Q3 2023 Carlyle Group Inc Earnings Call

Speaker 1: Good day and thank you for standing by. Welcome to the Carlyle Group third quarter 2023 earnings conference 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, please press

Good day, and thank you for standing by and welcome to the Carlyle Group third quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one one.

Speaker 1: Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand a conference over to your speaker today, Daniel Harris, and that head of investor relations.

On your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Daniel Harris head.

Head of Investor Relations.

Speaker 2: Thank you, Josh. Good morning and welcome to Carlisle's third quarter of the 2023 earnings call. With me on the call this morning is our Chief Executive Officer, Harvey Schwartz, and Chief Financial Officer, John Redett.

Thank you Josh good morning, and welcome to Carlyle's third quarter 2023 earnings call.

With me on the call. This morning is our Chief Executive Officer, Harvey Schwartz, our Chief Financial Officer, John or debt.

Speaker 2: 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, 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 if the substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliation of these measures to GAAP in our earnings release to the extent reasonably available.

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 and a replay will be available on our website we.

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 reconciliation of these measures to GAAP in our earnings release 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 factors section of our annual report on Form 10K 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.

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 obligation to update any forward looking statements at any time.

Speaker 2: So turning to our results, for the third quarter, we generated $205 million in fee-related earnings and $367 million in distributable earnings, with DE per common share of $0.87. Our net accrued carry balance was $3.5 billion as of the end of the quarter, and we declared a quarterly dividend of $0.35 per common share.

So turning to our results for the third quarter, we generated $205 million in fee related earnings and $367 million in distributable earnings with de per common share of <unk> 87.

Our net accrued carry balance was $3 5 billion as at the end of the quarter and we declared a quarterly dividend of <unk> 35 per common share.

Speaker 2: In order to ensure participation by all those on the call today, please limit yourself to one question and return to the queue for any additional follow-ups. And with that, let me turn the call over to our Chief Executive Officer, Harvey Schwartz.

In order to ensure participation by all those on the call today. Please limit yourself to one question and return to the queue for any additional follow ups and with that let me turn the call over to our Chief Executive Officer Harvey Schwartz.

Speaker 3: Thanks, Dan. Good morning, everyone, and thanks for joining us.

Thanks, Dan and good morning, everyone and thanks for joining us.

Speaker 3: Today I'll update you on the areas where we have strong momentum and where we are focused on accelerating growth. Before getting into that, let me touch on the macro.

Today I'll update you on the areas, where we have strong momentum and where we are focused on accelerating growth before getting into that let me touch on the macro.

Speaker 3: An already complex environment has become increasingly uncertain with the tragic events unfolding in the Middle East.

An already complex environment has become increasingly uncertain with the tragic events unfolding in the middle East.

Speaker 3: multiple wars along with higher rates, and economic uncertainty as increased volatility and reduced confidence levels.

Multiple wars, along with higher rates and economic uncertainty increased volatility and reduced confidence levels.

Speaker 3: We all know sentiment is the greatest market elixir and negative sentiment is slow transaction activity over the past year. We all know sentiment is slow transaction activity over the past year.

I'll now sentiment as the greatest market elixir and negative sentiment is slow transaction activity over the past year.

That said.

Speaker 3: Despite the challenging market backdrop, deal activity has shown signs of improvement as third quarter buyout activity was at the highest pace in over a year. However, my own opinion is that lower activity levels and reduced confidence will likely persist for a bit longer.

Despite the challenging market backdrop deal activity is showing signs of improvement as third quarter buyout activity within the highest patient over a year. However, my own opinion is that lower activity levels and reduced confidence will likely persist for a bit longer.

Speaker 3: As we said in the past, our view is that rates will stay higher for longer.

As we said in the past our view is that rates will stay higher for longer.

Speaker 3: after 20 years of declining rates and central bank market intervention, the overall cost of capital is shifted higher and they remain so for some time.

After 20 years of declining rates and central bank market intervention. The overall cost of capital has shifted higher and may remain so for some time.

Speaker 3: Market participants have reluctantly accepted this reality and begun reprising assets based on this outcome.

Participants have reluctantly accepted this reality and begun to repricing assets based on this outcome. However.

Speaker 3: However, as is often the case in market regime shifts, this process of market digestion will take time. Ultimately, higher rates could dampen economic activity.

However, as is often the case in market regime shifts this process of market digestion will take time, ultimately higher rates could dampen economic activity.

Speaker 3: Complex and uncertain environments don't necessarily mean a lack of opportunity as we've seen over decades navigating through all market cycle.

Complex and uncertain environments don't necessarily mean, a lack of opportunity as we've seen over decades navigating through all market cycles.

Speaker 3: Our goal investment teams continue to stay focused on generating excess alpha in this market environment. And with over 70 billion of bribe how to across our platform, we have the flexibility to boy capital and build on strategic partnerships.

Our investment teams continue to stay focused on generating excess alpha in this market environment and with over $70 billion of dry powder across our platform, we have the flexibility to deploy capital and build on strategic partnerships.

Speaker 3: Now let me shift to areas of focus as we position the firm for growth.

Now, let me shift to areas of focus as we position for growth.

Speaker 3: First, our insurance strategy has very strong underlying momentum. Fortitude's announced transaction with Lincoln Financial has met all closing conditions and is expected to close later this month.

First our insurance strategy is very strong underlying momentum for.

<unk> announced transaction with Lincoln financial has met all closing conditions and is expected to close later this month.

Speaker 3: We'll pick up approximately $24 billion in new AUM from the increase in Fortitude's general account assets, as well as additional capital that rotates into Carlyle funds.

We will pick up approximately $24 billion of new AUM from the increase in Florida to general account assets as well as additional capital that rotates into Carlyle funds.

Speaker 3: In addition to this transaction, our team is developing new investment and distribution strategies that target the needs of insurance investors and our private credit business.

In addition to this transaction our team is developing new investment and distribution strategies that target the needs of insurance investors and our private credit business we.

Speaker 3: We see substantial growth and potential new transactions across the insurance vertical. We see significant growth and potential new transactions across the insurance vertical.

We see substantial growth and potential new transactions across the insurance vertical.

Next private wealth.

Speaker 3: Carlaw brand has always been received well in the private wealth channel, and we're building on that momentum. We have raised over $45 billion to this channel over time. In this year, we have raised more than $3 billion. I feel good about this channel given the strength of our brand. Over the coming quarters and years, we expect to accelerate product development and see further growth in sales and distribution.

Carlyle brand has always been received well in the private wealth channel and we're building on that momentum.

We have raised over $45 billion through this channel over time and this year, we have raised more than $3 billion.

Feel good about this channel given the strength of our brand.

Over the coming quarters and years, we expect to accelerate product development and see further growth in sales and distribution.

Speaker 3: There's a lot of upside in private wealth, and we expect our footprint to be significantly larger in coming years.

There's a lot of upside in private wealth, and we expect our footprint to be significantly larger in coming years.

Speaker 3: Moving on, we are seeing momentum across several of our investment strategies in the market today. Few examples, including PAM-Bio, US Real Estate, and Secondary.

Moving on we are seeing momentum across several of our investment strategies in the market today.

Examples include Japan buyout U S real estate and secondaries.

Speaker 3: Each of these strategies aren't tracked to grow meaningfully due to strong investment performance, our deep client relationships, and an attract to set a deployment opportunities.

Each of these strategies are on track to grow meaningfully due to strong investment performance, our deep client relationships and an attractive set of deployment opportunities.

Speaker 3: During the quarter, we raised $6.3 billion in new capital, bringing year-to-date fund raising to $20 billion.

During the quarter, we raised $6 $3 billion of new capital, bringing year to date fund raising the $20 billion.

Speaker 3: Overall, it's not been pleased with our pace of fundraising thus far in 2023, but our current expectation is for a step higher in new capital raised throughout the fourth quarter.

Overall.

We've not been pleased with our pace of fundraising thus far in 2023, but our current expectation is for a step higher in new capital raised throughout the fourth quarter.

Speaker 3: With the final pose of our latest US Bi-Out strategy, we now have $105 billion of corporate private equity assets under management, including $21 billion in dry powder across our CP funds that allow us to pursue deals of any size around the globe.

But the final close of our latest U S. Buyout strategy, we now have a $105 billion of corporate private equity assets under management, including $21 billion in dry powder across our CPE funds that allow us to pursue deals of any size around the globe.

Speaker 3: We continue to raise capital for our next minted Asia, Europe , and Japan by Australia, which should further add to this amount in the coming quarters.

We continue to raise capital for our next vintage Asia, Europe, and Japan buyout strategies, which should further add to this amount in the coming quarters.

Speaker 3: Moving to credit. This is an area we are focused on accelerating our growth and expect to be significantly larger over time. Global credit is built a diverse set of strategies to serve an increasing number of institutions on private wealth LPs.

Moving to credit. So this is an area. We are focused on accelerating our growth and expect to be significantly larger over time.

Global credit has built a diverse set of strategies to serve an increasing number of institutional and private wealth Lps.

Speaker 3: who manage over $150 billion in assets today, nearly triple the level of just three years ago including the world's largest CLO business.

We manage over $150 billion in assets today, nearly triple the level of just three years ago, including the world's largest CLO business.

Speaker 3: Our team is focused on the significant opportunity ahead to attract asset that migrate from bank balance sheets to private capital strategies. A trend we expect to play out over the next several years.

Our team is focused on the significant opportunity ahead to attract assets and migrate from bank balance sheets to private capital strategies, a trend we expect to play out over the next several years.

Speaker 3: Finally, let me focus on expense management. We have made faster progress in this area than I originally expected. I give a lot of credit to the team for driving this process.

Finally, let me focus on expense management.

We have made faster progress in this area than I originally expected I will give a lot of credit to the team for driving this process with.

Speaker 3: We've identified several areas that have already led to a lower run rate of expenses. As a result, we delivered better than expected third quarter FRE. I expect an even larger impact in 2024. The changes we are making across the firm are improving our organizational structure, emphasizing our areas of strength, enhancing our ability to grow, and helping to maintain best in class talent across our product.

We've identified several areas that have already led to a lower run rate of expenses as a result, we delivered better than expected third quarter FRE.

I expect an even larger impact in 2024.

The changes we are making across the firm are improving our organizational structure, emphasizing our areas of strength enhancing our ability to grow and helping to maintain best in class talent across our platform.

Speaker 3: Closing, our leadership team is focused on taking meaningful actions to drive long-term value for our investors and shareholders. With that, let me now turn the call over to John .

In closing our leadership team is focused on taking meaningful actions to drive long term value for our investors and shareholders with that let me now turn the call over to John.

Speaker 4: Thanks, Harvey. Good morning, everyone. As Harvey highlighted, we delivered better than expected results this quarter, supported by our focus on expense management and our diversified global platform. We produce 367 million indistricable earnings or 87 cents in DE per share. Year to date, we have generated over a billion of DE or $2.38 in DE per share.

Thanks, Ravi good morning, everyone.

As Harvey highlighted we delivered better than expected results. This quarter supported by our focus on expense management and our diversified global platform.

We produced $367 million in distributable earnings or <unk>, 87, and <unk> per share year to date, we have generated over $1 billion, a day or $2 38.

And <unk> <unk> per share.

Speaker 4: We finished the third quarter with 382 billion of assets under management, up 4% year over year.

We finished the third quarter with $382 billion of assets under management up.

Up 4% year over year.

Speaker 4: AUM is poised to increase upon the closing of the 4-2 transaction with Lincoln, which should occur in late November .

AUM is poised to increase upon the closing of the <unk> transaction with Lincoln.

Which should occur in late November we.

Speaker 4: We expect this transaction to add 40 million in incremental FRE.

We expect this transaction to add $40 million and incremental FRE.

Speaker 4: Across our global platform, we deployed $4.1 billion of capital this quarter, with nearly a third in our solution strategies and over a billion in real estate, infrastructure, and natural resources.

Across our global platform, we deployed $4 1 billion of capital this quarter with nearly a third and our solution strategies and over $1 billion in real estate infrastructure and natural resources.

Speaker 4: Despite investment headwinds, we deployed $12.6 billion of capital year to date 2023.

Despite investment headwinds, we deployed $12 6 billion of capital year to date 2023.

Speaker 4: We realize $5.6 billion of proceeds this quarter for our LPs, largely across our energy, power, solutions, and credit strategies.

We realized $5 6 billion of proceeds this quarter for our Lps largely across our energy power solutions and credit strategies year.

Year to date.

Speaker 4: we have returned over $15 billion in cash to our LPs, a higher level than we deployed. Carlyle is one of the few firms that has been able to deliver this outcome.

We have returned over $15 billion in cash to our Lps, a higher level than we deployed.

Carlyle is one of the few firms that has been able to deliver this outcome.

Speaker 4: We raise 6.3 billion in capital in the quarter, generally split between each of our segments.

We raised $6 3 billion in capital in the quarter generally split between each of our segments.

Speaker 4: And as Harvey said, we expect a stronger fourth quarter of fundraising.

And as Harvey said, we expect a stronger fourth quarter of fund raising.

Speaker 4: In solutions, we raise 2.4 billion largely for our secondaries and co-investment strategies, which will continue to raise capital and finalize their fundraising in 2024.

In solutions we.

We raised $2 4 billion largely for our secondaries and co investment strategies, which will continue to raise capital and finalize their fund raising in 2024 and.

Speaker 4: In global credit, we attracted new capital for opportunities to credit, direct lending, and our private wealth fund, CTAC. In year to date, we have raised nearly a billion dollars for carlional strategic solutions, our asset-based finance strategy.

In global credit.

We attracted new capital for opportunistic credit direct lending and.

And our private wealth fund Seatac and.

And year to date, we have raised nearly $1 billion for Carlyle strategic solutions, our asset based finance strategy.

Speaker 4: In global private equity, we closed our 8th US file fund, and along with our grossly raised over 16 billion of committed capital.

In global private equity, we closed our eight U S buyout fund and along with our grossly raised over $16 billion of committed capital in.

Speaker 4: In addition, we raise capital across the latest vintage NGP strategy, Asia buyout, and renewables.

In addition, we raised capital across the latest vintage <unk> strategy.

Asia buyout and renewables.

Shifting to fee related earnings.

Speaker 4: Management fees totaled $518 million in the third quarter, up modestly compared to the prior year. We have $10 billion of pending fee-earning AUM that will activate fees largely as we deploy additional capital.

Management fees totaled $518 million in the third quarter up modestly compared to the prior year.

We have $10 billion of pending fee, earning AUM that will activate fees largely as we deploy additional capital.

Speaker 4: Capital market activity remains slow and transaction and advisory fees of 11 million declined sharply from last year. That said, we expect Q4 transaction revenue to grow as we have good visibility into near-term fee generation.

Capital market.

Capital markets activity remains slow and transaction and advisory fees of $11 million declined sharply from last year.

That said, we expect Q4 transaction revenue to grow as we have good visibility into near term fee generation.

Speaker 4: B-related performance revenue of $23 million were higher than the third quarter of last year, but as we previously signaled, it declined sequentially. Global credit FRPR continued to move higher with good asset flows and strong performance in our evergreen products, while global private equity declined sequentially, a trend that is likely to persist in Q4.

Fee related performance revenue of $23 million were higher than the third quarter of last year, but as we've previously signaled it declined sequentially global credit FRP or continue to move higher with good asset flows and strong performance in our evergreen products, while global private equity declined sequentially a trend that.

Is likely to persist in Q4.

Speaker 4: Cash compensation and benefits of $256 million declined more than $30 million compared to the second quarter due to lower fee-related performance revenue compensation, as well as our efforts to operate the firm more efficiently. To date, we have actioned approximately $40 million in annual run rate expense savings. Our work here remains.

Cash compensation and benefits of $256 million declined more than $30 million compared to the second quarter.

Due to lower fee related performance revenue compensation as well as our efforts to operate the firm more efficiently to date.

We have action approximately $40 million in annual run rate expense savings.

Our work here remains in the early innings.

Speaker 4: G&A expenses were also lower as we benefited from expense discipline and lower fundraising cost. We expect G&A expense to modestly increase in Q4 due to year-end seasonality, though we remain focused on controlling annual expense growth in 2024.

G&A expenses were also lower as we benefited from expense discipline and lower fund raising costs, we expect G&A expense to modestly increase in Q4 due to year end seasonality that we remain focused on controlling annual expense growth in 2024.

Speaker 4: Overall, third quarter fee-related earnings of $205 million were relatively flat to the last quarter.

Overall third quarter fee related earnings of $205 million were relatively flat to the last quarter we.

Speaker 4: We now expect to deliver a higher level of FRE in the second half of 2023 relative to the first half.

We now expect to deliver a higher level of FRE in the second half of 2023 relative to the first half.

Speaker 4: FRE margin in the third quarter was 37%, and we remain focused on driving this margin higher over time.

FRE margin in the third quarter was 37% and we remain focused on driving this margin higher over time.

Speaker 4: Our net accrued carry balance totaled $3.5 billion, with a small decline from Q2 due to realization.

Our net accrued carry balance totaled $3 5 billion with a small decline from Q2 due to realizations are.

Speaker 4: Our global carry fund portfolio appreciated 2% in the quarter with relative strength in infrastructure, natural resources, and credit. And our real estate portfolio continued to be pressured by higher rates despite strong underlying asset performance.

Our global carry fund portfolio appreciated 2% in the quarter with relative strength in infrastructure natural resources and credit and.

In our real estate portfolio have continued to be pressured by higher rates.

Despite strong underlying asset performance.

Wrapping up <unk>.

Speaker 4: Despite the challenging backdrop, we are executing across the firm and see good opportunities across our global platform to create value for both investors and shareholders. With that, let me turn the call over to the

Despite the challenging backdrop, we are executing across the firm and see good opportunities across our global platform to create value for both investors and.

And shareholders.

With that let me turn the call over to the operator for your questions.

Speaker 5: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and return to the queue for any follow ups. One moment for questions.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question and return to the queue for any follow ups one moment for questions.

Our first question comes from Patrick David with.

Thomas Research you May proceed.

Hey, good morning, everyone.

Speaker 2: You hinted at this earlier but could you better frame any potential timing dynamics between 3Q and 4Q gross flows? Maybe a better idea of how much AUM has already closed so far in 4Q and then more broadly perhaps update us on your thoughts on the potential sizing of remaining large funds in the market over the next 6 to 12 months. Thank you.

You hinted at this hey, good morning, guys.

Alright.

Could you better frame any potential timing dynamics between <unk> and <unk> gross flows maybe a better idea of how much AUM has already closed so far in <unk> and then more broadly perhaps update us on your thoughts on the potential sizing of remaining large funds in the market over the next six to 12 months. Thank you.

Speaker 3: So, you know, as I said, Patrick, and thanks for the question, as I said, you know, in my prepared remarks, weren't particularly pleased with the year to date fundraising.

So.

As I said, Patrick and thanks for the question as I said in my prepared remarks, we're particularly pleased with the year to date fund raising.

I think.

Speaker 3: You know, we talked about this a bit, you know, with my arrival, one of the things that I really wanted to focus on as a new CEO and a new company was really spent a lot of time internally having my people get to know me and then a lot of time externally. I've now met with, I think over.

We've talked about this a bit with my arrival one of the things that I really wanted to focus on as a new CEO and a new company was really spent a lot of time internally I mean people get to know me and then a lot of time externally have now met with I think over 200 of our investors globally.

Speaker 3: 200 of our investors globally in what's about nine months.

Speaker 3: And I can really feel the momentum building. And so we would expect a meaningful step up in fourth quarter fundraising. Can't promise these things, market environments could be delayed, but it feels quite good. And then when you think about the...

Nine months and I can really feel the momentum building.

So we would expect a meaningful step up in the fourth quarter fund raising cant promise these things market environments can be delays.

But it feels quite good and then when you think about the.

Speaker 3: The funds we have in the marketplace now, real estate, secondaries.

The funds we have in the marketplace now real estate Secondaries, Japan, I think as we come into 2024.

Speaker 5: I think as we come into 2024, as I said, the momentum feels quite positive and we'll see how fourth quarter shakes out, but we're feeling pretty optimistic.

As I said the momentum feels quite positive now.

We'll see how fourth quarter shakes out, but we're feeling pretty optimistic.

Thank you.

Well, thank you for your questions.

Our next question comes from.

Alex <unk> with Goldman Sachs. You May proceed.

Speaker 6: Hey, good morning. Thanks everybody. I was hoping we could get into expenses a little bit more. Hey, Harvey. So, nice progress on expenses so far this quarter, you alluded to run rate savings and there's more to go from there. So, maybe help us frame kind of what's really run rate in the 3rd quarter. How do you expect that to shake out at the end of the year? And then more importantly, what are your early thoughts on FRE growth and expense trajectory for next year?

Hey, good morning, Thanks, everybody.

And a little bit more.

So nice progress with expenses so far this quarter you alluded to run rate savings and there is more to go from there. So maybe help us frame kind of what's really run rate in the third quarter. How do you expect that to shake out at the end of the year and then more importantly.

What are your early thoughts on FRE growth and expense trajectory for next year.

Speaker 4: Alex, it's John . As we said on our second quarter earnings call.

Yes, Alex it's John.

We said on our second quarter earnings call.

Speaker 4: We really want to drive our FRA margin higher. It's a key focus area for the firm.

We really want to drive our FRE margin higher it's a key focus area for the firm in the third quarter. We saw we saw a slight uptick in the margin.

Speaker 4: In the third quarter, we saw a slight uptick in the margin. But look, we've been really focused on our expense base. I think we've made some progress. As I said earlier, we've already actioned 40 million run rate. And I expect this number, quite frankly, to grow as we continue to focus on expenses. And I would say overall, we've gotten at the expenses faster than we thought we would. I've been in the CFO seat for five weeks.

But look we've been really focused on our expense base I think we've made some progress as I said earlier, we've already <unk>.

<unk> $40 million run rate.

And I expect this number quite frankly to grow as we continue to focus on expenses.

And I would say overall, we've gotten at the expenses faster than we thought we would have been in the CFO seat for five weeks.

Speaker 4: And I'm pretty pleased with the pace of which in terms of what we're getting at. Like every single expense is on the table I tell you. There is no such thing as a sacred expense.

And I'm pretty pleased with the pace of which.

In terms of what we're getting at.

Like every single expenses on the table I would tell you there is no such thing as a sacred expense.

Speaker 4: But this is very much a process, and I would just describe it as very, very early days. But overall, we're pleased with the progress we've made in the third quarter.

But this is very much a process.

And I would just describe it as very very early days, but overall, we are pleased with the progress we've made.

Third quarter.

Thanks Alan.

Thanks, Alex.

Moment for questions.

Speaker 7: Our next question comes from Craig Siegenhaler with Bank of America. You may proceed. Thanks, good morning, everyone. Hey, Greg, morning.

Our next question comes from Craig Siegenthaler with Bank of America, You May proceed.

Thanks, Good morning, everyone.

Hey, Greg good morning.

So my question is on the CLO business and just given.

You just did the <unk> deal and you are the largest CLO manager in the World now we felt unique perspective on this but as you noted defaults are picking up off a very very low base.

I wanted your perspective on where you see them trending over the next year.

And also given the subordination inherent.

<unk>.

What are you thinking in terms of loss translation with the equity first watch tranches and also I remember this issue came up a few years ago.

Are there scenarios, where there could be triggers where management fees could turn off the CLO vehicles.

Speaker 3: Let me just comment on the broader nature of our CIO business. So the team has done actually an excellent job. You know, we have an over 20-year history here in managing that business. We're quite proud of the fact that the team has taken the mantle of largest in the world.

So let me just comment on the broader nature of our CLO business. So the team is not actually an excellent job you know we have an over 20 year history here.

And managing that business were quite proud of the fact that the team has taken the mantle of largest in the world.

Speaker 3: You know, our expectation has been implied by our comments.

Our expectation has been implied by our comments is that we think we've been very benign credit environment and would expect credit to deteriorate on average from here, having said that from the standpoint of putting capital to work I think it's a fantastic time to be putting capital to work. If you look at default rates over the past couple of years and even.

Speaker 3: is that we think we've been in a very benign credit environment and would expect.

Speaker 3: credit to deteriorate on average from here. Having said that, from the standpoint of putting capital to work, I think it's a fantastic time to be putting capital to work. If you look at the fault rates.

Speaker 3: over the past couple years and even today they're running low relative to average points in history. And so our full expectation of that credit would be that credit falls across the industry.

Today, they're running low relative to average points in history, and so our full expectation is that credit would be dead credit folks across the industry, whether it's in banking private markets et cetera that youre going to see this pick up, particularly as you come into refinancing walls and low later 'twenty four 'twenty five 'twenty six as long as rates stay high market stay where they are which.

Speaker 3: whether it's in banking, private markets, et cetera, that you're going to see this pick up, particularly as you come into refinancing walls and.

Speaker 3: So later 24, 25, and 26, as long as rates stay high and markets stay where they are, which again is our expectation.

It is our expectation so the team is doing and it really very very good job of managing this.

Speaker 3: So the team is doing a really very, very good job of managing this. To give you a little detail strategically about how we're thinking about it, we're in the process right now investing in the business. We have a fund that's in the process of being raised, should close end of November , December , which will be a captive equity fund, which will help really support the business through growth. In terms of any specific triggers or anything like that, why don't we just take that offline and then we'll have Dan follow up with you on those level details.

To give you a little detailed strategically about how we're thinking about it we're in the process right now.

Investing in the business, we have a fund that's in the process of being raised should close in November December which would be a captive equity fund, which will help really support.

The business to growth in terms of any specific triggers or anything like that why don't we just take that offline and then we will have Dan follow up with you on those level details.

I'm happy to so Craig I'll give you a call.

Speaker 1: Thanks, Frank. Thank you. One moment for questions. Our next.

Thanks, Craig.

Thank you.

One moment for questions.

Our next question comes from Ken Worthington with Jpmorgan you May proceed.

Hi, good morning, and thanks for taking the question.

Speaker 4: As we think about fundraising and energy, NGP 13 seems to have had a strong start and the performance of prior vintages seems to be quite good. I think NGP 12 was a smaller fund. Could 13 be a record-sized natural resource fund for Carlisle?

How should we think about fundraising in energy and G. P. <unk> seems to have had a strong start and the performance of prior vintages seems to be quite good I think NTP 12 was a smaller fund could <unk> be a record size natural resource fund for Carlyle.

Speaker 6: And then you had good realizations in energy this past quarter. How does the pipeline look for energy realizations as we look out over the next few quarters?

And then you <unk>.

Had good realizations and energy this past quarter, how does the pipeline look for energy realizations as we look out over the next few quarters. Thanks.

No.

Speaker 3: I think the teams have done an excellent job. Our Europe-based team, I think in particular, is done an excellent job in terms of...

I think the teams have done an excellent job.

Our euro based team I think in particular has done an excellent job in terms of monetization and the opportunity set in this area.

Speaker 3: monetizations and the opportunity set. This area, when you look across our entire complex of energy, infrastructure, renewables,

When you look across our entire complex.

Energy infrastructure renewables I really think we add sort of a unique team in sort of our capability set.

Speaker 3: I really think we have sort of a unique team and this sort of archaed mobility set.

Speaker 3: So I think broadly speaking, this is an opportunity for growth. Not gonna get into specifics about particular monetizations because obviously that subject to market environment, but I can tell you, we feel quite confident with the team and their performance and they continue to an excellent job. So that's too difficult for me to point specifically.

So I think broadly speaking this is an opportunity for growth I'm not going to get into specifics about particular monetization because obviously, that's subject to market environment, but I can tell you.

We feel quite confident with the team and their performance and they continue to do an excellent job, but too difficult for me to point specifically to.

Speaker 3: individual asset monetization, but the pipeline feels pretty good.

Individual asset monetization, but the pipeline feels pretty good.

Speaker 3: I think more importantly, the breadth of the team. And when we think about the opportunity set and friends over the next five, 10, 15, 20 years, we feel really, really well positioned. And I think you could broadly discuss this in terms of energy transition and climate. I think we have some very talented folks on the ground.

I think more importantly, the breadth of the team.

And when we think about the opportunity set in trends over the next 510 15 20 years, we feel really really well positioned and I think you could broadly discussed this in terms of.

Energy transition in climate.

I think we have.

Some very talented folks on the ground.

Great. Thank you.

Thank you.

One moment for questions.

Speaker 8: Our next question comes from Glenn Shore with Evercore ISI. You may proceed. Hi, thanks very much.

Our next question comes from Glenn Schorr with Evercore ISI you May proceed.

Hi, Thanks very much.

So good morning, Glenn.

Good morning.

I appreciate that I think he dangled some.

Speaker 8: optimistic comments about uh... some proxy developed in both insurance and private well

Optimistic comments about some products being developed in both insurance and private wealth.

And you gave us a lot to chew on in terms of all your dry powder and seeking investments. My question is just more strategic.

Speaker 8: He gave us a lot that you want in terms of all your dry powder and seeking investments. My question is just more strategic.

Do the individual businesses.

Speaker 8: have plans that it targets goals that they're working on. And the question is, when do we outsiders get a glimpse of you bringing that to the table?

Have plans that it targets goals that they're working on and the question is.

When do we outsiders get a glimpse of you, bringing that all together and how to think about the next couple of years I appreciate that.

Speaker 8: than you in midstream in this Harvey, but it's been a long way.

And midstream in this Harvey, but it's been a long wait for investors. Thanks.

Speaker 3: So that was fine as my responsibility. I appreciate the question. So.

That's fine it's my responsibility can I appreciate the question.

So.

Speaker 3: Let's just go back to sort of how I think about it and how the team thinks about it. And our approach really is what I'll call, not to sound boring, or textbook-esque, principles-based. And by that I mean there's a very methodical process that we're going through that ranges from business reviews, interactions with LPs, making sure we have all the adjacencies where we think we can provide the most value to our investors.

Let's just go back to sort of how I think about it.

And how the team thinks about it and our approach really is what I'll call them not to sound boring our textbook.

Principals base and by that I mean, there is a very methodical process that we're going through that ranges from business reviews interactions with Lps, making sure. We have all the Adjacencies, where we think we can provide the most value to our investors. How we can drive growth how we can manage expenses.

Speaker 3: how we can drive growth, how we can manage expenses, and how we want to create operating flexibility across the entire platform. So all those things are.

And how we want to create operating flexibility across the entire platform. So all those things are in process.

Speaker 3: In terms of specific areas of growth and progress we've made to date, I feel really good about the momentum. You know, if you and I were catching up back in February and you had said, hey, Harvey, where do you think the team would be with you in, you know, November ? I don't think we would have made as much progress. I don't.

In terms of specific areas of growth.

And progress we've made to date.

I feel really good about the momentum.

If you and I are attaching up back in February and you had said Hey Army, where do you think the team would be with you.

November.

I don't think we would've made as much progress.

Speaker 3: Nobody, I'm not patting anybody in the back here, but I don't know that we would have transitioned the CFO , put in a new head of technology, brought in a new head of distribution, brought in a new head of wealth, and really begun to shape the architecture of the firm in a way, which I think really allows the firm and the entire leadership team to mobilize the firm. So I feel really good about that. In terms of update, would you call yourself an outsider? Update for outsiders. As I've said before, that's really a...

Nobody from not having anybody in the back here, but I don't know that we would've transitioning the CFO, putting in a new head of technology.

And a new head of distribution brought in a new head of wealth and really began to shape. The architecture of the firm in a way, which I think really allows the firm.

And the entire leadership team to mobilize the firm so I feel really good about that in terms of update where do you put yourself an outsider update for outsiders.

As I've said, it before and Thats really a.

Speaker 9: Community that's an output.

To me, that's an output and we have to run this very sort of surgically methodical process.

Speaker 3: We have to run this very surgically methodical process.

Speaker 3: But the foundation is really coming together quite well. And so we'll come back to you as soon as we're ready to meet but to me that's an output. And the last thing I'll say is, I truly appreciate your urgency around this. I can promise you, John , myself, the whole leadership team, folks in the business, we have way more urgency than you do. So as soon as we're in a position to do all that, we will. I know that's not a great answer for you, but that's our process.

The foundation is really coming together quite well and so we will come back to you as soon as we're ready to hit but to me that's an output and the last thing I'll say is I.

Truly appreciate your urgency around this.

I can promise you John myself, the whole leadership team folks in the businesses, we have way more urgency than you do.

So as soon as we are in a position to do all that we will and also had a great answer for you but.

That's our process.

Thank you one moment for questions.

Speaker 1: Our next question comes from Michael Cypress with more instantly you may perceive.

Our next question comes from Michael Cyprus with Morgan Stanley You May proceed.

Speaker 10: Morning, thanks for taking the question. What today ask on private credit? Just curious how you see the impact of the new proposed bank couple of rules on the opportunity set for private credit. And in particular, which product area do you anticipate banks pulling back from the most and which areas and which opportunities that you think are most attractive for car law versus which areas maybe less attractive and maybe you could talk to some of the steps. You may need to take in order to capture the opportunity set. Are there any areas you need to fill in? And in particular, you can see the impact of the new proposed bank couple of rules on the opportunity set.

Good morning, Thanks for taking the question I wanted to ask on private credit just curious how you see the impact of the new proposed bank capital rules on the opportunity set for private credit and in particular, which product areas do you anticipate banks pulling back from the most and which areas and which opportunities Thats do you think are most attractive for <unk>.

While versus which areas, maybe less attractive and maybe you could talk to some of the steps you may need to take in order to capture the opportunities that are there any areas you need to fill in a bit more.

Speaker 3: So I think as you all know, I was the chief financial officer over at Goldman from 2012 to 2017. And so that was really the first significant wave of regulatory change that came through the banking system. And so, you know, I saw that process up close.

Sure so.

I think as you as you all know I was the.

Chief Financial Officer of a Goldman from 2012 to 2017, and so that was really the first significant wave of regulatory change that came through the banking system and so.

I saw that process up close.

Speaker 3: I would expect this process to be similar across the entire banking system, particularly on the back of Silicon Valley Bank, Republic Bank, et cetera. And so.

Expect this process.

<unk> to be similar across the entire banking system, particularly on the back of Silicon Valley Bank Republic Bank et cetera.

So.

<unk>.

Speaker 3: My expectation, I say there's a very wide distribution of potential outcomes here, but I'll give you my personal expectation. My personal expectation is there'll be sort of a flurry of activity, maybe one-off transactions. We're involved in several dialogues on our side, but I think you'll see a flurry of activity, but I really think this is a process that really plays out two, three, four, five years.

My expectation and I've seen there's a very wide distribution of potential outcomes here, but I'll give you my personal expectation my personal expectation is there'll be sort of a flurry of activity.

Maybe one off transactions, we are involved in several dialogues on our side, but I think youll see a flurry of activity, but I really think this is a process that really plays out 2345 years.

Speaker 3: I think it really is as simple as...

I think it really is as simple as.

Speaker 3: The regulatory community doing their job to identify where they feel they're systemic risk. And...

The regulatory community doing their job to identify where they feel they're systemic risk and.

Speaker 3: really not the best liability asset management which we've seen already in a number of cases. And in private markets as you know, we have long-term capital and the ability to point that capital. So I think it's sort of two phases. It's like a quick phase we see maybe a flurry of transactions over the next year. And then you see a longer term settling in where we as Carlisle and other market participants we can provide. We provide very valuable capital to borrowers and to

<unk> really not the best liability asset management, which we've seen already in a number of cases and in private markets. As you know we have long term capital and the ability to deploy that capital. So I think there's sort of two phases, just like a quick phase we see maybe a flurry of transactions over the next year and then you see a longer term settling in where we as Carlisle and other market participants we can provide.

We provide very valuable capital to borrowers and to the economy.

Speaker 3: Where that plays out, I think that's in the full gamut. I mean, we've already seen it sort of in leverage loans in sponsor lending. That's a multi year. That's an old process. And I think it will continue to extend to those most heavily weighted, risk-weighted assets. Could be in the asset bag market. You could see things in consumer loans. Certainly, this is going to take multiple years, but we're going to have to work through as an economy and as a system.

Where that plays out I think that's in the full gamut I mean, we've already seen it sort of in leveraged loans and sponsored lending that's a multiyear that's an old process and I think it will continue to extend through those most heavily weighted risk weighted assets could be in the asset backed market you could see.

Things in consumer loans certainly.

This is going to take multiple years, but we're going to have to work through as an economy and as a system.

Speaker 1: real estate debt that exists out there. So I think it's gonna be very broad-based, but I actually think again, a longer term opportunity than end up playing out over multiple years. Thank you. Great, thanks. One moment for...

Real estate debt that exists out there. So I think it can be very broad based but I actually think again longer term opportunities and ends up playing out over multiple years.

Thank you great. Thanks.

One moment for questions.

Our next question comes from Brennan Hawken with UBS you May proceed.

Good morning, Thanks for taking my questions.

Brendan.

Speaker 1: Hi, Harvey. So I appreciate the focus on expenses and definitely encouraging to hear your messaging there. So, curious how you strike a balance in between discipline and efficiency? And I believe there were some one-time items in private equity in the quarter. Could you maybe help us size those so we can understand what the right base is to think about moving forward?

So I appreciate the focus on expenses and definitely encouraging to hear your messaging. There. So curious how you strike a balance in between discipline and efficiency and I believe there were some one time items in private equity in the quarter could you maybe help us.

Size those so we can understand what the right basis to think about moving forward.

Yeah, Brian it's John.

Yes.

Speaker 4: We're very focused on expenses, but we're more focused on growth. We do see more opportunity for some expense savings.

Yes.

We're very focused on expenses.

But we're more focused on growth.

We do see more opportunity for some expense savings were.

Speaker 4: We're not going to be cutting anywhere near the point to where it impacts growth. We're very focused on growth.

We're not going to be cutting anywhere near near the point to where it impacts growth. We're very focused very focused on growth.

And in terms of in terms of the G&A.

Speaker 4: In terms of the GNA, I would describe the beat of kind of 20 millionish as roughly 5 million was more a result of our focus and work around GNA expenses. The rest of the 20 beat, the 15ish was really more.

I would describe the beat of kind of $20 million ish as roughly 5 million.

It was more a result of our focus and work around.

G&A expenses, the rest of the 20% to 15 ish was really more one off items that likely won't occur again in the fourth quarter and as I said in my remarks, we do expect the fourth quarter G&A to trend higher than the third quarter, but we're very focused on on managing our G&A number in the fourth quarter of 2000.

Speaker 4: one-off items that likely won't occur again in the fourth quarter. And as I said in my remarks,

Speaker 4: We do expect the fourth quarter GNA to trend higher than the third quarter, but we're very focused on managing our GNA number in the fourth quarter in 2024.

<unk> 24.

Speaker 3: Yeah, I think John said it perfectly. I think this is about

I think John said it perfectly I think this is about.

Speaker 3: Two things high level, one is about operational excellence.

Two things high level one is about.

Operational excellence.

Speaker 3: And as John Teteroli, there's nothing sacred. And so...

And as John said earlier, there is nothing sacred.

And so.

Speaker 3: We're going to be exceptionally disciplined. I think the other thing is it just creates a lot of operational flexibility to invest in growth.

We're going to be exceptionally disciplined I think the other thing is it just creates a lot of operational flexibility to invest in growth.

Speaker 3: and growth areas like wealth, parts of credit, insurance, you know, those are areas where we're going to make sure that we have the resources to participate.

And growth areas like wealth parts of credit insurance.

Those are areas, where we're going to make sure that we have the resources to participate.

But it gives us a lot of operating flexibility.

Speaker 3: Great. I'm really pleased what this moon is done in a short period of time to come up with 40 million of run rate savings, which we'll keep building on. I think is, again, I give him a lot of credit.

Great I'm really pleased what the team has done in a short period of time to come up with $40 million run rate savings, which we'll keep building out I think is.

Again, I give them a lot of credit.

Thank you.

One moment for questions.

Speaker 1: Our next question comes from Brian Videl with Deutsche Bank, you may proceed.

Our next question comes from Brian Bedell with Deutsche Bank You May proceed.

Great. Thanks, good morning folks.

Speaker 11: Good morning. And, Ditt, thanks for for the, just moving on, I guess, on the last answer on the expense side, thanks for the non-recurring disclosure there. The 40 million run rate savings is, if you can just talk about, is that starting in the fourth quarter? Or is that partially...

Good morning, Brian Good morning.

Thanks for the.

And just building on I guess on the last answer on the expense side. Thanks for the nonrecurring.

Disclosure there.

The $40 million run rate savings.

If you could just talk about it.

Is that starting in the fourth quarter or is that partially in.

Speaker 11: in the third quarter and then just as more structurally as we move into 2024, I think you mentioned you think you're in the early innings in this regard.

In the third quarter and then just just more structurally as we move into 2024 I think you mentioned you think you are in the early innings in this regard.

Speaker 11: any sense of, you know, whether that, that you think that you can keep that line either flat or down, I know you would definitely want to invest for growth.

Any sense of.

Whether that do you think that you can keep that line either flat or down I know you do have definitely want to invest for growth.

Speaker 11: and then just any commentary around that 40 million between GNA and compensation and whether any change to the compensation structure is contemplated for 2024 or is being worked on.

And then just.

Any commentary around that $40 million between G&A and and compensation and weather.

Any change to the compensation structure is contemplated for 2024 and is being worked on at this stage.

Speaker 4: Yeah, Brian , it's Sean. I would think of this more as a 2024.

Yeah, Brian it's John.

I would think of this more as a 2024.

Speaker 4: run rate number. I mean, look, I've been in the seat five weeks as I said earlier, and we really just started this process. That's why I kind of refer to it as the early earnings of this kind of expense review process. In terms of competition, I mean, look, where are human capital business are our largest expenses, obviously?

Run rate number I mean look I've been in the seat five weeks as I said earlier and we really just started this process thats why I kind of referred to it as the as the.

As the early innings of this kind of expense review process.

In terms of compensation I mean look we're a human capital business, our largest expense is obviously compensation.

Speaker 4: compensation. It's certainly something we're very focused on. We're very aware of what our competitors have done on the compensation front. And I would just say it's part of the overall expense review going forward. And again, look, I think in...

Certainly something we're very focused on.

We're very aware of what our competitors have done on the compensation front and I would just say, it's part of the overall expense review going forward.

And again look I think in <unk>.

Speaker 4: Overall, the $40 million number is largely compensation driven, and I would say 15% of it's roughly G&N.

Overall, the $40 million number is largely.

Top cop, driven compensation, driven and kind of I would say 15% of its roughly G&A.

Perfect great. Thank you so much.

Thank you. Thank you.

One moment for questions.

Speaker 1: Our next question goes from Brian McKenna with JMP Security CMA-

Our next question comes from Brian Mckenna with JMP Securities You May proceed.

Thanks, Good morning, everyone. So investment solutions is in the middle of a strong fundraising cycle and we should see some nice expansion into 2024, but how should we think about gross here longer term and are there any other strategic opportunities within this business away from the core strategies that could drive some incremental growth over time.

Speaker 10: Thanks, good morning everyone. So investment solutions is in the middle of a strong fundraising cycle. And we should see some nice expansion into 2024. But how should we think about growth here longer term? And are there any other strategic opportunities within this business, away from the core strategies that could drive some incremental growth?

Speaker 3: So the shorter answer to that is yes, so it's a fantastic team. It's a great business.

So the short answer to that is yes.

Look it's a fantastic team, it's a great business.

Speaker 3: It's kind of where the puck is, right? Primary across the industry is a little slower. Secondary activity is...

It's.

It's kind of where the puck is write primary across the industry is a little slower secondary activity is.

Speaker 3: is a lot higher. Our expectation is that'll be sustainable. Well, there are a number of different business adjacencies that fit nicely here. That the team is growing and building. So I would expect to see this as an area of growth over the next several years. And we have a fantastic team. Thanks, Harvey. Thank you.

<unk> is a lot higher our expectation is that will.

Be sustained for a while there are a number of different.

Business Adjacencies that fit nicely here that.

The team is growing and building.

So I would expect to see this as an area of growth over the next several years and we have a fantastic team.

Thanks Harvey.

Thanks.

Thank you one moment for questions.

Speaker 1: Our next question comes from Stephen Drewback with World Research, you may proceed.

Our next question comes from Steven <unk> with Wolfe Research you May proceed.

Hi, good morning.

Speaker 6: They've seen it in a bit of a long time. Yeah, it's been too long, Harvey. I hope you're well. Nice to hear you, boys. Yeah, you're, you're two. Why to ask on the FRE margin outlook, and maybe just at the risk of being a dead horse, they want to ask on expenses and they get a bit further. Whether the 40 million of run rate cost savings, contemplate any incremental investment. So whether it's a gross versus net savings figure given you do have a lot of growth priorities as well, Harvey, that you outline.

Hey, Sam it's been a long time, yes, it's been too long Harvey I hope you're well.

Nice to hear your voice.

Yours too wanted to ask on the FRE margin outlook and maybe just at the risk of beating a dead horse they want to ask on expenses and dig in a bit further.

Whether the $40 million of run rate cost savings contemplates any incremental investment so whether it's a gross versus net savings figure given you do have a lot of growth priorities as well Harvey that you outlined.

Speaker 6: and how we should think about the trajectory for FRE margins in 24 versus this quarter's jumping off point given the realization of some of those efficiency benefits.

And how we should think about the trajectory for FRE margins in 'twenty four versus this quarter's jumping off point given the realization of some of those efficiency benefits.

Speaker 3: Yeah, so, I mean, John's touched on a fair bit of this. I think.

So.

John such on a fair bit of it is I think.

Speaker 3: you know, I don't want to disappoint you, but we're not going to give you real specifics on 2024. I would tell you that there's a couple of levers that

And I don't want to disappoint, you, but we're not going to give you a real specifics on 2024 I would tell you that theres a couple of levers that.

Speaker 3: We're working on which, when we're ready, we'll begin to a little bit more. But I would say this sort of free, very, very big high level things happening. One is the one rate savings. And while that's meaningful, and I'm really proud, this is not just about kind of expenses. When you look at the transaction that the team has completed an insurance.

We're working on which.

When we're ready, we'll dig into a little bit more but I would say theres sort of three very very big high level things happening. One is the run rate savings and that's meaningful and I'm really proud this is not.

This is not.

Just about cutting expenses when you look at the transaction that the team has completed an insurance as you look at that transaction over the next two years.

Speaker 3: As you look at that transaction over the next two years, that'll drive about 40 million of incremental FRA just in that transaction. In the undrawn capital that John talked about, that'll drive about 90 million of top line.

That will drive about $40 million of incremental FRE adjusted that transaction in the Undrawn capital that John talked about that will drive about $90 million of top line fees 10 billion. So there is a lot happening.

Speaker 5: fees, $10 billion. So there's a lot happening in terms of FRE growth. And then of course you have the fundraising that we talked about. And as I said, I feel really good about the momentum. Better than I thought I would, nine months in. But this worked a deal. There's a lot of work to do. Thank you. I'm.

In terms of FRE growth.

And then of course, you have the fundraising that we've talked about and as I said I feel really good about the momentum I don't know I thought I would nine months in.

But there's work to do but a lot of work to do.

Thank you.

One moment for questions.

Our next question comes from Dan Fannon with Jefferies. You May proceed.

Thanks, Good morning.

Speaker 11: Morning, Harvey, you mentioned private wealth as an area that you can be much larger in, three billion year-to-date in flows. Can you talk about what's in the market today and then how you see that evolving from a product perspective and what you think is a reasonable goal in terms of organic growth from that channel?

Good morning, Harvey You mentioned you mentioned private wealth is an area that you can be much larger than $3 billion year to date and flows can you talk about what's in the market today and then how you see that evolving from a product perspective, and what you think is a reasonable goal in terms of.

Organic growth from that channel.

No.

Speaker 3: I'm really enthusiastic about this as a long-term area of growth for Carla.

<unk>.

I'm really enthusiastic about this as a long term area of growth for Carlyle.

Speaker 3: You know, we've had products in the market for a long time. As I mentioned, we've raised $45 billion across closed and evergreen funds. But you know, the wealth and you know, we have are you guys got a details for us, for us?

<unk> had products in the market for a long time as I mentioned, we've raised $45 million.

Across.

Closed an evergreen funds.

The <unk> team.

Sure.

Speaker 3: has grown pretty substantially, but there's more work to do on product development, growth of the team. We're investing quite heavily. I'm personally spending a fair bit of time in this space. It really became a big initiative for me in, I don't know, month six or month seven.

Has grown pretty substantially but there is more work to do on product development growth of the team, we're investing quite heavily I'm personally spending a fair bit of time in this space and we really became a big initiative for me and I don't know a month six months seven.

And.

Speaker 3: I feel very optimistic here. I think as an industry, we have to be really thoughtful as capital continues to migrate into this sector. I think, you know, if you look at the wealth assets around the world, which we all expect will continue to grow. It's a very small percentage in all terms. So this is gonna play out over a decade. But as this growth happens, I think Carl Lowe.

I feel very optimistic here I think as an industry, we have to be really thoughtful as capital continues to migrate into the sector. I think if you look at the the.

The wealth assets around the world, which we all expect will continue to grow it's a very small percentage and alternatives. So this is going to play out over a decade.

Hi.

But as this growth happens I think Carlo.

Speaker 3: He'll be brand recognition, the history of the firm, the historic presence of the founders.

The brand recognition in the history of the firm.

The historic presence of the founders.

No.

Speaker 3: David Rubenstein's brand in and of itself. I think these are all really, really additive, powerful things that provide momentum for Carlyle, but this is going to play out over years. I think most importantly, we just have to have the right products to ensure that the wealth investor gets really high performance. And that's what we're focused on.

David Rubenstein brand in and of itself I think these are all really really additive powerful things that.

Momentum for Carlyle.

But this is going to play out over years.

Most importantly, we just have to have the right products.

To ensure that the wealth investor gets really high.

Performance.

And that's what we're focused on.

Thank you.

One moment for questions.

Speaker 1: Our next question comes from Ben Budis with Farquaad, you may proceed.

Our next question comes from Ben <unk> with Barclays. You May proceed.

Hi, good morning, and thanks for taking the question.

Speaker 1: I wanted to follow up sort of on the discussion of investing for growth versus cost savings. Harvey, you mentioned a number of growth areas, private credit and the asset back opportunity. Insurance, you talked about developing new investment and distribution strategies. And earlier you talked about the progress you made in terms of hiring. So can be circling back to all of that. In terms of the future hiring future growth, do you feel like you have the capabilities you need to go after those opportunities sets or where might you need to increase hiring if it doesn't have investments? And inside the distribution side, or do you feel like you can kind of do what you want to do with what you have? Thanks.

Wanted to follow up on the discussion of investing for growth versus kind of cost savings Harvey you mentioned, a number of sort of growth areas private credit in the asset backed opportunity insurance, you talked about developing new investment and distribution strategies.

Earlier, you talked about the kind of the progress you made in terms of hiring so can make.

Circling back to all of that in terms of the future hiring future growth do you feel like you have the capabilities you need to sort of go after those opportunity sets or where might you need to kind of.

Increased hiring is it on the investment side, the distribution side or do you feel like you can kind of do what you want to do with what you have.

Speaker 3: So, well, first of all, I think the team's amazing. Broadly speaking, I've been so impressed that I got here with the business leaders.

So.

Well first of all I think the team's amazing broadly speaking I mean, some impressions I got here with the business leaders.

Speaker 3: You know, world-class organizations, they know how to redeploy resources and how to effectively, you know, tap the brakes, hit the gas. You know, we're not creating new science over here in terms of how we think about expense management and reinvestment. And as I said, the key here is to create operational flexibility. We're not just trying to drive the cost structure down. We want to make sure that we have the best people, retain the best people, attract the best people. So all this is about creating that operational flexibility. The insurance team.

World class organizations, they know how to redeploy resources and how to effectively tap the brakes hit the gas.

We're not creating new signs over here in terms of how we think about expense management and reinvestment and as I said the key here is to create operational flexibility.

We're not just trying to drive the cost structure down we want to make sure that we have the best people retain the best people attractive best people. So all this is about creating that operational flexibility.

The insurance team.

Speaker 3: is really vastly built out through our partners in Fortitude. I think over time as wealth scales will continue to scale, but we made meaningful investment there. I think the investing engine in credit is broadly built out. Some of this will be more about at the margin, but I don't see as much investment.

It's really vastly build out.

Through our partners in Fortitude.

I think over time as well scales, we will continue to scale.

But we've made meaningful investment there and I think the investing engine and credit is broadly build out some of this will be more about at the margin.

But but I don't see as much investment.

Speaker 3: Or big gaping holes at this stage or certainly things will build and the world's going to be dynamic. And so we'll pivot to where it's dynamic. But.

Big gaping holes at this stage, we're certainly things will build.

And it was going to be dynamic and so we will pivot to where it's dynamic but the.

Speaker 3: But we're certainly very focused on growth.

But we're certainly very focused on growth.

Speaker 3: But we're equally focused on running this business in the most disciplined possible way.

But we are equally equally focused on running this business in the most disciplined possible way.

Thank you.

One moment for questions.

Speaker 1: Our next question comes from Brian Videl with Deutsche Bank. You may proceed.

Our next question comes from Brian Bedell with Deutsche Bank You May proceed.

Speaker 11: Oh, great. Thanks very much for the follow up. Maybe Harvey, if you can just give us an update on the capital markets business. I know that's an area you didn't focused on where you think there's a lot of opportunity for Carlyle and the product set that you have and the talent you have right currently.

Great. Thanks, very much of a follow up.

Maybe maybe Harvey if you could just give us an update on.

On the capital markets business I know Thats an area you didn't.

Focused on.

Where you think there is a lot of opportunity for you.

Yes.

<unk>.

For Carlisle and the <unk>.

The product set that you have and the talent you have right.

Speaker 11: Maybe as we move into 2024, is that an area where you think you can Significantly build the revenue stream on a year-over-year basis provided of course that

Currently.

Maybe as we move into 2024 is that an area, where you think you can.

Significantly build the revenue stream on a year over year basis provided of course that we have.

Speaker 11: We have a fairly normal market environment or is that more of a little bit of a longer term?

Fairly normal market environment or is that more of a a little bit of a longer term build.

Speaker 3: no i don't think it's a longer term bill we don't want to be the biggest in the world here and capital markets

No I don't think its a longer term bill we don't want to be the biggest in the world here in capital markets.

Speaker 3: And that's really more my feeling for this strategy, but we're coming from such a low base.

And Thats really more my feeling for their strategy, but we're coming from such a low base that incremental growth.

Speaker 3: that incremental growth and a normalized market environment should be pretty easy if we don't deliver that for you then we're not doing our job. So I think John mentioned it was pretty muted quarter but fourth quarter pipeline feels pretty good coming into 2024 in a more normalized environment. I think we have the team now positioned in a way aligned with the businesses in terms of resources.

In a normalized market environment should be pretty easy if we don't deliver that for you then we're not doing our job so.

I think John mentioned, it was pretty muted quarter, but fourth quarter pipeline feels pretty good coming into 2024, and a more normalized environment. I think we have the team now positioned in a way aligned with the business is in terms of resources.

Speaker 3: and incentives and degree of focus that I think that the opportunity set should be much better coming into 24 again subject to market conditions. Now I would describe it as version 1.0. When we get to a version 2.0 we'll come back to you in terms of how we build that out. But a lot of this as I've said before we have all of the raw material. We just need to leverage all the adjacencies we have internally have the right incentives, stay focused, and then we can provide value.

And incentives and degree of focus that I think.

That the opportunity set should be much better coming into 'twenty four again subject to market conditions now I would describe it is worth one point out when we get to a version two point out.

We'll come back to you in terms of how we build that out but.

A lot of it is as I've said before we have all the raw material, we just need to leverage all of the Adjacencies. We have internally have the right incentives stay focused and then we can drive value through this.

Speaker 11: That's great color. Can I ask one more or should I get back in the queue?

That's great color can I ask one more or should I get back in the queue.

Got to talk to Dan <unk> about that.

I'll, let you ask I'll, let you answer right here, but the endpoint the authenticity about that but I will say kind of guy.

Alright.

Thanks, Thanks for I think it'll be a quick one just on the fund raising side, obviously optimistic on <unk> or are we still a man camp for fund raising in 2023 to exceed that of 2022 or do you think the timing could be.

Squishy around the December January timeframe or that might bump into 'twenty, four and a little bit.

Speaker 11: Now our expectations will exceed 2020-22, subject to market conditions and some stuff flipping. And any other thing I'll say is, we're trying to give you as much insights, but we're not running a place for November , December , right? So we're running it for the long term. But I understand you're focused on the quarter. No, no, that's good. Great, thanks so much for taking my questions. Of course.

No our expectations will exceed.

2022 subject to market conditions, and some stuff flipping in the other thing I'll say is we're trying to give you as much insight.

But we're not running the place for November December right. So.

We're running it for the long term, but I, but I understand your focus on the quarter.

No no. That's good that's good great. Thanks, so much for taking my questions.

<unk>.

Thank you.

One moment for questions.

Speaker 1: And our last question goes from Patrick David with Autonomous Research, Humipers.

And our last question comes from Patrick David with Autonomous Research you May proceed.

Speaker 2: Thanks for the follow up. Arv, you mentioned the still uncertain environment. So you may be better frame how the 4Q realization pipeline looks versus 3Q. Thank you.

Okay. Thanks for the follow up you mentioned the still uncertain environment. So could you maybe better frame, how the <unk> realization pipeline looks versus <unk>. Thank you.

Speaker 4: Yeah, I mean, Patrick, that's a obviously a difficult question to answer in the sense. We're in some challenging markets.

Yes, I mean, Patrick.

Obviously, a difficult question to answer in the sense, we're in some challenging markets.

Speaker 4: But, you know, look, I would say confidence is low today. Uncertainty is...

But look I would say confidence is low today.

Uncertainty is.

Speaker 4: is elevated. And it's Harvey said, you know, we have a lot of dry powder. I like the fact that we have a lot of dry powder. Some of the better investments we've made at Carlisle have been in markets where uncertainty is elevated like today. So I think we feel good about that. But looking forward projecting realizations is something that's very difficult for us to do.

Is elevated and then.

As Harvey said, we have a lot of dry powder I like the fact that we have a lot of dry powder or some of the better investments. We've made at Carlyle have been in markets, where uncertainty is elevated like today. So so I think we feel good about that but.

But looking forward projecting realizations is something thats very difficult for us to do.

Thanks, Patrick.

Speaker 1: Thank you, and I'd now like to turn the call back over to Daniel Harris for any closing remarks.

Thank you and I'd now like to turn the call back over to Daniel Harris for any closing remarks.

Speaker 2: Yeah, thanks everybody. We appreciate your time and support. Thank you, Mr. Stincparlile. If you have any further questions or follow-ups, please reach out to Investor Relations. We look forward to talking to you again next quarter.

Yes. Thanks, everybody. We appreciate your time this quarter and your interest in Carlyle. If you have any further questions or follow ups. Please reach out to Investor Relations. We look forward to talking to you again next quarter.

Speaker 1: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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

[music].

Yeah.

Yes.

Okay.

Yeah.

Okay.

Okay.

Okay.

Okay.

Yes.

Yes.

Yes.

Okay.

[music].

Okay.

[music].

Yes.

Yes.

Okay.

[music].

Okay.

Sure.

[music].

Okay.

Okay.

[music].

Yes.

[music].

Okay.

Okay.

Okay.

Okay.

Okay.

[music].

[music].