Q4 2021 Carlyle Group Inc Earnings Call

Speaker 1: Good day and thank you for standing by. Welcome to the Carlyle Group Fourth Quarter 2021 earnings panel. At this time all participants are in a listen-only mode.

Okay.

Good day and thank you for standing by welcome to the Carlyle Group fourth quarter 2021 earnings call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one on your telephone.

Please be advised that today's conference is being recorded.

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Speaker 1: I'd like to hand the conference over to your speaker today, Daniel Harris, Head of Investor Life.

I'd now like to hand, the conference over to your Speaker today, Daniel Harris head of Investor Relations. Please go ahead.

Yeah.

Speaker 2: Thank you, Shannon. Good morning and welcome to Carlisle's fourth quarter 2021 earnings call. With me on the call this morning is our Chief Executive Officer, Kyu-Sung Lee, and our Chief Financial Officer, Kurt Bueser.

Thank you Shannon good morning, and welcome to Carlyle's fourth quarter 2021 earnings call with me on the call. This morning is our Chief Executive Officer, Kyu song, Li and our Chief Financial Officer, Kurt you Sir.

Speaker 2: Earlier this morning, we issued a press release and a detailed earnings presentation, both of which are available on our Investor Relations website at ir.carlyle.com. This call is being webcast and a replay will be available on our website. We will refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliations of these measures to GAAP in our earnings presentation to the extent reasonably available.

Earlier. This morning, we issued a press release and the detailed earnings presentation, both of which are available on our Investor Relations website at IR Dot Carlisle Dot com.

This call is being webcast and a replay will be available on our website.

We'll refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliations of these measures to GAAP in our earnings presentation to the extent reasonably available.

Speaker 2: Any forward-looking statements made today do not guarantee future performance and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties including those identified in the risk factor section of our annual report on Form 10-K that could cause actual results to differ materially from those indicated. Carlisle assumes no obligation to update any forward-looking statements at any time.

Any forward looking statements made today do not guarantee future performance and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on Form 10-K that could cause actual results to differ materially from those indicated Carlyle assumes no.

Asian to update any forward looking statements at any time.

Speaker 2: Turning to our results, for the fourth quarter, we generated $174 million in fee-related earnings and $903 million in distributable earnings, with DE per common share of $2.01.

Turning to our results for the fourth quarter, we generated $174 million in fee related earnings and $903 million in distributable earnings with de per common share of $2 <unk>.

Speaker 2: We produced net realized performance revenue of $683 million and entered 2022 with an accrued carry balance of $3.9 billion. For the full year, we generated $598 million in FRE and $2.2 billion in distributable earnings, with DE per share of $5.01. We declared a quarterly dividend of 25 cents per common share.

We produced net realized performance revenue of $683 million and enter 2022 with an accrued carry balance of $3 9 billion.

And for the full year, we generated $598 million in FRE in $2 $2 billion in distributable earnings with de per share or $5 <unk>, we declared a quarterly dividend of <unk> 25 per common share.

Speaker 2: To ensure participation by all those on the call, please limit yourself to one question and one follow-up and then return to the queue for any additional questions. And with that, let me turn the call over to our Chief Executive Officer, Kyu Sang Lee.

To ensure participation by all those on the call. Please limit yourself to one question and one follow up and then return to the queue for any additional questions and with that let me turn the call over to our Chief Executive Officer <unk> <unk>.

Speaker 3: Thanks, Dan. Hello everyone and thanks for joining us today as we discuss our fourth quarter and full year 2021 results as well as provide line of sight into 2022.

Thanks, Dan Hello, everyone and thanks for joining us today, as we discuss our fourth quarter and full year 2021 results as well as provide line of sight into 2022.

Speaker 3: We started last year by laying out our strategic plan for future growth, and I'm pleased to tell you that we are delivering on our goals.

We started last year by laying out our strategic plan for future growth and I'm pleased to tell you that we are delivering on our goals.

Speaker 3: We had an exceptional 2021 with records across the board in fee-related earnings, distributable earnings, and every major investment metric. I am proud of our people and the results they have created.

We had an exceptional 2021 with records across the board in fee related earnings distributable earnings.

The major investment metric.

I am proud of our people and the results they have collectively produced.

Speaker 3: Our fourth quarter performance caps this strong year and illustrates the powerful growth trajectory across a more diversified platform.

Our fourth quarter performance capped a strong year and illustrates the powerful growth trajectory across a more diversified platform.

Speaker 3: I want to highlight the key drivers underpinning our record year as our FRE has grown to new sustainable levels, our growth initiatives are starting to pay off, and our performance has set the stage for robust, distributable earnings over the next several years.

I want to highlight the key drivers underpinning a record year as our FRE has grown to new sustainable levels. Our growth initiatives are starting to pay off and our performance has set the stage for robust distributable earnings over the next several years.

Speaker 3: Let's start by underscoring our investment performance with valuations increasing 41% year over year and realizations of $44 billion across all of our traditional carry funds.

Let's start by underscoring our investment performance with valuations, increasing 41% year over year and realizations of $44 billion across all of our traditional carry funds.

Speaker 3: Portfolio construction continues to be a strength, especially as we enter a period of greater volatility.

Portfolio construction continues to be a strength, especially as we enter a period of greater volatility.

Speaker 3: We're investing more capital as we expand our aperture and leverage even more effectively our global scale and sector expertise.

We're investing more capital as we expand our aperture and leverage even more effectively our global scale and sector expertise.

Speaker 3: This has resulted in record investment activity. We deployed 14 billion dollars in Q4 alone and 34 billion dollars in 2021, each a record.

This has resulted in record investment activity, we deployed $14 billion in Q4 alone and $34 billion in 2021, each a record.

Speaker 3: This investment perform ability to send realized proceeds back to our limited partners has helped their fundraising efforts.

This investment performed the ability to send realized proceeds back to our limited partners has helped us fund raising efforts.

Speaker 3: In 2021, we raised $51 billion, nearly double what we raised in 2020.

In 2021, we raised $51 billion nearly double what we raised in 2020.

Speaker 3: We aim to continue this momentum over the next few years as we focus on the substantial upside potential to our investor day target, which would help us drive financial results beyond our FRE ambition.

We aim to continue this momentum over the next few years as we focus on the substantial upside potential to our Investor day target, which would help us drive financial results beyond our FRE ambitions.

Speaker 3: Alternative sources of capital formation such as high net worth, retail, open-ended funds, permanent capital, and insurance represent upside and are an increasing source of fundraising dollars as we pick our spots to grow these sources of capital.

Alternative sources of capital formations, such as high net worth retail open ended funds permanent capital and insurance represent upside and are an increasing source of fund raising dollars as we pick our spots to grow these sources of capital.

Speaker 3: stepping back, the headline is, we ended 2021 with strong fundraising momentum that will carry over into 2022.

Stepping back the headline is we ended 2021 with strong fund raising momentum that will carryover into 2022.

Speaker 3: Our extraordinary performance across the board has established a new level of earnings power, which gives us the confidence to raise our due then substantially. You'll hear more on this from Kurt later.

Our extra ordinary performance across the board has established a new level of earnings power, which gives us the confidence to raise our dividend substantially youll.

Youll hear more on this from Curt later.

Speaker 3: More importantly, this performance also gives us the resources to continue investing strategically to build a firm and accelerate growth.

More importantly, this performance also gives us the resources to continue investing strategically to build a firm and accelerated growth.

Speaker 3: Now turning to strategic growth opportunities, our investments in global credit are paying off both organically and through strategic acquisition.

Now turning to strategic growth opportunities our investments in global credit are paying off both organically and through strategic acquisitions.

Speaker 3: For example, our credit opportunity strategy has grown to $8 billion in about four years. With Carl Aviation, we expect FRE to triple in three years since the acquisition.

For example, our credit opportunity strategy has grown to $8 billion in about four years with Carlyle aviation, we expect FRE to triple in three years since the acquisition.

The growth continues with our energy now focused on building out infrastructure credit, which we are doing organically and jumpstarting growth in real estate credit.

Speaker 3: The growth continues with our energy now focused on building out infrastructure credit, which we are doing organically and jump-starting growth in real estate credit.

Speaker 3: Another scalable platform initiative is Fortitude, which continues to progress as planned, and given the current activity level and pipeline, we are confident that 2022 could be a breakout year for this very scalable permanent capital platform.

Another scalable platform initiative is fortitude, which continues to progress as planned and given the current activity level and pipeline. We are confident that 2022 could be a breakout year for this very scalable permanent capital platform.

Speaker 3: Several years ago, we asked for patience as we rebuilt our global credit platform.

Several years ago, we asked for patients as we rebuilt our global credit platform.

Speaker 3: We're using the same playbook in other areas like infrastructure and renewables, where we see significant room for growth and similar to fortitude, anticipate an active year.

We're using the same playbook in other areas like infrastructure and renewables, where we see significant room for growth and similar to fortitude anticipate an active year.

Finally, our focus on building the firm includes investment in leadership and impact in ESG capabilities, which are increasingly required to drive returns and meet the needs of our Lps.

Speaker 3: Finally, our focus on building the firm includes investment and leadership in impact and ESG capabilities, which are increasingly required to drive returns and meet the needs of our LPs.

Speaker 3: At Carlyle, ESG is not one funder product, but a part of everything we do.

At Carlisle ESG is not one fund or product, but a part of everything we do.

Speaker 3: One example is the ESG Data Convergence Project, announced in partnership with CalPers in September , 2021, which has reached a milestone commitment of over 100 leading GPs and LPs globally to its partnership, representing $8.7 trillion in AUM, and over 1,400 underlying portfolio companies.

One example is the ESG data convergence project announced in partnership with Calibers in September 2021.

Which has reached a milestone commitment of over 100, leading GPS in lp's globally towards partnership representing eight seven trillion in AUM and over 1400 underlying portfolio of companies.

Speaker 3: And just this week, Carlisle took another important step as one of the first in our industry to announce its commitment to achieve net zero greenhouse gas emissions by 2050 or sooner across direct investment.

And just this week Carlyle took another important step as one of the first in our industry to announce its commitment to achieve net zero greenhouse gas emissions by 2050 or sooner across direct investments.

Speaker 3: by integrating an ESG mindset across the firm, in our investment processes and throughout our value creation, our approach benefits all stakeholders.

By integrating and ESG mindset across the firm in our investment processes and throughout our value creation, our approach benefits all stakeholders.

To wrap up we entered 2022 better positioned than ever before.

Speaker 3: To wrap up, we entered 2022 better position than ever before. Carl is a stronger and healthier firm today because of our 2021 progress.

Karl is a stronger and healthier firm today because of our 2021 progress.

Speaker 3: Our focus remains on continuously improving how we drive value and generating attractive returns. We are confident in our ability to grow FRE, drive investment performance, and strategically build a firm for future growth.

Our focus remains on continuously improving how we drive value and generating attractive returns and we are confident in our ability to grow FRE drive investment performance and strategically build the firm for future growth.

Speaker 3: We are focused on building the best investment for impossible and running it better than ever before.

We are focused on building the best investment firm possible and running it better than ever before.

Speaker 3: As the environment continually shifts around us, our diversified investment platform and global team have demonstrated resilience and adaptability. I remain confident in our ability to thrive and capture opportunities in any environment.

As the environment continually shifts surround us our diversified investment platform and global team have demonstrated resilience and adaptability.

We remain confident in our ability to thrive and capture opportunities in any environment.

Speaker 4: I'm proud of our team and we remain focused on continuing to deliver for shareholders and all stakeholders. I appreciate the hard work as we accelerate our activity for another very active year of executing on our vision of thinking bigger, moving faster and performing better. Over to you, Kurt. Thanks, Q. Thank you. Good morning, everyone.

I am proud of our team and we remain focused on continuing to deliver for shareholders and all stakeholders I. Appreciate the hard work as we accelerate our activity for another very active year of executing on our vision of thinking bigger moving faster and performing better.

Over to you Kirk.

Thank you and good morning, everyone.

Speaker 4: I want to begin by reiterating many things Hugh mentioned to emphasize what our strong performance this year means.

I want to begin by reiterating many things you mentioned to emphasize what our strong performance this year means.

Speaker 4: We generated over $5 per share in the Stribble earnings in 2021, well more than double the average generated in the last five years.

We generated over $5 per share and distributable earnings in 2021.

Well more than double the average generated in the last five years.

Speaker 4: In fact, the fourth quarter is $2.01 per share, would have exceeded a full year in four of the past five years.

In fact, the fourth quarter's $2 one per share would have exceeded the full year in four of the past five years.

Speaker 4: These results are driven by attractive investment performance and are fortifying our balance sheet to help us deliver long-term sustainable growth in our global platform and fee-related earnings.

These results are driven by attractive investment performance and our fortifying our balance sheet to help us deliver long term sustainable growth on a global platform and fee related earnings.

Let's dive deeper into all of this.

Speaker 4: This year we focused on delivering strong, sustainable and growing fee-related earnings.

This year, we focused on delivering strong sustainable and growing fee related earnings.

Speaker 4: 2021 was a record year for the firm's overall FRE. Every segment generated record FRE.

2021 was a record year for the firm's overall FRE.

Every segment generated record FRE.

Speaker 4: and our full year FRE margin grew to 33% up from 30% in 2020. In fact, FRE grew more than 20% off the adjusted level in 2020, and our five year FRE Cager is 24%.

And our full year FRE margin grew to 33% up from 30% in 2020.

In fact, FRE grew more than 20% off the adjusted level in 2020.

And our five year FRE CAGR is 24%.

Speaker 4: This is the outcome of scaling our platform and positioning Carlisle for growth.

This is the outcome of scaling our platform and positioning Carlyle for growth.

Speaker 4: As Q noted, we also had a record year for fundraising, and much of that will have a stronger impact on fee-related earnings in 2022.

As <unk> noted, we also had a record year for fundraising and much of that will have a stronger impact on fee related earnings in 2022.

Speaker 4: Record fundraising of $51 billion, along with strong fund performance, helped drive total assets under management up 22% over the past year.

Record fund raising of $51 billion, along with strong fund performance helped drive total assets under management up 22% over the past year.

Speaker 4: As we look ahead, we will continue to focus on running the firm effectively and efficiently.

As we look ahead, we will continue to focus on running the firm effectively and efficiently.

Speaker 4: On an organic basis, we expect to see FRE growth of more than 20% in 2022 driven by strong top-line growth.

On an organic basis, we expect to see FRE growth of more than 20% in 2022, driven by strong top line growth.

Speaker 4: 2021 fundraising underpins much of our expected growth in 2022.

2021 fund raising underpins much of our expected growth in 2022.

Speaker 4: Notably, we activated fees on our new US buyout and growth capital funds, as well as our most recent US real estate fund, all in Q4, elevating fee revenues in the fourth quarter and setting the stage for higher fee revenues this year.

Notably, we activated fees on our new U S buyout and growth capital funds as well as our most recent U S. Real estate fund all in Q4 elevating fee revenues in the fourth quarter and setting the stage for our higher fee revenues this year.

Speaker 4: In addition, we expect to see a breakout year for global credit in 2022.

In addition, we expect to see a breakout year for global credit in 2022.

Speaker 4: The business has 73 billion dollars in assets under management as of year end.

The business has $73 billion in assets under management as of yearend.

Speaker 4: more than two times larger than it was less than four years ago. Underpinned by nearly 17 billion dollars in fundraising in 2021 for a broad spectrum of strategies, as many investors continue to shift away from traditional fixed income to private credit opportunities.

More than two times larger than it was less than four years ago underpinned by nearly $17 billion in fund raising in 2021 for a broad spectrum of strategies as many investors continue to shift away from traditional fixed income to private credit opportunities.

Speaker 4: This segment has several scaled products, structured credit, opportunistic credit, direct lending, and aviation, as well as several newer products in infrastructure and real estate credit, including the recent I-STAR transaction that will close in the coming weeks, that are all well positioned for growth.

This segment has several scaled products.

<unk> credit.

Opportunistic credit direct lending and Eva.

Asian, as well as several newer products and infrastructure and real estate credit, including the recent I start transaction that will close in the coming weeks that are all well positioned for growth.

Yes.

Speaker 4: Our global investment solutions business has the scale, global reach, and data to help fund investors continually reassess and reconstruct their portfolios in pursuit of capturing returns.

Our global investment solutions business has the scale global reach and data to help fund investors continually reassess and reconstruct our portfolios in pursuit of capturing returns.

Speaker 4: In a world where private capital has become mainstream, and a significant portion of our investors' portfolios, this approach is more important than ever before, and has enabled this business to more than double FRA to $84 million from $37 million just a year ago.

In a world where private capital has become mainstream.

And a significant portion of our investors call. Those this approach is more important than ever before and has enabled this business to more than double FRE to $84 million from $37 million, just a year ago.

Speaker 4: Performance has also been impressive with appreciation of 48% in 2021 and net accrued performance revenues of $319 million at your end. More than double from a year ago.

Performance has also been impressive with depreciation of 48% in 2021, and net accrued performance revenues of $319 million at year end more than double from a year ago.

Speaker 4: Our global private equity business is a diversified business.

Our global private equity business is to diversify the business.

Speaker 4: with platforms supporting corporate private equity, real estate, infrastructure, and natural resources all on a global basis.

Which platform supporting corporate private equity real estate infrastructure and natural resources, all on a global basis.

Speaker 4: In corporate private equity, we're a builder of businesses, pulling more value creation levels than ever. Helping companies reinvent their business models and drive growth.

In corporate private equity were a builder of businesses pulling more value creation levers than ever helping companies reinvent their business models and drive growth.

Speaker 4: You can see the results of this work in our record net realized performance revenues. Just in the fourth quarter, Global Private Equity realized $10 billion in proceeds fueled by exits in PPD, PK, Coresight and the sale of more than $1 billion of Zoom info.

You can see the results of this work and our record net realized performance revenues just in the fourth quarter global private equity realized $10 billion in proceeds fueled by exits in PPD.

K core site and the sale of more than $1 billion of zoom info.

Speaker 4: As Hugh said earlier, this success is a function of our investment in teams, technology, diversity, and platform.

The SKU said earlier. This success is a function of our investment in teams technology diversity and platforms.

Speaker 4: We have $124 billion in remaining fair value of invested assets in just our traditional carry funds, which ended the year up 30% year over year and positions us for continued significant realizations in the future.

We have $124 billion in remaining fair value of invested assets and just our traditional carry funds, which ended the year up 30% year over year and positions us for continued significant realizations in the future.

Speaker 4: 2021 was a special year with over $1.5 billion in net realized performance revenues, which will be difficult to replicate. But we believe 2022 will be another strong year. We should realize on average $1 billion over each of the next several years.

2021 was a special year with over $1 $5 billion in net realized performance revenues, which will be difficult to replicate but we believe 2022 will be another strong year.

Should realize on average $1 billion over each of the next several years.

Speaker 4: Of course, in any given year the health of the global markets is likely to drive variants the upside or downside around that expectation.

Of course in any given year the health of the global markets is likely to drive variance to the upside or downside around that expectation.

Speaker 4: Finally, I would like to spend some time on the strength of our balance sheet. After prepaying $250 million over 2,023 bonds, our balance sheet reflects $2.5 billion in cash and $2.1 billion in firm investments.

Finally, I'd like to spend some time on the strength of our balance sheet.

After prepaying $250 million over 2023 bonds, our balance sheet reflects $2 5 billion in cash and $2 1 billion in firm investments.

Speaker 4: To put the cash balance in perspective, cash increased nearly $1.5 billion from a year ago.

The cash balance and perspective cash increased nearly $1 $5 billion from a year ago.

Speaker 4: In 2021, we generated realized investment income of $210 million from our balance sheet investments or nearly tripled what we earned the previous year. Again, this level of income realizations may not be easy to replicate, but we believe that we should routinely generate investment income at levels of $150 million or more per year on average.

In 2021, we generated realized investment income of $210 million from our balance sheet investments are nearly triple what we earned the previous year.

Again this level of income realizations may not be easy to replicate but we believe that we should routinely generate investment income at levels of $150 million or more per year on average.

Speaker 4: Our strong cash position and expectation for elevated earnings position us to deploy our capital as we previously discussed.

Our strong cash position and expectation for elevated earnings position us to deploy our capital as we previously discussed.

Speaker 4: This includes investing in next generation funds and new strategies, growing our adjacencies, and pursuing accretive inorganic growth. We see various opportunities to drive shareholder value resulting from the improved strength of our balance sheet.

This includes investing in next generation funds and new strategies growing our adjacencies pursuing accretive inorganic growth, we see various opportunities to drive shareholder value, resulting from the improved strength of our balance sheet.

Speaker 4: Our credit ratings at both S&P and Fitch are on a positive watch for a potential upgrade, highlighting the upward trajectory of our firm and our financial footing.

Our credit ratings at both S&P and Fitch on positive watch for a potential upgrade highlighting the upward trajectory of our firm and our financial footing.

Speaker 4: The strength of our balance sheet, along with a significant increase in FRE in 2021, allows the board to comfortably and sustainably raise our fixed dividend to $1.30 for 2022, a 30% increase.

The strength of our balance sheet, along with a significant increase in FRE in 2021 allows the board to comfortably and sustainably raise our fixed dividend to $1 30 for 2022, a 30% increase.

Speaker 4: The higher dividend will begin with Q1. As we continue to grow FRA from here, and as we laid out in our strategic plan, we expect we will be able to raise the dividend further in coming years.

The higher dividend will begin with Q1 as we continue to grow FRE from here and as we laid out in our strategic plan. We expect we will be able to raise the dividend further in coming years.

Speaker 4: We're outperforming our own expectations and believe we're a well-positioned and do so for the next several years. Our strong momentum is allowing us to grow our fee-related earnings and distribual earnings and invest in Carlisles' longer-term growth.

We are outperforming our own expectations and believe we are well positioned to do so for the next several years, our strong momentum is allowing us to grow our fee related earnings and distributable earnings and invest in carlyle's longer term growth.

Speaker 4: We are creating exceptional value for shareholders, and we will continue to deliver on this growth in 2022. Now let me turn the call over to the operators so we can take your questions.

We are creating exceptional value for shareholders and we will continue to deliver on this growth in 2022 now let me turn the call over to the operator, so we can take your questions.

Speaker 1: You as a Minder tax a question. You will need to press star one or your telephone to withdraw your question press.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

Withdraw your question press the pound key.

Standby, while we compile the Q&A roster.

Speaker 1: Our first question comes from Alex Blustein with Goldman Sachs.

Our first question comes from Alex Blaustein with Goldman Sachs. Your line is open.

Speaker 5: Hey, good morning everybody. Thanks for taking the question. So first question, just a little bit more strategic. I guess 2021 was a really strong year, essentially on every front, but most notably, FRE growth.

Hey, good morning, everybody. Thanks for thanks for taking the question.

So first question just a little bit more strategic I guess Q2 1 was a really strong year essential on every front, but most not most notably a hardie growth.

Speaker 5: One of the concerns we continue to hear from investors and Carla broadly is that you really won't be able to sustain that kind of growth momentum going forward, but from your comments, you seem to be obviously pretty confident in that. So where's the disconnect? How do you expect the dynamic to play out and maybe give us a little bit more in terms of the drivers that gives you that confidence?

One of the concerns we continue to hear from investors in Carlisle broadly is that you really won't be able to sustain that kind of growth momentum going forward, but from your comments you seem to be obviously pretty confident in that so where is the disconnect. How do you expect that dynamic to play out and maybe give us a little bit more in terms of the drivers that gives you that confidence.

Speaker 3: Yeah, good morning, Alex. Look, I'm really confident and importantly, the entire team is confident in our momentum and the fact that we're going to keep this going.

Yeah. Good morning, Alex look I'm really confident and importantly, the entire team is confident in our momentum and the fact that we're going to keep this going.

Speaker 3: Look, the FRE has already been growing 20% a year for the past five years. I think that's mostly gone unnoticed.

Look <unk> already been growing 20% a year for the past five years I think that's mostly gone unnoticed and if you get a little bit more granular. If you look at Q4, we generated $174 million of FRE that run rate multiply that by four it already positions us for a strong year of FRE growth in 2022 and Thats before.

Speaker 3: And if you get a little bit more granular, if you look at Q4, we generate $174 million of FRE. That run rate, multiply that by four, it already positions us for a strong year of FRE growth in 2022. And that's before additional upside from our activities that we've got underway.

Additional upside from our activities that we've got underway.

Speaker 3: Yeah, look, with respect to business building, I think you touched on it in your note this morning and it's the right place to look. Our global credit business is about to have a breakout year. We've talked to you about the fundraising. It's got over 70 billion of AUM, raised $17 billion last year. But really the thing to look at, all the patients and building that business, this is the year where I think operating leverage really starts to kick in. And I think off of that growth, more is going to fall to the bottom line with respect to FRA.

Look with respect to business building I think you touched on it in your note. This morning, and it's the right place to look our global credit business is about to have a breakout year. We've talked to you about the fund raising its got over 70 billion of AUM raised $17 billion last year, but really the thing to look at all the patients in building that business.

This is the year, where I think operating leverage really starts to kick in and I think off of that growth more is going to fall to the bottom line with respect to FRE.

Speaker 3: and then turning to our incredible investment performance it's across the board and you know despite the record realizations we had we still have about four billion dollars of net accrued carry balances it's very diversified across regions across sectors across funds uh... for me you know for us it's not a question of if this comes out but when it comes out as as curtailuted to in this comment

And then turning to our incredible investment performance, it's across the board and despite the record realizations. We had we still have about $4 billion of net accrued carry balances, it's very diversified across regions across sectors across funds.

For me for US it's not a question of if this comes out but when it comes out as Curt alluded to in his comments and.

Speaker 3: And then let me just address the broader base momentum we have on fundraising. So we pointed out $51 billion of fundraising. I want to note two thirds of that was away from corporate private equity, healthy fundraising in US real estate, in solutions, in credit. It's broad based across all segments. And I point that out because I think folks aren't appreciating that we're much more diversified and it's a much broader business and a platform than ever before.

And then let me just address the broader base momentum we have on fundraising. So we pointed out $51 billion of fund fund raising and I want to I want to note two thirds of that was away from corporate private equity healthy fundraising in U S real estate and solutions and credit it's broad based across all segments and I.

Point that out because I think folks on appreciating that we're much more diversified.

Much broader business and our platform than ever before.

Speaker 3: Now of course this is all before the fact that our balance sheet is about as strong as it's ever been.

Now of course this is all before the fact that our balance sheet is about as strong as it's ever been.

Speaker 3: And I am very focused on driving the firm into new strategic adjacencies in markets that are large, that are scalable, and that can be very effort regenerative. So when you throw that all together, yeah, I'm really confident. And the last piece to all this, you need a great team. This team is executing. So all of that is what gives me confidence that this is going to continue.

And I am very focused on driving the firm into new strategic Adjacencies in markets that are large that are scalable and that can be very regenerative. So when you throw that altogether.

Yeah, I'm really confident and.

The last piece to all this you need a great team. This team is executing so all of that is what gives me confidence that this is going to continue.

Speaker 5: Great, that's super helpful. Thanks for that. My follow-up is going to touch around just the operating leverage and the model, and I really want to zone in on the competition philosophy. We've seen a number of players in the alternative space.

Great. That's super helpful. Thanks for that my follow up.

Is going to touch around just the operating leverage in the model and I really want to zone in on compensation philosophy.

We've seen a number of players in the alternative space sort of shift the compensation structure towards paying out more carry and obviously maximizing FRE margins, including a recently listed large private equity firm as Im sure you guys know.

Speaker 5: sort of shift the compensation structure toward paying out more carry and obviously maximizing FRE margins, including a recent list at a large private equity firm, as I'm sure you guys know. Although there's a degree of just P&L geography, obviously, in all of that, it does align compensation with fund performance and therefore LP. So, what are your thoughts about that dynamic for Carlyle? And as you are a lot more scaled today than in the past, just with respect to management P base, why not pursue a similar strategy?

Although there is a degree of just P&L geography, obviously and all of that it does align compensation with fund performance and therefore LP. So what are your thoughts about that dynamic for Carlyle and as you are a lot more scale today.

Then in the past just with respect to management fee base why not pursue a similar strategy.

Speaker 4: Thanks for that. Let me take that. So first, compensation structures, as you point out, are really important in driving behavior. And we feel good about our structures and how they're aligned for stakeholders across all investment cycles.

Alex Thanks for this is Kurt let me, let me take that so first compensation structures. As you pointed out are really important in driving behavior and we feel good about our structures and how they're aligned for stakeholders across all investment cycles of.

Speaker 4: course we're always thinking about compensation and alignment and how to better align compensation of our professionals with that of our shareholders and performance. Because what you pay for is likely we're going to be what you get. At the same time we do believe in pay for performance and have been consistent in saying that our split of performance compensation shows strong alignment with limited partners on carry and fund performance with shareholders on driving fee related earnings

Of course, we're always thinking about compensation and alignment and how to better align compensation of our professionals with out of our shareholders and performance.

What you pay for it is likely we are going to be what you get the same time, we do believe in pay for performance and have been consistent in saying that our split of performance compensation shows strong alignment with limited partners on carry and fund performance.

With shareholders on driving fee related earnings.

Speaker 6: and using the firm capital to build our retained earnings. That's important for driving future growth. We're going to continue to grow our business and our earnings. That's what we're focused on. We've been doing that really well as QGIS outline. We have great confidence in the future. To the extent that we decide to make any changes in our compensation models, we'll let you know. The bottom line is we believe in alignment. Great. Thanks for taking both questions.

And using the firm capital to build our retained earnings so that's important for driving future growth.

We're going to continue to grow our business.

Our earnings that's what we're focused on.

We've been doing that really well as Q, just outline have great confidence in the future and to the extent that we decided to make any changes in our compensation models. We'll let you know, but the bottom line is we believe in alignment.

Great. Thanks for taking my questions.

Thank you. Our next question comes from Craig <unk> with Bank of America. Your line is open.

Good morning, Q, Kurt hope everyone's doing well.

Speaker 7: Good to hear from you.

Sure Eric Nice to hear from you.

Speaker 8: So my first question is on credit and a similar question to Alex's first one, but 17 billion of fundraising in 2021, this was a pretty big increase year over year, and we see you keep expanding horizontally into new segments.

So my first question is on credit.

Similar question to Alex's first won by <unk>.

$17 billion of fund raising in 2021. This is a pretty big increase year over year, and we see keep expanding horizontally into new segments.

Speaker 8: We saw that with ISAR this week. So how should we think about the forward run rate for fundraising credit given larger funds?

We saw that with ICR. This week, so how should we think about the forward run rate for fund raising credit given larger funds.

Speaker 8: a wider offering and also some scale advantages on the distribution front because I believe you'll be doing new things in the retail side too.

Later offering and also some scale advantages on the distribution front because I believe you will be doing new things on the retail side.

Speaker 4: Hey Craig, it's Craig. Hey, just thanks for that question. Global Credit is set up really well. So let me just kind of...

Hey, Craig its Greg.

For that question global credit to set up really well. So let me just kind of tick through some of the areas and starting with fund raising so you look at kind of our past it's been a nice tick up in fund raising in global credit over sequential years.

Speaker 4: tick through some of the areas in starting with fundraising. So.

Speaker 4: you look at kind of art you know our path it's been a nice pickup in fund raising in global credit over sequential years you know something like kind of eleven billion last year seventeen billion this year and attending the year in the new em it's about sixteen billion dollars but that's the majority of that is global credit and it'll turn on mostly as we deploy you know capital during on next year and so that'll be an underpinning a lot of growth but to do some of the big components tell you

It sounds like 10 or $11 billion last year, a $17 billion this year and in our pending fee, earning AUM, which is about $16 million. The vast majority of that is global credit and it will turn on mostly as we deploy capital during next year and so that'll be an underpinning a lot of growth plus tick through some of the big components.

First the structured credit business, our CLO that business is booming. So we issued 14 CLO globally in 2021 currently managing about $34 billion in liquid credit strategies that $14 billion of CLO. We issued is about seven $5 billion.

Speaker 4: the structured credit business, our CLOs. That business is just booming. So we issued 14 CLOs globally in 2021. It's currently managing about $34 billion in liquid credit strategies. That $14 billion of CLOs we issued is about $7.5 billion. And we think we're taking market share in this space.

And we think we're taking market share in this space, that's really going to help underpin a lot of further growth in FRE in 'twenty two because you didn't get all of the benefit of that FRE growth. This past year, and so youre going to see more in that space. So activity in the CLO really good as Kim mentioned in his opening remarks our.

Speaker 4: That's really going to help underpin a lot of further growth in the FRE in 2022, because you didn't get all the benefit of that FRE growth this past year, and so you're going to see more in that space. So activity in the CLOs, really good.

Speaker 4: Q mentioned in his opening remarks, our opportunistic credit business is already at $8 billion deploying really well. Although those fees, again, turn on as they deploy capital, so as the investment phase continues.

<unk> credit business is already at $8 billion deploying really well, although sees again turn on as they deploy capital. So as that investment pace continues more increase in revenues. So good space in opportunistic credit.

Speaker 4: more increase in revenues, so good space and opportunistic credit. aviation business

Aviation business.

Boy really nice nearly triple our run rate and fee related earnings.

Speaker 4: nearly a triple of run rate in fee related earnings. The size of that has continued to go up. You've seen some of these big transactions that they've done of recent fly a year ago and the big one this year. So look, they're now about, they should be after all of this close, you know, increasing their total AAM from about $8 billion as of the third quarter to more than $13 billion. That all positions us to be able to triple the run rate of the FRE coming out of that bill.

So that business is continuing to go up you've seen some of these big transactions that they've done a recent fly a year ago.

And the big one this year, so look theyre now about they should be after having this all of this close increasing their total AUM from about $8 billion as of the third quarter to more than 13 billion that all positions us to be able to triple the run rate of the FRE coming out of that business.

Speaker 4: If you then, you know, further think we got some newer products like SeaTac.

First I think we've got some newer products like sea Tac.

Speaker 4: small but growing really fast, really contributing to our results. Our direct lending business continues to do well and is growing. And then we've got some new initiatives. So as you point out, the iSTAR transaction that was announced yesterday for real estate credit and also our infrastructure credit business.

Small, but growing really fast really contributing to our results our direct lending business continues to do well and is growing and then we've got some new initiatives. So as you pointed out ISR transaction.

It was announced yesterday for real estate credit and also our infrastructure credit business. These aren't new platforms. The transaction yesterday really allows us to jumpstart, where we think over time will be a big business. So I wouldn't have high expectations for it for this year in terms of driving earnings.

Speaker 4: These aren't new platforms. The transaction yesterday really allows us to jumpstart what we think, over time, will be a big business.

Speaker 4: So I wouldn't have high expectations for it for this year in terms of driving earnings. We've just gotten our place in a really good spot where we have the AUM, the talent pool, and really the platform is now in place to really be able to launch it.

We've just gotten a place in a really good spot, where we have the AUM the talent pool and really the platform is now in place to really be able to launch. It. So think 24 and thereafter for when this business will really kind of really matters. So we're investing in long term growth and from a firm capital perspective.

Speaker 4: think 24 and thereafter for when this business will really kind of really matter so we're investing in long term growth.

Speaker 4: from a firm capital perspective you know it's about two hundred million bucks in terms of firm capital so you know i thought was a good use of firm capital related to achieve those those outcomes and let's not forget the j

200 million box in terms of firm capital so.

Thought it was a good use of firm capital related to achieve those outcomes and let's not forget the adjacencies.

Speaker 4: So, fortitude and capital markets, biggest adjacent fees, incloable credit, they're also performant really well in driving growth. So hopefully that answers your question, Craig.

So fortitude and capital markets Big Adjacencies in global private they're also performing really well and driving growth. So hopefully that answers your question Greg.

Alright Thats helpful.

Speaker 3: hey crag you that if this is q and and uh... really good to have you uh... back uh... uh... with us here uh... you know the only thing i would add uh... let me just take a step back we're being very strategic and thought how we build out our credit business it's it's a platform approach across big scalable uh... strategies you see how we're doing this uh... you know you've been very patient with us and it's really starting to pay off the other thing i would say

Hey, Craig this is Q and really good to have you back.

With us here, the only thing I would add and let me just take a step back we're being very strategic and thoughtful in how we build out our credit business. It's a platform approach across big scalable strategies, you see how we're doing this.

You've been very patient with us and it's really starting to pay off the other thing I would say.

Speaker 3: As I talk to LPs, we're in the early innings here. Credit is relatively, private credit is relatively under-penetrated relative to private equity. There continues to be secular tailwinds and more flows are coming in and wanting private credit exposure.

As I talked to Lps, we're in the early innings here credit is relatively private credit is relatively underpenetrated relative to private equity there continues to be secular tailwind and more flows are coming in and wanting private credit exposure.

Speaker 3: So we've got great momentum. Kurt touched on this. This is an asset class with products that will fit particularly well to retail.

So.

We've got great momentum Kurt touched on this this is an asset class with products that will.

Fit, particularly well to retail it's an area, where you can find permits sources of capital, which we've done now with our Bdcs.

Speaker 3: It's an area where you can find permanent sources of capital, which we've done now with our BDCs.

Speaker 3: and you noted that publicly. So we've got great momentum. It is sustainable. These are sticky FRE businesses that we think just keep growing as we have secular tailwinds behind our platform.

You noted that publicly so we've got great momentum is sustainable. These are sticky fr businesses that we think just keep growing as we have secular tailwind.

<unk> platform.

Speaker 8: Thank you, Q. And Kurt, I heard your commentary on Fortitude being a breakout year in 2022. So does this mean insurance M&A? Or is this really kind of robust, more organic growth in the institutional B2B channel? I was just hoping you could articulate that comment. And it probably relates to some of the stuff you just said in credit.

Thank you.

And Curt I heard your commentary on <unk> to being a breakout year in 2020. So does this mean insurance M&A or is this really kind of robust organic growth in the institutional BTB channel I was just hoping you could articulate that comment and it probably relates to some of the stuff you just set in credit.

Speaker 4: So let me talk about fortitude. First and foremost...

Yes, So let me talk about Fortitude first and foremost that business is doing great. It's bigger and is better at this point in time than what our expectations are so let me step back a little bit we completed the carve out which was not easy to big business really pleased with the management team.

Speaker 4: That business is doing great. It's bigger and it's better at this point in time than what our expectations are. So let me step back a little bit. We completed the carve-out.

Speaker 4: which was not easy to big business, really pleased with the management team there that they're executing really well. They've been able to execute a couple of acquisitions, the potential assurance life of product that was announced in Q3, and then there's another big green insurance contract that just got done. They have a great pipeline for future deals.

They're that they're executing really well they've been able to execute a couple of acquisitions.

The Prudential assurance life product that was announced in Q3.

And then there is another big reinsurance contract that just got done they have a great pipeline for future deals all of that is already has a fee run rate to Carlisle about $50 million.

Speaker 4: All of that already has a fee run rate to Carlisle, about $50 million to our business. And there's about $10 billion of total assets under management that are fee paying, seven of which is invested directly into our funds, three of which is how we structured the actual fortitude investment with our partners.

Our business and Theres about $10 billion of total assets under management that are fee paying seven of which were invested directly in the <unk>.

Funds III of witches.

How we've structured the actual fortitude investment with our partners. So it's really set up well for further growth. The pipeline is there and we think this is going to be an active year for that business in terms of future scale and good.

Speaker 4: So it's really set up well for the growth. The pipeline is there and we think this is going to be an active year for that business in terms of future scale and good things are happening.

Good things are happening.

Thank you Kirk.

Thank you. Our next question comes from Bill Katz with Citigroup. Your line is open.

Speaker 9: Okay, thanks very much. So, Q, I think you mentioned now a couple of times, and Kurt, both, it sounds like the deal pipeline might be picking up and you have some good balance sheet. Could you maybe go down a layer and talk to where you think you might see an opportunity? I think last quarter or so, you had mentioned you want to monetize and take the free cash flow from the realizations and drive FRE and I think permanent capital. I think I heard that again today. Could you talk a little bit, maybe specifically what segments or products you could see that opportunity playing through?

Okay. Thanks, very much so <unk> I think you've mentioned now a couple of times it Kurt.

<unk>.

It sounds like the deal pipeline might be picking up and you have sort of a good balance sheet could you maybe go down a layer and talk to.

Where you think you might see an opportunity I think last quarter. So you had mentioned you want to monetize and take the free cash flow from the realizations and drive FRE I think permanent capital I think I heard that again today, but can you talk a little bit maybe specifically what segments or products, you could see that opportunity playing through.

Speaker 3: Sure Bill. Thanks for the question. I mean look, take a step back to the criteria for us is we're looking for strategic adjacencies.

Sure Bill.

Thanks for the question, let me take a step back.

Criteria for us as we're looking for strategic Adjacencies.

Speaker 3: in big and scalable strategies that are going to be generative of FRE that can be great growth drivers for us in the years to come.

In big and scalable strategies that are going to be generative.

Sorry.

Can be great growth drivers for us in the years to come.

Okay. So we're very focused and disciplined on that.

If you'll recall back at Investor day, which is about a year ago I mentioned that I think the two best areas for this for us are going to be in the credit asset class and in the solutions business, which continues to grow very fast in our industry.

Speaker 3: We're already a dominant global private equity player around the world. I think the bigger opportunities for scalability and FRE generation are gonna come in the credit asset class and in solutions for us. Hopefully that gives you...

Already done.

Dominant global private equity player around the world.

I think the bigger opportunities for scalability and FRE generation are going to come in the credit asset class and then in solutions for us.

So hopefully that gives you a little bit more color.

Speaker 9: Okay, thanks. And then just to come back to the net realization guidance for the next couple of years. So it sounds like it's up a little bit from your investi-date, which is nice to hear.

Okay. Thanks, and then just to come back to the net realization guidance for the next couple of years. So it sounds like it's up a little bit from your Investor day, which is nice to hear.

Speaker 9: When I look sequentially, and this may be too tactical of you, but your net accrued carry balance actually dipped a little bit quarter to quarter, but when I look at some of your seasoning ratios, like your in-carry ratio, your percent publics, and those aged four years or more, those all sort of slipped a little bit. Maybe it's quibbling. So how do you sort of triangulate between sort of appreciate 21 was a great year.

When I look sequentially and this may be too tactical view, but youre your net accrued carry balance actually dipped a little bit month quarter to quarter, but when I look at some of your seasoning ratios in carry ratio your percent publix in those age when we get some more those also have slipped a little bit maybe it's equivalent but how do you sort of triangulate between so I appreciate it.

He was a great year, two 1 billion so on average now.

Speaker 9: to a billion on average now when you have a bit of a less public portfolio loss being equal.

And when you have sort of a bit of a less public portfolio all else being equal.

Speaker 4: Bill, so, what look at, you know, I really think that the overall platform is set up really, really well. The billion five that we generated in the last year is far beyond, you know, anyone's expectations, just a phenomenal year. And if you look at kind of on the go forward, based...

So.

I really think that the overall platform is set up really really well. The 1 billion files are we generating realized carry last year is far beyond anyone's expectations, just a phenomenal year.

And if you look at kind of on a go forward basis.

Speaker 4: I think we can continue to do really well. And let's talk about some of those specifics. So we started the year not at 3.9 billion. And in fact, if you look at last quarter to this quarter, the fact that we still had the appreciation that we had.

Think we can continue to do really well and let's talk about some of those specifics. So we started the year not at $3 9 billion and in fact, if you look at last quarter to this quarter. The fact that we still have depreciation that we had to keep it essentially rounded to the same $3 $9 billion is pretty damn good.

Speaker 4: to keep it essentially rounded the same three point nine billion dollars is pretty bad on good when you realize six hundred eighty three million dollars in a quarter let's go back to carliles big you know realization years you know from one of the public to two thousand seventeen six hundred eighty three million dollars of net-reliced performance that was an annual number.

When you realized $683 million in a quarter and let's go back to carlyle's big realization years.

From Wuhan public to 2017 $683 million of net realized performance revenues that was an annual number we.

Speaker 4: We did that in one quarter. And so as we look going forward, I'm very confident there's 3.9 billion of accrued carry but more importantly is the $124 billion of invested capital in the ground at remaining fair value. That number is about double what it was during the last cycle and it's 30% higher than at the beginning of this year.

We did that in one quarter and so.

We look going forward I'm very confident there is $3 9 billion of acute care, but more importantly is the $124 billion of invested capital in the ground and remaining fair value that number's about double what it was during the last cycle and it's 30% higher than at the beginning of this year. So.

Speaker 4: So all of the components to really be able to drive carry going forward are in place.

All of the components to really be able to drive carry going forward are in place. So.

Speaker 4: So, the in-carry ratio is still really good. It likes 75%. You know, the amount that's, you know, is still accrued despite really strong realizations, I feel really good about. And, you know, you look at our gap numbers, even there, I mean, look at the gap EPF number, it's a nice forward indicator of things to come.

The in carry ratio is still really good at like 75%.

The amount that is still a crude despite really strong realizations I feel really good about.

You look at our GAAP numbers, even there I mean look at the GAAP EPS number to nice forward indicator of things to come.

Speaker 3: Hey Bill, it's Q. You know, great exit activity is a function of great investment activity and hard work that's gone into it three or four years prior.

Hey, Bill it's Kew.

Great exit activity is.

He is a function of great investment activity and hard work that's gone into it three or four years prior.

Speaker 3: And our investment engine is really firing. And our deal teams, they're really performing. We're creating real value in our portfolios.

And our investment engine is really firing and our deal teams. They are really performing we're creating real value in our portfolios and if you look at our investment pace and our ability to deploy more I mean $34 billion in 2021, that's really the forward indicator.

Speaker 3: And if you look at our investment pace and our ability to deploy more, I mean $34 billion in 2021.

Speaker 3: That's really the forward indicator, the setup for what our earnings power is going to be three, four, five years hence. So the 3.9 billion of carry that we have now, the fact that it stayed flat despite record realization.

Setup for what our earnings power is going to be 345 years, hence right. So the $3 9 billion of carry that we have now the fact that it stayed flat despite record realizations talks to the talks.

Speaker 3: talks to our business model that we are driving great deployment and great portfolio company appreciation so the engine is really working.

Talks to our business model that we are driving great deployment and great portfolio company appreciation. So the engine is really working.

Speaker 9: Okay, so we're managing more money, we're investing more money, we're creating more value than ever before, and it's just going to be a matter of time before that comes out in our earnings over three, four, five years. Okay, thank you both.

Okay. So we're managing more money, we're investing more money, we're creating more value than ever before and it's just going to be a matter of time before that comes out in our earnings over 345 years.

Okay. Thank you both.

Thanks Bill. Thank you. Our next question comes from Chris Kotowski Oppenheimer <unk> Company. Your line is open.

Yes.

Speaker 10: Yeah, good morning and thank you. I wonder if you could give us a bit more color on the iSTAR transaction just because I have a feeling this is kind of like a case study for...

Yes, good morning, and thank you.

Wonder if you could give us a bit more color on the star transaction, just because I have a feeling this is kind of like a case study for your strategy.

Speaker 10: your strategy of using balance sheet capital to try to drive FRE growth. So, you know, in the press release it said that you acquired it for roughly $3 billion and you just said on the call that $200 million came from your balance sheet. So I'm curious about the remaining $2.8. Does that come from a specifically raised, you know, third party vehicle or does it come from just ordinary funds across the...

Using balance sheet capital to try to drive FRE growth. So.

In the press release, it said that you acquired it for roughly $3 billion and you just said on the call that $200 million came from your balance sheet. So I'm curious about the remaining $2 eight does that come from a specifically raised third party vehicle or does it come from just ordinary funds across the.

Speaker 10: the board and then how should we think about in terms of the

The board and then how should we think about in terms of.

The day, one revenues that.

Speaker 10: The day one revenues that it generates at this level, and in the press release, you say you expected the scale to 10 billion, you know, what would it be, you know, at a mature, fully, fully platform level at that level? Kind of those...

It generates at this level.

In the press release, you say you expect it to scale to $10 billion.

Would it be at a mature fully fully platform level at that level.

All of those.

If you can give some color around those things.

Speaker 4: So Chris, you know, I think it's a great question and we're really pleased about the transaction and, you know, really overall what's happened in credit just today, kind of comment on it a minute ago. The deal itself, $3 billion purchase price.

So Chris.

I think it's a great question and we're really pleased about the transaction and really overall, what's happening in credit just kind of comment on a minute ago.

The deal itself 3 billion purchase price.

Speaker 4: really kind of setting us up for a good platform in real estate credit. It's one that we know well. Roger Coase just taking the lead in all of this, really built that in the past, bringing over some of the people that he knows really well. So from a personal perspective, really good. From an asset perspective, we know the assets.

Really kind of setting us up for a good platform in real estate credit. It's one that we know well <unk> just taken the lead in all of this really built out in the past, bringing over some of the people that he knows really well so from a personal perspective really good from an asset perspective, we know the assets.

Speaker 4: It's a levered transaction, so there's about two to one leverage.

Yes.

Levered transaction. So there is about two to one leverage.

Speaker 4: And from an equity piece that was funded by some of our LPs, both in existing products and a strategic investor, and we're about 20%. The important part is we'll be the...

And from an equity piece that was funded by some of our.

Lps, both in existing products and a strategic investor and we're about 20% will be the important part is will be the GP. So you kind of think about this as a fund structures.

Speaker 4: So you kind of think about this as fun structures. We're the GP of that.

Where the GP of that.

Speaker 4: This enables us over time to potentially use this to be in the retail channel, but more work to come on all of that. And it's going to take us, as I said before, two to three years before this really culminates.

This enables us over time to potentially use is to be in the retail channel, but more work to come on all of that and it's going to take us as I said before two to three years before this really culminates, but we need to make investments like this now to build a drive that kind of growth in <unk>.

Speaker 4: But we need to make investments like this now to be able to drive that kind of growth in 2024, 2025 and thereafter. So this is a good move for us as a firm and really jump starts what I think is going to be a very big business.

2020 for 2025 and thereafter. So this is this is a good move for us as a firm and really jumpstart what I think is going to be a very big business.

Speaker 10: You know, Mark Jenkins who runs this said, look, he's looking to build a $10 billion business, and I know Mark pretty well, and Mark's not gonna stop at 10. Okay, alrighty, that's it for me, thank you.

Mark Jenkins, who runs as said look you're looking to build a $10 billion of businesses and I know mark pretty well Mark is not going to stop at 10.

Okay Alright.

Alright Thats it from me thank you.

Thanks, Chris.

Thank you our next comes from Gerry O'hara with Jefferies. Your line is open.

Speaker 11: Great, thanks. Just maybe want to pick up a little bit on the investment solutions business, clearly see some kind of growing momentum there as it relates to net accrued revenue. But perhaps you could just kind of give us a little bit of an update on how that segment is evolving and where you might see that kind of headed into next.

Great. Thanks.

Just maybe wanted to pick up a little bit on the investment solutions business, clearly see similar kind of growing momentum there as it relates to <unk>.

Our net accrued revenue, but perhaps you could just kind of give us a little bit of an update on how that segment is evolving and where you might see that kind of headed into next year.

Speaker 4: care hey thanks for the question investment solutions is done really well you know we've we've doubled f re you know eighty four million dollars this year thirty seven million dollars a year ago more importantly this is in a very attractive space

Hey, Thanks for the question investment solutions has done really well.

We've doubled our Ferrari $84 million this year of $37 million a year ago. More importantly, this is in a very attractive space. So solutions products are really a good way for a lot of people to come into private equity.

Speaker 4: So, solutions products are really a good way for a lot of people to come into private equity. And their performance is phenomenal. 48% this patched year, they've mastered really data and how to help LPs construct portfolios. And so, they've done a really nice job of that. And their deployment tanks has been really good this year.

Their performance is phenomenal, 48% this past year, they've mastered really data and how to help.

Construct portfolios and so they've done a really nice job of that in their deployment pace has been really good this year.

Speaker 4: You point out the fruit care, obviously, that's a reflection of the 48% appreciation.

You point out.

The acute care, obviously, that's a reflection of the 48% appreciation.

Speaker 4: and look, I think we're well positioned for carry in that business to be a realized carry to be a much bigger number. Now, you start to see some of that really coming in here in the fourth quarter. Still small and irrelevant to overall carolile, but much bigger than what you've seen before. Remind you that, you know, this is all European style waterfalls. When we bought Alponsaus, we didn't buy the, you know, the historical carry. And so, truly only on the funds are there raised where the participation rates are right. So, that's going to really start to...

And look I think we're well positioned for carry in that business to be realized carry to be a much bigger number now you start to see some of that really coming in here in the fourth quarter still small relative to overall carlyle, but much bigger than what you've seen before remind you that this is all European style waterfalls.

When we bought <unk>, we didn't buy the.

Historical carry and so it's really only on the funds are then they are raised where the participation rates right and so that's going to really start to play off 2000, 'twenty three 'twenty four 'twenty five is when those numbers thats most of that 300 twentyish of net accrued carry will really pop in those years and youll see a nice increase until that point for <unk>.

Speaker 4: 2023, 24, 25 is when those numbers, most of that 320-ish of net accrue carry will really pop in those years. I think you'll see a nice increase until that point, but it'll be those years where that number really comes through.

As yours, where that number really comes through in the meantime.

Speaker 4: In the meantime, you know, Rulken and the team are really working hard on ways to continue to grow that business. The secondary platform and the combats and platform are hot platforms. They're looking at other ways to kind of, you know, take advantage of what they know and do things. But, you know, more to come on that is that all kind of unfold.

Roque and the team are really working hard on ways to continue to grow that business. The secondary platform in the co investment platform, our hot platforms, they're looking at other ways to kind of take advantage of what they know and do things, but more to come on that is that all kind of unfolds.

Speaker 3: Hey Jerry, it's Q. The only high level thing I'd add is...

Hey, Jerry it's too the only the only high level thing I'd add is.

Speaker 3: You know, there's a theme that I introduced which is, or actually came with the first question which is,

There is a theme that I introduced which is our actually came with the first question which is.

Speaker 3: under appreciation. I think our FRE strength is underappreciated. I think the diversity of our platform is underappreciated and the breadth of it. And quite frankly, I think people are starting to...

Under appreciation.

Our FRE strength is underappreciated I think the diversity of our platform is underappreciated and the breadth of it and quite frankly, I think people are starting to figure out.

Speaker 3: Alp Invest, which is a leader in the solution space, a great brand, a great platform. You used to contribute, oh, probably, I don't know, 12, 13 million of FR-3, 3, 4 years back. Now it's, you know, closing in on 100. It's a strong platform, one of the market leaders. And that holds.

If invest which is.

Leader in the solution space, a great brand great platform used to contribute Oh, probably on a $12 million to $13 million of FRE three four years back now.

Closing in on 100, it's a strong platform one of the market leaders and that whole space.

Speaker 3: It's got real tailwinds in our industry because as the ALTS business has grown, CIOs and CEOs of these big plans, they need tools for better deployment, portfolio optimization and access to liquidity.

<unk> got real tailwind in our industry because as the <unk> business has grown <unk> and Ceos of these big plans, they need tools for better deployment portfolio optimization and access to liquidity.

Speaker 3: And it just shows, it just talks to the maturation and the scale of what this industry has become.

And it just shows it just it just it just talks to the maturation and the scale of what this industry has become.

Speaker 3: uh... that this part of the industry now it has vibrant as it is uh... with real uh... growth and momentum behind it so we've got real um... we got real uh... we feel really good about the prospects of alphanvesites a great team market leading in i think like i said

This part of the industry now is as vibrant as it is with real growth and momentum behind it. So we've got real.

We've got real we feel really good about the prospects of alpha invest it's a great team market, leading and I think like I said.

Speaker 3: we're underappreciated with respect to how important it is and what its opportunities for growth are within Carlyle.

Underappreciated with respect to how important it is and what its opportunities for growth are within Carlisle.

Speaker 11: Great, that's helpful. And then I guess, Q sticking with you and as it relates to sort of strategic opportunities, you know, the other deal I think that was announced was I guess a partnership with iCapital and AllFunds. Perhaps you could comment a little bit about, you know, how your vision and into the kind of retail market is expected to evolve, I guess, in the coming years. Thanks.

Great that's helpful and then.

I guess sticking.

Sticking with you and as it relates to sort of strategic opportunities.

The other deal I think that was announced was I guess, a partnership with <unk> capital and all funds, perhaps you could comment a little bit about how.

Your vision into the retail market is expected to evolve.

In the coming years. Thank you.

Speaker 4: Jerry, let me jump in and take that. So look.

Jeremy let me jump in and take that.

Look alternative source of capital for US really include high net worth capital retail open ended funds permanent capital in insurance and they are all additive to our efforts to drive growth and we have a number of initiatives in each of these areas some of which we've already talked about and thanks for pointing out the <unk>.

Speaker 4: I'll turn the source to the capital for us, really include a high network capital, a retail, open ended funds, permanent capital and insurance, and they're all additive to our efforts to drive growth. And we have a number of initiatives.

Speaker 4: to in each of these areas, some of which we've already talked about, and thanks for pointing out the I-CAPITAL announcement yesterday. That's another one of these initiatives that we think over time will be meaningful. You know, we're an investor in I-CAPITAL, but you know,

Capital announcement yesterday, it's another one of these initiatives that we think over time will be meaningful we're an investor in <unk> capital, but it's.

Speaker 4: i wouldn't you think that this is a major uh... revelation it's it's just added to the overall process here bigger picture is the fifty one billion dollars that we raise this past year double reiss of the prior momentum is good and it's diversified diversified across all of our businesses

I wouldn't think that this is a major revelation, it's just additive to the overall process here. The bigger picture is the $51 billion that we raised this past year double what we raised the prior year momentum is good and it's diversified it's diversified across all of our businesses.

Speaker 12: And this coming year we'll probably have about 20 different products in the market, really enabling that strength and momentum to continue. And more importantly, feel really confident about our ability to drive FRE.

It does.

Coming year, we'll probably have about 20 different products in the market really enabling that strength and momentum to continue and more importantly feel really confident about our ability to drive FRE.

Yes.

Thanks for taking the questions.

Thanks Jerry.

Okay.

Our next question Patrick Davitt with Autonomous Research your line is open.

Speaker 13: Good morning guys. There's a view in the marketplace that private equity broadly has been one of the most boosted asset classes by this.

Hey, good morning, guys.

There is a view in the marketplace that private equity broadly has been one of the most.

Asset classes by.

Long period of Central Bank accommodation. So in that vein is now perhaps one of the more negatively exposed asset classes to this year's inflationary higher rate less accommodative environment, particularly given the pivot to growth.

A lot of firms appear to have taken so could you give us your reaction to that perception and more specifically frame.

Speaker 13: Can you give us your reaction to that perception and more specifically frame what you think Carl has?

What you think carlyle's exposure as to what might be considered growth year, a higher multiple positions in the portfolio.

Speaker 3: Sure, hey Patrick, great question obviously. This is something we're really, everyone is focused on us especially. And you know, it's a question about rising rates. It's a question of...

Sure Hey, Patrick Great question. Obviously this is something we're really everyone is focused on us, especially in it's a question about rising rates. It's a question about volatility inflation all in one so let me let me try to address it now so first of all with some of the correction thats happening in the market.

Speaker 3: volatility inflation all all in one so let me let me try to address it You know so first of all with some of the correction that's happening in the market And we're all seeing it the rotations that are occurring clearly this will have an impact on mark

And we're all seeing it the rotations that are occurring clearly this will have an impact on marks.

Speaker 3: But I'd like to point out and and Kurt or Nan help me out here I think only 11% of our portfolio and public names right now is that correct? Correct. Okay. So about 11% of our names are in public names at the moment But we really feel good about our portfolio construction very well diversified across industry sectors big companies smaller companies across all regions And that type of portfolio construction with our long-term orientation

But I'd like to point out and Curt or Dan help me out here I think only 11% of our portfolio and public names right. Now is that correct correct. Okay. So about 11% of our names in public names.

Names at the moment.

But we really feel good about our portfolio construction very well diversified across industry sectors big companies smaller companies across all regions.

And that type of portfolio construction.

With our long term orientation, where we don't have liquidity pressure because of marks.

Speaker 3: where we don't have liquidity pressure because of marks.

Speaker 3: gives me real good comfort that over the long term, or folio, it will be quite resilient as we enter a fair to volatility. Now, if you think about some of the corrections we're seeing, especially with respect to valuations,

Gives me real good comfort that over the long term.

Portfolio.

It will be quite resilient as we enter a period of volatility now if you think about <unk>.

Some of the corrections, we're seeing especially with respect to valuations.

Speaker 3: You know, quite frankly, on the buy side of the equation, we're meeting great companies and the entry points are now more attractive. So I think longer term this bodes well and I'm on record as saying, you know, a healthy correction is not necessarily a bad thing with respect to our investment activity.

Frankly on the buy side of the equation, we're meeting great companies and the entry points are now more attractive so I think longer term dispose well and I'm on record as saying a healthy correction is not necessarily a bad thing with respect to our investment activity. So so.

Speaker 3: So, you know, with a long-term view, again, you know, we're of a view that as multiples trade down, it could be more attractive to us from an investment perspective. Turning to the credit business.

With a long term view.

Again.

We're of a view that.

As multiples trade down it could be more attractive to us from an investment perspective, turning to the credit business.

Speaker 3: I think folks have to appreciate a vast preponderance of our assets there, our floating rate.

I think folks have to depreciate.

A vast preponderance of our assets there are floating rate.

Speaker 3: Okay, so all else equal, assuming economic backdrop is benign. Rising rates mean that platform generates more profits.

Okay. So all else equal assuming economic backdrop is.

As benign.

Rising rates means that platform generates more profit.

Speaker 3: Okay, and then with effective volatility, volatility with effect to the credit platform actually creates flow especially in our special sit and credit opportunistic strategies.

Okay, and then with respect to volatility.

Volatility.

With respect to the credit platform actually creates flow, especially in our special sit in credit opportunistic strategies.

Speaker 3: But more broadly speaking, I'd say, Patrick, you know, there's one thing I've learned. Volatility creates change and change creates deal flow.

But more broadly speaking I would say Patrick if theres, one thing Ive learned volatility creates change and change creates deal flow.

Speaker 3: And our platform is very broad. It's around the world. It's very diversified across strategies, across industry sectors.

And our platform is very broad it's around the world, it's very diversified across strategies across industry sectors, and we've been able to pivot really nicely over the past several years to finding opportunity. So as we enter this period of volatility and make no doubt about it we're not being complacent.

We're studying what's happening very carefully of course, we're focused on inflation of course, we're focused on rising rates of course of course, we are carefully tracking markets, but volatility creates changes that are creating opportunities for our broad based platform, especially with a long term lens. So hopefully that gives you.

Speaker 3: but volatility creates changes that are creating opportunities for a broad-based platform, especially with a long-term lens.

Speaker 1: So hopefully that gives you a little bit of color on the environment and how we're positioned to navigate through it. Thank you. Thank you. Our next question comes from Shore with the...

A little bit of color on the environment and how we're positioned to navigate through it.

Thank you.

Thank you. Our next question comes from shore with Evercore. Your line is open.

Hello there.

Quickie first you talked about this great growth.

20, plus an effort, which I think is very welcomed.

We talk about the margin you plant you talked about in the past about plans to increase that over time, I think youre scaling really well I don't know if the repeat all the things you said.

Any specific thoughts on where you think the margin can be the next year or two.

As the scale.

So that's coming through.

Speaker 4: My name is Kurt. So thanks for the question. You know, we, you know, in our investor day, we said we would get the 40%. I'm not backed off of that target. That's for 2024.

Kurt So thanks for the question.

At our Investor Day, we said, we would get to 40% have not backed off of that target that's for 2024.

Speaker 4: We grew from 30% beginning of this year to 33% for the full year of this year. Q4 was 34%. We're well positioned. Yes, there's some increases and some costs in the fourth quarter, but our job is to grow the top line faster than the expenses and feel really comfortable with our ability to do that. I think you're going to see continued expansion in margin over the coming years. We'll hit the target in 2024.

We grew from 30% beginning of this year to 33% for the full year. This year Q4 was 34%.

Well position, yes, there is some.

<unk> costs in the fourth quarter, but our job is to grow the top line faster than expenses and feel really comfortable with our ability to do that I think youre going to see continued expansion in margin over the coming years, we will hit the target in 2024.

I'll take the sooner on that Okay no problem.

Speaker 4: Okay, no problem. Hey Glen, hey Glen, it's Q. I read your note this morning. You have 15 positives and only four negatives in your quick takeaway. If I, if I, if I counted correctly, so. What is this? Um, it's a question for you. I'm curious. This is more theoretical, I guess, but.

Hey, Glenn Glenn It's Q I read your note. This morning, Yes, 15 positives in only four negatives in your quick takeaways.

If I counted correctly.

Yeah.

A question for you I'm curious this is more theoretical I guess, but if I look at your private equity business. It's big it's global it's been fully integrated <unk> once we make sure everything I'm curious.

In credit.

The growth is great. The cavalry isn't great performance, great everything that you pointed out I'm curious on how you are.

How you are integrating yet and whether or not it needs to be integrated.

Meaning because each sub asset class stand on its own.

<unk> raised capital on its own go to Lps on its own.

Underneath the covers.

Years out will look just like private equity.

Speaker 3: Yeah, Glenn, it's a great question. And when I say and Kurt says, we are taking a platform approach, we are being very intentional with that language. We have teams of investment professionals that are managing multiple strategies.

Yes, Glenn it's a great question and when I say and Kirt says we are taking a platform approach.

We're being very intentional with that language.

We have teams of investment professionals that are managing multiple strategies.

Speaker 3: And we have a credit distribution capability set that is raising money across our platform strategies and increasingly we are also talking to LPs that are coming in to multiple strategies at the same time in SMAs and other type of structured programs. And so it is with real intention that we've designed for the long term a strategy that is platform.

And we have a credit distribution capability set that is raising money across our platform strategies and increasingly we are also talking to Lps that are coming into multiple strategies at the same time in SMA and other type of structured.

Grams, and so it is with real intention that we've designed for the long term our.

A strategy that is platform driven.

Speaker 3: It takes time to get that going, build it the right way, and to have it really pay off, which is why you've heard me from the very beginning several years back to ask a little for patience. I think it's starting to pay off. Not only is the growth starting to happen, but it's also starting to get bigger.

It takes time to get that going build it the right way and to have it really pay off which is why you've heard me from the very beginning several years back to ask for patients.

I think it's starting to pay off not only is the growth starting to happen.

Speaker 3: Okay, and you're seeing that organically and also inorganically, we're going to be very thoughtful and take our shots inorganically, but you're seeing a consistent strategy on the platform. And what that means is, at some point in time, there's a...

Okay, and Youre seeing that organically and also inorganically, we're going to be very thoughtful and take our shots inorganically, but youre seeing a consistent strategy around the platform and what that means is.

At some point in time, there is a tipping point, where the AUM base and the revenue base starts to drop more earnings because of the operating leverage that we've created okay that has not yet occurred to date, but we are approaching that tipping point.

Speaker 3: where the AUM base and the revenue base...

Speaker 3: starts to drop more earnings because of the operating levers that we've created.

Speaker 3: That has not yet occurred to date, but we are approaching that tipping point, which is why we keep alluding to the fact that we are approaching that tipping point.

Which is why we are keep alluding to the fact that we think we're going to have a breakout year in credit as it relates to the FRE drop.

Speaker 3: that that we think we're gonna have a breakout year in in credit as it relates to the fr e drop uh... uh... from uh... all the growth that we've been seeing and that we expect to continue

From all the growth that we've been seeing and that we expect to continue so hopefully that gives you really good.

Speaker 3: So hopefully that gives you really good color on not only the strategic design of the platform, but what we think the business model will enable this to do from a financial perspective, no longer long-term, but in the short to medium term.

<unk> on not only the strategic design of the platform, but what we think the business model will enable this to do from a financial perspective.

No longer long term, but in the short to medium term.

Thanks for all that.

Thank you. Our next question comes from Lee with <unk>. Your line is open.

Speaker 2: Great. Good morning. Thanks for taking my questions. I guess it's hard to believe there's any more questions left at this point. But real quickly, on the capital markets business, I know it's a relatively small piece, but maybe this is another one of those underappreciated initiatives. Can you maybe just update us on that, kind of your current expectations for that over the next couple of years?

Great. Good morning, Thanks for taking my questions. It's I guess, it's hard to believe Theres any more questions left.

At this point, but.

Real quickly.

On the capital markets business I know, it's a relatively small piece, but maybe this is another one of those underappreciated initiatives could you maybe just update us on that.

Kind of your current expectations.

That over the next couple of years.

Speaker 12: You gave an update obviously on the investor day a while back, but just like to get another update.

You gave an update obviously in the Investor day, while back, but just like to get another update.

Sure so.

Speaker 4: Look, really pleased with how this initiative has really commenced and gone on. And it's a good example of people teaming together working across the entire platform.

Look really pleased with how this initiative is really commenced and gone on and it's a good example of people teaming together working across the entire platform.

Speaker 4: Brian Lemley who quarterbacked this initiative, you know, has really done a nice job of working with all of our credit and bioprofessionals

Brian <unk> quarterbacks this initiative as.

Has really done a nice job of working with all of our credit and buyout professionals.

Speaker 4: uh... and also with our solutions teams uh... and it's just you know capitalizes really on the deep activity that we see around the globe and really looking to add value in anything and everything that they're involved in so you're adding value is is the foreign phone event the other piece is obviously deal flow really makes this business drive and what you're already seen is in total we have about the just shy of a hundred million dollars

And also with our solutions teams.

And it's just capitalize is really on the deep activity that we see around the globe.

And really looking to add value and anything and everything that they are involved and so adding value is is the cornerstone of that the other pieces. Obviously deal flow really makes this business drive and what Youre already seeing is in total we have about just shy of $100 million this year in transaction and advisory fees.

Speaker 4: this year in transaction advisory fees with the vast majority of that coming from the capital market activity.

With the vast majority of that coming from this capital markets activity.

Speaker 4: It's just been great in terms of what they've been able to do this year. I think as we go forward, you know, a lot of the learnings in terms of, you know, how to make all the internal workings work right, how to have everyone incentivized right to...

It's just been great in terms of what they've been able to do this year I think as we go forward.

A lot of the learnings in terms of.

How to make all of the internal workings work right how to have everyone incentivize right.

Speaker 4: work and coordinate together. And remember, we're not an investment bank, so I'm not going after other people's stuff. We're just trying to help and do the things that we're doing really well. So this has had a really nice trajectory. I think it will continue to grow. It'll be somewhat dependent upon capital markets activity and deal flow, but given that all of that remains relatively strong, I think we'll continue to do some good things here.

Work in coordinate together and remember we're not an investment bank.

So im not going after other People's stuff, we're just trying to help and do the things that we're doing really well. So this is this has had a really nice trajectory I think it will continue to grow it'll be somewhat dependent upon capital markets activity and deal flow, but given that all of that remains relatively strong.

We will continue to do some good things here.

Thats the color you need.

Speaker 12: You know, that was helpful. That was my only question. Thanks for your patience. Thanks Rob.

That was helpful that was my only question. Thanks for thanks for your patience.

Thanks, Rob.

Our next question comes from Adam <unk> with UBS. Your line is open.

Speaker 14: good morning thank you for taking the questions um... just want to circle back to retail uh... more from a product angle uh... in the release yesterday you mentioned interval funds and bdc

Hello. Good morning. Thank you for taking the questions just wanted to circle back to retail more from a product angle and the release yesterday, you mentioned interval funds and Bdcs sounds like you've got a pretty full suite, so which of those is kind of gaining the most traction right now.

Speaker 14: which of those is kind of getting the most traction right now you know anything that you expected in terms of getting traction not getting traction and finally you know if there are any product gaps that you might have to fill in or is it more about just expand

Anything that you expected in terms of getting traction not getting traction and finally, if there are any product gaps that you might have to fill in or is it more about just expanding distribution at this point. Thank you.

Speaker 4: Good question. Look, as I said before, there's a number of alternative channels we're chasing and working on. And we have initiatives in each of these. Now some of the, and I would just, you know, say look, a lot of this is not what we're dependent upon to drive the results that we're talking about. The confidence that Q expressed earlier is really from, you know, running the ship the way we've been running it. And to the extent that we can execute really well on this, it's all going to be additive. So in terms of specific...

Good question.

I said before there's a number of alternative channels, what we're chasing and working on.

We have initiatives in each of these now some of the.

Just.

Say look a lot of this is not what we're dependent upon to to drive the results.

We're talking about the confidence that Q expressed earlier is really from running the ship the way we've been running it and to the extent that we can execute really well on this it's all going to be additive.

In terms of specific products, but we have a very good product within our credit business.

Speaker 4: But we have a very good product within our credit business. Well, you know, we call it C-TAC.

We call it <unk>.

Speaker 4: And it's been going really nicely, throwing out nice feeds because the performance there has been phenomenal and it's been bringing in new investors. So, you know, I'm optimistic about where that can go.

And it's been growing really nicely throwing a nice fees because the performance there has been phenomenal and its been bringing in new investors and so.

I'm optimistic about where that can go.

Speaker 4: We have a number of BDCs. They're performing well. The team is working really hard to ancillary products around them, so that is also helpful. And there's new things in the works across the broader platform of the firm that we're working on, but it's not really ready for prime time in terms of talking about it in detail.

We have a number of Bdcs theyre performing well team is working really hard to ancillary products around them. So that that is also helpful. And there is new things in the works across the broader platform of the firm that we're working on.

But it's really ready for prime time in terms of talking about it in detail. Thanks Scott.

Speaker 14: got it that's good detail appreciate it uh... and then just circling back on one of the phrases that kind of resonate in your prepared remarks uh... is picking your spots and

Got it thats good detail I appreciate it and then just circling back on one of the freezes that kind of resonated in your prepared remarks.

It's picking your spots and so just wondering if you could.

Speaker 14: wondering if you could talk about spots maybe that you didn't pick, like certain opportunities either that other firms are doing or maybe just opportunities that weren't a good fit for Carlisle and how you're thinking about that. Thank you.

Talk about spots, maybe that you didnt pick like certain opportunities either that other firms are doing or maybe just opportunities.

We're in a good fit for Carlyle and then how youre thinking about that thank you.

Look.

Speaker 4: You know, where we're going to be picking our spots is we, you know, we've now been focused on kind of building a big balance sheet.

Where we're going to be picking our spots as we we've now been focus on kind of building a big balance sheet not for the sake of.

Speaker 4: Not for the sake of having a big balance sheet, because that gets valued at not very much, but for the sake of being able to grow fee-related earnings.

Having a big balance sheet, because that gets valued it not very much but for the sake of being able to grow fee related earnings and so the ISR transaction that you saw as the start of what we're doing there more to come but we're focused on kind of Houston in particular inorganic growth, but also then using that capital to grow.

Speaker 4: And so the ISR transactions that you saw is the start of what we're doing there, more to come, but we're focused on kind of, you know, in particular, inorganic growth, but also then using that capital to grow in a lot of our own internally developed initiatives and expand in terms of giving bigger scale out of funds and the like. So really, you know, see a way that we're going to be using our capital to grow the firm. Make.

So a lot of our own internally developed initiatives and expand in terms of getting bigger scale out of funds and the.

So really Coa that we're going to be using our capital to grow the firm.

Makes sense. Thank you very much.

Thanks.

Our next question is from Bill Katz with Citigroup. Your line is open.

Speaker 9: Okay, this is just some fine-tuning from my model. When you look at your management fees, they had a significant bounce sequentially and I appreciate you turned on a number of funds. Was there any catch-up fees in there? And as we look at the expense side, anything unusual on the cash comp or the G&A line as we think about into the next couple of quarters? Thank you.

Okay. That's just.

Fine tuning from my model when you look at your management fees.

Significant bounce sequentially I appreciate it turned on a number of funds was there any catch up fees in there and as we look at the expense side anything unusual on the cash comp or the G&A line as we think about into next couple of quarters. Thank you.

Speaker 4: So Bill, look, probably on your revenue question, on feed management fees, depends on how you're doing. And remember, we turned on a number of funds here in the fourth quarter.

Sure.

So bill.

Probably on your revenue question on fee management fees depends on how Youre doing it remember we turned on a number of funds here in the fourth quarter.

Speaker 4: You know, not really catch up, manage the fees because we turn them on, so there's nothing to catch up back to.

Not really catch up management fees, because we turn demand theres nothing to catch up back to.

Speaker 4: You know, this next to the fourth quarter, very light and catch up management fees, very light the whole year. Next year will be a little bit of a different story on catch up management fees. I think you'll see a lot more in catch up management fees. Next year in part because when you turn it on.

Next to the fourth quarter very light in catch up management fees very light the whole the whole year next year, it will be a little bit of a different story on catch up management fees I think youll see a lot more in catch up management fees next year in part because when you turn it on early and then you have a long fund raised that's where you'll have it.

Speaker 4: early and then you have a long fundraise, that's where you'll have it. But in the fourth quarter, a higher effective fee rate, if you're doing it off of an average...

But in the fourth quarter, a higher effective fee rate, if you're doing it off of an average of fee paying AUM beginning of the period ended the period that the denominator will get distorted there. So so just be careful if thats the math that you're doing.

Speaker 4: A fee paying AUM beginning of the period end of the period, the denominator will get the store to there. So just be careful if that's the map that you're doing.

Speaker 4: In terms of compensation, look, you know, the end of the year is the bonus period. We had just a great year, really, you know, hit all of, you know, key records on, you know, really all the metrics, liked what our people were doing, and liked their focus on driving FRE. And so, you know, we had a great year, and we had a great year, and we had a great year,

In terms of compensation looked at the end of the year is the bonus period, we had just a great year really hit all of them.

Key records on really all the metrics like what our people are doing and like they are focused on driving FRE and so we paid them.

Speaker 4: We paid them. And I feel good about that. And as you heard, Q and I talk about, we're very confident about our ability to drive growth and drive up or re and continue to be focused on margin and running the firm effectively and efficiently. And I think that also makes sense in the current market where a talent and attracting and retaining top talent is important.

And I feel good about that and as you heard Q and I talked about we're very confident about our ability to drive.

Growth and drive FRE and continue to be focused on margin and running the firm effectively and efficiently and I think that also makes sense in the current market, where talent and attracting and retaining top talent is important on G&A G&A Pops all over as you guys know as you followed us.

Speaker 4: on GNA, yeah, well GNA pops all over as you guys know and you follow us. You know, for the full year, we're about 270, which is about the same as last year when you adjust for the litigation cost recoveries. Fourth quarter did have some investments that were being made and some new initiatives and legal costs, as we'll see with that some extra fundraising cost.

For the full year, we were about $2 70, which is about the same as last year. When you adjust for the litigation cost recoveries fourth quarter did have some investments that were being made and some new initiatives and legal costs associated with that some extra fund raising cost.

Speaker 4: Actually, I hope that kind of continues because that's really then kind of what feels long-term growth. And then we have some compliance costs that tend to be back in and because you know, tax returns and all that kind of nonsense occurs. More at the end of the year and so you end up with a bit of more cost at that point in time. So hopefully that gives you some color on how that plays through.

I hope that kind of continues because that's really been kind of what fuels long term growth and then we have some compliance costs tend to be back ended because tax returns and all that kind of nonsense occurs more at the end of the year and so you end up with a bit of more cost at that point in time. So hopefully that gives you some color on how that plays.

Through.

Yeah, that's perfect. Thanks, so much.

Speaker 1: and I'm currently showing no further questions at this time. I like trying to call it back over to Daniel Harris.

Thank you and I'm currently showing no further questions at this time I'd like to turn the call back over to Daniel Harris for closing remarks.

Speaker 2: Thank you, everyone, for your time today. Should you have any follow-up questions, feel free to call investor relations at any time. Otherwise, we'll look forward to talking to you again next quarter. Thank you.

Thank you everyone for your time today should you have any follow up questions feel free to call Investor relations at any time, otherwise we look forward talking to you again next quarter. Thank you. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

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Speaker 15: That part F.

Speaker 15: C.

Yes.

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Speaker 15: MUSIC

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Speaker 15: Qu.

Speaker 1: Good day and thank you for standing by. Welcome to the CarLal Group 4th quarter 2021 earnings call. At this time, all participants are in a listening mode. After the speakers

Good day and thank you for standing by welcome to the Carlyle Group fourth quarter 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one on your telephone.

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Speaker 1: I don't like to have a conference over to you speaker today. Daniel Harris hit him in the bathroom.

I'd now like to hand, the conference over to your Speaker today, Daniel Harris head of Investor Relations. Please go ahead.

Speaker 2: Thank you, Shannon. Good morning and welcome to Carlisle's fourth quarter 2021 earnings call. With me on the call this morning is our Chief Executive Officer, Qisong Li and our Chief Financial Officer, Kurt Bueser.

Yeah.

Thank you Shannon good morning, and welcome to Carlyle's fourth quarter 2021 earnings call with me on the call. This morning is our Chief Executive Officer, Kyu song, Li and our Chief Financial Officer, Kurt user.

Speaker 2: Earlier this morning, we issued a press release and a detailed earnings presentation, both of which are available on our Investor Relations website at ir.carlyle.com. This call is being webcast and a replay will be available on our website. We will refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliations of these measures to GAAP in our earnings presentation to the extent reasonably available.

Earlier. This morning, we issued a press release and the detailed earnings presentation, both of which are available on our Investor Relations website at IR Dot Carlisle Dot com.

This call is being webcast and a replay will be available on our website.

We'll refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliations of these measures to GAAP in our earnings presentation to the extent reasonably available.

Speaker 2: Any forward-looking statements made today do not guarantee future performance and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factor section of our annual report on Form 10-K that could cause actual results to differ materially from those indicated. Carlisle assumes no obligation to update any forward-looking statements at any time.

Any forward looking statements made today do not guarantee future performance and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on Form 10-K that could cause actual results to differ materially from those indicated Carlyle assumes no.

Asian to update any forward looking statements at any time.

Speaker 2: Turning to our results, for the fourth quarter, we generated $174 million in fee-related earnings and $903 million in distributable earnings with DE for common share of $2.1.

Turning to our results for the fourth quarter, we generated $174 million in fee related earnings and $903 million in distributable earnings with de per common share of $2 <unk> we.

Speaker 2: We produce net realized performance revenue of $683 million and enter 2022 with an accrued carry balance of $3.9 billion. And for the full year, we generated $598 million in FRE and 2.2 billion in distributable earnings with DE per share of $5.1. We declared a quarterly dividend of 25 cents per common share.

We produced net realized performance revenue of $683 million and enter 2022 with an accrued carry balance of $3 9 billion.

And for the full year, we generated $598 million of FRE and $2 2 billion and distributable earnings with de per share of $5 <unk>.

We declared a quarterly dividend of <unk> 25 per common share.

Speaker 2: To ensure participation by all those on the call, please limit yourself to one question and one follow-up and then return to the queue for any additional questions. And with that, let me turn the call over to our Chief Executive Officer, Q Song Ling.

To ensure participation by all those on the call. Please limit yourself to one question and one follow up and then return to the queue for any additional questions and with that let me turn the call over to our Chief Executive Officer Q suddenly.

Speaker 3: Thanks, Dan. Hello everyone and thanks for joining us today as we discuss our fourth quarter and full year 2021 results as well as provide line of sight into 2022.

Thanks, Dan Hello, everyone and thanks for joining us today, as we discuss our fourth quarter and full year 2021 results as well as provide line of sight into 2022.

Speaker 3: We started last year by laying out our strategic plan for future growth, and I'm pleased to tell you that we are delivering on our goals.

We started last year by laying out our strategic plan for future growth and I am pleased to tell you that we are delivering on our goals.

Speaker 3: We had an exceptional 2021 with records across the board and fee related earnings, distributable earnings, and every major investment metric. I am proud of our people and the results they have.

We had an exceptional 2021 with records across the board in fee related earnings distributable earnings in every major investment metric.

Im proud of our people and the results they have collectively produced.

Speaker 3: Our fourth quarter performance caps this strong year and illustrates the powerful growth trajectory across a more diversified platform.

Our fourth quarter performance capped a strong year and illustrates the powerful growth trajectory across a more diversified platform.

Speaker 3: I want to highlight the key drivers underpinning our record year as our FRE has grown to new sustainable levels, our growth initiatives are starting to pay off, and our performance has set the stage for robust, distributable earnings over the next several years.

I want to highlight the key drivers underpinning our record year as our FRE has grown to a new sustainable levels.

Growth initiatives are starting to pay off and our performance has set the stage for robust distributable earnings over the next several years.

Speaker 3: Let's start by underscoring our investment performance with valuations increasing 41% year over year and realizations of $44 billion across all of our traditional carry funds.

Let's start by underscoring our investment performance with valuations, increasing 41% year over year and realizations of $44 billion across all of our traditional carry funds.

Speaker 3: Portfolio construction continues to be a strength, especially as we enter a period of greater volatility.

Portfolio construction continues to be a strength, especially as we enter a period of greater volatility.

Speaker 3: We're investing more capital as we expand our aperture and leverage even more effectively our global scale and sector expertise.

We're investing more capital as we expand our aperture and leverage even more effectively our global scale and sector expertise.

Speaker 3: This has resulted in record investment activity. We deployed 14 billion dollars in Q4 alone and 34 billion dollars in 2021, each a record.

This has resulted in record investment activity, we deployed $14 billion in Q4 alone and $34 billion in 2021, each a record.

Speaker 3: This investment performance and ability to send realized proceeds back to our limited partners has helped their fundraising efforts.

This investment performed the ability to send realized proceeds back to our limited partners has helped their fund raising efforts.

Speaker 3: In 2021, we raised $51 billion, nearly double what we raised in 2020.

In 2021, we raised $51 billion nearly double what we raised in 2020.

Speaker 3: We aim to continue this momentum over the next few years as we focus on the substantial upside potential to our investor-day target, which would help us try financial results beyond our FRE ambition.

We aim to continue this momentum over the next few years as we focus on the substantial upside potential to our Investor day target, which would help us drive financial results beyond our FRE ambitions.

Speaker 3: Alternative sources of capital formation such as high net worth, retail, open-ended funds, permanent capital, and insurance represent upside and are an increasing source of fundraising dollars as we pick our spots to grow these sources of capital.

Alternative sources of capital formations, such as high net worth retail open ended funds permanent capital and insurance represent upside and are an increasing source of fund raising dollars as we pick our spots to grow these sources of capital.

Speaker 3: stepping back, the headline is, we ended 2021 with strong fundraising momentum that will carry over into 2022.

Stepping back the headline is we ended 2021 with strong fund raising momentum that will carry over into 2022.

Speaker 3: Our extraordinary performance across the board has established a new level of earnings power, which gives us the confidence to raise our dividend substantially. You'll hear more on this from Kurt Lair.

Our extraordinary performance across the board has established a new level of earnings power, which gives us the confidence to raise our dividend substantially.

You'll hear more on this from Curt later.

Speaker 3: More importantly, this performance also gives us the resources to continue investing strategically to build a firm and accelerate growth.

More importantly, this performance also gives us the resources to continue investing strategically to build a firm and accelerate growth.

Speaker 3: Now turning to strategic growth opportunities, our investments in global credit are paying off, both organically and through strategic acquisition.

Now turning to strategic growth opportunities our investments in global credit are paying off both organically and through strategic acquisitions.

Speaker 3: For example, our credit opportunity strategy has grown to $8 billion in about four years. With Carl Aviation, we expect FRE to triple in three years since the acquisition.

For example, our credit opportunity strategy has grown to $8 billion in about four years and with Carlyle Aviation, we expect FRE to triple in three years since the acquisition.

Speaker 3: The growth continues with our energy now focused on building out infrastructure credit, which we are doing organically and jump-starting growth in real estate credit.

The growth continues with our energy now focused on building out infrastructure credit, which we are doing organically and jumpstarting growth in real estate credit.

Speaker 3: Another scalable platform initiative is Fortitude, which continues to progress as planned. And given the current activity level in pipeline, we are confident that 2022 could be a breakout year for this very scalable, permanent capital platform.

Another scalable platform initiative as Fortitude, which continues to progress as planned and given the current activity level and pipeline. We are confident that 2022 could be a breakout year for this very scalable permanent capital platform.

Speaker 3: Several years ago, we asked for patience as we rebuilt our global credit platform.

Several years ago, we asked for patience as we rebuilt our global credit platform.

Speaker 3: We're using the same playbook in other areas like infrastructure and renewables, where we see significant room for growth and similar to Fortitude, anticipate an active year.

We're using the same playbook in other areas like infrastructure and renewables, where we see significant room for growth and similar to fortitude anticipate an active year.

Speaker 3: Finally, our focus on building the firm includes investment and leadership in impact and ESG capabilities, which are an increasingly required to drive returns and meet the needs of our LP.

Finally, our focus on building the firm includes investment in leadership and impact in ESG capabilities, which are increasingly required to drive returns and meet the needs of our Lps.

Speaker 3: At Carlyle, ESG is not one fund or product, but a part of everything we do.

At Carlisle ESG is not one fund or product, but a part of everything we do.

Speaker 3: One example is the ESG Data Convergence Project, announced in partnership with CalPERS in September 2021, which has reached a milestone commitment of over 100 leading GPs and LPs globally to its partnership, representing $8.7 trillion in AUM and over 1,400 underlying portfolio companies.

One example is the ESG data convergence project announced in partnership with Calibers in September 2021, which has reached a milestone commitment of over 100, leading GPS and Lps globally towards partnership representing eight seven trillion in AUM and over 1400 underlying portfolio company.

Speaker 3: And just this week, Carlisle took another important step as one of the first in our industry to announce its commitment to achieve net zero greenhouse gas emissions by 2050 or sooner across direct investment.

These.

And just this week Carlyle took another important step as one of the first in our industry to announce its commitment to achieve net zero greenhouse gas emissions by 2050 or sooner across direct investments.

Speaker 3: by integrating an ESG mindset across the firm, in our investment processes and throughout our value creation, our approach benefits all stakeholders.

By integrating and ESG mindset across the firm in our investment processes and throughout our value creation, our approach benefits all stakeholders.

Speaker 3: To wrap up, we entered 2022 better position than ever before. Carle is a stronger and healthier firm today because of our 2021 progress.

To wrap up we entered 2022 better positioned than ever before.

Karl is a stronger and healthier firm today because of our 2021 progress.

Speaker 3: Our focus remains on continuously improving how we drive value and generating attractive returns. We are confident in our ability to grow FRE, drive investment performance, and strategically build the firm for future growth.

Our focus remains on continuously improving how we drive value and generating attractive returns and we are confident in our ability to grow FRE drive investment performance and strategically build the firm for future growth.

Speaker 3: We are focused on building the best investment firm possible and running it better than ever before.

We are focused on building the best investment firm possible and running it better than ever before.

Speaker 3: As the environment continually shifts around us, our diversified investment platform and global team have demonstrated the resilience and adaptability. I remain confident in our ability to thrive and capture opportunities in any environment.

As the environment continually shifts surround us our diversified investment platform and global team have demonstrated resilience and adaptability.

We remain confident in our ability to thrive and capture opportunities in any environment.

Speaker 4: I'm proud of our team and we remain focused on continuing to deliver for shareholders and all stakeholders. I appreciate the hard work as we accelerate our activity for another very active year of executing on our vision of thinking bigger, moving faster, and performing better. Over to you, Kurt. Thank you and good morning everyone.

I'm proud of our team and we remain focused on continuing to deliver for shareholders and all stakeholders I. Appreciate the hard work as we accelerate our activity for another very active year of executing on our vision of thinking bigger moving faster and performing better.

Over to you Kirk.

Thank you and good morning, everyone.

Speaker 4: I want to begin by reiterating many things few mentioned to emphasize what our strong performance this year means.

I want to begin by reiterating many things you mentioned to emphasize what our strong performance this year means.

Speaker 4: We generated over $5 per share in the strid learnings in 2021. Well more than double the average generated in the last five years.

We generated over $5 per share and distributable earnings in 2021.

Now more than double the average generated in the last five years.

Speaker 4: In fact, the fourth quarter is $2.01 per share, would have exceeded a full year in four of the past five years.

In fact, the fourth quarter's $2 one per share or does it exceeded our full year and four of the past five years.

Speaker 4: These results are driven by attractive investment performance and are fortifying our balance sheet to help us deliver a long-term, sustainable growth on our global platform and V-related earnings. Let's dive deep into the conversation.

These results are driven by attractive investment performance and our fortifying our balance sheet to help us deliver long term sustainable growth on a global platform and fee related earnings.

Let's dive deeper into all of this.

Speaker 4: This year we focused on delivering strong, sustainable and growing fee-related earnings.

This year, we focused on delivering strong sustainable and growing fee related earnings.

Speaker 3: 2021 was a record year for the firm's overall FRE. Every segment generated record FRE.

2021 was a record year for the firm's overall FRE.

Every segment generated record FRE.

Speaker 4: and our full year FRE margin grew to 33% up from 30% in 2020. In fact, FRE grew more than 20% off the adjusted level in 2020 and our five-year FRE CAGR is 24%.

And our full year FRE margin grew to 33% up from 30% in 2020.

In fact, FRE grew more than 20% off the adjusted level in 2020.

And our five year FRE CAGR is 24%.

Speaker 4: This is the outcome of scaling our platform and positioning Carlisle for growth.

This is the outcome of scaling our platform and positioning Carlyle for growth.

Speaker 4: As Q noted, we also had a record year for fundraising and much of that will have a stronger impact on fee related earnings in 2022.

As <unk> noted, we also had a record year for fundraising and much of that will have a stronger impact on fee related earnings in 2022.

Speaker 4: Record fundraising of $51 billion, along with strong fund performance, helped drive total assets under management up 22% over the past year.

Record fund raising of $51 billion, along with strong fund performance helped drive total assets under management up 22% over the past year.

Speaker 4: As we look ahead, we will continue to focus on running the firm effectively and efficiently.

As we look ahead, we will continue to focus on running the firm effectively and efficiently.

Speaker 4: On an organic basis, we expect to see FRE growth of more than 20% in 2022, driven by strong top-line growth.

On an organic basis, we expect to see FRE growth of more than 20% in 2022, driven by strong top line growth.

Speaker 4: 2021 fundraising underpins much of our expected growth in 2022.

2021 fund raising underpins much of our expected growth in 2022.

Speaker 4: Notably, we activated fees on our new US buyout and growth capital funds, as well as our most recent US real estate fund, all in Q4, elevating fee revenues in the fourth quarter and setting the stage for higher fee revenues this year.

Notably, we activated fees on our new U S buyout and growth capital funds as well as our most recent U S. Real estate funds all in Q4 elevating fee revenues in the fourth quarter and setting the stage for our higher fee revenues this year.

Speaker 4: In addition, we expect to see a breakout year for global credit in 2022.

In addition, we expect to see a breakout year for global credit in 2022.

Speaker 4: The business has $73 billion in assets under management as of year end.

The business has $73 billion in assets under management as of year end.

Speaker 4: More than two times larger than it was less than four years ago. Underpinned by nearly $17 billion in fundraising in 2021 for a broad spectrum of strategies, as many investors continue to shift away from traditional fixed income to private credit opportunities.

More than two times larger than it was less than four years ago underpinned by nearly $17 billion in fundraising in 2021 for a broad spectrum of strategies as many investors continue to shift away from traditional fixed income to private credit opportunities.

Speaker 4: This segment has several scaled products, structured credit, opportunistic credit, direct lending and aviation, as well as several newer products in infrastructure and real estate credit, including the recent I-STAR transaction that will close in the coming weeks, that are all well positioned for growth.

This segment has several scaled products.

Structured credit.

Opportunistic credit direct lending.

Asian, as well as several newer products and infrastructure and real estate credit, including the recent ISR transaction that will close in the coming weeks that are all well positioned for growth.

Speaker 4: Our global investment solutions business has the scale, global reach, and data to help fund investors continually reassess and reconstruct their portfolios in pursuit of capturing returns.

Our global investment solutions business has the scale global reach and data to help fund investors continually reassess and reconstructive portfolios.

A suite of capturing returns.

Speaker 4: In a world where private capital has become mainstream, and a significant portion of our investors' portfolios, this approach is more important than ever before, and is able this business to more than double FRA to $84 million from $37 million just a year ago.

In a world where private capital has become mainstream with.

And a significant portion of our investors <unk>. This approach is more important than ever before and has enabled this business to more than double FRE to $84 million from $37 million, just a year ago.

Speaker 4: Performance has also been impressive with appreciation of 48% in 2021 and net accrued performance revenues of $319 million at year end, more than double from a year ago.

Performance has also been impressive with appreciation of 48% in 2021, and net accrued performance revenues of $319 million at year end more than doubled from a year ago.

Speaker 4: Our global private equity business is a diversified business.

Our global private equity business is a diversified business.

Speaker 4: with platforms supporting corporate private equity, real estate, infrastructure, and natural resources all on a global basis.

Platform supporting corporate private equity real estate infrastructure and natural resources, all on a global basis.

Speaker 4: In corporate private equity, we're a builder of businesses, pulling more value creation levels than ever. Helping companies reinvent their business models and drive growth.

In corporate private equity were a builder of businesses pulling more value creation levers than ever helping companies reinvent their business models and drive growth.

Speaker 4: You can see the results of this work in our record net realized performance revenues. Just in the fourth quarter, Global Private Equity realized $10 billion in proceeds fueled by exits in PPD, PK, Coresight and the sale of more than $1 billion of Zoom info.

You can see the results of this work and our record net realized performance revenues just in the fourth quarter global private equity realized $10 billion in proceeds fueled by exits in PPD PK core site and the sale of more than $1 billion of zoom info.

Speaker 4: As Hugh said earlier, this success is a function of our investment in teams, technology, diversity, and platform.

As Steve said earlier. This success is a function of our investment in teams technology diversity and platforms.

Speaker 4: We have $124 billion in remaining fair value of invested assets in just our traditional carry funds, which ended the year up 30% year over year and positions us for continued to significant realizations in the future.

We have $124 billion in remaining fair value of invested assets and just our traditional carry funds, which ended the year up 30% year over year and positions us for continued significant realizations in the future.

Speaker 3: 2021 was a special year with over $1.5 billion in net realized performance revenues, which will be difficult to replicate. But we believe 2022 will be another strong year. We should realize on average $1 billion over each of the next several years.

2021 was a special year with over $1 $5 billion in net realized performance revenues, which will be difficult to replicate but we believe 2022 will be another strong year.

And we should realize on average $1 billion over each of the next several years.

Speaker 4: of course and any given year the health of global markets and viper dry bearings the upside or down five around that expectation

Of course in any given year the health of the global markets is likely to drive variance to the upside or downside around that expectation.

Speaker 4: Finally, I would like to spend some time on the strength of our balance sheet. After pre-paying $250 million over 2023 bonds, our balance sheet reflects $2.5 billion in cash and $2.1 billion in firm investment.

Finally, I'd like to spend some time on the strength of our balance sheet.

After prepaying $250 million of our 2023 bonds, our balance sheet reflects $2 5 billion in cash and $2 1 billion in firm investments.

Speaker 4: to put the cash balance in perspective cash increased nearly one point five billion dollars from a year ago

The cash balance and perspective cash increased nearly $1 5 billion from a year ago.

Speaker 4: In 2021, we generated realized investment income of $210 million from our balance sheet investments or nearly triple what we earned the previous year. Again, this level of income realizations may not be easy to replicate, but we believe that we should routinely generate investment income at levels of $150 million or more per year on average.

In 2021, we generated realized investment income of $210 million from our balance sheet investments are nearly triple what we earned the previous year.

Again this level of income realizations may not be easy to replicate but we believe that we should routinely generate investment income at levels of $150 million or more per year on average.

Speaker 4: Our strong cash position and expectation for elevated earnings position us to deploy our capital as we previously discussed.

Our strong cash position and expectation for elevated earnings position us to deploy our capital as we previously discussed.

Speaker 4: This includes investing in next-generation funds and new strategies, growing our adjacencies, and pursuing a creative, inorganic growth. We see various opportunities to drive shareholder value, resulting from the improved strength of our balance.

This includes investing in next generation funds and new strategies growing our adjacencies pursuing accretive inorganic growth, we see various opportunities to drive shareholder value, resulting from the improved strength of our balance sheet.

Speaker 4: Our credit ratings at both S&P and Fitch are on a positive watch for a potential upgrade, highlighting the upward trajectory of our firm and our financial footing.

Our credit ratings at both S&P and Fitch on positive watch for a potential upgrade highlighting the upward trajectory of our firm and our financial footing.

Speaker 4: The strength of our balance sheet, along with the significant increase in FRE in 2021, allows the board to comfortably and sustainably raise our fixed dividend to $1.30 for 2022 at 30% increase.

The strength of our balance sheet, along with a significant increase in FRE in 2021 allows the board to comfortably and sustainably raise our fixed dividend to $1 30 for 2022, a 30% increase the.

Speaker 4: The higher dividend will begin with Q1. As we continue to grow FRA from here and as we laid out in our strategic plan, we expect we will be able to raise the dividend further in coming years.

The higher dividend will begin with Q1.

As we continue to grow FRE from here and as we laid out in our strategic plan. We expect we will be able to raise the dividend further in coming years.

Speaker 4: We're outperforming our own expectations and believe we are well-positioned to do so for the next several years. Our strong momentum is allowing us to grow our fee-related earnings and distributable earnings and invest in Carlyle's longer-term growth.

We are outperforming our own expectations and believe we are well positioned to do so for the next several years, our strong momentum is allowing us to grow our fee related earnings and distributable earnings and invest in carlyle's longer term growth.

Speaker 4: We are creating exceptional value for shareholders and we will continue to deliver on this growth in 2022. Now let me turn the call over to the operators so we can take your questions.

We are creating exceptional value for shareholders and we will continue to deliver on this growth in 2022 now let me turn the call over to the operator, so we can take your questions.

Speaker 1: If you as a reminder task a question you will need to press star one or your telephone. To withdraw your question press the PASS.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

To withdraw your question press the pound key.

Please standby, while we compile the Q&A roster.

Speaker 1: Our first question comes from Alex Blustein with Goldman Sachs.

Our first question comes from Alex Blaustein with Goldman Sachs. Your line is open.

Speaker 5: Hey, good morning everybody. Thanks for taking the question. So first question, just a little bit more strategic. I guess Q21 was a really strong year, essentially on every front, but most notably FRE growth.

Hey, good morning, everybody. Thanks for thanks for taking the question.

So first question just a little bit more strategic I guess Q2 1 was a really strong year essential on every front, but most not most notably a hardie growth.

Speaker 5: One of the concerns we continue to hear from investors and Carla broadly is that you really won't be able to sustain that kind of growth momentum going forward, but from your comments, you seem to be obviously pretty confident in that. So where's the disconnect? How do you expect the dynamic to play out and maybe give us a little bit more in terms of the drivers that gives you that confidence?

One of the concerns we continue to hear from investors in Carlisle broadly is that you really won't be able to sustain that kind of growth momentum going forward, but from your comments you seem to be obviously pretty confident in that so where is the disconnect. How do you expect that dynamic to play out and maybe give us a little bit more in terms of the drivers that gives you that confidence.

Speaker 3: Yeah, good morning Alex. Look, I'm really confident and importantly the entire team is confident in our momentum and the fact that we're going to keep this going.

Yeah. Good morning, Alex look I'm really confident and importantly, the entire team is confident in our momentum and the fact that we're going to keep this going.

Speaker 3: Look, FRE has already been growing 20% a year for the past five years and I think that's mostly gone unnoticed.

Look <unk> already been growing 20% a year for the past five years, I think thats, mostly gone unnoticed and if you get a little bit more granular. If you look at Q4, we generated $174 million of FRE that run rate multiply that by four it already positions us for a strong year of FRE growth in 2022 and Thats before.

Speaker 3: And if you get a little bit more granular, if you look at Q4, we generate $174 million of FRE. That run rate multiply that by four. It already positions us for a strong year of FRE growth in 2022. And that's before additional upside from our activities that we've got underway.

Additional upside from our activities that we've got underway.

Speaker 3: Look, with respect to business building, I think you touched on it in your note this morning and it's the right place to look. Our global credit business is about to have a breakout year. We've talked to you about the fundraising. It's got over 70 billion of AUM, raised $17 billion last year, but really the thing to look at.

Look with respect to business building I think you touched on it in your note. This morning, and it's the right place to look our global credit business is about to have a breakout year. We've talked to you about the fund raising its got over $70 billion of AUM raised $17 billion last year, but really the thing to look at all of the patients in building that business.

Speaker 3: all the patience in building that business, this is the year where I think operating leverage really starts to kick in. And I think off of that growth, more is going to fall to the bottom line with respect to FRE.

This is the year, where I think operating leverage really starts to kick in and I think off of that growth more is going to fall to the bottom line with respect to FRE.

Speaker 3: and entering to our incredible investment performance it's across the board and you know despite the record realizations we had we still have about four billion dollars of net accrued carry balances it's very diversified across regions across sectors across funds uh... for me you know for us it's not a question of if this comes out but that's all is that the record!?

And then turning to our incredible investment performance, it's across the board and despite the record realizations. We had we still have about $4 billion of net accrued carry balances, it's very diversified across regions across sectors across funds.

For me for US it's not a question of if this comes out but when it comes out as Curt alluded to in his comments and.

Speaker 3: and then let me just address you know the broader base momentum we have on fund raising so we point out fifty one billion dollars of fund fund raising you know i want to i want to know two-thirds of that was away from corporate private equity healthy fund raising in u.s. real estate and solutions and credit it's broad-based across all segments and and i point that out because i think folks on appreciating that we're much more diversified and it's a much broader business and a platform than ever before

And then let me just address the broader base momentum we have on fundraising. So we pointed out $51 billion of fund fundraising and I want to I want to note two thirds of that was away from corporate private equity healthy fundraising in U S real estate and solutions and credit it's broad based across all segments and I.

Point that out because I think folks on appreciating that we're much more diversified and it's a much broader business and our platform than ever before now of course. This is all before the fact that our balance sheet is about as strong as it's ever been.

Speaker 3: Now of course this is all before the fact that our balance sheet is about as strong as it's ever been.

Speaker 3: And, you know, I am very focused on driving the firm into new strategic adjacencies in markets that are large, that are scalable, and that can be very effer regenerative. So when you throw that all together, yeah, I'm really confident. And, you know, the last piece to all this, you need a great team. This team is executing. So all of that is what gives me confidence that this is going to continue.

And I am very focused on driving the firm into new strategic Adjacencies in markets that are large that are scalable and that can be very fr regenerative. So when you throw that altogether.

Yeah, I'm really confident and.

The last piece to all this you need a great team. This team is executing so all of that is what gives me confidence that this is going to continue.

Speaker 5: Great, that's super helpful. Thanks for that. My follow-up is going to touch around just the operating leverage and the model, and I really want to zone in on the competition philosophy. We've seen a number of players in the alternative space.

Great. That's super helpful. Thanks for that my follow up.

Is going to touch around just the operating leverage in the model and I really want to zone in on compensation philosophy.

We've seen a number of players in the alternative space sort of shift the compensation structure towards paying out more carrier and obviously maximizing FRE margins, including a recently listed large private equity firm as Im sure you guys know.

Speaker 5: sort of shift the compensation structure toward paying out more carry and obviously maximizing FRE margins, including a recently listed large private equity firm, as I'm sure you guys know. Although there's a degree of just P&L geography, obviously, in all of that, it does align compensation with fund performance and therefore LP. So, what are your thoughts about that dynamic for Carlyle? And as you are a lot more scaled today than in the past, just with respect to management fee base, why not pursue a similar strategy?

Although there is a degree of just P&L geography, obviously and all of that it does align compensation with fund performance and therefore LP. So what are your thoughts about that dynamic for Carlyle and as you are a lot more scale today than.

And then in the past just with respect to management fee base why not pursue a similar strategy.

Speaker 4: Alex, thanks for that. It's a great, let me take that. So for compensation structures, you point out are really important in driving behavior. And we feel good about our structures and how they're aligned for stakeholders across all investments like.

Alex Thanks for this is Kurt let me, let me take that so first compensation structures. As you pointed out are really important in driving behavior and we feel good about our structures and how they're aligned for stakeholders across all investment cycles.

Speaker 4: course we're always thinking about compensation and alignment and how to better align compensation of our professionals with that of our shareholders and performance. Because what you pay for is likely we're going to be what you get. At the same time we do believe in pay for performance and have been consistent in saying that our split of performance compensation shows strong alignment with limited partners on carry and fund performance with shareholders on driving fee related earnings

Of course, we're always thinking about compensation and alignment.

Better align compensation of our professionals with out of our shareholders and performance.

What you pay for it is likely we are going to be what you get at the same time, we do believe in pay for performance and have been consistent in saying that our split our performance compensation shows strong alignment with limited partners on carry and fund performance with.

With shareholders on driving fee related earnings.

Speaker 6: and using the firm capital to build our retained earnings. So that's important for driving future growth. We're gonna continue to grow our business and our earnings, that's what we're focused on. We've been doing that really well as Q just outlined, have great confidence in the future. And to the extent that we decide to make any changes in our compensation models, we'll let you know. But the bottom line is we believe in alignment. Great, thanks for taking both questions.

And using the firm capital to build our retained earnings so that's important for driving future growth.

We're going to continue to grow our business and our earnings that's what we're focused on.

We've been doing that really well as Q, just outlined have great confidence in the future and to the extent that we decided to make any changes in our compensation models. We'll let you know, but the bottom line is we believe in alignment.

Great. Thanks for taking my questions.

Thank you. Our next question comes from Craig <unk> with Bank of America. Your line is open.

Good morning, Q, Kurt hope everyone's doing well.

Speaker 7: Hey Craig, good to hear from you.

Sure Eric Nice to hear from you.

Speaker 8: So my first question is on credit and a similar question to Alex's first one, but 17 billion of fundraising in 2021, this was a pretty big increase year over year, and we see you keep expanding horizontally into new segments.

So my first question is on credit and a similar question to Alex's first one but <unk>.

$17 billion of fund raising in 2021. This is a pretty big increase year over year, and we see keep expanding horizontally into new segments.

Speaker 8: We saw that with ISAR this week. So how should we think about the forward run rate for fundraising credit given larger funds?

We saw that with ICR. This week, so how should we think about the forward run rate for fund raising credit given larger funds.

Speaker 8: a wider offering and also some scale advantages on the distribution front because I believe you'll be doing new things on the retail side too.

Later offering.

And also some scale advantages on the distribution front, because I believe you will be doing new things on the retail side.

Speaker 4: Hey, credit card. Hey, just thanks for that question. Global credit set up really well. So let me just kind of

Hey, Craig its Greg just thanks for that question global credit to set up really well. So let me just kind of tick through some of the areas and starting with fund raising so you look at kind of our path. It's been a nice tick up in fund raising in global credit over sequential years.

Speaker 4: tick through some of the areas in starting with fundraising.

Speaker 4: You look at kind of our past, it's been a nice tick up in fundraising, in global credit over sequential years, something like 10 or 11 billion last year, 17 billion this year, and in our pending figuring in AUM, which is about $16 billion, the vast majority of that is global credit, and it'll turn on mostly as we deploy capital during next year, and so that'll be an underpinning a lot of growth. Let's kick through some of the big components. Good.

Sounds like 10, or 11 billion last year, a $17 billion this year and in our pending fee, earning AUM, which is about $16 million. The vast majority of that is global credit and it'll turn on mostly as we deploy capital during next year and so that'll be an underpinning a lot of growth, but let's tick through some of that.

Big components first the structured credit business, our CLO that business is booming. So we issued 14 CLO globally. In 2021 currently managing about $34 billion in liquid credit strategies that $14 billion of CLO. We issued is about seven 5 billion.

Speaker 4: The structure credit business, our CLO, that business is just booming. So we issue 14 CLOs globally in 2021. Currently managing about $34 billion in liquid credit strategies. At 14 billion of CLOs, we issue this about $7.5 billion. And we think we're taking market share in this space.

<unk>.

And we think we're taking market share in this space, that's really going to help underpin a lot of further growth in FRE in 'twenty two because you didn't get all of the benefit of that FRE growth. This past year, and so youre going to see more in that space. So activity in the CLO really good as kyu mentioned in his opening remarks, our opportune.

Speaker 4: That's really going to help underpin a lot of further growth in the FRE in 2022, because you didn't get all of the benefit of that FRE growth this past year, and so you're going to see more in that space. So activating the CLOs really good.

Speaker 4: As Q mentioned in his opening remarks, our opportunistic credit business is already at $8 billion, deploying really well. All those fees, again, turn on as they deploy capital. So as that investment pace continues...

As to credit business is already at $8 billion deploying really well, although sees again turn on as they deploy capital. So as that investment pace continues more increase in revenues. So good space in opportunistic credit.

Speaker 4: more increase in revenues, so good space and opportunistic credit. aviation business

Aviation business.

Really nice nearly triple our run rate and fee related earnings.

Speaker 4: nearly a triple of run rate and fee related earnings the size of that business as continue to go up you've seen some of these big transactions that they've done of recent fly a year ago and the big one this year. So look, they're now about, they should be after every this all of this close, you know, increasing their total AIM from about $8 billion as of the third quarter to more than 13 billion, that all positions us to be able to triple the run rate of the FRE coming out of that business.

The size of that business is continuing to go up you've seen some of these big transactions that they've done a recent fly a year ago.

And the big one this year, so look theyre now about they should be after having this all of this closed the increase to their total A&M from about $8 billion as of the third quarter to more than 13 billion that all positions us to build a triple the run rate of the FRE coming out of that business.

Speaker 4: If you then, you know, further think we got some newer products like Sea-Tac, small but growing really fast, really contributing to our results. Our direct lending business continues to do well and is growing. And then we've got some new initiatives. So you know, as you point out, you know, I-STAR transaction that was announced yesterday, you know, for real estate credit and also our infrastructure credit business.

Further we got some newer products like <unk>.

Small, but growing really fast really contributing to our results our direct lending business continues to do well and is growing and then we've got some new initiatives. So as you pointed out ISR transaction.

It was announced yesterday for real estate credit and also our infrastructure credit business. These are new platforms. The transaction yesterday really allows us to jumpstart, where we think over time will be a big business. So I wouldn't have high expectations for it for this year in terms of driving earnings.

Speaker 4: These are new platforms, the transaction yesterday really allows us to jumpstart what we think over time will be a big business.

Speaker 4: So I wouldn't have high expectations for it for this year in terms of driving earnings. We've just gotten our place in a really good spot where we have the AUM, the talent pool, and really the platform is now in place to really be able to launch it.

We've just gotten a place in a really good spot, where we have the AUM the talent pool and really the platform is now in place to really be able to launch. It. So think 24 and thereafter for when this business will really kind of really matters. So we're investing in long term growth and from a firm capital perspective, it's about 200.

Speaker 4: I think 24 and thereafter, when this business will really kind of really matter, so we're investing in long-term growth.

Speaker 4: And from a firm capital perspective, you know, it's about 200 million bucks in terms of firm capital. So, you know, I thought it was a good use of firm capital related to achieve those those outcomes. And let's not forget the...

Box in terms of firm capital. So I thought it was a good use of firm capital related to achieve those outcomes and let's not forget the adjacencies.

Speaker 4: So fortitude and capital markets, biggest adjacent fees in global private, they're also performing really well in driving growth. So hopefully that answers your question, Craig.

Fortitude and capital markets Big Adjacencies in global private they're also performing really well and driving growth. So hopefully that answers your question Craig.

Alright Thats helpful.

Speaker 3: Hey Craig, this is Q and really good to have you back with us here. You know, the only thing I would add, and let me just take a step back. We're being very strategic in how we build out our credit business. It's a platform approach across big, scalable strategies. You see how we're doing this, you know, you've been very patient with us, and it's really starting to pay off. The other thing I would say...

Hey, Craig this is Q and really good to have you back with.

With us here, the only thing I would add and let me just take a step back we're being very strategic and thoughtful in how we build out our credit business. It's a platform approach across a big scalable strategies you see how we're doing this.

<unk> been very patient with us and it's really starting to pay off the other thing I would say.

Speaker 3: As I talk to LPs, we're in the early innings here. Credit is relatively, private credit is relatively under-penetrated relative to private equity. There continues to be secular tailwinds and more flows are coming in and wanting private credit exposure. So, I think that's a really good question.

As I talked to Lps, we're in the early innings here credit is relatively private credit is relatively underpenetrated relative to private equity there continues to be secular tailwind and more flows are coming in and wanting private credit exposure.

Speaker 3: So we've got great momentum, Kurt touched on this. This is an asset class with products that'll fit particularly well to retail.

So.

We've got great momentum Kurt touched on this this is an asset class with products that will.

Fit, particularly well to retail it is an area where you can find permits sources of capital, which we've done now with our Bdcs.

Speaker 3: It's an area where you can find permanent sources of capital, which we've done now with our BDCs.

Speaker 3: and you noted that publicly. So we've got great momentum. It is sustainable. These are sticky FRE businesses that we think just keep growing as we have secular tailwinds behind our platform.

You noted that publicly so we've got great momentum. It is sustainable these are sticky FRE businesses that we think just keep growing as we have secular tailwind.

<unk> platform.

Speaker 8: Thank you, Q. And, perk, I heard your commentary on Fortitude being a breakout year in 2022. So does this mean insurance M&A, or is this really kind of robust, more organic growth than the institutional B2B channel? I was just hoping you could articulate that comment, and it probably relates to some of the stuff you just said in credit.

Thank you, Joe and Kurt I heard your commentary on <unk> to being a breakout year in 2020. So does this mean insurance M&A or is this really kind of robust organic growth in the institutional BTB channel I was just hoping you could articulate that comment and it probably relates to some of that.

The feature set and credit.

Speaker 4: Yeah, so let me talk about fortitude first and foremost.

Yes, So let me talk about Fortitude first and foremost that business is doing great. It's bigger and is better at this point in time than what our expectations are so let me step back a little bit we've completed the carve out which was not easy to big business really pleased with the management team.

Speaker 4: That business is doing great. It's bigger and it's better at this point in time than what our expectations are. So let me step back a little bit. We've completed the carve-out.

Speaker 4: which was not easy to big business, really pleased with the management team there, that they're executing really well. They've been able to execute a couple of acquisitions, you know, the Prudential Assurance Life product that was announced in Q3, and then there's another big reinsurance contract that just got done. They have a great pipeline for future deals.

They're that they're executing really well they've been able to execute a couple of acquisitions.

The Prudential assurance life product that was announced in Q3.

And then there is another big reinsurance contract that just got done they have a great pipeline for future deals all of that is already has a fee run rate to Carlisle about $50 million.

Speaker 4: All of that is already has a fee run rate to Carlisle about $50 million to our business.

Speaker 4: And there's about $10 billion of total assets under management that are fee paying, seven of which is invested directly in our funds, three of which is how we structured the actual fortitude investment with our partners.

Our business and there is about $10 billion of total assets under management that are fee paying seven of which were invested directly in the funds three of which is the.

How we structured the actual fortitude investment with our partners. So it's really set up well for further growth. The pipeline is there and we think this is going to be inactive year for that business in terms of future scale and.

Speaker 7: So it's really set up well for the growth. The pipeline is there. And we think this is gonna be an active year for that business in terms of future scale. And good things are happening. Thank you.

Good things are happening.

Thank you Kirk.

Okay.

Thank you. Our next question comes from Bill Katz with Citigroup. Your line is open.

Speaker 9: Okay, thanks very much. So, Kure, I think you mentioned now a couple times and Kurt both sounds like the deal pipeline might be picking up and you have some good balance sheet. Could you maybe go down a layer and talk to where you think you might see an opportunity? I think last quarter, so you would mention you wanna monetize and take the free cash flow from the realizations and drive FRE and I think permanent capital, I think I heard that again today. But could you talk a little bit baby specifically what segments or products you could see that opportunity playing through?

Okay. Thanks, very much so Q I think you've mentioned now a couple of times incurred both.

It sounds like the deal pipeline might be picking up and you have certainly a good balance sheet could you maybe go down a layer and talk to.

Where you think you might see an opportunity I think last quarter. So you had mentioned you want to monetize and take the free cash flow from the realizations and drive FRE I think permanent capital I think I heard that again today, but can you talk a little bit maybe specifically what segments or products, you could see that opportunity playing through.

Speaker 3: Sure, Bill. Thanks for the question. I mean, look, take a step back. The criteria for us is we're looking for strategic adjacencies.

Sure Bill.

Thanks for the question I mean look take a step back.

Criteria for us as we're looking for strategic Adjacencies.

Speaker 3: In big and scalable strategies, there are gonna be a generative of FRE that can be great growth drivers for us in the years to come.

And big and scalable strategies that are going to be generative of FRE.

That can be great growth drivers for us in the years to come.

Speaker 3: Okay, so we're very focused and disciplined on that. If you'll recall, back at investor day, which is about a year ago, I mentioned that I think the two best areas for this for us are going to be in the credit asset class and in the solutions business, which continues to grow very fast in our industry.

So we're very focused and disciplined on that.

If you'll recall back at Investor day, which is about a year ago.

I mentioned that I think the two best areas for this for us are going to be in the credit asset class and in the solutions business, which continues to grow.

Very fast in our industry.

Speaker 3: We're already a dominant global private equity player around the world. I think the bigger opportunities for scalability and FRE generation are going to come in the credit asset class and in solutions for us. That's what FRE gives you.

We're already dominant global private equity player around the world.

I think the bigger opportunities for scalability and FRE generation are going to come in the credit asset class and then in solutions for us.

Hopefully that gives you a little bit more color.

Speaker 9: Okay, thanks. And then just to come back to the net realization guidance for the next couple of years. So it sounds like it's up a little bit from your investiDate, which is nice to hear.

Okay. Thanks, and then just to come back to the net realization guidance for the next couple years. So it sounds like it's up a little bit from your Investor day, which is nice to hear.

Speaker 9: When I look sequentially, and this may be too tactical of you, but your net accrued carry balance actually dipped a little bit quarter to quarter, but when I look at some of your seasoning ratios, like your in-carry ratio, your percent publics, and those aged four years or more, those all sort of slipped a little bit. Maybe it's quibbling. But how do you sort of triangulate between, certainly appreciate 2021 was a great year.

Look sequentially and this may be too tactical view, but youre your net accrued carry balance actually dipped a little bit month quarter to quarter, but when I look at some of your seasoning ratios in carry ratio your percent Publix in those age where you get some more those also have slipped a little bit maybe it's equivalent but how do you sort of triangulate between so I appreciate the <unk>.

Speaker 9: to you know a billion sort of on average now uh... when you have you know sort of a little less public portfolio of sping equal

Was a great year to a $1 billion of on average now.

And when you have sort of a bit of a less public portfolio all else being equal. Thank you.

Speaker 4: Bill, so, but look, I really think that the overall platform is set up really, really well. The billion five that we generated in the last carry last year is far beyond anyone's expectations, just a phenomenal year. And if you look at kind of on a go forward base.

So.

Yes.

I really think that the overall platform is set up really really well the $1 billion five we generating realized carry last year is far beyond anyone's expectations, just a phenomenal year.

And if you look at kind of on a go forward basis.

Speaker 4: I think we can continue to do really well. And let's talk about some of those specifics. So we started the year not at 3.9 billion. And in fact, if you look at last quarter to this quarter, the fact that we still had the appreciation that we had.

Think we can continue to do really well and let's talk about some of those specifics. So we started the year not at $3 9 billion and in fact, if you look at last quarter to this quarter. The fact that we still have depreciation that we had to keep it essentially rounded at the same $3 $9 billion is pretty damn good.

Speaker 4: to keep it essentially rounded the same three point nine billion dollars is pretty bad on good when you realize six hundred eighty three million dollars in a quarter let's go back to carliles big you know realization years you know from one point public to two thousand seventeen six hundred eighty three million dollars of net-run performance that was an annual number

Good when you realized $683 million in a quarter and let's go back to them Carlyle big realization years.

Moving Pablo to 2017 $683 million of net realized performance revenues that was an annual number we.

Speaker 4: We did that in one order. And so, as we look going forward, I'm very confident. 3.9 billion of a food care, but more importantly, is $124 billion of an invested capital in the ground and remaining for value. That numbers about double what it was during the last cycle. And it's 30% higher than at the beginning of this year.

We did that in one quarter and so as we look going forward I'm very confident there is $3 9 billion of acute care, but more importantly is the $124 billion of invested capital in the ground and remaining fair value that number's about double what it was during the last cycle and its 30 <unk>.

And higher than at the beginning of this year. So all of the components to really be able to drive carry going forward are in place. So.

Speaker 4: So all of the components to really be able to drive carry going forward are in place.

Speaker 3: So, the in-carry ratio is still really good. It likes 75%, the amount that's installed crude, despite really strong realizations, actually are really good about. And you look at our gap numbers, even there. I mean, look at the gap EPF number, the nice forward indicator of things to come.

The in carry ratio still really good at like 75%.

The amount that is still a crude despite really strong realizations I feel really good about and you look at our GAAP numbers, even there I mean look at the GAAP EPS number to nice forward indicator of things to come.

Speaker 3: Hey Bill, it's Q. You know, great exit activity is a function of great investment activity and hard work that's gone into it three or four years prior.

Hey, Bill it's Kew.

Great exit activity is a function of great investment activity and hard work that's gone into it three or four years prior.

Speaker 2: And our investment engine is really firing and our deal teams, they're really performing. We're creating real value in our portfolios. And if you look at our investment pace and our ability to deploy more, I mean, $34 billion in 2021.

And our investment engine is really firing and our deal teams. They are really performing we're creating real value in our portfolios and if you look at our investment pace and our ability to deploy more $34 billion in 2021, that's really the forward indicator.

Speaker 3: that's really the forward indicator the setup for what our earnings power is going to be three four five years hence right so so the three point nine point carry that we have now the fact that it stayed flat despite record realization

Setup for what our earnings power is going to be 345 years, hence right. So the $3 9 billion of carry that we have now the fact that it stayed flat despite record realizations talks to the talks.

Speaker 3: talks to the, our business model, that we are driving great deployment and great portfolio company appreciation. So the engine is really working.

Talks to that our business model that we are driving great deployment and great portfolio company appreciation. So the engine is really working.

Speaker 9: Okay, so we're managing more money, we're investing more money, we're creating more value than ever before, and it's just going to be a matter of time before that comes out in our earnings over three, four, five years. Okay, thank you both.

Okay. So we're managing more money, we're investing more money, we're creating more value than ever before and it's just going to be a matter of time before that comes out in our earnings over 345 years.

Okay. Thank you both.

Thanks Bill. Thank you. Our next question comes from Chris Kotowski Oppenheimer <unk> Company. Your line is open.

Speaker 10: Yeah, good morning and thank you. I wonder if you could give us a bit more color on the i-star transaction just because I have a feeling this is kind of like a case study for

Yes, good morning, and thank you.

Wonder if you could give us a bit more color on the star transaction, just because I have a feeling this is kind of like a case study for your strategy.

Speaker 10: your strategy of using balance sheet capital to try to drive FR E-GRO. So, you know, in the press release it said that you acquired it for roughly $3 billion and you just said on the call that $200 million came from your balance sheet. So I'm curious about the remaining $2.8. Does that come from a specifically raised, you know, third party vehicle or does it come from just ordinary funds across the...

Using balance sheet capital to try to drive FRE growth. So.

In the press release, it said that you acquired it for roughly $3 billion and you just said on the call about $200 million came from your balance sheet. So I'm curious about the remaining $2 eight does that come from a specifically raised.

Third party vehicle or does it come from just ordinary funds across the.

Speaker 10: of the board. And then, you know, how should we think about in terms of, you know, the

The board and then how should we think about in terms of.

Speaker 12: The day one revenues that it generates at this level, and in the press release, you say you expected the scale to 10 billion, you know, what would it be, you know, at a mature, fully, fully platform level at that level? Kind of those...

The day, one revenues that.

It generates at this level.

And in the press release, you say you expected to scale to $10 billion.

Would it be at a mature fully fully platform level at that level.

And of those.

If you can give some color around those things.

Speaker 4: So Chris, you know, I think it's a great question and we're really pleased about the transaction and, you know, really overall what's happened in credit just today, kind of comment on it a minute ago. The deal itself, $3 billion purchase price.

So Chris.

I think it's a great question and we're really pleased about the transaction.

So really overall, what's happening in credit just kind of comment on a minute ago.

The deal itself 3 billion purchase price.

Speaker 4: you know really kind of the you know set this up for a good platform in real estate credits one that we know well the writer cozy just take the lead in all of this you know really built that in the past bring over you know some of the people that he knows really well so you know from a personal perspective really good from the asset perspective we know the asset

Really kind of setting us up for a good platform in real estate credit is one that we know well <unk> just taken the lead in all of this really built out in the past, bringing over some of the people that he knows really well so from a personnel perspective really good from an asset perspective, we know the assets.

Speaker 4: It's a levered transaction, so it's about two-to-one leverage, and from an equity piece that was funded by some of our LPs, both in existing products and a strategic investor, and we're about 20 percent. The important part is we'll be the GDPR.

Levered transaction. So there is about two to one leverage.

And from an equity piece that was funded by some of our <unk>.

Lps, both in existing products, and our strategic Investor and we're about 20% will be the important part is will be the GP. So you kind of think about this as a fund structures.

Speaker 4: So you kind of think about this as fund structures. We're the GP of that.

Speaker 4: This enables us over time to potentially use this to be in the retail channel, but more work to come on all of that. And it's going to take us, as I said before, two to three years before this really culminates.

Where the GP of that.

This enables us over time to potentially use is to be in the retail channel, but more work to come on all of that and it's going to take us as I said before two to three years before this really culminates, but we need to make investments like this now to build a drive that kind of growth in 2020 for 2025.

Speaker 4: But we need to make investments like this now to be able to drive that kind of growth in 2024, 2025 and thereafter. So this is a good move for us as a firm and really jump starts what I think is going to be a very big business.

And thereafter. So this is this is a good move for us as a firm and really jumpstart what I think is going to be a very big business Mark Jenkins, who runs as said look you look into build a $10 billion businesses and I know mark pretty well in March is not going to stop at 10.

Speaker 10: you know mark jankin's run to said look you looking to build a ten billion our business and i know mark pretty well and mark back in the stock that ten okay already that's it for me thank you

Okay.

Alright Thats it from me thank you.

Thanks, Chris.

Thank you our next comes from Gerry O'hara with Jefferies. Your line is open.

Speaker 11: Great, thanks. Just maybe want to pick up a little bit on the investment solutions business, clearly see some kind of growing momentum there as it relates to net accrued revenue. But perhaps you could just kind of give us a little bit of an update on how that segment is evolving and where you might see that kind of headed into next.

Great. Thanks.

Just maybe wanted to pick up a little bit on the investment solutions business, clearly see similar kind of growing momentum there as it relates to <unk>.

Our net accrued revenue, but perhaps you could just kind of give us a little bit of an update on how that segment is evolving and where you might see that kind of headed into next year.

Speaker 4: care hey thanks for the question investment solutions is done really well you know we've we've doubled f-r-e you know eighty four million dollars this year thirty seven million dollars a year ago more importantly this is in a very attractive space

Yeah, Hey, Thanks for the question investment solutions has done really well.

We've doubled our FRE $84 million this year of $37 million a year ago. More importantly, this is in a very attractive space. So solutions products are really a good way for a lot of people to come into private equity.

Speaker 4: So Solutions products are really a good way for a lot of people to come into private equity and their performance is phenomenal. 48% this past year.

And their performance is phenomenal, 48% this past year, they've mastered really data and how to help.

Speaker 4: They've mastered, you know, really data and how to help.

Speaker 4: LPs construct portfolios and so they've done a really nice job of that and their deployment tanks has been really good this year

Construct portfolios and so they've done a really nice job of that in their deployment pace has been really good this year.

Speaker 4: You point out the fruit care, obviously, that's a reflection of the 48% appreciation.

You point out.

The fruit there obviously, that's a reflection of the 48% appreciation.

Speaker 4: And look, I think we're well positioned for carry in that business to be a realized carry to be a much bigger number. Now you start to see some of that really coming in here in the fourth quarter, still small and relative to overall Carlisle, but much bigger than what you've seen before. Remind you that this is all European style waterfalls.

Look I think we're well positioned for carry in that business to be realized carry to be a much bigger number now you start to see some of that really coming in here in the fourth quarter still small relative to overall carlyle, but much bigger than what you've seen before remind you that this is all European style waterfalls.

Speaker 4: When we bought Alpenzas, we didn't buy the historical carry, and so it's really only on the funds that are raised where the participation rate is right. So that's going to really start...

When we bought <unk>, we didnt buy the <unk>.

Oracle carry and so it's really only on the funds are then they are raised where the participation rates right and so that's going to really start to play off 2023, 24 25 is when those numbers. That's most of that 300 twentyish of net accrued carry will really pop in those years and youll see a nice increase until that point for <unk>.

Speaker 4: 2023, 24, 25 is when those numbers, most of that 320-ish of net accrue carry will really pop in those years. I think you'll see a nice increase until that point, but it will be those years where that number really comes through.

Here's where that number really comes through in the meantime.

Speaker 4: In the meantime, you know, rules and the team are really working hard on ways to continue to grow that business. The secondary platform and the co-investment platform are hot platforms. They're looking at other ways to kind of, you know, take advantage of what they know and do things. But, you know, more to come on that as that all kind of unfolds.

Roque and the team are really working hard on ways to continue to grow that business. The secondary platform in the co investment platform, our hot platforms, they're looking at other ways to kind of take advantage of what they know and do things, but more to come on that is that all kind of unfolds.

Speaker 3: a jury to the only the only high level thing i'd at it

Hey, Jerry it's two the only the only high level thing I'd add is.

Speaker 3: You know, there's a theme that I introduced which is, or actually came with a first question, which is...

There is a theme that I introduced which is our actually came with the first question which is.

Speaker 3: under appreciation. I think our FRE strength is underappreciated. I think the diversity of our platform is underappreciated and the breadth of it and quite frankly, I think people are starting to feel...

Under appreciation.

I think our FRE strength is underappreciated I think the diversity of our platform is underappreciated and the breadth of it and quite frankly.

I think people are starting to figure out ALP invest which is a leader in the solution space a great brand great platform used to contribute Oh, probably I don't know $12 million to $13 million of FRE three four years back now.

Speaker 3: Alp and best which is a leader in the solution space a great brand a great platform used to contribute Oh probably I don't know 12 13 million of f r e three four years back now it's uh you know closing in on a hundred It's a strong platform one of the market leaders and that holds

Closing in on 100 <unk>.

Strong platform, one of the market leaders and that whole space, but just got real tailwind in our industry because as the <unk> business has grown <unk> and Ceos of these big plans, they need tools for better deployment portfolio optimization and access to liquidity.

Speaker 3: It's got real tailwinds in our industry because as the ALTS business has grown, CIOs and CEOs of these big plans, they need tools for better deployment, portfolio optimization and access to liquidity.

Speaker 3: And it just shows, it just talks to.

And it just shows.

It just it just it just talks to the maturation and the scale of what this industry has become that this part of the industry now is as vibrant as it is with real growth and momentum behind it. So we've got real.

Speaker 3: the maturation and the scale of what this industry has become, that this part of the industry now is as vibrant as it is with real growth and momentum behind it. So we've got real, we feel really good about the prospects of Alf Invest. It's a great team, market leading, and I think like I said,

We got real we feel really good about the prospects of Alf invest it's a great team market, leading and I think like I said.

Speaker 2: we're underappreciated with respect to how important it is and what its opportunities for growth are within Carlyle.

Underappreciated with respect to how important it is and what its opportunities for growth are within Carlisle.

Speaker 11: Great, that's helpful. And then I guess, Q, sticking with you, and as it relates to strategic opportunities, the other deal I think that was announced was I guess a partnership with I Capital and all funds. Perhaps you could comment a little bit about how your vision and into the retail market is expected to evolve, I guess, in the coming years. Thanks.

Great that's helpful and then.

I guess.

Sticking with you and as it relates to sort of strategic opportunities.

The other deal I think that was announced was I guess, a partnership with <unk> capital and all funds, perhaps you could comment a little bit about how.

Your vision into the retail market is expected to evolve.

In the coming years. Thank you.

Speaker 4: Jerry, let me jump in and take that. So, look.

Jeremy let me jump in and take that.

Look alternative source of capital for US really include high net worth capital retail open ended funds permanent capital in insurance and they are all additive to our efforts to drive growth and we have a number of initiatives in each of these areas some of which we've already talked about and thanks for pointing out the <unk>.

Speaker 4: Alternative source to capital for us really include high network capital, retail, open ended funds, permanent capital and insurance, and they're all additive to our efforts to drive growth. And we have a number of initiatives.

Speaker 4: in each of these areas, some of which we've already talked about. And thanks for pointing out the iCapital announcement yesterday. That's another one of these initiatives that we think over time will be meaningful. You know, we're an investor in iCapital, but you know, it's

Capital announcement yesterday, that's another one of these initiatives that we think over time will be meaningful we're an investor in <unk> capital, but.

Speaker 4: i wouldn't you think that this is a major uh... revelation it's it's just added to the overall process here the bigger picture is the fifty one billion dollars that we raise this past year double we raise the prior momentum is good and diversified diversified across all of our businesses

I wouldn't think that this is a major revelation, it's just additive to the overall process here. The bigger picture is the $51 billion that we raised this past year double over the prior year momentum is good and it's diversified it's diversified across all of our businesses.

Speaker 4: And you know this coming year we'll probably have about 20 different products in the market

It does.

Coming year, we'll probably have about 20 different products in the market.

Speaker 12: really enabling that strength and momentum to continue. And more importantly, feel really confident about our ability to drive F.R.E.

Enabling that strength and momentum to continue and more importantly, we feel really confident about our ability to drive FRE.

Okay.

Thanks for taking the questions.

Thanks Jerry.

Our next question from Patrick Davitt with Autonomous Research your line is open.

Speaker 13: Good morning guys. There's a view in the marketplace that private equity broadly has been one of the most boosted asset classes by the state of California.

Hey, good morning, guys.

This view on the marketplace that private equity broadly has been one of the most appreciated asset classes by.

A long period of Central bank accommodation. So in that vein is now perhaps one of the more negatively exposed to asset classes to this year's inflationary high rate less accommodative environment, particularly given the pivot to growth a lot of firms appear to have taken so could you give us your reaction to that perception and more specifically frame.

Speaker 13: Can you give us your reaction to that perception and more specifically frame what you think Carlos?

What you think Carlyle is exposure as to what might be considered growth year hydro multiple positions in the portfolio.

Speaker 3: Sure, hey Patrick, great question obviously this is something we're really, everyone is focused on us especially and you know it's a question about rising rate it's a question of

Sure Hey, Patrick Great question. Obviously this is something we're really everyone is focused on us, especially in it's a question about rising rates. It's a question about volatility inflation all in one so let me let me try to address it. So first of all with some of the correction that's happening in the market.

Speaker 2: volatility, inflation, all in one. So let me try to address it. So first of all, with some of the correction that's happening in the market, and we're all seeing it, the rotations that are occurring, clearly this will have an impact on mark.

And we're all seeing it the rotations that are occurring clearly this will have an impact on marks.

Speaker 2: But I'd like to point out, and Kurt or Dan, help me out here, I think only 11% of our portfolio are in public names right now, is that correct? Correct. Okay, so about 11% of our names are in public names at the moment. But we really feel good about our portfolio construction. Very well diversified across industry sectors, big companies, smaller companies, across all regions. And that type of portfolio construction with our long-term orientation.

But I'd like to point out and Curt or Dan help me out here I think only 11% of our portfolio and public names right. Now is that correct correct. Okay. So about 11% of our names in public.

Names at the moment.

But we really feel good about our portfolio construction very well diversified across industry sectors big companies smaller companies across all regions.

And that type of portfolio construction.

With our long term orientation, where we don't have liquidity pressure because of marks.

Speaker 3: where we don't have liquidity pressure because of marks.

Speaker 2: gives me real good comfort that over the long term, or folio, it will be quite resilient as we enter a period of volatility. Now, if you think about some of the corrections we're seeing, especially with respect to valuations,

Gives me real good comfort that over the long term.

Portfolio.

It will be quite resilient as we.

Enter a period of volatility now if you think about.

Some of the corrections, we're seeing especially with respect to valuations.

Speaker 2: You know, quite frankly, on the buy side of the equation, we're meeting great companies and the entry points are now more attractive. So I think longer term this bodes well and I'm on record as saying, you know, a healthy correction is not necessarily a bad thing with respect to our investment activity.

Quite frankly on the buy side of the equation, we're meeting great companies and the entry points are now more attractive. So I think longer term this bodes well and I'm on record as saying a healthy correction not necessarily a bad thing with respect to our investment activity.

No.

So.

With a long term view.

Again.

We're of a view that.

As multiples trade down it could be more attractive to us from an investment perspective, turning to the credit business.

Speaker 2: I think folks have to appreciate a vast preponderance of our assets there are floating rates.

I think folks have to depreciate, a vast preponderance of our assets there are floating rate.

Speaker 2: Okay, so all else equal, assuming economic backdrop is benign, rising rates means that platform generates more profit.

Okay. So all else equal assuming economic backdrop is.

As benign.

Rising rates means that platform generates more profit.

Speaker 2: Okay, and then with respect to volatility, volatility with respect to the credit platform actually creates flow, especially in our special-sit and credit opportunistic strategies.

Okay, and then with respect to volatility.

Volatility.

With respect to the credit platform actually creates flow, especially in our special sit in credit opportunistic strategies.

Speaker 2: But more broadly speaking, I'd say Patrick, you know, there's one thing I've learned, volatility creates change and change creates deal flow. And our platform is.

But more broadly speaking I would say Patrick Theres, one thing Ive learned volatility creates change and change creates deal flow.

And our platform is very broad.

Speaker 2: It's around the world. It's very diversified across strategies, across industry sectors.

Around the world, it's very diversified across strategies across industry sectors, and we've been able to pivot really nicely over the past several years to finding opportunity. So as we enter this period of volatility and make no doubt about it we're not being complacent, we're studying what's happening very carefully of course.

Speaker 2: and we've been able to pivot really nicely over the past several years to finding opportunities. So as we enter this period of volatility and make no doubt about it, we're not being complacent, we're studying what's happening very carefully of course we're focused on inflation, of course we're focused on rising rates, of course we're carefully tracking markets.

<unk>, we're focused on inflation of course, we're focused on rising rates of course of course, we are carefully tracking markets, but volatility creates changes that are creating opportunities for our broad based platform, especially with a long term lens. So hopefully that gives you a little bit of color on the environment and how we're <unk>.

Speaker 2: but volatility creates changes that are creating opportunities for a broad-based platform, especially with our long-term lens.

Speaker 1: So hopefully that gives you a little bit of color on the environment and how we're positioned to navigate through it. Thank you. Thank you. Our next question comes from Shore.

<unk> to navigate through it.

Thank you.

Thank you. Our next question comes from shore with Evercore. Your line is open.

Hello there.

Quickie first you talked about this great growth.

20, plus on FRE, which I think is very welcomed.

We talk about the margin you plant you talked about in the past about plans to increase that over time, I think youre scaling really well I don't have to repeat all the things you said.

Any specific thoughts on where you think the margin can be in the next year or two.

As the scale.

It's coming through.

Speaker 4: That's correct. So thanks for the question. You know, we, you know, in our investor day, we said we get the 40% I'm not backed off of that target. That's for 2024.

Kurt So thanks for the question.

At our Investor Day, we said, we would get to 40% have not backed off of that target that's for 2024.

Speaker 4: We grew from 30% beginning of this year to 33% for the full year of this year. Q4 was 34%. We're well positioned. Yes, there's some increases and some costs in the fourth quarter, but our job is to grow the top line faster than the expenses and feel really comfortable with our ability to do that. I think you're going to see continued expansion in margin over the coming years. We'll hit the target in 2024.

We grew from 30% the beginning of this year to 33% for the full year. This year Q4 was 34%.

Well position, yes, there's some.

Creases and some costs in the fourth quarter, but our job is to grow the top line faster than expenses and feel really comfortable with our ability to do that I think youre going to see continued expansion in margin over the coming years, we will hit the target in 2024.

Yeah.

Speaker 3: Okay, no problem. Hey Glenn, hey Glenn, it's Q. I read your note this morning. You have 15 positives and only four negatives in your quick takeaway. If I remember, if I, if I counted correctly. Yeah, it is. What is it? Question for you. I'm curious. This is more theoretical, I guess.

I'll take the sooner on that Okay no problem.

Hey, Glenn Glenn It's Q I read your note. This morning, Yes, 15 positives in only four negatives in your quick takeaways.

If I counted correctly.

Yeah.

Question for you I'm curious this is mark theoretical I guess, but if I look at your private equity business is big it's global it's been fully integrated <unk> once we make sure everything I'm curious.

In credit.

The growth is great the calories and great performance, great everything that you pointed out I'm curious on how you are.

How you are integrating yet and whether or not it needs to be integrated meaning meaning because each sub asset class and Amazon raised capital on its own go to LTE is on its own or underneath the covers.

Years out will it look just like private equity.

Speaker 2: Yeah, Glenn, it's a great question. And when I say, and Kurt says, we are taking a platform approach, we are being very intentional with that language. We have teams of investment professionals that are managing multiple strategies.

Yes, Glenn it's a great question and when I say, an incurred says we are taking a platform approach.

It's we're being very intentional with that language.

Teams of investment professionals that are managing multiple strategies.

Speaker 3: And we have a credit distribution capability set that is raising money across our platform strategies and increasingly we are also talking to LPs that are coming in to multiple strategies at the same time in SMAs and other type of structured programs. And so it is with real intention that we've designed for the long term a strategy that is platform.

And we have a credit distribution capability set that is raising money across our platform strategies and increasingly we're also talking to Lps that are coming in to multiple strategies at the same time in SMA and other type of struck.

<unk> programs and so it is with real intention that we've designed for the long term.

Our strategy that is platform driven.

Speaker 2: It takes time to get that going, build it the right way, and to have it really pay off, which is why you've heard me from the very beginning several years back to ask a little for patience. I think it's starting to pay off. Not only is the growth starting to happen, but it's also starting to pay off.

It takes time to get that going build it the right way and to have it really pay off which is why you've heard me from the very beginning several years back to ask for patients.

I think it's starting to pay off not only is the growth starting to happen.

Speaker 2: Okay, and you're seeing that organically and also inorganically, we're gonna be very thoughtful and take our shots inorganically, but you're seeing a consistent strategy on the platform and what that means is, at some point in time, there's a...

Okay, and Youre seeing that organically and also inorganically, we're going to be very thoughtful and take our shots inorganically, but youre seeing a consistent strategy around the platform and what that means is.

At some point in time, there is a tipping point, where the AUM base and the revenue base starts to drop more earnings because of the operating leverage that we've created okay that has not yet occurred to date, but we are approaching that tipping point.

Speaker 3: where the AUM base and the revenue base...

Speaker 2: starts to drop more earnings because of the operating numbers that we've created.

Speaker 2: That has not yet occurred to date, but we are approaching that tipping point, which is why we keep alluding to the fact that we are approaching that tipping point.

Which is why we are keep alluding to the fact that we think we're going to have a breakout year in credit as it relates to the FRE drop.

Speaker 2: that we think we're going to have a breakout year in credit as it relates to the FRE drop.

Speaker 2: from all the growth that we've been seeing and that we expect to continue.

From all the growth that we've been seeing and that we expect to continue so hopefully that gives you really good.

Speaker 3: So hopefully that gives you really good color on not only the strategic design of the platform, but what we think the business model will enable this to do from a financial perspective, no longer long-term, but in the short to medium term.

Color on not only the strategic design of the platform, but what we think the business model will enable this to do from a financial perspective, no longer long term, but in the short to medium term.

Thanks for all that.

Thank you. Our next question comes from Lee with <unk>. Your line is open.

Speaker 12: Great. Good morning. Thanks for taking my questions. I guess it's hard to believe there's any more questions left at this point, but real quickly on the capital markets business, you know, I know it's a relatively small piece, but maybe this is another one of those underappreciated initiatives. You may be just update us on that kind of your car next expectations for that over the next couple of years.

Great. Good morning, Thanks for taking my questions. It's I guess, it's hard to believe there is any more questions left.

At this point, but.

Real quickly.

On the capital markets business I know, it's a relatively small piece, but maybe this is another one of those underappreciated initiatives could you maybe just update us on that.

Kind of your current expectations for.

That over the next couple of years.

Speaker 12: You gave an update obviously in the investor day while back but just like to get another update.

You gave an update obviously in the Investor day, while back, but just like to get another update.

Sure so.

Speaker 4: What really pleased with how this initiative is really, you know, commenced and gone on, and it's a good example of people teaming together, working across the entire platform.

Look really pleased with how this initiative is really commenced and gone on and it's a good example of people teaming together working across the entire platform.

Speaker 4: Brian Lemley who quarterbacks this initiative, you know, it's really done a nice job of working with all of our credit and bioprofessionals

Brian Let me quarterbacks this initiative as.

It has really done a nice job of working with all of our credit and buyout professionals.

Speaker 4: and also with our solutions teams. And it just capitalizes really on the deep activity that we see around the globe, and really looking to add value in anything and everything that they're involved in. So adding value is the cornerstone of that. The other piece is obviously deal flow really makes this business drive. And what you're already seeing is in total, we have about just shy of $100 million.

And also with our solutions teams.

And it's just capitalize is really on the deep activity that we see around the globe.

And really looking to add value and anything and everything that they are involved and so adding value is is the cornerstone of that the other pieces. Obviously deal flow really makes this business drive and whats Youre already seeing is in total we have about just shy of $100 million this year in transaction and advisory fees.

Speaker 4: this year in transaction and advisory fees, with the vast majority of that coming from this capital market's activity.

With the vast majority of that coming from this capital markets activity.

Speaker 4: We, it's just been great in terms of what they've been able to do this year. I think as we go forward, you know, a lot of the learnings in terms of, you know, how to make all the internal workings work right, how to have everyone incentivize, right?

It's just been great in terms of what they've been able to do this year I think as we go forward.

A lot of the learnings in terms of.

How to make all of the internal workings work right now to have everyone incentivize right.

Speaker 4: work and coordinate together. And remember, we're not an investment bank. So I'm not going after, you know, other people's stuff. We're just trying to help and do the things that we're doing really well. So this is this has had a really nice trajectory. I think it can it will continue to grow. It'll be, you know, somewhat dependent upon capital markets activity and deal flow. But, you know, given that all that remains relatively strong, I think we'll continue to do some good things here.

Work can coordinate together and remember we're not an investment bank.

So im not going after other People's stuff, we're just trying to help and do the things that we're doing really well. So this is this has had a really nice trajectory I think it will continue to grow it.

It'll be somewhat dependent upon capital markets activity and deal flow, but given that all of that remains relatively strong I think we will continue to do some good things here.

Speaker 12: You know, that was helpful. That was my only question. Thanks for your patience. Thanks, Robert.

So thats the color you need.

That was helpful that was my error.

Only question. Thanks for thanks for your patience.

Thanks, Rob.

Our next question comes from Adam <unk> with UBS. Your line is open.

Speaker 14: Hi, good morning. Thank you for taking the questions. Just want to circle back to retail more from a product angle. In the release yesterday, you mentioned Interval Funds For thinks of a regional ours company closer involved in the

Hello. Good morning. Thank you for taking the questions just wanted to circle back to retail more from a product angle.

Our release yesterday, you mentioned interval funds and Bdcs sounds like you've got a pretty full suite, so which of those is kind of gaining the most traction right now.

Speaker 14: Which of those is kind of gaining the most traction right now? You know, anything that you expected in terms of getting traction, not getting traction. And finally, you know, if there are any product gaps that you might have to fill in, or is it more about just expanding?

Anything that you expected in terms of getting traction not getting traction and finally, if there are any product gaps that you might have to fill in or is it more about just expanding distribution at this point. Thank you.

Speaker 4: Good question. Look, as I said before, there's a number of alternative channels we're chasing and working on. And we have initiatives in each of these. Now some of the, and I would just, you know, say look, a lot of this is not what we're dependent upon to drive the results that we're talking about. The confidence that Q expressed earlier is really from, you know, running the ship the way we've been running it. And to the extent that we can execute really well on this, it's all going to be additive. So in terms of specific...

Good question.

<unk> said before there is a number of alternative channels, what we're chasing and working on.

We have initiatives in each of these now some of the and I would just.

Say look a lot of this is not what we're dependent upon to to drive the results.

So we're talking about the confidence that <unk> expressed earlier is really from running the ship the way we've been running it and to the extent that we can execute really well on this it's all going to be additive.

So.

In terms of specific products.

Speaker 4: But we have a very good product within our credit business. We call it CTAC.

Have a very good product within our credit business.

Speaker 4: And it's been going really nicely, throwing a nice feed because the performance there has been phenomenal and it's been bringing in new investors. And so, you know, I'm optimistic about where that can go.

We call it <unk>.

And it's been growing really nicely throwing a nice fee is because the performance there has been phenomenal and has been bringing in new investors and so.

I'm optimistic about where that can go.

Speaker 4: We have a number of BDCs. They're performing well. Team's working really hard. The insulated products are around them, so that data is also helpful. And there's new things in the works across the broader platform of the firm that we're working on. But it's the night really great for prime time in terms of talking about it in detail.

We have a number of Bdcs theyre performing well team is working really hard to ancillary products around them that that is also helpful. And there is new things in the works across the broader platform of the firm that we're working on.

But it's really ready for prime time in terms of talking about it in detail.

Speaker 14: Got it. That's good detail. Appreciate it. And then just circling back, one of the phrases that kind of resonated in your prepared remarks is picking your spots and...

Got it thats good detail appreciate it.

And then just circling back on one of the freezes that kind of resonated in your prepared remarks.

It's picking your spots and so just wondering if you could.

Speaker 14: wondering if you could talk about spots maybe that you didn't pick, like certain opportunities either that other firms are doing or maybe just opportunities that weren't a good fit for Carlisle and how you're thinking about that. Thank you.

Talk about spots, maybe that you didnt pick like certain opportunities either that other firms are doing or maybe just opportunities that weren't a good fit for carlyle and how youre thinking about that thank you.

Speaker 4: Where we're going to be picking our spots is we've now been focused on kind of building a big balance sheet.

Look.

Where we're going to be picking our spots as we.

We've now been focus on kind of building a big balance sheet not for the sake of having a big balance sheet, because that gives value to not very much but for the sake of being able to grow fee related earnings.

Speaker 4: Not for the sake of having a big balance sheet because that gets valued at not very much. But for the sake of being able to grow, be related earnings.

Speaker 4: And so the iSTAR transaction that you saw is the start of what we're doing there. More to come, but we're focused on kind of just in particular inorganic growth, but also then using that capital to grow a lot of our own internally developed initiatives and expand in terms of getting bigger scale out of funds and the like. So really, you know, see a way that we're going to be using our capital to grow the firm. Thank you.

So the ISR transaction that you saw as the start of what we're doing there more to come but we're focused on kind of Houston in particular inorganic growth, but also then using that capital to grow and a lot of our own internally developed initiatives and expand in terms of getting bigger scale other funds and the like.

So really Coa that we're going to be using our capital to grow the firm.

Makes sense. Thank you very much.

Thanks.

Our next question is from Bill Katz with Citigroup. Your line is open.

Speaker 9: Okay, this is just some fine-tuning from my model. When you look at your management fees, they had a significant bounce sequentially and I appreciate you turned on a number of funds. Was there any catch-up fees in there? And as we look at the expense side, anything unusual on the cash comp or the G&A line as we think about into the next couple of quarters? Thank you.

Okay. This is just some fine tuning from my model when you look at your management fees.

Significant bounce sequentially and I appreciate it turned on a number of funds was there any catch up fees in there and as we look at the expense side anything unusual on the cash comp or the G&A line as we think about into next couple of quarters. Thank you.

Speaker 4: So Bill, look, probably on your revenue question, on feed management fees, depends on how you're doing. And remember, we turned on a number of funds here in the fourth quarter.

Sure So bill.

Look on on probably on your revenue question on fee management fees depends on how Youre doing it remember we turned on a number of funds here in the fourth quarter.

Speaker 4: You know, not really catch up, manage the fuse because we turned them on, so there's nothing to catch up back to.

Not really catch up management fees, because we turned demand theres nothing to catch up back to.

Speaker 4: You know, this next to the fourth quarter, very light and catch up management fees, very light the whole year. Next year will be a little bit of a different story on catch up management fees. I think you'll see a lot more in catch up management fees. Next year in parts because when you turn it on.

Next to the fourth quarter very light in catch up management fees very light the whole the whole year next year, it will be a little bit of a different story on catch up management fees I think youll see a lot more in catch up management fees next year in part because when you turn it on early and then you have a long fund raised that's where you'll have it.

Speaker 4: Early and you have a long fundraise, that's where you'll have it. But in the fourth quarter, a higher effective fee rate, if you're doing it off of an average...

But in the fourth quarter, a higher effective fee rate if youre doing it off of an average of fee paying AUM beginning of the period ended the period that the denominator will get distorted there. So so just be careful if thats the math that you're doing.

Speaker 4: of FEEPING and AUM beginning of the period, end of the period, the denominator will get distorted there. So just be careful if that's the map that you're doing.

Speaker 4: In terms of compensation, look, you know, the end of the year is the bonus period we had just a great year really, you know, hit all of, you know, key records on, you know, really all the metrics like what our people are doing and like their focus on driving at priority. And so

In terms of compensation.

Look at the end of the year is the bonus period, we had just a great year really hit all of <unk>.

Key records.

All the metrics like what our people are doing and like they are focused on driving FRE and so we pay them.

Speaker 4: We paid them. And I feel good about that. And as you heard, Q and I talk about, we're very confident about our ability to drive growth and drive up our rate and continue to be focused on margin and running the firm effectively and efficiently. And I think that also makes sense in the current market where talent and attracting and retaining top talent is important.

And I feel good about that.

And as you heard Q and I talked about we're very confident about our ability to drive.

<unk> and drive FRE and continue to be focused on margin and running the firm effectively and efficiently and I think that also makes sense in the current market, where talent and attracting and retaining top talent is important.

Speaker 4: on gna, yeah, what gna pops all over as you guys know if you follow us um, you know, for the full year we're about 270, which is about the same as a last year when you adjust for the litigation cost recoveries. Fourth quarter did have some investments over dm8 and some new initiatives and legal costs to full speed with add some extra fundraising cost.

On G&A.

G&A Pops all over as you guys know as you followed us.

For the full year, we were about $2 70, which is about the same as last year. When you adjust for the litigation cost recoveries fourth quarter did have some investments that were being made and some new initiatives and legal costs associated with that some extra fund raising cost.

Speaker 4: Actually, I hope that kind of continues because that's really been kind of what fuels long-term growth. And then we have some compliance costs that tend to be back in because tax returns and all that kind of nonsense occurs more at the end of the year and so you end up with a bit of more cost at that point in time. So hopefully that gives you some color on how that plays through.

I hope that kind of continues because that's really been kind of our fuels long term growth and then we have some compliance costs tend to be back ended because tax returns and all that kind of nonsense occurs more at the end of the year and so you end up with a bit of more cost at that point in time. So hopefully that gives you some color on how that play.

Through.

Yeah, that's perfect. Thanks, so much.

Speaker 1: I'm currently showing no further questions at this time. I like trying to call back over to Daniel Harris.

Thank you and I'm currently showing no further questions at this time I'd like to turn the call back over to Daniel Harris for closing remarks.

Speaker 16: Thank you, everyone, for your time today. Should you have any follow-up questions, feel free to call and best relations at any time. Otherwise, we'll look forward to talking to you again next quarter. Thank you.

Thank you everyone for your time today should you have any follow up questions feel free to call Investor relations at any time, otherwise we look forward talking to you again next quarter. Thank you. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect.