Carlyle Group has delayed the closure of its new pan-Asian buyout fund after strong demand for a separate Japan-focused vehicle sapped investor interest, according to a report by Pensions & Investments citing unnamed sources familiar with the situation.
The Washington-based private equity firm has requested an extension for closing its sixth regional buyout fund. Since its launch over two years ago, the fund has secured $3bn in commitments – falling short of its $8.5bn target. Typically, such fundraising efforts are completed within 18 months.
The slower-than-expected fundraising is attributed to increased caution among global investors, who are concerned about overpaying for assets and uncertain exit opportunities, leading to more thorough due diligence processes.
Additionally, Carlyle’s $2.9bn Japan fund, which closed in May and is nearly 70% larger than its predecessor, has drawn attention away from the pan-Asian fund as international investors focus more on Japan. Carlyle has raised nearly $6bn in Asia since last year, including $950m for its second growth fund.
A spokesperson for Carlyle in Hong Kong declined to comment on the matter.
Investors in the new Asia fund are expected to benefit from access to deals in Japan, such as the recently announced $610m acquisition of KFC Holdings Japan.
Geopolitical tensions, declining exit opportunities, challenges in capital distribution, and significant losses from Chinese investments in recent years though, have led some investors to reduce their allocations to pan-Asian funds in favour of focusing on their home markets.
Carlyle has informed investors that the exposure to China in its sixth Asia fund will be reduced to 20% over the next fund cycle, reflecting a broader trend among competitors like KKR & Co and Bain Capital, who are focusing more on markets such as India and Korea.
CVC Capital Partners meanwhile, raised $6.8bn for its sixth Asia fund in February, 50% more than its 2020 fund, by focusing on Southeast Asia and other regional markets.
