXES 1. The Distributable Earnings in the Carlyle Consolidated column is income before provision for income taxes, which is the U.S. GAAP measure that is most directly comparable to Distributable Earnings. 2. S
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