KKR and Carlyle Report Diverging Fortunes as Fundraising and Job Cuts Take Center Stage
Two of the world’s biggest private equity firms have reported starkly diverging fortunes as KKR boosted its fundraising expectations while Carlyle axed jobs as part of a cost-cutting drive.
On Tuesday, KKR announced their noticeable uptick in fundraising and their plans to launch new flagship corporate buyout funds in the US and Asia. This comes as the investment group builds its operations in infrastructure and property while doing more deals after a rise in interest rates over the past 18 months curbed industry activity.
In contrast, Carlyle reported that its fundraising this year had underwhelmed and that it was focused on reducing costs. After closing its most recent flagship buyout fund with $14.8bn in overall assets, 20% less than its predecessor, Carlyle is now cutting expenses and reducing its investment teams in areas with unexciting growth prospects.
KKR’s shares rose more than 5%, while Carlyle’s shares fell 1%, underscoring the diverging path of the two firms. Much of this disparity is attributed to Carlyle’s fumbled succession from its three billionaire founders, whereas KKR has seen no internal turmoil in its leadership.
Since taking the helm at Carlyle earlier this year, CEO Harvey Schwartz has been focused on turning around the group amid challenging market conditions.
Despite the tough times for Carlyle, Schwartz remains optimistic about the group’s future growth and fundraising efforts, particularly in areas such as credit and insurance-related investment assets, debt and equity underwriting operations, and funds designed for wealthy individuals.
The diverging fortunes of KKR and Carlyle highlight the varying challenges facing the private equity industry and the different strategies that firms are employing to navigate them.