Carlyle Sees LBO Fund Commitments Exceeding $10B Target

Carlyle Group LP, the world’s second-biggest private-equity firm, plans to finish raising its newest buyout fund in the next few months with commitments exceeding the $10 billion target, according to an investor letter.

Carlyle has raised $9.4 billion for Carlyle Partners VI, according to the July 1 letter sent to the Washington-based firm’s investors, portions of which were obtained by Bloomberg News. Carlyle said it has “visibility” on investor commitments that will push the fund over the target size, according to the letter.

Randall Whitestone, a Carlyle spokesman, declined to comment on the fundraising.

Fewer buyout firms are raising larger pools of capital as the industry consolidates and investors, seeking to cut costs, allocate their money to a smaller group of managers. Ten funds raised 55 percent of the capital raised in the second quarter, according to London-based research firm Preqin Ltd. Carlyle has raised more than $2 billion for the flagship fund since May 9, when it reported first-quarter earnings.

Carlyle executives had pledged more than $700 million to the fund as of the second quarter last year, regulatory filings and a person familiar with the matter said at the time. The firm offered an incentive to big backers by lowering their management fee to 1.1 percent if they committed at least $500 million, compared with 1.5 percent for smaller investors, according to people with knowledge of the matter.

Carlyle’s Returns

Carlyle’s current flagship fund, which raised $13.7 billion in 2007, had an 11 percent net internal rate of return and a multiple of invested capital of 1.5 as of March 31. More than 94 percent of that fund has been invested in or committed to deals, Carlyle said in the letter. Its predecessor pool, raised in 2004 with $7.9 billion, was generating a 13 percent return and a 2.1 times multiple.

KKR & Co., the New York-based firm run by Henry Kravis and George Roberts, has gathered more than $7.5 billion for its latest flagship fund and expects to complete fundraising this year, the company said in April. Blackstone Group LP, which was the first of the large buyout groups to raise money after the financial crisis, collected more than $16 billion for its fund last year.

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