The Carlyle Group Inc. · NASDAQ:CG
The Carlyle — Nasdaq Investor Conference December 2019
27 slides from The Carlyle's conference presentation, Dec 2, 2019
Slide 1: Nasdaq Investor Conference
DECEMBER 2019 NASDAQ INVESTOR CONFERENCE CURT BUSER CHIEF FINANCIAL OFFICER
Slide 2: Important Information
Important Information This presentation has been prepared by The Carlyle Group L.P. (together with its affiliates, “Carlyle”) and may only be used for informational purposes only. This presentation may not be referenced, quoted or linked by website, in whole or in part except as agreed to in writing
Slide 3: Carlyle Is a Leading Global Private Investment Firm
CARLYLE IS A LEADING GLOBAL PRIVATE INVESTMENT FIRM
Slide 4: The Carlyle Group Overview
The Carlyle Group Overview • The Carlyle Group was founded in 1987 in Washington DC Today we have more than 1,775 employee across 33 offices on 6 continents • Carlyle is a global leader in private capital investment management, one of the fastest growth areas of financial services • Carlyle manage
Slide 5: Carlyle Is A Global Leader In Private Capital Investing
Carlyle Is A Global Leader In Private Capital Investing Carlyle is diversified across sectors with industry leading positions Investment Solutions Corporate Private Equity Private Equity and $45 Buyout Real Estate Long dated P/E - Funds Total AUM: Middle Market and - Secondaries - Co-investments $22
Slide 6: Our Activity and Performance Metrics Have Been Robust
Our Activity and Performance Metrics Have Been Robust (Last 5-years) Capital $135 Average Raised1 12% Annual Carry Fund Appreciation billion From Our Fund Investors $93 $132 Invested Realized Capital Proceeds in our Back To Our billion Carry Funds billion Fund Investors Note: Data as of 9/30/2019. 1
Slide 7: The Private Capital Industry Is No Longer Alternative
THE PRIVATE CAPITAL INDUSTRY IS NO LONGER “ALTERNATIVE”
Slide 8: Private Capital Industry Stronger Than Ever
Private Capital Industry Stronger Than Ever Historical Assets Under Management ($billions) 7,000 $6 trillion+ 10-Year CAGR (2009-1Q 2019): 6,000 Infrastructure: 16% Private Debt: 12% Natural Resources: 11% 5,000 Private Equity: 10% Real Estate: 9% Total Private Capital: 10% 4,000 3,000 2,000 1,000 0
Slide 9: Private Capital Continues to Outperform
Private Capital Continues to Outperform Private Equity1 Real Estate2 Private Credit3 POOLED REAL ESTATE RETURNS PRIVATE DEBT FUND POOLED BUYOUT RETURNS (NET) COMPARED (NET) VS NCREIF PROPERTY INDEX RETURNS (NET) VS GLOBAL TO PUBLIC MARKET EQUIVALENT PUBLIC MARKET EQUIVALENT HY INDEX (TOTAL RETURN) 1
Slide 10: Investment Outperformance Leading to Larger Allocations
Investment Outperformance Leading to Larger Allocations Which Help Achieve Targeted Investment Returns Investors Expected to Increase or Maintain Allocations in the Longer-Term Private Equity 95% Private Debt 95% Infrastructure 94% Real Estate 90% Natural Resources 88% Maintain Increase Driving Inve
Slide 11: Private Equity Is An Engine for Growth
Private Equity Is An Engine for Growth Carlyle’s Private Equity Value Creation Relative to Publicly Traded Companies Impact of Private Capital 10.0% • Support good companies to grow into 9.0% 720 bps great companies 3.5% 8.0% • Enable businesses to grow by providing 7.0% access to capital to expand
Slide 12: Growth in PE-Backed Companies Mirrors Fall in Public Listings
Growth in PE-Backed Companies Mirrors Fall in Public Listings Companies increasingly looking to stay private longer and require private capital to grow 9,000 8,000 7,000 6,000 Companies 5,000 4,000 3,000 2,000 1,000 0 2000 2001 2002 2003 2005 2006 2008 2009 2010 2011 2012 2013 2015 2016 2018 2004 20
Slide 13: Carlyle Platform Has Strong Operating Momentum
CARLYLE PLATFORM HAS STRONG OPERATING MOMENTUM
Slide 14: Fee-earning AUM Has Accelerated With Significant Fundraising Success
Fee-earning AUM Has Accelerated With Significant Fundraising Success FEE-EARNING AUM ($BN) • Fee-earning AUM of $159 billion near record levels in CPE, Real Assets & Global $200 Core FEAUM CAGR: 10% Credit Total FEAUM CAGR: 4% $175 $160 $159 • Recently surpassed multi-year $100 billion $150 fundrais
Slide 15: Fee Related Earnings And Margins Moving Higher
Fee Related Earnings And Margins Moving Higher And We Expect The Trend To Continue Fee Related Earnings growth accelerated FRE & MARGIN TRENDS1 over the last few years $500 $500 35% FRE of $345 million through Q3 2019 $450 $450 positions CG to generate approximately 30% $400 $450 million for FY 2019
Slide 16: Positioned to Grow Fee Related Earnings and Investment Platform
Positioned to Grow Fee Related Earnings and Investment Platform Growth Opportunity Example / Data Point Continue to scale current series of funds across Many recent new funds were 30-40%+ larger all segments than predecessors Launch scalable, new funds across geographies Recent examples include Oppo
Slide 17: Accelerating Remaining Fair Value and Net Accrued Performance Revenue
Accelerating Remaining Fair Value and Net Accrued Performance Revenue Support Upcoming Recovery in Net Realized Performance Revenue REMAINING FAIR VALUE OF NET ACCRUED NET REALIZED PERFORMANCE CAPITAL PERFORMANCE REVENUE REVENUE ($BN, CPE/RA/GC CARRY FUNDS) ($BN) ($ MM) $1.8 $646 $83 $79 $1.7 $320 $
Slide 18: C-Corp Conversion Will Help Unlock Shareholder Value
C-CORP CONVERSION WILL HELP UNLOCK SHAREHOLDER VALUE
Slide 19: We Are Converting To A C-Corp From A Publicly Traded Partnership
We Are Converting To A C-Corp From A Publicly Traded Partnership Carlyle will convert to a Corporation as of January 1, 2020 Implementing a fixed $1.00/share dividend for 2020 (current yield: ~3.5%) SIMPLE INDUSTRY VA LUA B L E F U L LY MAXIMIZES and LEADING recurring ALIGNED index and transpare
Slide 20: Conversion to Full C-Corp Will Help Unlock Shareholder Value and Trading Liquidity
Conversion to Full C-Corp (Effective January 2020) Will Help Unlock Shareholder Value and Trading Liquidity Expect Significant Index Inclusion in 1H20 Alts Have Seen Significant Uptick in Volume • CRSP Indices – 1Q 2020 % Change in Average Daily • S&P TMI Indices – 1Q 2020 Trading Volume 159% (post
Slide 21: Carlyle Presents An Attractive Investment Opportunity
Carlyle Presents An Attractive Investment Opportunity Platform Growth Value1 Technical Improvement FEE-EARNING AUM ($BN) PRICE TO 2020E • Carlyle will convert to a 17x 17x Full C-Corp effective +28% 15x 14x January 1, 2020 12x $159 • Removal of K-1 reporting likely to improve relative $124 attractiv
Slide 22: We Are Performing Well And Positioned For Growth
We Are Performing Well And Positioned For Growth • Carlyle is a global leader in the growing private capital industry • We are committed to delivering strong results for all of our stakeholders (including fund investors, unitholders, employees and our communities) • Continued margin expansion and gr
Slide 23: The Carlyle Group
THE CARLYLE GROUP
Slide 24: Appendix
APPENDIX
Slide 25: Key Metrics Summary
Key Metrics Summary Quarterly Data Annual Data 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 2014 2015 2016 2017 2018 YTD 2019 Total AUM(1) ($ bn) 195.1 201.5 209.7 212.3 216.5 221.5 222.7 221.8 Total AUM(1) ($ bn) 194.5 182.6 157.6 195.1 216.5 221.8 Corporate Private Equity 72.6 75.0 81.2 81.6 80.8 84.3
Slide 26: Summary Financial Results
Summary Financial Results Quarterly Annual Pre-tax Segment Measures ($ millions) 4Q18 1Q19 2Q19 3Q19 2015 2016 2017 2018 YTD 2019 Segment Revenues Fund Management Fees 391 382 415 385 1,198 1,086 1,081 1,362 1,181 Portfolio Advisory Fees, net and Other 6 6 5 5 33 29 32 31 16 Transaction Fees, net 25
Slide 27: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials Quarterly Annual ($ millions) 3Q18 4Q18 1Q19 2Q19 3Q19 2015 2016 2017 2018 YTD 2019 Income (loss) before provision for income taxes $ 61 $ (79) $ 470 $ 542 $ 261 $ 402 $ 45 $ 1,132 $ 360 $ 1,274 Adjustments: Net unrealized performance revenues 55 253 (15
The Carlyle Group — Nasdaq Investor Conference December 2019 on 6ix