The Carlyle Group Inc. · NASDAQ:CG
The Carlyle — Investor Presentation (February 2019)
36 slides from The Carlyle's investor presentation, Feb 12, 2019
Slide 1: The Carlyle Group Unitholder Presentation
The Carlyle Group Unitholder Presentation February 12, 2019
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: $216 bn ◌ Available Capital: $75 bn Corporate Real Global Investment Private Equity Assets1 Credit Solutions (CPE) (RA) (GC) (IS) $81 $46 $44 $46 AUM ($bn) • Buyout • Real Estate • Structured Credit • Private Equity Middle Market Energy Dire
Slide 4: Core Business Metrics Robust & Diversified
Core Business Metrics Robust & Diversified Carry Fund Appreciation Net Accrued Performance Revenue (2018) (as of 12/31/2018) 9% $1.7 billion CPE RA GC IS CPE RA GC IS 5% 5% 5% 19% $1.1bn $475m $51m $81m Invested Capital Realized Proceeds (2018) (2018) $22.4 billion $24.0 billion CPE RA GC IS CPE RA
Slide 5: Exceptional Investment Performance Is Our Primary Goal
Exceptional Investment Performance Is Our Primary Goal Carry Fund Appreciation LTM Carry Fund Appreciation vs • outpaced the MSCI ACWI by Major Equity Index Performance 1 ~1700 basis points over the LTM 25% 20% • Realized/Partially Realized 19% CPE investments generated a 15% 2.4x MOIC & 27% Gross I
Slide 6: Accrued Performance Revenues Remain at Healthy Levels
Accrued Performance Revenues Remain at Healthy Levels Net Accrued Performance Revenue Balance 2013-16 vintage ($ billions) $1.8 $1.8 $1.7 $1.7 funds1 account for more than 60% of $1.3 $1.2 the $1.7 billion Net $1.1 Accrued Performance Revenue Balance as of December 31 2012 2013 2014 2015 2016 2017 2
Slide 7: Deployment Has Increased As Our Investment Platform Has Grown
Deployment Has Increased As Our Investment Platform Has Grown Invested Capital ($ billions) All Carry Funds $22.0 $22.4 Investment $17.9 Solutions $14.8 $14.0 Global $12.8 $12.3 Credit Real Assets Corporate Private Equity 2012 2013 2014 2015 2016 2017 2018 Note: Data as of 12/31/2018. There is no gu
Slide 8: Continue to Generate Significant Annual Realized Proceeds
Continue to Generate Significant Annual Realized Proceeds Realized Proceeds ($billions) All Carry Funds Realized Proceeds Poised to Remain 29.4 29.0 29.4 25.3 25.4 26.0 Investment Solutions Robust and Grow 24.0 Over Time With Global Credit Larger Investment Real Assets Platform Corporate Private Equ
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 accelerated in 2018 to end the year at a $90 million quarterly run rate • We expect to generate approximately $400 million in Fee Related Earnings in 2019 • We intend to continue to scale existing fund platforms, creat
Slide 11: Fee Related Earnings and Margins Are Trending Up
Fee Related Earnings and Margins Are Trending Up Fee Related Earnings FRE & Margin Trends 2 growth accelerated over $450 30% the last few quarters as we $400 activated fees on our largest 25% buyout funds $350 Fee Related Earnings ($mm) $300 20% FRE Margin (%) Run rate FRE of $90 $250 15% million1 i
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%+ +40% $49 bn $35 bn 1 2 Prior Generation 2013-16 Vintage Funds Next Generation 3 Note: Data as of 12/31/2018. Reflects Management’s views as of 2/8/2019. Please see “Important I
Slide 13: Continuing Momentum and Scale in Global Credit
Continuing Momentum and Scale in Global Credit Global Credit has $250+ million in Global Credit annual run-rate management fees, up AUM: $44 billion 26% YoY Continue to build out capabilities to manage larger amounts of capital Loans & Fortitude relationship is expected to help Structured Cred
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 90% of $100 billion target with a full year to go IS CPE Strong partnerships with more GC than 1,950 global investors from 90 RA countries Raised $33 billion in 2018 Gros
Slide 15: Fundraising Strength Driving Fee-earning AUM Higher
Fundraising Strength Driving Fee-earning AUM Higher $200 Fee-earning AUM Substantially all of ($ billions) current Fee-earning $175 $160 AUM locked up in $150 long term fund IS structures and not $125 $115 subject to quarterly $100 GC redemption $75 $6.5 billion in RA Pending Fee-earning $50 AUM wil
Slide 16: Carlyle Is Delivering Attractive Financial Performance
Carlyle Is Delivering Attractive Financial Performance 16
Slide 17: Carlyle Is Delivering Attractive Financial Performance
Carlyle Is Delivering Attractive Financial Performance ($mm or $per unit) 2016 2017 2018 Management Fee Revenue $1,086 $1,081 $1,362 Fee Related Earnings 1 $33 $192 $350 Distributable Earnings 1 $652 $670 $674 Distribution Per Common Unit $1.55 $1.41 $1.34 Note: Data as of 12/31/2018. 1) Fee Related
Slide 18: Strong Balance Sheet With Growing Value Per Unit
Strong Balance Sheet With Growing Value Per Unit Key Balance Sheet Items1 12/31/2018 Key Balance Sheet Items ($ billions) ($ in billions, except per adjusted unit amounts) Cash, Cash Equivalents and Corporate Treasury Investments 2 $0.7 $3.5 $6.86 / $3.0 unit Net accrued performance revenues $7.14 /
Slide 19: We Are Tracking Well Against Our Main Focus Areas
We Are Tracking Well Against Our Main Focus Areas Investment performance continues to be strong: 2018 carry fund appreciation of 9% well outperformed global equity index Investment platform scaling significantly and we remain on track to surpass our $100 billion fundraising target Gaining traction o
Slide 20: Segment Summaries
SEGMENT SUMMARIES 20
Slide 21: Corporate Private Equity: Platform Continues to Scale
Corporate Private Equity: Platform Continues to Scale While Maintaining Superior Long Term Performance Total AUM ($bn) Fee-earning AUM ($bn) Key Points $81 $62 $65 $63 $73 Superior, diversified track record $51 $40 $41 $36 $36 • 2.4X MOIC on realized and partially realized investments • Experience
Slide 22: Real Assets: Growing Real Estate Platform & Opportunities
Real Assets: Growing Real Estate Platform & Opportunities in Natural Resources, Power and Infrastructure Total AUM ($bn) Fee-earning AUM ($bn) Key Points $46 $42 $38 $34 $43 $28 $31 $28 $32 $33 US Real Estate business delivering strong performance • Strong performance and substantial scaling in op
Slide 23: Global Credit: Significant Growth Potential
Global Credit: Significant Growth Potential as We Build a Larger Diversified Credit Platform Total AUM1 ($bn) Fee-earning AUM1 ($bn) Key Points $44 $34 $35 Focused on enhancing and scaling credit $31 $37 $35 $29 $33 $24 $27 platform • Private credit accelerating as an asset class • New credit team
Slide 24: Investment Solutions: Successful Fundraising Efforts & Strong Performance
Investment Solutions: Successful Fundraising Efforts & Consistent Strong Performance Support Future Upside Potential Total AUM ($bn) Fee-earning AUM ($bn) Key Points $51 $46 $43 $46 $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: CPE Portfolio Company Earnings Growth Drives Value Creation
CPE Portfolio Company Earnings Growth Drives Value Creation Drivers of Value Creation1 (% of Value Created) Equity Total Value Invested EBITDA Debt Multiple Fund Growth Paydown Expansion US Buyout2 64% 23% 13% Asia Buyout3 72% 13% 15% Europe Buyout4 60% 13% 27% 1) Includes both realized & unrealized
Slide 27: CPE's Proven, Disciplined Investment Process Drives Consistent Returns
CPE’s Proven, Disciplined Investment Process Drives Consistent Returns $20 185 Deals Median MOIC: 2.1X Average MOIC: 2.6X $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 12/31/2018. Represents realized and part
Slide 28: 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 $13.7 18% 14% 2.
Slide 29: Private Equity Funds Have Performed Well During Various Investment Cycles
Carlyle’s Private Equity Funds Have Historically Performed Well During Various Investment Cycles Total Investments Realized/Partially Realized Investing Fund Period MOIC Gross IRR MOIC Gross IRR Carlyle Partners IV 2004 – 2007 2.4X 16% 2.4X 16% Carlyle Partners V 2007 – 2012 2.1X 18% 2.6X 25% Carlyl
Slide 30: Record Amount of Remaining Fair Value Supports Further Growth
Record Amount of Remaining Fair Value Supports Further Growth In Performance Revenue Remaining Fair Value CPE/RA/GC Carry Funds ($ billions) $90 CPE RA GC $79 $80 $70 $63 $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 3Q
Slide 31: Breadth of Fundraising Resources Drive New Investor Relationships
Breadth of Fundraising Resources and Capabilities Drive New Investor Relationships • More than 1,950 fund investors from 90 countries 2010 2013 2018 • More than 375 new fund investors over the past 3 years have committed $7.8 billion ~1,300 1,600+ 1,950+ Investors Investors Investors • 66% of fund i
Slide 32: Diverse Investment Activity Across Carry Funds And Credit
Diverse Investment Activity Across Carry Funds And Credit Despite Competitive Global Markets LTM Total Investment Activity ($ billions) Carry Fund Deployment: $22.4 $11.3 Credit Investment Activity (Non-Carry Fund): $6.8 $1.2 Other CPE $1.7 Europe Buyout $1.9 Asia Buyout Middle Market $2.2 Lending O
Slide 33: Investments Remain Diversified Across Age
Investments Remain Diversified Across Age With Majority of Investments Held Privately Remaining Fair Value of CPE/RA/GC Carry Fund Portfolio1 - $79 billion 7% “Aging” of carry fund 43% portfolio remains 0-2 Public years diversified with 24% of Remaining Fair Value 2-4 in investments made more than 4
Slide 34: Summary Financial Results
Summary Financial Results Quarterly Annual Pre-tax Segment Measures ($ millions) 1Q18 2Q18 3Q18 4Q18 2014 2015 2016 2017 2018 Segment Revenues Fund Management Fees 288 328 355 391 1,229 1,198 1,086 1,081 1,362 Portfolio Advisory Fees, net and Other 10 6 10 6 41 33 29 32 31 Transaction Fees, net 3 4
Slide 35: Key Metrics for "The Carlyle Engine"
Key Metrics for “The Carlyle Engine” Quarterly Data Annual Data 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 2013 2014 2015 2016 2017 2018 Total AUM(1) ($ bn) 161.9 169.8 174.4 195.1 201.5 209.7 212.3 216.5 Total AUM(1) ($ bn) 188.8 194.5 182.6 157.6 195.1 216.5 Corporate Private Equity 53.0 54.3 55.7 72
Slide 36: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials Quarterly Annual ($ millions) 4Q17 1Q18 2Q18 3Q18 4Q18 2015 2016 2017 2018 Income (loss) before provision for income taxes $ 395 $ 126 $ 253 $ 61 $ (79) $ 402 $ 45 $ 1,132 $ 360 Adjustments: Net unrealized performance revenues (219) (57) (200) 55 253 397
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