The Carlyle Group has raised $1.35 billion (€860 million) for Carlyle Strategic Partners II, its second fund to focus on distressed and corporate opportunities and an increasingly popular strategy given current market conditions. Strategic Partners II’s predecessor closed on $211 million in 2004 and is currently fully invested.
“The turbulent economic and capital markets environment and excessive leverage on corporate balance sheets create great opportunities for distressed investing around the globe,” said Carlyle managing director and fund co-head Brett Wyard.
…excessive leverage on corporate balance sheets create great opportunities for distressed investing…
The fund, which was targeting $500 million, will invest in the debt of “operationally sound, financially distressed companies” with an aim to obtain influence or control, Carlyle said. Its mandate allows investment throughout the capital structure including bank loans, public debt and public and private equity. It has already begun investing.
One of Carlyle’s other specialty credit vehicles, the Euronext-listed Carlyle Capital, was recently liquidated after defaulting on some $16.6 billion. Although both are credit-focussed vehicles, Carlyle Strategic Partners II’s strategy is completely different from that of Carlyle Capital, which at the time of its liquidation invested exclusively in US government agency AAA-rated residential mortgage-backed securities. It had previously divested itself of all other securities which were perceived as “risky” in a $900 million fire sale last August.
Carlyle has $81.1 billion under management across 60 funds and is currently raising five additional funds, according to the Probitas Partners 2008 Private Equity Deskbook. Its fourth energy fund in affiliation with Riverstone Holdings is targeting $6 billion; Carlyle Asia Partners III is targeting $2 billion; Carlyle Middle Eastern Fund is targeting $1 billion; Carlyle Mezzanine Fund II is targeting $600 million; and Carlyle Europe Technology Fund will be targeting a yet to be determined amount.