Carlyle Group Inc Q1 2025 Earnings Call Transcript

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

Question: Ben Budish - Barclays - Analyst : Hey, good morning and thanks for taking the question. Maybe just starting out with something high level. I mean you talked a little bit about the macro backdrop. Just given your portfolio is quite global, can you talk a little bit about how you're viewing the impact of trade policy and tariffs on investment and deployment activity? And how is that maybe feeding into LP discussions. You mentioned in Q1, especially earlier in the year, you had returned a lot of capital. How is that sort of impacting LP discussions more recently?

Question: Alexander Blostein - Goldman Sachs Group, Inc. - Analyst : Hi, good morning, everybody. Thank you for the question as well. So Ari, I wanted to double-click into Private Equity for a second. So very good momentum outside of Private Equity. Obviously, you talked about AlpInvest and real estate and credit. All of that is moving along nicely. But given the fact that there's just so much focus for you and really the industry broadly as well on DPI performance and just the elongated sales cycle we're seeing in private equity. How are you thinking about the corporate PE franchise for the next 12 to 18 months? What does it mean for CP IX and in terms of both sizing and timing?

Question: Patrick Davitt - Autonomous Research - Analyst : Hi, good morning. So nice to see you had some chunky insurance wins. But how should we be thinking about those relative to the kind of roughly $40 billion flow guide you were expecting for the year? Is this counting towards that? Or should we consider it incremental to that? And then more specifically, within that flow track, could you update us on how the wealth product flows are tracking, how the redemption requests are tracking since Liberation Day? Thank you.

Question: Brian Bedell - Deutsche Bank - Analyst : Oh great, thanks. Good morning, folks. Thanks for bringing my question. Maybe just shifting to expenses, very good FRE margin in 1Q. It seems like it's tracking a little bit ahead of the run rate expected for the year. So maybe if you can talk, John, a little bit about that run rate. Is this a good run rate for G&A as we move through the year? And should we be expecting any additional expenses related to the retail wealth efforts?

Question: Brian Mckenna - Citizens JMP Securities - Analyst : Thanks. Good morning, everyone. So AlpInvest has experienced some pretty impressive growth over the past year. And it seems like the business remains well positioned moving forward. But how should we think about related fundraising for the balance of this year? I know CAPM will be in the market. But what else will you be raising capital for? And then just bigger picture, if I look at AlpInvest FRE, it now represents 20% plus of firm-wide FRE. So where can this contribution go longer term?

Question: Kenneth Worthington - JPMorgan Chase & Co - Analyst : Hi, good morning. We're seeing some potential for stress in the endowment sector and the financial media is suggesting their position in private markets could decline. I guess maybe first, do you think this is a legitimate topic or might it be overblown? And assuming it's not overblown, can you talk about this from a risk perspective for Carlyle and future fundraising if endowments slow investments in private markets? And then the different perspective is, what could this mean for AlpInvest and your secondaries and wealth business given your dry powder and fundraising potential there?

Question: Michael Brown - Wells Fargo Securities - Analyst : Great, thank you for taking my question. So Harvey, there's headlines that continue to come out about a large life and annuity provider and they're considering some strategic alternatives. Would Carlyle consider some inorganic growth in that space? Is that something that's kind of interesting to you in terms of the opportunity to manage something of that asset size? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 12:30PM, CG.OQ - Q1 2025 Carlyle Group Inc Earnings Call And can you just maybe touch on some of the strategic ways you could approach something like that, just given the size and complexity? Would that have to be done via kind of partnership? Maybe how could that work with Fortitude. Any interesting color here would be helpful. Thank you.

Question: Michael Cyprys - Morgan Stanley - Analyst : Hey, good morning. Thanks for taking the question. I was hoping maybe you could elaborate upon the opportunity set that you see in Japan across your business, a lot happening there at the micro level across Japan. Just curious if you could speak to some of the opportunities across the Buyout business, but then also across Fortitude and on the credit side as well? Thank you.

Question: William Katz - TD Cowen - Analyst : Thank you for taking the question. Good morning, everybody. Maybe for John or yourself, Harvey, you've done a very nice job as you highlighted on the transaction line. Could you unpack maybe the difference between sort of regular way leverage to deployment versus where you stand in terms of the capital markets? And as you look ahead, how should we think about the flight path for growth off of the first six months -- last six months of levels? Thank you.

Question: Kyle Voigt - Keefe, Bruyette, & Woods, Inc. - Analyst : Hi, good morning. Thanks for taking my question. Just a question on real estate. It looks like CRP X was activated in April and has $7.5 billion committed, so already almost larger than the prior vintage. Just wondering if you could give us an updated view on the sizing for CRP X? And if you could also just tie that into what we could possibly expect for GP segment management fee step up in 2Q versus 1Q as that fund turns on or even an update to the prior comments for the full year GP management fee trajectory in '25 would be helpful.

Question: Brian Bedell - Deutsche Bank - Analyst : Oh great, thanks for taking my follow up. Actually, I just wanted to come back on Fund IX. Given you're 70% committed on Fund VIII, just the thought process around being back in the market for that fund. Could that be as early as 4Q in terms of a potential fundraise. And I guess in your fundraising sort of target for this year or what you've outlined, is any consideration of Fund IX within that target?

Question: Michael Cyprys - Morgan Stanley - Analyst : Oh, thanks for taking the follow-up question. Just wanted to circle back just around the fundraising targets. I think you guys mentioned $40 billion for the year, 6% FRE growth. Did those include the blocks from Fortitude? I think in the quarter, you had $4 billion, and I think there's maybe another $4 billion coming in the second quarter. Just wanted to clarify if that's embedded in the $40 billion fundraising, 6% FRE growth for the year?

Question: Patrick Davitt - Autonomous Research - Analyst : Hey, thanks for the, follow up. As you pointed out, had some bigger realizations from CP VII in 1Q. How should we think about the triggers for that fund to start actually generating cash carry. And more specifically within that, does IRR need to be higher than 8% before you would feel comfortable doing that? Thank you.