Thank you, Michelle. Good morning, and welcome to Carlyle's Third Quarter 2026 Earnings Call.

With me on the call this morning is our Chief Executive Officer, Harvey Schwartz, and our Chief Financial Officer, Justin Plouffe. Earlier this morning, we issued a press release and a detailed earnings presentation, which is available on our Investor Relations website.

This call is being webcast, and a replay will be available. We will refer to certain non-GAAP financial measures during today's call.

These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliation of these measures to GAAP in our earnings release to the extent reasonably available.

Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the Risk Factors section of our annual report on Form 10-K, that could cause actual results to differ materially from those indicated.

Carlyle assumes no obligation to update any forward-looking statements at any time. In order to ensure participation by everyone on the call today, please limit yourself to one question, and return to the queue for any additional follow-ups.

With that, let me turn the call over to our Chief Executive Officer, Harvey Schwartz.

Hi, good morning, everyone, and thank you for joining us. We delivered a strong quarter, strong third quarter for our shareholders with distributable earnings of $1.12 per share, one of our best quarters ever.

This is up 17% from a year ago and driven by a fivefold increase in net realized performance revenues. More importantly, we continue to build momentum across the global platform as we execute our strategic plans.

We have a near-record level of pending fee-earning AUM that will result in more than $230 million in new management fees when activated. We continue to lead the industry in returning capital, with distributions to our clients approaching $100 billion since the beginning of 2024.

We are just in the early stages of a powerful fundraising supercycle that will accelerate growth over the next several years. Before I walk through the highlights, I want to spend a few minutes on the macro environment.

The first observation I'll make is that the underlying economic engine remains quite strong. Our Carlyle economic indicators systematically roll up time series data across all of our portfolio companies, which collectively employ approximately 750,000 people.

This gives us a unique perspective on underlying economic activity. The data shows that annualized revenues grew at 6%, while EBITDA grew at a double-digit rate.

This points to a durable and healthy economy, showing resiliency even during periods when market sentiment has been more volatile. The strong economy, in combination with sticky inflation, reinforces our long-held view that rates will stay higher for longer.

That view reflects more than 5 years of inflation above the Fed's target. We've been adapting to this higher-rate environment for a long time and have found that a more normalized cost of capital rewards disciplined underwriting, operational expertise, and global scale, all of which are Carlyle strengths.

At the same time, geopolitical dynamics are reshaping the global investment landscape. In nearly every conversation with clients and government officials, two priorities come up: security and economic growth.

Whether it's national security, energy security, or data security, those priorities are driving enormous demand for capital in areas where we have deep expertise. With the US midterm elections behind us, the results were more decisive than expected, but the outcome was largely as anticipated.

The favorable market reaction is consistent with historical trends, as greater clarity on the political landscape helps reduce uncertainty. As I've said before, confidence is the greatest elixir for markets.

Now a few highlights from the quarter. First, in Global Private Equity, we remain a significant outlier in returning capital to our clients.

Across our Global Private Equity segment, we returned $24 billion to our clients over the past year. Drilling down into Corporate Private Equity, we returned 21% of fair value to investors over the past year.

That's nearly double the industry average and represents levels not seen since 2021. As a firm, we made a strategic decision to monetize assets and return capital to investors.

The substantial liquidity we've delivered over the past several years has addressed investors' needs and contributed directly to our success in attracting new capital. Second, we continue to see real operating momentum in Global Credit.

During the quarter, we brought in more than $7 billion of inflows into Global Credit. Fortitude's reinsurance transaction with Unum Group, which closed earlier this week, will add more than $5 billion to our AUM in the fourth quarter.

More recently, we announced a $7.7 billion asset-backed finance transaction with Truist Financial Corporation, which shows how we're helping banks manage their balance sheets while giving our investors access to an attractive set of investment opportunities. These transactions underscore the accelerating demand for the strategy we've built in private credit and insurance.

Third, we have systematically diversified our revenue stream over the last 3 years. Transaction fees over the past year are a record $264 million, more than 3 times the 2023 level.

We've also delivered record year-to-date fee-related performance revenue, driven by record AUM in our global wealth platform. Looking ahead, we're seeing strong momentum across our businesses, and we expect the fourth quarter to be one of our strongest ever for inflows, which Justin will discuss shortly.

To wrap up, the forward momentum across our global platform is exceptional. We're delivering for our shareholders, and are well positioned to build on that success in 2027 and beyond.

With that, let me turn the call over to Justin.

Thanks, Harvey, and good morning, everyone. We delivered a strong third quarter with a step-up in realizations and healthy net realized performance revenue.

We generated distributable earnings of $433 million in the third quarter, or $1.12 per share. That's up 17% from a year ago.

Year-to-date, distributable earnings were $1.2 billion, or $3.08 per share. Fee-related earnings were $293 million at a 47% margin.

Year-to-date, FRE was a record $950 million. As we look forward, we expect full-year FRE to be the highest in our firm's history.

Fund management fees were $1.65 billion year-to-date, and were $547 million in the quarter. We expect management fees to step up meaningfully in 2027 as we activate the next generation of our flagship funds.

Transaction fees were a record $197 million year-to-date, up 25% compared to the same period last year, and $33 million in the quarter. Fee-related performance revenues were also a record at $184 million year-to-date, up 46% compared to the same period last year, and were $50 million in the quarter.

Net realized performance revenues were $235 million year-to-date. Our third-quarter result of $100 million increased fivefold from a year ago.

This increase was driven by a diverse set of strategies in private equity and our global energy platform. Realized proceeds from our carry funds were $28 billion year-to-date, up 25% from the prior period, and were $9 billion in the third quarter.

Net accrued performance revenues were $2.1 billion. On a per-share basis, this equates to over $6 per share in future earnings power.

Turning now to inflows. We raised $41 billion year-to-date and $11 billion in the quarter.

We expect to close out the year with one of our best ever inflow quarters in Q4, with at least $20 billion of inflows expected, including the $5 billion transaction with Unum Group that Harvey mentioned earlier. That is expected to bring full-year inflows to about $60 billion, more than 10% above last year's level.

As of the third quarter, total AUM was $479 billion. Even more importantly, pending fee-earning AUM rose to $28 billion, up almost 50% year-over-year and nearly the highest level in the firm's history.

That pending amount reflects a diverse set of strategies that have raised capital, but have not yet activated fees. It will give us more than $230 million of annualized management fees once fully activated.

We expect this capital to be a key driver of our top-line growth in 2027. Again, this is important to note: we remain at the very beginning of our multiyear fundraising supercycle.

We ended the quarter with $94 billion of available capital for investment, also approaching the highest level in firm history. This capital is spread across all three segments, with $40 billion in Global Private Equity, $32 billion in Carlyle AlpInvest, and $22 billion in Global Credit.

Now let me turn to the individual segments, starting with Global Credit. Fee-related earnings were a record $324 million year-to-date, up 8% compared to the same period last year.

For the third quarter, fee-related earnings were $93 million, 11% higher than a year ago, driven by a 10% increase in management fees. Fee-related performance revenues in Global Credit continued to build, with $120 million year-to-date, up 40% compared to last year.

Total AUM ended the quarter at $207 billion, which was supported by $7 billion of inflows, including a strong first close in our latest vintage opportunistic credit fund. Deployment was $5 billion in the quarter, led by our liquid credit, aviation, and opportunistic credit strategies.

Carlyle AlpInvest delivered record year-to-date FRE of $222 million, including $68 million in Q3. Run rate management fees increased 16% year-to-date after adjusting for catch-up fees.

Total AUM was $110 billion, up 8% year-over-year, with $15 billion of inflows over the last 12 months. This strong momentum reflects the broad array of investment solutions that AlpInvest has introduced over the past several years.

AlpInvest had historically invested largely through closed-end carry funds and institutional SMAs, but we have systematically introduced new evergreen strategies for the wealth channel and new verticals like portfolio finance and credit secondaries, which have allowed AlpInvest to expand its investor base and its universe of investable assets. Shifting to Global Private Equity.

Third-quarter distributable earnings were $237 million, up more than 60% year-over-year on higher net realized performance revenue. Fee-related earnings were $131 million in the quarter, and fee-earning AUM was $96 billion.

GPE realized proceeds were $5.7 billion in the quarter and $24 billion for the last 12 months, with notable exits including Rigaku, Camino Natural Resources, and Tescan Group. Deployment was nearly $4 billion, including Secturian, first transaction from our new defense and industrials platform.

Finally, let me turn to capital management. We ended the quarter with over $7 billion of balance sheet assets, or almost $20 per share.

We declared a quarterly dividend of 35 cents per common share, consistent with our dividend policy. We repurchased or withheld a record 15 million shares year-to-date, including 4.5 million shares in the quarter.

Our share count is down about 2% thus far this year as we continue to actively manage dilution and see value in our share price. We have $1.4 billion remaining on our $2 billion share repurchase authorization, giving us ample ability to continue managing share count.

As Harvey noted, the underpinnings of our platform continue to show strong momentum. We remain on track for our 3-year plan and are confident that growth will accelerate as we move through our fundraising supercycle.

With that, let me turn it back to the operator to take your questions.

Hey, Harvey, Justin. Good morning, everybody.

Wanted to ask you guys around the growth outlook for the rest of the year and also into 2027, just given your comments around accelerating momentum that you expect in the business. You highlighted a number of times now that 2026 is a bit of a transition year, which we've obviously seen play out.

Maybe a couple of questions. One, should we still expect FRE growth to be in mid-single digits for 2026?

Then secondly, maybe you could speak to the budgeting of management fee growth into 2027 and kind of some of the key building blocks. Thanks.

Thanks, Alex. Appreciate the question.

I think at the beginning of the year, we told you guys this would be more of a muted year for growth. It's more or less exactly on plan, give or take, I'd say, mid-single digits, might fall a little bit short of that as we come through the end of the year.

Really depends on how the flow is, but we're talking 1% or 2% either side of that. We're not talking meaningful numbers.

Again, it's more or less on plan. In terms of where we're really feeling quite good about the plan is the momentum in the aggregate franchise around the build-up and the beginning of the supercycle.

As Justin mentioned, and we really wanted to give you some sense of this obviously as we come into the end of the year, we're also 1 month into the quarter, the fund flows feel quite good coming into the fourth quarter. Who knows if the world will throw us some weird curveball and some things will move into the first quarter, but that's irrelevant.

Inflows feel quite good, and I think the momentum going into '27 all feels quite good. I think the question marks really are more about the macro environment, what plays out over the next 3 to 6 months.

We're seeing good momentum in the wealth channel, and we expect that to keep growing. I would say that's probably the only thing that's been a bit of a headwind for the industry, and obviously in credit, and we've experienced a bit of that as well.

Otherwise, everything feels more or less on plan, exactly as we described to you guys, give or take a percent or two. Now where we're really outperforming, obviously, is on the realization side.

That continues. The pipeline on realizations actually feels quite good still.

In that sense, the momentum and the flows feel quite good across the whole platform.

All right. Thank you.

Sure.

Hi, good morning, Harvey and Justin. Thanks for taking my question.

Good morning.

Was hoping to double-click into some of the comments you just made, Harvey, on the monetization outlook. Despite the challenged environment for some of the public holdings, you managed to realize a good chunk of the book this quarter, Rigaku among others.

Was hoping you could speak to how you're thinking about the monetization pipeline over the next 3 to 6 months. It sounds like you guys are still seeing some good momentum there.

What's your line of sight on monetizations in early '27 and beyond, and how is that informed by the midterm outcome, if you can speak to that, too?

I'll let Justin walk you through, but in terms of how we think about it, what we generally do is we give you insight into things that we actually know are in queue, we don't really speculate beyond that, just so everybody has a sense of how we frame the numbers every time. When we talk about it, absent market disruptions, we talk about it with a very high degree of confidence.

A lot's obviously happened. I would say, stepping back before Justin walks you through the details, I think the market reaction to the midterms is consistent with history.

The market, broadly speaking, tends to like something that approaches more of a gridlock situation in the second half of an administration. I think what we saw yesterday, less specifically around private markets, but public markets, I think what we saw was really the reaction to the degree to which the outcome, though expected directionally, actually ended up being more significant.

Obviously, some of this is around the whole anticipation and thought process about capital flowing into data centers and AI. Now as you know strategically as a firm, we've approached this in a more diversified, I would say on a relative basis, more cautious, if you want to say, approach to allocating capital.

Particularly in credit, we've stayed very diversified around that. I actually think, as we come into '27 and '28, this will give us a good resolution in terms of how people should think about AI and the data center.

I actually think it's going to open up more opportunities for folks like us as we get more clarity around the processes and how this will play. In terms of the near-term outlook and things that we're seeing, let me have Justin walk you through the numbers.

Steven, as realizations have been a strength for us for a while. We're actually approaching $100 billion of realizations now over the past 3 years.

This has been a consistent theme for us. Right now, we've got almost $6 billion of deals already signed up for exits that will come through in Q4, and some of those will be in 2027.

We continue to see momentum on the realization side. It's been a strength for us, and we're continuing to return capital to LPs, which obviously they like.

To Harvey's point, I think the market for realizations is going to react well to stability and having one more thing taken off the table in terms of uncertainty. I expect the market for realizations will continue to be strong for us.

On the public positions, obviously you guys track all the public positions, they were a little muted for a while, obviously more recently. I don't know, what are the current numbers, Justin?

They were a bit more muted in Q3, but they're up 17% since the end of the quarter, which is a billion dollars, is actually a little more than a billion dollars in value for our investors just in the last month. We don't focus on the day-to-day movements of public stocks.

We focus on whether or not we own good companies, and we think we do. Since the end of the quarter, we've really seen momentum there.

That's great color. Thanks for taking my question.

Sure.

Good morning.

Hey, Brennan. Hey, Brennan.

Hey. Was curious.

Looked at the AUM roll-forward, and saw that within credit, there was a $5.7 billion headwind from market and other to the fee-paying AUM line. The carry fund performance doesn't seem to reflect that, I was guessing maybe it was SMAs.

Could you maybe unpack what might have caused that and how we should think about that going forward? Thanks.

That's actually sort of a simple one, Brennan, although it isn't obvious and jump off the page. Rates went up during the quarter, and what that means is that the fair value of assets at our Fortitude affiliate go down.

Doesn't mean it changes really the amount that we're managing. It doesn't change anything about performance.

It's not outflows. That $5 billion is really just the impact of higher rates on the Fortitude fair value mark.

Overall, look, we're returning capital to investors at a high rate, which we said, which is a good thing, and that's what you want us to do. There's some AUM impact of that, but the particular one you mentioned is really just the math on higher rates.

Yep, that makes sense given September. Thanks, Justin.

Sure, no problem.

Great. Good morning.

Thanks for taking my question.

Good morning.

Hey, Harvey. Hey, Justin.

If you could touch on the fundraising in the wealth channel? How have the inflows been into drawdown and evergreens here?

Can you talk about is it kind of a challenge raising in both types currently? Then on the evergreens specifically, can you maybe just provide a pulse check on the gross sales by major fund, and then how redemptions could trend for CTAC based on some of your real-time conversations in the channel?

Sure. Look, we continue to have really strong momentum in the wealth channel.

Our inflows are 24% up LTM. Our AUM's 30% up year-over-year.

Wealth continues to be a growth engine for us. I'd particularly call out our products in AlpInvest, which continue to take in strong inflows.

Then our CPET product, which is our Carlyle-wide private equity product, that actually, just as of yesterday, crossed $1 billion in AUM. We're seeing great momentum there.

At a high level, obviously, the entire market in private credit started to have some noise around it back in the spring. We're starting to see redemption levels stabilize and come down.

If those products continue to perform across the industry, I think you'll see that turn around as well. Look, wealth for us continues to be a growth driver.

We've got great momentum, and we expect it to be key for us in '27 and beyond.

Sorry, you're also seeing some capital flowing through to CP IX from the wealth channel?

We haven't had a first close there. Whether or not the wealth channel will be a part of that, I'm sure it will be part of all of our major fundraises.

What we've tried to do in the wealth channel is be really thoughtful about the products that we're bringing to that channel, and make sure they're really designed well for that channel. I think CPET is a great example of that.

We spent a lot of time designing that product as a private equity product that made sense for individual wealth investors. We intentionally rolled it out slowly last year, and now we're getting on the big platforms.

I think because it was designed well for that channel, that's one of the reasons we're seeing so much momentum there.

Mike, the only thing I'd add, cuz I think this is at the core of your question, or the way you asked it, but I think Justin's covered virtually all of it, is I think you're asking sort of like the mix of drawdown versus evergreen. Virtually, and the team will confirm all these numbers with you offline in detail if you want, but it's really been all driven by evergreen, which has been our focus.

We really haven't been in the market with drawdown. As the supercycle begins, there'll be a component of drawdown for funds that make sense for drawdown, but what we were just really walking you through is the evergreen mix, which, as there wasn't much of an evergreen strategy a couple years ago, but the team has really done a remarkable job of bringing things to market.

There really hasn't been drawdown activity, but that's in queue for '27, '28.

Great. Thank you for that clarification.

That helps.

Hi, thanks so much.

Hey, Glenn. Hey, Glenn.

Hello there. I wonder if you could help us on, even just conceptually, on the FRE ramp through '27 and '28.

You have a ton of dry powder. I'm curious on, in a normal-ish backdrop, whatever that means, is that a 1 or 2-year deployment or 2 or 3-year deployment?

What I'm trying to get at is how much of that FRE ramp from this low single-digit number is within your control in terms of deploying capital that you already have, and how much do we have to rely on the supercycle happening, and the market could or could not help or take that away? You get what I'm getting at?

What's within your control?

No, we got it. We got it.

No, I understand the question. We're not going to unpack that completely for you, I only tell you that so that you can be prepared to be dissatisfied.

Let me give you the sort of theoretical framing and thinking about it. The way we think about the supercycle, and we have a good feel for the supercycle in terms of, again, barring unforeseen macro factors, what's in queue, what the momentum build looks like.

Obviously, in many cases, as we raise those funds, you immediately get fees in those drawdown vehicles, etc. In terms of the backlog of deployment, I think you're just seeing sort of the transition of very, very large monetization period, certainly relative to the industry group, and then the build-up in new capital.

We're in this transition mode again, which, going back to the plan we walked you through earlier this year, it's more or less spot on with the plan, with a couple of give-and-takes. You should expect FRE build as we come through '27.

I think where you can draw confidence from all this is because we have these different levers. We have capital markets activity, which again flywheels off of the fundraising, actually having all the funds in a position where they can drive capital markets activity.

We're feeling pretty confident about all that collective momentum. Hard to unbundle precise deployment because we put no pressure on the teams to deploy.

What we really demand from the teams is that they price the risk correctly, and we're seeing some pretty attractive opportunities out there. I think as we come into '27, we're going to continue to see great opportunities to price marginal risk, but that's how the teams are thinking about deployment.

We obviously control more of the factors around the fundraising, really it only ends up being really a factor of timing. What we'll try and do is at some point in '27, we'll give you a more detailed update so you can wrap your brain around it.

I hope that was helpful.

Thanks, Harvey.

Thanks, Glenn.

Great. Thanks.

Good morning. Thanks for taking the question.

Maybe just to go back to the monetization cycle. To what extent do you expect this pace to accelerate your fundraising plans as we come into '27?

In terms of that return of capital, which areas could it help influence the fundraising? Clearly, CP IX is one of them, but maybe if you can comment on what other types of strategies in Global PE and maybe even in credit would benefit from the acceleration of return of capital?

Sure. Thanks, Brian.

Look, I think they all benefit from return of capital because it's probably the number one issue on LPs' minds. It's particularly pronounced in PE.

The PE industry has been challenged in terms of return of capital. Obviously, we have not.

We've been one of the outliers in that space. Certainly CP IX, our defense and industrials strategy, but even in credit, I would say, the realizations we've had in CCOF, returning capital, showing and proving out that strategy, have really helped us with the fundraise there.

We had a great set of first closings in Q3 with over $3.3 billion in that strategy. It's top of LPs' minds.

Return of capital is going to benefit every one of our strategies, particularly in private equity, but that's why we're going to continue to do it. We've always done this, and I can't emphasize that enough.

Our teams think about exits at the moment that we make the investment. For us to say we're doing $100 billion, that's an outlier over 3 years for the industry, but for us, this is what we planned to do.

This is right on track, and LPs greatly appreciate that.

Thank you.

Hi, good morning. Thanks for taking the question.

Fortitude has been active in recent quarters buying blocks of business. Does the change in the interest rate outlook alter the opportunity or appetite to buy and execute on these blocks?

Maybe talk a little bit about how dialogue is going to continue to expand that business.

Yeah. The short answer to that is, no.

Obviously, interest rates have an impact on the overall environment everywhere, every asset class. I think that what the team has been quite focused on is the integrated approach to managing insurance capital around the globe.

What Fortitude does, obviously, it gives us the ability to provide capital. If you think of the entire insurance space globally, where we're getting the collective momentum as a solution provider and as a fiduciary, because obviously we're not in the annuity business, is the ability to be a third-party provider of capital, but also an asset manager at the same time.

If an insurer has a capital need, obviously Fortitude can be that capital provider, but more broadly across the insurance space, the types of transactions we're doing in asset-backed finance, aviation finance, some of those solutions that we're putting together in Carlyle AlpInvest, all of these are very valuable solutions in private investment grade. This is all about completing out that aspect of the platform so that we can be a solution provider for any insurer, whether they desire capital or risk transfer, or whether they're in an excess capital position and then want to deploy capital for us to manage.

That's how it fits. Interesting,

interesting. Thank you very much.

Hi, this is actually Ben Budish from Barclays. Thanks for taking the question.

You talked about the realization cycle being supportive of flows. I was wondering if you could just click in more to CP IX specifically.

That's obviously kind of your largest flagship fund in the market. We've seen, I think, $5 billion come in so far.

Curious if you could update on that one, and any kind of changing near-term expectations, and your confidence on being able to raise more than the predecessor fund. Thank you.

The specifics on the narrative around the fundraising, we're really constrained about what we can talk about, but obviously we'll be having our first close coming up in the next couple of months, you'll have more insight into that. I think, to add to what Justin was saying before on a prior question, in terms of fund flows and return of capital, in private equity broadly, where we've been the most significant outlier, we get the most significant benefit.

In a sector where clients are feeling that they're not getting adequate return of capital, if you're one of the outliers that's actually returning capital, obviously that resonates with them. Again, this was a strategic decision we made a couple of years ago.

We liked the market environment. We knew we had the right companies.

We had very little exposure to software or areas where very high-multiple positions were struggling to come to the marketplace. I think it's still going to take the industry a bit of time to digest the capital that is a bit trapped.

For us, we've seen a unique window relative to the industry group, and so we've obviously been monetizing a lot of assets and will continue. I think that just sets us up better for fundraising over time and speaks to the breadth of the diversification of the business.

In particular for private equity, when you can return capital in any sector where others aren't, it's a differentiating factor, it's a plus.

All right, great. Thanks, Harvey.

Sure.

Morning. Wanted to follow up on your comments on AI credit and data center investments where you've been more cautious.

It sounds like you might see better risk-adjusted returns in this new backdrop. How do you think about approaching that market?

Are we talking about sort of more maybe more deployment from existing funds, raising new special purpose funds, or is it more of a capital markets focus? How do you think about wading into that area?"

Yeah. Mark Jenkins, Co-President and Head of Credit and Insurance, and Jason Thomas put out a paper not too long ago with a lot of attention, which, I think for some of the media was a little misunderstood, but the core of it really reflected our investment thesis as it relates to this space broadly, which is: one, we are very, very strong believers in the impact of AI, the technology, what it will do over time.

What we were a little more cautious about were some of the uncertainties around structures, collateral, the rush of capital, and just not repeating some of the mistakes that were made just a couple of years ago by parts of the marketplace in the SAS capital space, right? We didn't want to be over-allocated.

Particularly this relates to credit, where we felt like the strategy that Mark and the team have been driving for a long time with success is, look, there's a lot of value in diversification. This is about not being over-allocated.

The same as it relates to equity. Now, I think as we move through this part of the cycle, my own personal view is data centers are going to get built.

This is a problem that is not going to be an inability to have data centers. I think actually what we're going to do is we're going to end up getting to a place where we have actually more certainty around this.

I think as we get more clarity, the risk-adjusted returns will actually even get better as a deployer of capital, I see it as an opportunity set. In terms of the ability to raise special-purpose vehicles or things like that, that's always an opportunity set, but I was really talking about the framework over the next 18 months.

I actually think the opportunity to deploy capital will become more attractive, but we are not ever going to violate the first principle about diversification here, because we think it's just better durable returns for our clients and more durable returns for the firm. We're big believers in the thesis, and as we get more clarity and work through this part of the cycle, I actually think you'll see some pretty attractive risk-adjusted returns with more certainty.

Great. Thank you.

Sure.

Good morning. This is Robin Holby on for Bill Katz, and thank you for taking the question.

We wanted to ask about the $8 billion loan acquisition from Truist. Are there any puts and takes to the timing of how you bring this into fee-paying AUM, and are there any balance sheet considerations from Carlyle, and what are the expected fee economics to Carlyle from the transaction?

That was a Q4 transaction, and so you'll see it flow through next quarter. There's nothing particularly unusual about it, not a balance sheet commitment, just a transaction done by our asset-backed finance team, one of the teams I think that has had some of the best deployment for us over the course of the past year.

I think it's just another example of the capabilities we have in asset-backed finance, a growing business for us, but nothing in particular unusual about it in terms of fees or balance sheet.

I think the only takeaway you should have is we've emphasized this business for a couple of years now. Team's done an amazing job.

They've been very disciplined about how they've built the business, designed the business, deployed the capital, grown the business. This wasn't something the business was capable of doing 3 years ago, but clearly you've seen a number of large transactions, and they're front and center in a lot of these important flows.

Thank you for taking the question.

Thank you. Good morning.

Appreciate taking the question. Can you share some of the drivers in the transaction and advisory fee line in the quarter?

It was a little lighter compared to recent quarters. Some peers had more elevated levels, and I understand these can be lumpier, but just curious on the drivers in the third quarter, and perhaps more importantly, the outlook just longer-term growth opportunity in this line.

Quarter to quarter, it's going to periodically be lumpy. I think the underscoring point you have to remember is we're not really deploying any balance sheet here, the quality of the revenue stream here is as high quality as you would like.

It's all going to flow off of activity levels. Sometimes you'll see an announcement, then you'll see fees come in in the next quarter, the subsequent two quarters, but it's all about the integrated flywheel effect of building as higher-quality revenue stream without committing balance sheet or de minimis balance sheet when needed to drive those fees.

I guess if we were deploying lots of balance sheet, we could probably smooth out that activity. It's just not the lower-quality earnings that we want to drive for right now.

This is really just all about the franchise and what the franchise is able to drive. Again, as we come through the supercycle of fundraising, that creates more activity, more deployment, more fees, but it's not going to be linear quarter-to-quarter.

You've seen the growth we've had over the last couple of years, and we expect it to continue to build.

Great. Thank you.

Appreciate taking the question.

Sure.

Hey, good morning. Thanks for taking the question.

You've talked about entering a significant fundraising cycle here with a number of flagships coming to the market. I was just hoping you could speak to what you're seeing in terms of institutional demand trends, how that's evolving in the context of just the broader industry backdrop being a bit lighter from realizations, understanding that you guys have been a bit more active, so that should be helpful.

As we look to 2027, I guess how much visibility do you have on a more meaningful acceleration in fundraising, and how should we be thinking about the timing of fund activations?

I think at the highest level, the easiest way to do it is to just break down the industry segments. From an institutional perspective, I would say that secondaries, co-invest, the solutions business, right in the center of huge amount of institutional interest and activity.

That has to do with a lot of things, not just the fact that the flip side of that coin is that the industry has been slow to monetize on the private equity side, but portfolio structuring and being a real solution provider has proved to be a really unique advantage. It might just be reallocating across asset classes, or how to think about funds.

The momentum there feels quite sticky and persistent right now. I would say, in credit, it feels quite good also.

For the wealth channel within credit obviously has had some challenges for the industry. I think institutional activities continue to pick up, and they're seeing value across credit.

When I say that, I'm not really just talking about a narrow slice, and I'm talking fully across the cap stack from investment grade all the way through. You've seen also great CLO activity for us.

I'd say that the institutional level of activity in credit is quite good. Then in private equity, I would say institutional activity, hard to say.

I would say, again, the big problem for the industry is that the peer group's not returning enough capital, broadly speaking, across the industry. I think that that has likely sort of hit a bottom.

Now whether or not we see a huge uptick, but clearly for our asset classes aerospace, defense, government services, things we do in diversified energy, healthcare, those are in vogue. I think if you just ended up in the unfortunate position where you had a technology disruption with very high multiple and a lot of SaaS exposure, it's a little more difficult.

It feels like institutional interest, particularly in our asset classes, is picking up somewhat, but I wouldn't say it's a hockey stick at this stage. Across the rest of the industry, I'd say institutional feels quite good.

Then just on the visibility into '27 for acceleration in fundraising, how are you thinking about that?

As we talked about, we're in the beginning of the supercycle. I think Justin was pretty specific.

It feels like the fourth quarter will be one of our best inflow quarters ever. Then we'll really be in the thick of things in '27 and '28.

We don't really think about it like accelerating from Q2 to Q1 or anything like that. I understand the models that you guys have to build.

It's just not the way we think through the fundraising.

Great. Thank you.

Sure.

Hi, good morning, everyone. Most of mine have been asked.

I just had a clarification on the CP IX point. It sounds like you see a first close in 4Q.

On that, I want to confirm that you already reported the $5 billion structured commitment in 2Q, right? The first close will just be the amount above that $5 billion.

Is that the right way to think about it?

I think whether or not it's Q4 or the beginning of Q1, I wasn't specific about that, but in the next couple of months. I think you should view that and that'll likely be, as you've seen, and I don't want to get stapled to a wall here on this, I would say that probably feels more like a 1A followed by a 1B.

This is really just a question of timing for institutional investors to get docs done, and seasonality, and things like that. That'll be a subcomponent of the first close would be the $5 billion.

The $5 billion has already been reported is my question. It's not when ever you

Yeah,

yeah.

Oh, correct. That's reported, obviously.

We have to report that. I view that as sort of just the cornerstone part of the capital raise.

That's not really the first close. That's part of the first close, obviously, in the vernacular of the way we use

it. It's already run through the AUM flow through forward.

I'm just yeah, trying to figure out how big of a

Yeah,

yeah, got

you.

Okay.

100%.

100%. That's

the right way to think about it. Thank you.

Great. Thanks, guys.

Thank you.

Hi, good morning. Thanks for taking the question.

Wanted to ask, and given the higher-rate environment, how are you evolving or adapting the value-creation plans to ensure performance in private equity is not impacted? I presume there's more focus on operational value add.

Anything you can help us understand through that would be great. Thanks.

Yeah. One of the great things I stepped into when I arrived at Carlyle, among the many great things, one was a, I would say, very conservative approach to liability management at the portfolio companies and a great capital markets team.

Now we didn't have a capital markets fee business, which actually we built over that time, but we had a great liability management team, which is now extended all the work they do at Carlyle. We've always taken a conservative approach to interest rates.

One of the reasons in part we've been able to have monetizations is I remember when I first got here 3 years ago and rates started to go up, we had really the most conservative liability structures. We haven't relied as much on interest rates or refinancings.

When you actually go through the portfolio monetizations in the history of Carlyle, it's not interest rates per se that's driving value. Now sometimes you get cycles where obviously there was a long cycle where rates were lower and you could refinance and that was a value contributor to certain assets, but that hasn't been the driver of value creation.

We certainly, every time we acquire a company, the team is working with all of our economists to best understand how much risk they want to take from that perspective, but we're not aggressive risk-takers when it comes to liability structures in those companies. Where we point our energy is on, if it's a carve-out, the expertise that it requires to take a carve-out, whether it's a roll-up strategy, how are we doing marketing, what are we doing in terms of AI—these are much more critical components—or data science, much more critical components to value creation than interest rates themselves.

We generally, as a firm, take a pretty conservative view to liability management, and that's just the history that Bill Conway and the founders ran the company with for 40 years.

Great. That's very helpful.

Thanks for the color.

Sure.

Great. Just a couple quick follow-ups.

Just on transaction fees, is the Truist ABF, is that something that will materially impact the fourth quarter transaction fees? Then just maybe just some perspective on the timing of $230 million of pending fee-earning AUM fees to come into the fee stream.

I know that's always hard to predict, but maybe on the credit side, how would you think about timing of that layer in then?

Sure. On the pending fee-earning AUM, very broad-based where that's coming from, hard to say blanket statement.

I would say historically, it's kind of the 12 to 24-month type of number, but that'll depend on credit deployment. Truist was a fourth-quarter deal, you'll see that come through the fourth-quarter numbers.

We've got a number of things coming through in transaction fees in the fourth quarter, I expect it will be a good quarter for us in that regard, but obviously we've got 2 months left, we'll have to see how that goes. For the pending fee-earning AUM, you're going to see that come through in '27 and '28, and as I said before, that's going to be a driver of our top line.

Great. Thank you.

Thank you, everyone, for your time today. Should you have any questions after the call, follow up with Investor Relations, and we look forward to talking to you again next quarter.