Harvey Schwartz, CEO of The Carlyle Group, the world’s fifth largest private equity firm, and former President and Co-COO at Goldman Sachs, has set new targets for the private equity firm’s growth and profitability, after a period of high interest rates and senior management issues, according to a report by the Financial Times.
The firm expects to increase fee-based earnings by almost 30% this year to $1.1bn as well as attract more than $40bn in new investor capital, focusing on its fast-growing credit and insurance-based investment units.
Carlyle also said it is aiming to increase profit margins and share buybacks substantially.
Finally, the firm intends to increase the percentage of earnings its shareholders receive from base management fees, which it says will create a predictable earnings stream for public shareholders to value, accompanied by the transfer of performance fees to its dealmakers.
As a result of this change, Carlyle took a $1.1bn non-cash charge in Q4, also increasing its share repurchase authorisation from $400m to $1.4bn in hopes of boosting its share price.
John Redett, CFO at Carlyle, said: “We intend to actively deploy this capital and our board and management team see compelling value in our shares.”
Schwartz’s targets signal an attempt to combat poor share price performance compared with rivals Blackstone, KKR and Apollo, who are forecast to earn more than double the $1.1bn target Carlyle has set for itself.
The report quotes Schwartz as saying: “I want to underscore that Carlyle is investing in growth first while remaining disciplined about expenses.
“It is all about focus, execution excellence and teamwork. If we do all of that the share price will follow.”
On Wednesday Carlyle reported better than expected fourth-quarter earnings having generated $254m in fee-based earnings, beating estimates of $207m from analysts polled by Bloomberg, as a fundraising push lifted assets under management to a record $426bn.
The firm lacked a permanent CEO after the departure of Kewsong Lee in 2022, who shared the role of Co-CEO with Glenn Youngkin from 2018 to 2020, with both periods marked by an alleged power struggle. One of Carlyle’s five Co-Founders, William E Conway, served as interim CEO until Schwartz’s appointment last year.
Last month, David Rubenstein, another Co-Founder of Carlyle, became the majority owner of the Baltimore Orioles, acquiring his native city’s sports team for $1.7bn.