Carlyle Group (NASDAQ:CG) Chief Executive Officer Harvey Schwartz said the asset manager remains on track with its multiyear plan, citing stronger fee-related earnings, improved margins and a coming “super cycle” of fundraising across major flagship funds.
Speaking at an Autonomous fireside chat hosted by U.S. asset manager analyst Patrick Davitt, Schwartz described Carlyle as three years into what has become a six-year transformation. He said the first phase focused on setting strategic priorities, reshaping leadership, changing the operating structure and redesigning capital management.
Schwartz said Carlyle increased fee-related earnings from the “low $800s” to $1.2 billion and improved margins by 1,000 basis points from what he characterized as a 37% margin when he joined. The company’s next three-year plan, announced in February, calls for fee-related earnings to rise from $1.2 billion to $1.9 billion, per-share earnings to move from “$4 and change” to “$6 and change,” and $200 billion of fundraising over three years.
“The targets we put out … are realistic,” Schwartz said, adding that the plan does not assume acquisitions, incremental insurance flows or “random one-offs.”
Geopolitical Backdrop Seen as Supportive for Private Capital
Schwartz rejected the idea that the current backdrop is “toxic” for levered assets, though he acknowledged heightened geopolitical complexity, stickier inflation and higher rates. He said Russia’s invasion of Ukraine marked a major shift in geopolitical risk and contributed to a world where national security now includes energy, defense and data.
Schwartz said this has increased global demand for private capital as governments seek growth while constrained by deficits. He said the environment favors firms with sector expertise in areas including aerospace, defense, healthcare, industrials and energy.
“The demand for private capital for the next foreseeable two cycles, call it 5-15 years, I think is enormous,” Schwartz said.
He added that Carlyle’s relative lack of exposure to areas such as software-focused private equity and direct lending, once viewed by some as a disadvantage, has become beneficial as investor focus has shifted toward “old economy” sectors.
Realizations and Private Equity Performance
On realizations, Schwartz said Carlyle has “bucked the trend” in returning capital, citing activity in its U.S. buyout fund. He said the firm returned $6 billion in 2025 and close to $7 billion in the first quarter, including Medline as well as strategic sales and IPOs.
Schwartz pointed to large public offerings in Japan and India, StandardAero and Medline as examples of exit activity. He said Carlyle has outperformed the industry by 500 to 600 basis points on capital returned as a percentage of net asset value.
He acknowledged that a prior U.S. buyout vintage faced challenges tied to consumer exposure, which he said Carlyle has since shut down. He described the current U.S. buyout vintage as a first-quartile fund in one comparison and second-quartile against a broader peer set, with no currently challenged assets despite being about 70% invested.
Defense, Japan and Energy Highlighted as Key Themes
Davitt asked about Carlyle’s newly announced military or defense investment platform. Schwartz said Carlyle has invested close to $40 billion across aerospace, defense and industrials over 40 years, or closer to $11 billion under a narrower definition. He described the firm as the only large player in the space and said the team’s historical returns have been “something like 4.5x” with high-20s to 30s internal rates of return.
Schwartz said the new platform is intended to capture smaller transactions that may not fit larger fund check sizes. He said the total addressable market is effectively “unlimited” as countries increase defense budgets globally.
In Japan, Schwartz said Carlyle has benefited from a 26-year presence and a dedicated local team. He cited policy and cultural shifts encouraging investment and private equity partnerships, as well as opportunities among listed companies trading below book value and businesses facing succession issues. He mentioned Carlyle’s acquisition of Kentucky Fried Chicken in Japan and the public listing of Orion Breweries as examples of recent activity.
Schwartz also highlighted energy as a long-term area of focus, saying Carlyle’s platform spans renewables, power and upstream energy. He said energy security and supply chain resilience are increasingly important global themes.
AlpInvest, Secondaries and Fundraising Innovation
Schwartz emphasized Carlyle AlpInvest as more than a secondaries business, describing it across four verticals: secondaries, co-investments, primaries and solutions. He said its solutions business can provide liquidity options to general partners and limited partners and helped structure a $5 billion cornerstone investment for Carlyle’s next buyout fund before formal fundraising began.
He said the transaction used a “modest component” of Carlyle’s balance sheet and secured full fees, helping the firm get ahead of fundraising while allowing investment teams to focus on deploying and managing capital.
On secondaries, Schwartz said the business is likely to grow for the foreseeable future, particularly if software-related uncertainty delays exits and locks up private equity capital. He said Carlyle AlpInvest can serve as a “capital allocation solution provider” for investors looking to adjust portfolios.
Asked about accounting practices in secondaries, Schwartz said Carlyle follows GAAP accounting and generally aims to be conservative in valuing level-three assets.
Wealth, Insurance and FRE Outlook
Schwartz said Carlyle remains committed to the wealth channel, though he cautioned that growth may not continue in a straight line. He said advisors and platforms are sophisticated and focused on matching alternative products to client needs. Carlyle’s CTAC wealth interval fund, he said, includes about 900 credits and is designed with diversification in mind.
He also pointed to retirement as a future growth area, citing Carlyle’s partnership with AllianceBernstein as an initial move. Schwartz said the firm’s three-year fundraising model includes wealth rising to 20% of total flows but excludes retirement and incremental insurance contributions.
On insurance, Schwartz said Carlyle did not build major block transaction assumptions into its three-year plan because such deals are difficult to predict. He said the block pipeline “looks pretty good” over the next several years, while stressing that Carlyle will not misprice risk just to gather assets.
Schwartz said he remains comfortable with Carlyle’s mid- to high-single-digit 2026 fee-related earnings guidance. He said momentum should become more visible in 2027 and 2028 as flagship funds return to market, including U.S. buyout, European technology, CCOF, Japan and AlpInvest funds.
“I feel good about the plan,” Schwartz said. “Again, the plan was structured in a way that we could galvanize everyone in the firm strategically around it.”
About Carlyle Group (NASDAQ:CG)
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager that invests across a range of strategies including private equity, real assets (such as real estate and infrastructure), global credit, and investment solutions. Founded in 1987 and headquartered in Washington, DC, Carlyle raises and manages investment funds that acquire, operate and exit companies and assets on behalf of institutional and private investors. The firm is publicly traded on the Nasdaq exchange and operates as an asset manager and investment advisor rather than as an operating company.
Carlyle’s core activities include sourcing and executing private equity buyouts and growth investments, originating and managing credit and financing solutions, and acquiring and operating real asset portfolios.
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