Carlyle Soars in Second Quarter as Exits Signal Stronger Markets

Strong Performance and Optimistic Outlook

Carlyle Group is showing resilience in the face of a recent slowdown in private-equity exits. The firm's executives are reporting that the market for selling assets is gradually improving, which is a positive sign for the industry.

In the second quarter, Carlyle exceeded analysts' expectations with a profit of $319.7 million for the three months ending June 30. This is more than double the profit recorded during the same period last year. Like other large, publicly traded private-equity firms, Carlyle saw high asset-management and capital-markets revenue, with fee-related earnings increasing by 18% compared to the previous year, reaching $323.3 million.

One of the most encouraging developments for the firm is the improvement in the exit market. According to Chief Financial Officer John Redett, the market is "approaching levels not seen since 2022," when the industry began experiencing a slowdown.

Carlyle returned $15 billion to investors over the 12 months through the end of the quarter. In the second quarter alone, corporate private-equity exits totaled nearly $4 billion. These exits included the sale of the U.S. commercial insurance division of NSM Insurance to New Mountain Capital and secondary stock sales of aircraft repair company StandardAero, as noted by Redett.

These successful exits have positioned Carlyle as an “outlier” among private-equity peers, many of which are struggling to sell their assets. Harvey Schwartz, CEO of Carlyle, highlighted this point, stating that while the corporate private-equity market has faced criticism for low returns to investors, Carlyle has defied this trend.

Schwartz also expressed optimism about the remainder of the year, citing favorable conditions such as high equity prices and tight credit spreads. He attributed some of the improved sentiment to policies under the Trump administration. While there was initial market turmoil following the announcement of broad tariffs in April, investors are now more accustomed to the president’s policy changes.

The administration has introduced several deregulatory moves and tax relief measures, and is preparing an executive order to make the private-equity industry more accessible to ordinary investors. Schwartz noted that there is now a general acceptance that the administration is acting in line with expectations at the beginning of the year, focusing on pro-growth initiatives.

Record Assets Under Management

Carlyle raised $13.4 billion during the quarter, bringing its total assets under management to a record $465 billion, which is 7% higher than a year prior. A significant portion of this amount, $5.1 billion, was raised by the firm’s subsidiary AlpInvest, primarily for its secondaries and portfolio-finance funds. Additionally, Carlyle closed its 10th U.S. opportunistic real-estate fund at $9 billion.

Leadership Changes

Last week, Carlyle made changes to its top management team under Schwartz, who has led the firm since early 2023. John Redett will become co-president alongside global credit head Mark Jenkins and global head of client business Jeff Nedelman. Michael Wand will take charge of the firm’s investment efforts in Europe, the Middle East, and Africa, as announced by the firm on July 28.