The Carlyle Group has raised $2.55 billion for the final close of Carlyle Asia Partners III, its third buyout fund focused on Asia ex-Japan, bringing the total capital managed by its Asian buyout team Carlyle Asia Partners to more than $5 billion.
The firm began fundraising in the first half of 2008, sources told PEI Asia. The fund’s initial target is unclear – various sources have in the past placed the target between $3 billion and $4 billion. Carlyle had raised $2.1 billion for this fund by September 2009, when one source told PEI Asia the firm would be happy with a final close of anywhere between $2.5 billion and $3 billion.
Carlyle does not comment specifically on the amount targeted for each fund, a spokeswoman said.
“It was a very difficult fundraising environment, but the track records of our previous funds, the team itself and Carlyle’s global network allowed us to basically perform very well in a difficult environment and we are very pleased with the amount of capital we have raised,” Patrick Siewert, managing director at Carlyle Asia, told PEI Asia in an interview.
Carlyle Asia Partners III is comfortably the largest fund closed for Asia in the last 18 months. The fund is significantly larger than Carlyle’s second Asian buyout fund, which closed on $1.8 billion in 2006. Its first buyout fund for the region, which closed in 1999, raised $750 million.
Other large Asian funds closed in the last 18 months include Tokyo-based Unison Capital’s third fund, which closed on ¥140 billion ($1.54 billion; €1 billion) in August 2009 and MBK Partners' second fund, which closed on $1.5 billion in July last year.
Carlyle Asia Partners III attracted commitments from institutional investors globally including the US, Europe, the Middle East and Asia. There has been strong interest from existing LPs owing to the track record of the CAP I and CAP II funds, Siewert said. “We are very pleased with the increase in the number of Asian LPs that have joined the fund and we see that as a natural evolution of the growth in money to invest and the growth in maturity of private equity in Asia,” he added.
Carlyle’s Asian buyout group has a team of 40 local professionals across offices in Beijing, Hong Kong, Mumbai, Seoul, Shanghai, Singapore and Sydney – a good reflection of the markets the firm is focused on. The group has made 21 investments in the region so far.
The firm’s Asian buyout arm makes large control deals and acquires strategic minority interests. Going forward, Carlyle does not anticipate a big change in its investment strategy. It will participate in the acquisition of 100 percent stakes, strategic minority investments and everything in between, Siewert said. “One of the beauties of our investment mandate is that we can help founder owners take their business to the next level whether they want that through control or just shy of control,” he said.
China will continue to be a key market for the firm. “Carlyle has put upwards of $5 billion to work in China and there is no reason why we would think China won’t be very prominent in our investment activity going forward,” Siewert said.
In January, Carlyle Asia Partners signed a memorandum of understanding with the Beijing Municipal Bureau of Financial Work on the formation of an RMB-denominated fund in Beijing. That fund will pursue investments independently and will also co-invest alongside Carlyle Asia Partners III.
Carlyle closed its fourth Asian growth fund, Carlyle Asia Growth Partners IV, on $1.04 billion in June 2009. In February this year, the firm signed an agreement with China’s largest privately-held investment conglomerate Fosun Group to jointly sponsor and manage a Shanghai-domiciled RMB fund for investment in high growth businesses in China. Carlyle’s Asian growth fund and Fosun will commit $50 million each to the first fund and the firms will target domestic Chinese investors for subsequent vehicles.
In all, the firm manages more than $10 billion across 11 funds investing in Asia (including Japan).