Q2 2023 Carlyle Group Inc Earnings Call
Good day and thank you for standing by welcome to the Carlisle Group second quarter, two twenty-three earnings conference call at.
At this time, all participants on a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press start one one on your telephone you will then hear an automated message advising your hand is raised to remove yourself from the queue. Please press star one one again, please be advised of today's conference is being ripped.
Oh, but now like to hand, the conference over to Daniel Harris head of Investor Relations. Please go ahead Sir.
Thank you and all that.
Good morning, and welcome to Carlisle second quarter 2000 twenty-three earnings call.
With me on the call. This morning is our Chief Executive Officer Harvey Schwartz.
Cheaper natural officer, Kurt you, Sir and incoming Chief financial Officer, and had a corporate strategy genre that.
Earlier. This morning, we issued a press release and a detailed earnings presentation, which is also available on our Investor Relations website.
This call is being webcast at 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 substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliation of these measures to gap in our earnings release to the extent reasonably available.
Any forward looking statements made today do not guarantee future performance and undue reliance should not be placed on them. These.
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 Carlisle assumes no obligation to update any forward looking statements at anytime.
So turning to our results for the second quarter, we generated 207 million in fee related earnings at $389 million distributable earnings.
D E for common share of 88 cents or to carry balance was 3.7 billion as of the end of the quarter and we declared a quarterly dividend a 35 cents per common sure.
In order to ensure participation by all those on the line today. Please limit yourself to one question and then returned to the queue for any additional follow ups.
And with that let me turn the call over to our Chief Executive Officer Harvey Schwartz.
Thanks, Dan Good morning, everyone and thank you for joining us.
I'm excited to be joined today by genre that you'll hear from later as well as Kurt.
There are two areas I would like to cover first the macro environment.
Second a review of several work screams that will position us to drive longterm growth.
First the macro environment.
As I've said previously where I'm one of the most complex periods in recent economic history <unk>.
Combination of sustained elevated inflation, along with central bank rate hikes as I do a corresponding increase in the cost of capital.
The peak of the inflationary cycle may have passed but our base case of that raged a higher for longer as we shift away from a decade of zero interest rate policy.
It remains early days and understanding the impact of this shift and corporate capital structures and liquidity.
Among other factors the shift and interest rates further contributes to mix investor appetite and sentiment.
In part our economic and market views are informed by the vast data and proprietary insights gathered from our <unk> our portfolio.
The data set includes nearly 300 global companies.
600, real estate investments and loans over 1300 issuers.
Let's start with inflation.
Starting to see it's more difficult for our portfolio companies to pass through increased cost reinforcing the view that the inflationary cycle is paid.
Our portfolio companies C E O's remain generally cautious in terms of how they're approaching the operating environment, but broadly our portfolios obscene accelerating activity with over 10% of EBITDA growth.
As you would expect these economic forces that slowed the pace of investment across the industry.
You see this in the amount of capital, we're deploying and you see it in lower Fundraisings Lp's slow decision, making a new fund allocations.
Having said that in general our teams are seeing signs of an increasing pace of early dealflo access.
Across most asset classes.
Now I want to update you on five key areas that we are focused on as a leadership team.
These are just a sample of activities are firm.
We have mobilized team and launched work streams for each of these.
As you would expect we are approaching these in a very deliberate and methodical manner and while early let me give you a line of sight into what we're doing.
First our insurance solutions business.
Our relationship with fortitude profitable strategic and vital but only one piece in the opportunity set.
Insurance companies look to free up capital and ship liabilities to improve that road pushing.
We're seeing a greater interest on their partner partner with us in a variety of important ways.
Second.
Our capital markets team.
They also have a large opportunity to scale their impact.
We have in place today, all the key ingredients for growth.
Ah well position and active private equity franchise, and an experienced capital markets team.
As activity rates pick up we expect that we will further leverage our deal flow and our portfolio companies need for capital to create a natural talent in this business.
Third.
We're also focused on our technology and our AI strategy.
This allows us to create operational efficiencies across the firm as well as our at our portfolio companies and is an important driver of growth and scale over the long term.
We recently appointed Suarez is our new Chief information Officer, and head of technology transformation.
She will work closely with the entire leadership team to drive <unk> technology transformation strategy and operations.
Now for us.
As we said before we see long term opportunity around private wealth.
We have recently hired a new had a private wealth strategy.
While we only have three products in the market covering 5 billion of assets today, We view this as an important channel for growth.
We'll be working with our distribution partners to bring product innovation globally to the wealth count most importantly, the Carlisle brand.
It's a huge differentiator here.
And fifth the last where extreme I'll mentioned is around expense management and improving FRE margin.
This means investing in our platform wisely to drive top line growth as well as closely monitoring the overall level and composition of expense as well as the capital required to run the firm.
This is a critical strategic effort.
We will continue to move with addiction, among sense of urgency around each one of these and we will continue to update you as these progress.
Close.
As I said, we are still operating within a somewhat challenging market backdrop.
It is important to state that will be patient when we need debate while at the same time capitalizing on opportunities that have like capital, where we see attractive risk reward.
As a leadership team we are intensely focused on delivering performance excellence for our investors.
Driving long term shareholder value.
We are taking action immobilized teams around priority areas to drive discipline growth and I'm really enthusiastic for carlyle's future.
Now before I handed to John I'd also like to take a moment to thank her first tremendous contributions to Carlisle over the last nearly 20 years.
I personally am thankful for cards counsel and support as I transitioned into Carlisle over the past six months and I've really enjoyed getting it on.
I know, you'll all join me and wishing and the best in his upcoming retirement.
Now John over to you. Thanks.
Good morning, everyone. I also want to thank <unk> for his 20 years of leadership at Carlisle and for the guidance. He continues to provide me as I tried to transition into the CFO role.
I look forward to working more closely with many of you in the coming period.
Is hardly highlighted we delivered solid results this quarter in a tough environment driven by a diversified investment platform.
And the focus of our global investment teams.
Reproduced 389 million and distributable earnings for the second quarter or 88 cents.
Per share year to date, we have generated 660 million of D E.
Or $1.51 indeed.
For sure we reach a $60 million of shares in the second quarter and have repurchased $160 million in the first half of the year.
Today I'm going to focus my remarks on three main areas.
He related earnings in the near term outlook.
Accrued Kerry.
And fundraising.
First he related already.
<unk> increase to $207 million in the quarter up from $193 million in Q1 2000 twenty-three.
Relative to the second quarter last year Fr declined 12% as modest growth in revenue was offset by continued investment into our people and teams.
Year to date.
Sorry, a $401 million was down 5% compared to the same period last year.
Second quarter management fees of 515 million increase sequentially after having declined for a few quarters.
With increases in each of our segments.
Over the next few quarters, New fund launches empty activation should support continued management fee growth.
Our second quarter results.
Bended benefited from $73 million in fee related performance revenue.
Looking ahead, we're not expecting to generate material fee related performance revenue in global private equity in the second half of 2023.
The global credit be related to performance revenue should remain stable.
Transaction and advisory fees were $18 million in the quarter.
Down significantly from a year ago, given muted capital markets activity, which is pressured both FRE and the margins.
And as you heard from Harvey driving an increasing level of transaction revenue from our investment platforms as a major focus area for the firm.
Compensation expense was $289 million in the second quarter, and 11% increase year over year, a majority of the increase this quarter was a function of higher fee related performance revenue as we generally approved compensation at 45% of associated revenue, excluding this impact compensation expense inquiry.
Only 5% year over year.
G&A expense of $102 million reflects a more normalized set a firm white activities relative to lower levels, we saw during the pandemic.
This quarter also included external fund raising costs largely captured in global investment solutions, which supported fund raising momentum.
G&A expense may pick up in the back half of the year as we typically have increased operating costs tied to our LP conferences.
With regards to our FRE outlook second half of 2023, FRE is likely to be similar in the aggregate to the first half of 2023 with a relatively stronger fourth quarter.
We remain focused on generating sustainable top line revenue growth as well as diversifying and growing FRE.
Moving on I would like to discuss our net accrued Carrie.
Our global Kerry fund portfolio appreciated, 2% in the quarter with relative strength and infrastructure and natural resources, Oh into an uptick in announced transactions, we had more muted appreciation in private equity and real estate.
Net occurred carry a balance of 3.7 billion declined from 4 billion last quarter. Most of this decline was driven by 175 million net realizations with the balance due to a reduction in a crude Kerry and global private equity.
Even with this decline the nettle cruel remains at a robust $10 per share, which is a substantial source of future shareholder value.
Let me finish up with an update on fund raising funding.
Fund investors continue to face challenging decisions and make commitments more slowly than in previous years. Despite.
Despite this slowdown we still expect to raise a larger amount of capital in 2023 than we did in 2022 through.
Through the first half of 2023, we raised $14 billion of new capital approximately halfway to last year's fundraising total.
We have momentum and several important strategies that should see inflows in the second half of 2023 likely weighted towards support order.
And global investment solutions, we are off to a good start for her latest vintage secondaries and co investment strategies, which should both continue into the second half of the year and into 2024. This new capital will turn on management fees. Later, this year and global credit we expect to grow off a slower start to 2023 we've.
Price <unk> in the second quarter after none in the first quarter or credit opportunity sponge should continue to attract more capital and a number of strategies in SMA is our position to generate positive flows with the fourth quarter likely to be relatively stronger than the third quarter.
And global private equity.
We expect to raise capital in the second half of the year and several bile funds in various real asset strategies.
Wrapping up let me reiterate my excitement to be in this new role working alongside Harvey in the entire Carlisle team to drive shareholder value. We are excited about the opportunities for continued growth and improved operational performance.
With that let me turn the call over to the operator for your questions.
Thank you.
As a reminder to ask a question you'll need to press start one one on your telephone.
A question. Please press star one one again, please wait for your name to be announced we ask that you. Please limit your questions to one please stand by while we compile that you're on a roster.
One moment for our first question please.
First question will come from the line of Alexandria blow steam with Goldman Sachs. Your line is now open.
Great. Thanks, Good morning, everybody Harvey maybe we can zona in on some of the key priorities that you mentioned in your prepared remarks, really starting I guess or in the last one that you highlighted around the expense structure and FRE margins could you just hold it in a little bit more in terms of what that means you're obviously came into the business with a fresh pair of eyes. So curious how.
That could impact compensation mix and ultimately the FRE margins longer term for this room.
Right when you said.
Which mix.
Alex I didn't have the confidence yet slash compensation I got you yeah. Okay. Thanks for the question Alex Good to hear your voice.
So.
This is a critical work stream.
We kind of gave you a flavor of the five there are more than those obviously.
But as I settled into the sea currently kicked off.
A worksheet and it was really focused on.
FRE margin and how we wanted to think about that and obviously he's in the process of hanging up baton over to John .
We could talk about both the top line growth, but you've narrowed and more on the compensation piece and the expense base. So.
We're basically.
Doing a line by line review going through the business and making sure. We're super disappointed about expanse now as it relates to compensation. That's obviously a critical component of it and the way we are approaching that is.
As you've heard me say before very first principle base and what I mean by that is we're going to start with the things that are most critical around compensation and that is you know is making sure that we have.
Really really as perfect as we can alignment with our constituencies are lp's, our employees and our shareholders.
And at this stage I think we're making good progress on the work strength.
I think there's a real opportunity here.
And importantly, as it relates to our team we want to make sure that they are aligned with the lp's that we retain an attractive as people and we really want to reward people for performance.
But as a first principle I would just say we are taking a white sheet of paper to this.
Being very thoughtful about it.
I lose Ya thanks, Alex.
Thank you one moment for our next question. Please.
Our next question comes from the line of Ken Weddington with J P. Morgan. Your line is now open.
Hi, good morning, and thanks for taking the question Hey, Ken how are Ya hike.
Hi, good morning.
John .
Maybe just starting high level can you give us some background of your time at Carlisle and your decision to trance transition to the CFO role and then maybe following up on on Alex's question sort of FRE margins dipped in the quarter can you talk us through the outlook for margins in this pond.
Text of challenging market backdrop number of fund launches, but increased investment and basically how do you see the direction of fee margins evolving as we go into the back half of the year.
Thanks, again, and I look forward to meeting you at some point in the near future just quickly on the first part of your question.
And all my background I've spent my entire career.
And financial services.
The last 16 years in private equity at Carlisle.
While while at Carlisle I focused on investing in financial services globally, a large component of that job Ken was value creation at the portfolio company level.
And I would just add the the financial services team has a great track record at Carlisle.
When the CFO opportunity was was presented to me honestly. It was the easiest courier decision I've ever made it was an easy yes.
I am Super excited to be in this role starting October 1st.
And I really look forward to working with Harvey and the team to further drive.
Shareholder value.
In terms of your second part of your question. The FRE margin I would just say look we know we can do better.
And as Harvey mentioned, we're very focused on expenses and margin.
And more importantly, we're very focused on delivering disciplined revenue growth and I would just say as we make progress on these work streams will keep you updated in the coming period.
Okay, great. Thank you.
One moment for our next question please.
And next question comes from Brian Mckenna with JMP Securities. Your line is now open.
Good morning, all.
Brian .
So Harvey even and you see a couple of quarters now I know you continue to analyze the business and I'm, assuming it might take some more time for you to frame out to longer term trajectory at the firm, but do you have any early expectations on what you think the underlying growth at Carlisle could look like over time based on everything you've seen thus far and then just you know based on some of the girls in issue.
That are underway.
Yeah, Great question so.
I think I'm coming up on six months.
And.
I think I've seen on almost 150 L. PS I traveled 40 days I've met with teams internally.
And I could not feel better sitting here today.
I ever would have imagined about the future Carlisle and the growth opportunity.
And I say that feeling.
Feeling quite informed.
On a number of levels the power of the brand.
The dialogue with Lp's directly.
Obviously part of my.
View on this and how I feel is informed by what I think is the trajectory for the industry, which I think is fantastic.
May not be fantastic quarter to quarter, but I think the long term trajectory. The interest industry is is quite good.
And you know what I think when I tried to give you some flavor of how we are now turning our focus to these work streams.
And.
The worst streams allow us to do a number of things. They obviously allow us to prioritize growth, whether it's an insurance and capital markets. Some credit various parts of our business is but also.
Allows us to focus on margin.
And how we want to think about the composition of compensation and things I've already talked about another thing that it serves as it really brings the team together and I feel great about the way the team is coming together in terms of the focus.
This is engagement across.
Including obviously, John hurt myself and the team that you know better also this includes some of the best investments in the World, which I brought together on various worst strands and so I feel great about the momentum.
This is not going to be an immediate.
Fourth quarter thing.
But if you asked me about the long term trajectory.
I felt really excited when I got here in February and I feel better now.
Super helpful. Thanks Harvey.
Sure. Thank you one moment for our next question.
And next question comes from the line of Chris Kotowski with Oppenheimer and company. Your line is now open.
Hey, Chris.
Chris We can't hear Chris.
Chris Your line may be muted.
We can come back to him operator to the next person one moment. Please.
Question comes from the line have been but with.
Barclays. Your line is now open.
Hi, good morning, and thanks for taking the question.
I wanted to ask about your good morning already I wanted to ask about your fund raising expectations, particularly in the private equity side, you know I know in your prepared remarks, you indicated that the pace of investment is slowing the fundraising a slogan general but as broader markets are kind of recovering maybe the denominator effect issues are sort of getting resolved a little bit any you know and as you are sort of seeing some kind of green shoots for overall trend.
Acting activity any kind of increased optimism more updated expectations for sort of the next vintage of private equity funds sticking in Asia buyout Europe , Japan to ones that are kind of expected to come later this year and into 24.
So broadly speaking on fund raising as we said we feel this year is going to be better than last year, that's broadly across the diversify platform right. So solutions, there's a lot of momentum.
There's a lot of momentum and credit there's a lot of momentum across state insurance complex.
So we feel good about that there's a lot of momentum in real estate private equity sales some headwinds.
Globally when you go around the world.
But we feel optimistic about.
Certain aspects of the fundraising that are in the market right now I can't obviously get into specifics because they are in the market right now, but I would say now or comments that you heard in the prepared remarks generally how we feel about it for the balance of the year, but a lot of momentum in those other areas.
Okay, great. Thanks, so much.
Thank you thanks, Benjamin our next question.
And next question comes from the line of Glen sure with.
Your line is now open.
Thanks, very much morning, Glenn.
Good morning.
You gave a bunch of comments that.
The second half of our first half and I and it was very clear that weighted towards fourth quarter given that we're in the third quarter and it's kind of slow right now.
So I wonder if you can help dimensionalize, how much waited fourth quarter of his third quarter and some of those items and then thinking about <unk>.
Growth you took optimistic the credit insurance, but I was wondering if we could get a little bit more.
<unk> are in the process of recovering knock wood, but what else is going to drive growth because there is the opposite of private equity the private credit backdrops fields.
Pretty good so maybe if you could talk with them and more on insurance indirect lending. Thanks.
Sure So I.
I mentioned in the works dreams, we mobilized and effort around insurance, obviously, we have fortitude.
Hugely valuable asset in our ownership there and so we mobilized worse things around that in some respects it exactly the way you talked about Glenn because the adjacencies between insurance origination where the pipeline is very very good for further transactions.
And the desire to work with Fortitude is a natural all creator of flow into our credit business. Again. This is not a third or fourth quarter event. This is longer term I can tell you about the momentum we say in the pipeline that we say.
Also as it relates to our credit franchise the performance has been good.
A little slower than we expected.
But it feels good in terms of the pipeline of fund raising and the team feels confident for the back half of the year.
So I feel good about the trajectory of all those pieces and of course, there's adjacencies in there with capital markets in terms of how we distribute and how we bring all that together that is really the purpose of bringing these words seems together interest about mobilising. The teams around these opportunities. So I would say we feel good about that I can't pin it down to.
Third quarter fourth quarter, and we don't really run the company that way. Glenn is you know it is certainly not the way I think about things.
But I feel very very confident about the trajectory and our focus on FRE margin and the things we talked about.
Okay. Thanks.
Glen Glen.
One moment for our next question.
And next question comes from the lineup, Brian Banal Deutsche Bank. Your line is now open.
Great. Thanks, Good morning, folks, Thanks, Hey, Brian Hey, you're wondering.
Maybe just get back on the the FRE margin and trajectory and and and really next let's let's think about next year not not the second half, but if we could put decided insurance solutions.
You've talked to Harvey about building up the capital markets effort. It sounds like you have the raw ingredients there to do that right now.
Ooh I'm, assuming that that can be leveraged quite well, but as we move into next year do you view that FRE margin expansion is more of an element of of revenue growth and scaling the business or or more coming from expense initiatives and you mentioned compensation is would there.
Abby, including any kind of change in structure and compensation and such as moving comp.
<unk> out of it for a reason and to and to performance.
Revenue.
Okay. Thanks, let me impact that a little bit so I just want to make sure I hit your points. So on FRE margin that is as I said, that's a critical work shrimp for us and what does that mean that means driving growth for the top line, but it also means being exceptionally disciplined.
In terms of expenses and how we're thinking about capital deployment and as I said, we started this process by Kurt now.
We're transitioning that over to John I feel very good about the momentum of that.
Given how long I've been here and how focused the team is and so the trajectory there should be good and with respect of compensation.
Again.
We want to make sure we get this perfectly right for our teams in the alignment for our constituencies, but yes <unk>.
Compensation and the composition of compensation and making sure we reward our best people on again at the same time aligning with our constituencies in our Lp's.
Yes, 100% that's on the table.
Early.
Giving your details on that as soon as we have them will share them, but that's a process and we're going to be very methodical, but I can tell you as it relates to FRE margin both growth and also expense management, where laser focused.
And you should hear it no differently.
Now you had a question inside there when you talked about capital markets, which I just wanted to drop into for a second.
I don't want to minimize it.
And not rocket science okay.
We're not building space shuttles over here for capital markets basically all we're doing is mobilizing the team to work in the Adjacencies a little bit differently.
We're not going to build up a big team, we don't Wanna be competing with the J P. Morgan to the world, but we do think there is a real valuable opportunity set here, where we can provide incremental revenues without any significant need to scale.
Yep.
That's a great color. Thank you.
Sure. Thanks. Thanks.
Thanks, Brian one moment for next question.
And then next question comes from the line of Michael Cyprus with Morgan Stanley . Your line is now open.
Hey, good morning. Thank you for taking my question. It we'd look out the next couple of years. It seems like you guys are set to generate substantial cash flow across the business. Just curious how you're thinking about deploying that cash generation what portion might be returned to shareholders versus what portion might you retain for organic growth versus inorganic and how important.
Or meaningful could inorganic opportunities to be at this point.
So for me, it's a it's a math question I don't want to oversimplify. It I think it's a question of really just.
Thinking through the strategic opportunities that may be presented us versus returning a capital as we talked about before right now.
I think the opportunities to return capital to shareholders may be more attractive, but that's a moment in time I think that.
When you look at the position of the firm and the footings of the firm in terms of what we have.
We have an insurance investment, which is quite critical to the firm. So we don't need to go out and acquire one.
We have the credit business, which is continuing to build organically we have the solutions business. So.
All the component pieces are here I wouldn't rule out certainly strategic partnerships, where we think that could accelerate growth.
But they would have to be a really good fit and.
Again I noticed.
The case, everybody says the map assess that makes sense.
We'll make those choices at the margin when presented.
But the brand is very powerful and if there's opportunities for us to scale in ways that are inorganic will certainly consider them.
But right now I would say, that's not front and center, but I wouldn't rule it out over the long term.
Thank you.
One moment for our next question.
And next question comes from the lineup tongue, let's BMO capital markets. Your line is now open.
Hi, good morning, Thanks very much.
Maybe coming back to the private wealth opportunity and I'm curious to get your thoughts around what the Colorado product set in the wealth channel might look like two or three years from now and not just in the U S, but internationally as well thank.
Thank you.
So this is where we where we feel like the brand.
Is a very very powerful differentiator.
The name recognition.
The presence of the founders.
And what they represent for the firm and David Rubenstein and sort of the gist of it is iconic and everybody in the world knows it.
Again, we're at the beginning of this journey I actually would say my opinion the industry is at the beginning of this journey.
Think product development will continue to.
Improve I think will be real innovation in a product over the next couple of years and I think as a team and car that we're going to be very thoughtful about this we only have three products in the market right now.
But this is a place where you know.
We want to make sure we have our market share and so we're going to be focused on it.
If it's early in the journey.
Thank you.
For our next question.
And next question comes from Patrick Data Autonomous Research. Your line is now open.
Hi, good morning, everyone.
There were a total of chunky realizations that help the two Q performance B.
How are you thinking about realizations and the second half now relative to your tone on the first corner call and is there a tangible pipeline you can speak to a tangible pipeline building you can speak to know thank you.
We wouldn't want to add this call without ever opening his mouth.
It looks like you wanted to actually see Patricks, we're going to let her take your question I think that the poor guys. Just I'd have one question on this call [laughter].
<unk> the question and before I answer that let me just say thank you.
Thank you really too you know all of our shareholders I wanted to say thanks to our founders I wanted to say thank you to really all the analysts that follow us it's been great working with you over this time, it's really been an honor and privilege for me to serve in this role and I have total confidence in Harvey and Johns leadership taken it forward and look we got a great team.
Carl how big Big bench lots of tenure on the on the team.
Really been a great honor in terms of realizations look we got $3.7 billion in that accrue carry roughly 10 Bucks a share just as John said, we we delivered a billion and a half of net carry realizations.
In 2021, and 2022 is roughly $1 billion first half this year 245.
It's really hard as I've said in the path to call it to to the nickel on which deal is gonna close when and how all that plays out.
I would kind of think second half of the year in total is going to look more or less like the first half of the year on on Kerry.
Gas and things can slide and until the activity really picks up again, it's a hard thing to really nail down, but again $3.7 billion, that's a lot of Kerry and.
Very excited about that the bill to turn that into cash.
Yes, Hi view that is Ah.
And just a war chest at $10 a share.
That's incredible.
Thank you.
One moment for our next question please.
And our next question comes from Craig's taken toddler with Bank of America. Your line is now open.
Hey, good morning, everyone.
Good morning, and Greg.
My My question is on the capital markets business.
Yeah, I know you're looking at to grow this business and at the 2021 Investor de Carlo provided a transaction.
The target of greater than 120 million by 2024, So I'm just I'm just curious if this targets still valid as we think about updating our models.
So I wasn't here in 2021, so I can't speak to that but we.
We haven't set targets I can I can give you a little insight into how we've been focus as a team.
This is more of an <unk>.
And then you want but we're systematically working on with the work stream that we mobilise were systematically working business by business to ensure that we have the right connectivity. The right plan literally pause every pocket of the firm in terms of how we want to drive.
<unk> here and I think that is a business.
I think it is a difficult business to predict it.
It's going to have an episodic nature to it because it's going to be sensitive to market activity.
And we're not looking to be a giant capital committed here. So this is really about us moving the ball from.
Very small at 50 million to marginally growing.
But will come back to you at a later date, but.
I would personally be reluctant to put hard targets out there but.
But I can give you some sense of scope when we look backwards.
At opportunities in the way that we approached him versus the way, we would know the opportunity looks meaningful and I feel good about it.
Thank you Harvey.
Thanks with your best of luck with.
With your next venture.
Thanks, Greg really appreciate it and it's been fun.
Thank you one moment for our next question.
As a reminder, ladies and gentlemen that star one to ask a question.
Our next question comes from the lineup Adam Baby with E. B S. Your line is now open.
Alright, Thank you and good morning.
And follow up.
Morning follow up around realizations I dunno, if Kirk gets a twofer out of this but.
There's been press during the quarter and more recently around a potential monetization of a significant holding in China.
Obviously I don't expect you to comment on a specific deal, but I just wanted to broaden that out because the other part of the press piece was that the the opposite might be included in continuation vehicle. So I wanted to broaden that out and just ask about the potential use of continuation vehicles add carwile given the amount of mature assets that you have in different.
Portfolios.
Potential benefits of that for the firm and also maybe a comment on the deal backdrop in China. Thanks, a lot.
Hey, Thanks for the question, let me make a few comments here so.
First we focus on our business operations across Asia, We've got a great track record there and the team that is just a phenomenal job really operating across Asia, China, India and many of the countries in that arena and so feel really good about the team and what they've accomplished and what.
They continued to do.
I am hesitant to talk about any specific deal.
Because things aren't done <unk>.
Continuation funds are tools that we look at.
Complexities with continuation funds as you're all aware and so it's not something that we.
Routinely do we spend a lot of time thinking it through and examine all of the potential conflicts around that but really it's premature to comment on anything specifically on this and I would say that those things also take some time to kind of pull together. So comments I made before in terms of the second half we're still the right way to think about it for your near term model.
Sounds good I appreciate all the best day.
Thank you. Thanks. Thank you.
And one moment for our next question.
I have a follow up with Michael Cyprus with Morgan Stanley . Your line is now open.
Great. Thank you I was just hoping you could maybe elaborate a bit on the deployment pipeline and the potential for new deal activity, maybe you could talk a little bit about how you are seeing that backdrop evolving Howard terms and structures adjusting and given the improvement in equity markets and reduction in the volatility what seems like peek fed funds here I guess what are the key her.
<unk> do you see at this point for deals getting it now it's been getting completed.
But.
I'll give you my perspective on that.
I would say that from the deal gene perspective, and the flows we're seeing in.
I would say there has been a marketing marked improved improvement and sentiments.
And I think we can be more optimistic about.
Activity going forward, but I'd say the market still feels fragile.
CTO confidence is improve.
Improving but we've had a major shift obviously and the cost of capital, which I talked about and I think it across the marketplace.
Still being digested of course this'll be worth through.
But that would give you that perspective at a high level, but we're seeing some interesting opportunities. Our teams are being very selective and deploying capital kind of know if you want to add anything to that yeah.
Like I think it comes down to confidence.
And I think you're starting to see the level of confidence increase among executives and I think that's a positive thing.
I do think we're still absorbing the high rate environment. We're in I think that's got a lot of people off guard thankfully, we have hedged most are capital structures.
So like I think you are going to start to see more activity looking at our pipelines across the platform or pipeline logs are looking a little better, but I think it's going to take time.
Any particular areas, where you might expect activity to return first versus what may take a little bit longer and and what may not come back.
Yeah, I would say I think you're going to see activity come back in private equity in credit pretty much. The same time I don't think one is necessarily ahead or behind the other.
Okay. Thank you.
Thanks, Mike Thank you.
Currently showing no further questions at this time I'd like to hand, the conference back over to Mr. Daniel Harris for closing remarks.
Yes. Thank you operator, thank you all for your time this morning and of course your interest in Carlisle do you have any questions feel free to follow up with Investor Relations. After the call and have a great day.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
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