Carlyle Group Inc at Morgan Stanley US Financials, Payments & CRE Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Cyprys - Morgan Stanley - Analyst : And we appreciate it. So why don't we kick off with a little bit of an introduction of your background and your transition to the CFO role. You've been at the firm at Carlyle for many years. You stepped into the CFO role. I think it was about a year ago, actually this time. How's the transition been? And how are you allocating your time these days?

Question: Mike Cyprys - Morgan Stanley - Analyst : Great. Maybe you can kind of give us a little bit of an update on the strategy that Harvey has laid out. Talk about some of the progress that you've made so far.

Question: Mike Cyprys - Morgan Stanley - Analyst : So you've mentioned margin, you mentioned expenses. So why don't we just dive into to that angle. I'm going to jump ahead to my margin expense question here and instead we'll come back to some other topics in a moment. So you have a 40% to 50% margin target for this year. Maybe just talk about some of the underlying contributors to get there. Clearly, you made some changes on the compensation side. But as you kind of look ahead on a multi-year outlook, maybe you can help unpack some of the building blocks, whether it's around the fee activations. And give us a flavor for the type of expense growth. You mentioned some expense cuts you've put through. Is there scope for more? Is there scope for more efficiency ahead?

Question: Mike Cyprys - Morgan Stanley - Analyst : So that's more like a medium term, couple of years type time frame to get there.

Question: Mike Cyprys - Morgan Stanley - Analyst : Fair enough. Why don't we take it up a notch, big picture, and maybe we could talk about some of the macro trends that you're seeing across the world through the lens of your portfolio, whether it's inflation, high interest rate backdrop. Just curious what you're seeing and how that's impacting some of the portfolio company trends in terms of revenue and earnings growth.

Question: Mike Cyprys - Morgan Stanley - Analyst : And related to that, you guys have about $75 billion of dry powder. So maybe with that backdrop that you outlined there from a macro standpoint and some of the portfolio trends, where are you seeing some of the interesting opportunities to put capital to work? Any areas that you're avoiding today?

Question: Mike Cyprys - Morgan Stanley - Analyst : And that's encouraging to hear that, the private equity pipeline.

Question: Mike Cyprys - Morgan Stanley - Analyst : Okay, maybe shifting over to exit backdrop. You had a very meaningful large exit already this year. And when you look at the overall portfolio today, particularly on the private equity side, how much of that would you say is exit ready, and you're just sort of waiting for a better backdrop, macro backdrop for sort of pulling the trigger and realizations. And do you need the IPO market to come back in order to see meaningful exits? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 12, 2024 / 2:15PM, CG.OQ - Carlyle Group Inc at Morgan Stanley US Financials, Payments & CRE Conference

Question: Mike Cyprys - Morgan Stanley - Analyst : And how's the pipeline today of exits as you look out?

Question: Mike Cyprys - Morgan Stanley - Analyst : Do you think the election could have any impact on the realization exit pipeline or the deployment?

Question: Mike Cyprys - Morgan Stanley - Analyst : Give us a 30-second takeaway.

Question: Mike Cyprys - Morgan Stanley - Analyst : Okay. Maybe shifting gears to fundraising. You have suggested that you could raise $40 billion of capital this year. Maybe talk a little bit about the building blocks to get there and what gives you the confidence in the $40 billion. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 12, 2024 / 2:15PM, CG.OQ - Carlyle Group Inc at Morgan Stanley US Financials, Payments & CRE Conference

Question: Mike Cyprys - Morgan Stanley - Analyst : Great, maybe digging into some of the businesses, starting with private credit. Maybe just give us a sense of the capability set today. You guys have been building out private credit business for a number of years. Maybe talk about the progress that you've seen so far and where do you see incremental opportunities to continue to build out about the private credit business.

Question: Mike Cyprys - Morgan Stanley - Analyst : Which would be some of the areas that you're more focused on scaling would you say of the --

Question: Mike Cyprys - Morgan Stanley - Analyst : And when you think about scaling infrastructure, credit, direct lending, the asset-based finance business, what are some of the steps that come to mind as you kind of look out over the next two years, some of the action items that you would envision taking? And would any of this be inorganic?

Question: Mike Cyprys - Morgan Stanley - Analyst : Since you brought buybacks up, first quarter was very strong in terms of buyback activity. What can we expect going forward, particularly here into the second quarter and the back half of this year?

Question: Mike Cyprys - Morgan Stanley - Analyst : Maybe bringing it back to credit part of the business. Want to talk about CLOs, you guys have a leading global CLO business. There's been some, well, a big recovery this year clearly in CLOs, but there's also been a little bit of noise in some parts of the marketplace that's impacting some credits in some portfolios. Maybe just give us an update on how this business is performing and how you're seeing the overall credit landscape today. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 12, 2024 / 2:15PM, CG.OQ - Carlyle Group Inc at Morgan Stanley US Financials, Payments & CRE Conference

Question: Mike Cyprys - Morgan Stanley - Analyst : That's encouraging. Maybe sticking with the credit side of the business, insurance. You have the partnership with Fortitude. Maybe just talk a little bit about how that partnership is evolving, maybe just remind us around that arrangement, how that works, and some of the key areas of growth that you see ahead because that's a closed block. Do you have opportunities to drive any new origination there and how the pipeline is for M&A?

Question: Mike Cyprys - Morgan Stanley - Analyst : And what might lead you to pivot to a different type of arrangement? And how do you sort of think about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 12, 2024 / 2:15PM, CG.OQ - Carlyle Group Inc at Morgan Stanley US Financials, Payments & CRE Conference

Question: Mike Cyprys - Morgan Stanley - Analyst : Are there any meaningful ones left in the marketplace?

Question: Mike Cyprys - Morgan Stanley - Analyst : Okay, fair enough. Maybe shifting gears over to capital markets. You've mentioned aspirations to bolster your capital markets capabilities. Maybe talk about the progress there. Where would you like to get to as you look out over the next couple of years and what the road map looks like to get there.

Question: Mike Cyprys - Morgan Stanley - Analyst : And as you're building out the credit businesses, there are also opportunities as well. How do you think about that?

Question: Mike Cyprys - Morgan Stanley - Analyst : Okay, private wealth channel represents significant opportunity for the industry and for Carlyle. You guys have a few products in the marketplace. CTAC you mentioned earlier. And CAPM another one on the solutions side. Maybe just talk about the traction that you're seeing, how you're thinking about scaling this from here as well as the distribution resources that you're putting up against this opportunity.

Question: Mike Cyprys - Morgan Stanley - Analyst : Maybe talk about the distribution resources that you're putting against this opportunity. How do you sort of think about that? What are some of the steps you're taking? And do you feel you have enough at this point?

Question: Mike Cyprys - Morgan Stanley - Analyst : And you mentioned a private equity product coming next year. Maybe just talk a little bit about how you envision that product working versus, say, the CAPM product that you have, the secondary solution, and how your private equity product might compare versus some of the others that have come to the marketplace of late.

Question: Mike Cyprys - Morgan Stanley - Analyst : And as you look out on five-year view, how do you think about the broader product road map into the private wealth channel? You have a broad range of capabilities at Carlyle. What else could make sense over time?

Question: Mike Cyprys - Morgan Stanley - Analyst : Great. Final topic, AI transcending many industries today in terms of topic of interest. Maybe just talk about how you're thinking about it at Carlyle. What does it mean for the private markets? And how are you experimenting with AI today?

Question: Mike Cyprys - Morgan Stanley - Analyst : How much efficiency you think you might be able toextract?

Question: Mike Cyprys - Morgan Stanley - Analyst : Like 20% sort of?

Question: Mike Cyprys - Morgan Stanley - Analyst : Okay, I'm afraid we're out of time.

Question: Mike Cyprys - Morgan Stanley - Analyst : Thank you so much, John.