Carlyle Raises $1 Billion for Financial Company Investing

Carlyle Group LP collected $1 billion for its second fund dedicated to investing in financial companies, half the pool’s original target amount.

Carlyle Global Financial Services Partners II was seeking $2 billion in 2012, according to a presentation at the time to investors, a copy of which was obtained by Bloomberg News. The fund started gathering money in 2011 and will invest in asset-management firms, insurance companies, financial technology and other business services, according to a statement today from Washington-based Carlyle, the second-biggest alternative-asset manager.

The firm’s financial-services team, led by Olivier Sarkozy, scaled back the fund’s size as the European Central Bank took unprecedented measures to prevent sovereign defaults in Europe and protect the continent’s financial system. Carlyle is seeking to take advantage of industry changes, including after-effects of the European debt crisis, new regulation in the U.S. and Europe, and increasing wealth in emerging markets, according to the presentation.

“We believe the fund is scaled appropriately to the opportunity set,” said Randall Whitestone, a Carlyle spokesman. The firm also received client interest in co-investing in the fund’s deals, Whitestone said, which would increase the vehicle’s buying power beyond $1 billion.

Carlyle, founded in 1987, oversees about $199 billion in alternative assets including private-equity funds, real estate, hedge funds and credit investments. Sarkozy, who joined Carlyle in New York from UBS AG in 2008, is the half-brother of former French President Nicolas Sarkozy.

Carlyle’s first financial-services fund finished raising $1.1 billion in 2010 and invested in companies including TCW Group Inc., BankUnited Inc., Duff & Phelps Corp. and Sandler O’Neill & Partners LP. The fund was generating an 11 percent net internal rate of return and was valued at 1.6 times invested capital as of March 31, according to the firm’s first-quarter earnings statement.

Blackstone Group LP, with $272 billion as of March 31, is the biggest manager of alternatives to stocks and bonds.

Before it's here, it's on the Bloomberg Terminal.