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Carlyle joins fundraising frenzy with a $3.5B credit fund

Co-CEOs Kewsong Lee has devoted resources to the credit arm, which they see as a huge area of growth.
Co-CEOs Kewsong Lee has devoted resources to the credit arm, which they see as a huge area of growth.
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Carlyle Group is raising more money to lend to troubled companies as the coronavirus wreaks havoc on the global economy.

The alternative asset manager plans to raise as much as $3.5 billion for a new credit opportunities fund, according to people with knowledge of the matter. Led by Alex Popov, the fund will be similar to the first iteration, which gathered $2.4 billion last year and focused on lending to family- and entrepreneur-owned businesses.

Asset managers are targeting large amounts of capital to benefit from stress in the credit markets as the pandemic leaves a growing number of companies in need of transitional capital they’d be unlikely to get from banks. Some competitors, including Oaktree Capital and Cerberus Capital Management, are focusing their new funds more on distressed debt, a segment that soared in last month’s market tumble.

Carlyle’s first credit opportunities fund provides companies loans of about $50 million to $250 million to be repaid in three to five years. Deals include Urban One, a multimedia group that creates and distributes content to African Americans, and Evoca, one of the biggest suppliers of espresso machines to restaurants, said the people, who asked not to be identified because the information is private.

A representative for Washington-based Carlyle declined to comment.

“These funds got an assist from the Fed when they were told they would backstop the higher end of the high-yield credit industry,” an expert says.
April 20

Co-CEOs Kewsong Lee and Glenn Youngkin have devoted resources to the credit arm, which they see as a huge area of growth. The $50 billion business headed by Mark Jenkins still has a way to go to catch rivals such as Blackstone and Apollo Global Management in size.

Carlyle in 2018 moved to expand the business by acquiring a company that purchases and leases commercial airplanes. It also partnered with OppenheimerFunds to reach high-net-worth investors with a new fund giving them access to structured credit, private loans and distressed debt.

Bloomberg News