Carlyle Group Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
CG$39.70-0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001527166-24-000067
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001527166-24-000079
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 1519 previous paragraphs and 1527 current paragraphs.
875 unchanged; 352 reworded; 278 added; 276 removed; 16 previous and 22 current paragraphs rearranged.
Tables are not compared: 48 previous and 48 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (278)
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billion in AUM and$159 billion in Fee-earning AUM.
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$84 billion in AUM and$51 billion in Fee-earning AUM.
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commenced investment activity.
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In the third quarter of 2024, global growth remained much more stable than many had feared, as monetary policy in most
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developed market economies continued to ease. Labor market indicators in the United States softened as the Federal Reserve
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initiated its easing cycle, while the European Central Bank (ECB) has now cut its deposit facility rate year-to-date by a
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cumulative 75bps amidst uneven growth. India experienced slower economic activity and consumption growth, and China
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continued to face uneven underlying growth as it attempted to stabilize property markets amid broader economic
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transformation. Meanwhile, momentum in Japan slowed as the country navigated market volatility following the Bank of Japan
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raising rates to the highest level in 15 years. By contrast, Korea’s economy rebounded as the Bank of Korea initiated its easing
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cycle following a second-quarter contraction.
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In the U.S., official data suggest the economy grew at a 2.8% annualized rate in the third quarter of 2024 and U.S.
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corporate margins continued to widen. Underlying growth was notably strong, with real consumption contributing nearly 2.5
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percentage points to the headline number. Spending rose strongly across both goods and services, with certain durable goods
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such as autos notching their strongest growth since the pandemic. Profit growth also remains strong: unlike 2020-22, when
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profit growth was primarily a pricing power phenomenon, today it is mainly driven by productivity gains that have thus far
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been underreported in official statistics. Lower base rates help as well; the Federal Open Market Committee’s decision to
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reduce the policy rate by 50bps in September responded to incoming data implying softening price pressures and a balancing
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labor market. The unemployment rate temporarily rose to 4.3% in July — the highest level since 2021 — on increased labor
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supply, before settling back to 4.1% by the end of the quarter, where it began. The Fed’s preferred inflation gauge, the core
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Personal Consumption Expenditures Price Index, has held steady, finishing August 2.7% above year ago levels. The Fed now
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views the risks to achieving its dual mandate of maximum employment and stable prices as roughly in balance. Market
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participants are generally in alignment with the Federal Reserve’s September Summary of Economic Projections, but the recent
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strength of the hard data has increased the market’s assigned probability of a pause in cuts before year-end; futures quotes
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currently imply slightly less than two full additional rate cuts in the fourth quarter of 2024.
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In Japan, momentum slowed but growth remained positive, with estimates indicating the economy grew at a 1.7%
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annualized rate in the third quarter. This performance occurred against a backdrop of market volatility. The Bank of Japan
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raised short-term borrowing costs from the previous range of 0% to 0.1% to 0.25% in July, its highest level in 15 years, and
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released a plan for tapering its asset purchases, signaling a pivotal shift away from a decade-long stimulus program. These
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actions, paired with hawkish comments from policymakers and a disappointing string of economic data in the U.S., led to a
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sharp appreciation of the yen, disrupting long-standing carry trades whose funding leg rested on Japan’s low rates. The surge in
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the currency value triggered asell-off in Japanese equity markets. Liquidity pressures led to a sell-off far in excess of what
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could be explained by any change in fundamentals. On August 5th, the Nikkei 225 fell 12.4%, while the TOPIX fell 12.2%,
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their largest respective single day declines since 1987. This event underscored the relative illiquidity of certain listed markets
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and how public market moves can diverge from underlying fundamentals, a distinction that is much less pronounced in private
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market valuations. While both public and private markets in Japan have elements of illiquidity, private assets are not as exposed
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to the sharp drawdowns that public markets experience during times of volatility.
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domestic consumption data remained soft, with annualized growth implied by proprietary portfolio data falling below 2% for
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the first time since pandemic lockdowns were lifted. While wage income has been growing at a 6% annualized rate, this has
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been offset by losses on real estate, which continue to intensify. Recognizing the unsustainability of maintaining 4% to 5%
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AUM and$155 billion in Fee-earning AUM.
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billion in AUM and$48 billion in Fee-earning AUM.
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investment activity.
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Global growth generally moderated in the second quarter of 2024 as the impact of persistently high interest rates began to
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manifest. U.S. economic activity showed signs of softening, India experienced slower economic activity and consumption
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growth, China’s economic momentum decelerated due to uneven underlying growth across sectors, and Korea’s economy
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contracted as domestic demand weakened. In contrast, Japan’s economy rebounded following a first quarter contraction, and
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In the United States, official data indicate the economy grew at a 2.8% annualized rate. However, excluding inventory
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accumulation, which accounted for nearly one-third of the expansion, growth was 2%. This is consistent with the estimate
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implied by our proprietary portfolio data, and June was clearly the weakest of the quarter’s three months. While goods spending
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appears to be growing at its slowest rate in a year, and “experiences” spending finished June down 3% from its April 2024
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peak, the level of overall experiences outlays remains elevated well above pre-pandemic levels, as evidenced by robust
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passenger enplanements and hotel occupancy rates. Fixed investment in industrial facilities continues to be a bright spot, led by
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investments in (renewable) power generation and storage, data centers, semiconductors, and battery and EV manufacturing.
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These investments coincide with a backlog of projects in this space, with announced investment roughly five times larger than
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the dollar value of assets put-in-place thus far. This investment also comes alongside explosive growth in direct government
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investment in infrastructure, which is now growing at a faster rate than private outlays. The slowdown in economic growth,
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combined with a rise in the unemployment rate in July to its highest level in over two years, present growing evidence of the
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disinflationary trends that the Federal Reserve has signaled are necessary to observe before it considers lowering interest rates.
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Additionally, inflation, as measured by the Federal Reserve’s preferred gauge, the core Personal Consumption Expenditures
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Price Index (PCE), fell to 2.6%, marking the lowest level since March 2021. Recent market volatility has created a wide range
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of expected outcomes for the federal funds rate among market participants, with expectations whipsawing from two to as many
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as ten 25 basis point rate cuts from the Federal Reserve in the second half of 2024.
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In Japan, estimates indicate the economy rebounded in the second quarter, growing at a 2.5% annualized rate,
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following a first-quarter contraction. This economic recovery occurred against a backdrop of notable currency movements. For
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the past three years, the yen has closely tracked levels expected given the differential between the yields on U.S. Treasuries and
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Japanese Government Bonds. That ended in June, as the yen weakened even as interest differentials narrowed, though there has
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been a significant reversal in the beginning of the third quarter. Since July 10, the yen has appreciated nearly 12% against the
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U.S. dollar. Japanese public equities and the yen exchange rate tend to move in opposite directions; the recent strengthening of
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the yen against the U.S. dollar has been accompanied by a sharp selloff in Japanese public markets. However, it is important to
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view recent market volatility in the context of longer-term trends. Overall, corporate governance and stock exchange reforms
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have thus far produced their intended effect, with delistings, buyouts, spinoffs, and asset sales accelerating as management
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teams restructure operations for higher returns. The optimism and growing business volumes of M&A advisors suggest that the
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recent moves in Japanese asset prices do not reflect the potential scale of improvement in profitability outlooks. Global
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enthusiasm (until the past few weeks) for the Japanese market has also influenced the Korean Financial Services Commission to
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introduce its own corporate governance reforms earlier this year. Korea’s market appears to have an even greater opportunity
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for reform, with a higher proportion of companies priced below their accounting value of assets compared to Japan. Corporate
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inefficiencies are viewed as an intolerable drag on growth in light of demographic realities.
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data indicate the economy slowed more than expected in the second quarter, growing at a 2.8% quarter-over-quarter annualized
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rate and 4.7% from a year ago. This weakness was due to subdued domestic consumption and a contracting real estate sector
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Unless context suggests otherwise, references in this report to “Carlyle,” the “Company,” “we,” “us,” and “our”
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Unless context suggests otherwise, references in this report to “Carlyle,” the “Company,” “we,” “us,” and “our” refer
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refer to The Carlyle Group Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in
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to The Carlyle Group Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in
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also includes the NGP Carry Funds advised by NGP. As of June 30, 2024, our Global Private Equity segment had$164
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also includes the NGP Carry Funds advised by NGP. As of September 30, 2024, our Global Private Equity segment had
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billion in AUM and$104 billion in Fee-earning AUM.
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$169 billion in AUM and$104 billion in Fee-earning AUM.
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debt, insurance solutions and global capital markets. As of June 30, 2024, our Global Credit segment had$190 billion in
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debt, insurance solutions and global capital markets. As of September 30, 2024, our Global Credit segment had$194
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related co-investment and secondary activities. As of June 30, 2024, our Global Investment Solutions segment had$81
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related co-investment and secondary activities. As of September 30, 2024, our Global Investment Solutions segment had
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management of$435 billion as of June 30, 2024 for each of our three global business segments (in billions):
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management of$447 billion as of September 30, 2024 for each of our three global business segments (in billions):
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Note: All amounts shown represent total assets under management as of June 30, 2024, and totals may not sum due to rounding. In addition,
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Note: All amounts shown represent total assets under management as of September 30, 2024, and totals may not sum due to rounding. In
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certain carry funds included herein may not be included in fund performance if they have not made an initial capital call or commenced
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addition, certain carry funds included herein may not be included in fund performance if they have not made an initial capital call or
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(7)Includes Mezzanine funds and Carlyle AlpInvest Private Markets Fund (CAPM).
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(7)Includes Mezzanine and Carlyle AlpInvest Private Markets (CAPM) funds.
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In India, despite moderating consumption, our proprietary portfolio data suggest the economy expanded at a 5.9%
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In India, our proprietary portfolio data suggest the economy grew at a 5.9% annualized rate in the third quarter. Despite a
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annualized rate in the second quarter. India appears poised for a significant period of catch-up growth and rising living
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slowdown in consumption, the country appears set for a period of substantial catch-up growth and improvements in living
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standards, driven by recent reforms in taxation, digital payments, and land reforms. With substantial required investments in
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standards, supported by recent reforms in taxation, digital payments, and land use. With substantial required investments in
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physical capital, the return on each unit of capital in India is notably higher compared to the rest of the world. In China, official
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physical capital, the return on each unit of capital in India remains considerably higher than the rest of the world. In China,
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euro area growth improved despite significant dispersion across regions and sectors.
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experience significant dispersion across regions and sectors. While shifting consumption patterns and higher finance costs have
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Earnings growth estimates remain significantly higher than in 2023, at an anticipated 10.8% for the year compared to 1%
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Earnings growth estimates for companies in the S&P 500 remain significantly higher than in 2023, at an anticipated 9.3%
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the previous year. Earnings are estimated to have grown by 11.5% in the second quarter of 2024, compared to the same period a
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for the year compared to 1% the previous year. Earnings are estimated to have grown by 3.6% in the third quarter of 2024,
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year ago, led by the communication services, information technology, financials, and utilities sectors. The estimated blended net
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compared to the same period a year ago, led by the information technology, health care, and communication services sectors.
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U.S. institutional loan activity set an all-time record in the first half of 2024, totaling almost $740 billion. Including add-
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At $960 billion, U.S. institutional loan activity set an all-time record for the first nine months of the year. In the leveraged
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portfolio had 1% appreciation in thesecond quarter of 2024. Within our Global Private Equity segment in thesecond quarter,
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quarter of 2022. Within our Global Private Equity segment in thethird quarter, our corporate private equity funds appreciated
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estate funds appreciated 1%. Our Global Credit carry funds (which represent approximately 11% of the total Global Credit
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thaw. Our Global Credit carry funds (which represent approximately 11% of the total Global Credit remaining fair value as of
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remaining fair value as of June 30, 2024) appreciated 3% in thesecond quarter, while carry funds in our Global Investment
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September 30, 2024) appreciated 3% in thethird quarter, while carry funds in our Global Investment Solutions segment
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months ended June 30, 2024 and 2023, respectively.
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markets fees in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
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We generally seek to reset our CLOs to renew the reinvestment period. In the absence of a reset, a CLO will begin to use cash
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reinvestment period. In the absence of a reset, a CLO will begin to use cash flows to repay outstanding debt tranches, which
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flows to repay outstanding debt tranches, which will reduce our AUM and Fee-earning AUM over time as the underlying
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will reduce our AUM and Fee-earning AUM over time as the underlying collateral runs off.
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Gross originations in our direct lending strategy totaled $1.1 billion in the second quarter of 2024, a nearly three-fold
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Gross originations in our direct lending strategy totaled$1.3 billion in the third quarter of 2024, continuing a steady trend
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increase over originations in the second quarter of 2023, which was impacted by the slowdown in sponsor M&A activity in
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of increases in gross originations since the second quarter of 2023, which was impacted by the slowdown in sponsor M&A
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2022 and 2023. Dividend yields on our business development companies and CTAC as of June 30, 2024 were approximately
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activity in 2022 and 2023. Dividend yields on our business development companies and CTAC as of September 30, 2024 were
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We had$12.4 billion in new capital inflows in thesecond quarter, and$17.7 billion year-to-date, towards our previously
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We had$8.8 billion in new capital inflows in thethird quarter, and$26.6 billion year-to-date, towards our previously
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announced target of $40 billion of capital inflows in 2024. The impact of muted realizations on investor liquidity has been
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announced target of $40 billion of capital inflows in 2024. Although investors are beginning to see net positive distributions in
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distributions to investors, combined with increasing geopolitical risk and continued global economic uncertainty, has
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geopolitical risk and continued global economic uncertainty, has compounded an already challenging fundraising landscape.
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amount of capital for our buyout funds, we have seen a decline in buyout fund sizes across most geographies, which may
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While we believe that we will continue to attract a significant amount of capital for our buyout funds, we have seen a decline in
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continue to result in lower management fees in Global Private Equity in the future.
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buyout fund sizes across most geographies, which may continue to result in lower management fees in Global Private Equity in
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registered investment advisers. In March 2024, the SEC adopted final public company climate-related disclosures rules
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registered investment advisers. In addition, the future of several final rules, such as the public company climate-related
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deadline, and the future of the Private Fund Adviser Rules remains in doubt. We are closely evaluating potential impacts to our
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disclosure rules and the private fund adviser rules, is in doubt pending the resolution of recent litigation. We are closely
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business of these rule proposals and adoptions and various financial, regulatory, and other proposals put forth by the current
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evaluating potential impacts to our business of these rule proposals and adoptions and various financial, regulatory, and other
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Administration and Congress. The potential for policy changes may create regulatory uncertainty for our investment strategies
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proposals put forth by the current and incoming Administration and Congress. The potential for policy changes may create
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and our portfolio companies and could adversely affect our profitability and the profitability of our portfolio companies.
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regulatory uncertainty for our investment strategies and our portfolio companies and could adversely affect our profitability and
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realizations from our Global Investment Solutions, Carlyle Aviation, and Abingworth fundsis typically later than in our other
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realizations from our Global Investment Solutions, Carlyle Aviation, and Abingworth funds is typically later than in our other
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performance revenues excludes any net accrued performance allocations and incentive fees that have been realized but will be
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performance revenues exclude any net accrued performance allocations and incentive fees that have been realized but will be
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incremental fundraising of$0.2 billion, and refinanced one CLO. We generally seek to reset our CLOs to renew the
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the profitability of our portfolio companies.
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Investments, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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for which fees have not yet been activated.
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Carlyle Global Capital Markets. The recognition of portfolio advisory fees, transactions fees, and capital markets fees can be
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volatile as they are primarily generated by investment activity within our funds, and therefore are impacted by our investment
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allocation accruals were primarily driven by appreciation in our secondaries & portfolio finance and co-investment
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2024 as compared to thethree months ended September 30, 2023, primarily driven by a decrease in the reimbursement of
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consent and amendment fees. Substantially all interest and other income of the CLOs and other consolidated funds together
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Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased $59.5
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for thethree months ended September 30, 2024 as compared to thethree months ended September 30, 2023, anddecreased
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VIII ($0.6 billion), and CAP V ($0.6 billion), as well as depreciation in CEP V ($0.5 billion).
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for thethree months ended September 30, 2024 as compared to thethree months ended September 30, 2023, anddecreased
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General, administrative and other indirect expenses. General, administrative and other indirect expenses increased $5.0
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fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.
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lower of cost or fair value and net asset value.
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on invested capital or fair value. Distributions from funds still in the commitment or weighted-average investment period do not
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billion were primarily driven by fee-paying capital raised and investment activity across all strategies. Market appreciation of
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$0.8 billion was driven by certain funds in our secondaries & portfolio finance and primary strategies in which fees are based
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the Global Credit Revolving Credit Facility.
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Note 13, Equity, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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former Carlyle Holdings unitholders in connection with the Conversion.
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compounded an already challenging fundraising landscape. While we believe that we will continue to attract a significant
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the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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reported results and is an additional measure to assess performance.
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which fees have not yet been activated.
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accruals were primarily driven by our secondaries & portfolio finance and co-investment strategies.
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Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased $50.0
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portion of compensation being derived from Realized performance revenues related compensation, as well as a decrease in
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compared to thethree and six months ended June 30, 2023 was primarily driven by an increase in capital market fees. The
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bonuses as a result of the updates to our compensation program effective as of December 31, 2023.
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amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.
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which charge fees on invested capital.
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of$7.6 billion for the period, including the issuance of five new CLOs and deployment in funds which charge fees on invested
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General, administrative and other indirect expenses. General, administrative and other indirect expenses decreased$4.6
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billion at December 31, 2023. The increase was driven by$4.6 billion of inflows related to fundraising primarily in our
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(3)Includes realized performance allocation-related compensation associated with our updated compensation program that has not yet
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condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.