Carlyle Group Inc. is preparing its first European private credit fund for wealthy individuals as it joins giants such as Blackstone Inc. in a race to tap the trillions of dollars held by the continent’s rich investors.
The new fund will invest across a range of financing strategies and focus on lending to European businesses. There are plans to roll out more in the coming months, both in Europe and the U.S., as the wealthy are now a priority, Shane Clifford, Carlyle’s new head of wealth, said in an interview.
“We have to be present and active in Europe, it’s our second market,” Clifford told Bloomberg News. Carlyle has brought aboard a head of product in New York and is hiring for its wealth team globally, including in Europe and Asia, he said. Carlyle manages just $6 billion across similar retail funds in the U.S., a small amount compared with rivals, and about $50 billion for high-net-worth clients in other structures.
Global money managers such as Blackstone have been chasing wealthy clients around the world for years. Now a slew of firms, from Apollo Global Management Inc. to Ares Management Corp., are also ratcheting up efforts to seek new sources of capital. With the traditional investor base of pensions and endowments turning more cautious amid high interest rates and geopolitical risks, Europe is one focus of the latest push.
Carlyle’s entry into this market underscores CEO Harvey Schwartz’s attempts to expand its client base beyond the mainstay big institutions. He has been under pressure from shareholders to help boost its languishing stock price and articulate a clear vision after years of leadership churn. He told analysts this month that he believes Carlyle’s brand will be an asset in its push for wealthy clients.
The new fund, called the Carlyle European Tactical Private Credit Fund, will generally allow withdrawals amounting to 5% of the fund’s net asset value each quarter to accommodate smaller investors who typically seek some assurance that they can draw cash. But in some circumstances, it may also exercise the right to suspend redemptions.
The standard share class will charge a fee of 1.2% of net asset value and also has an incentive fee of 12% after the manager hits a 4% hurdle.
But the Washington-based private equity firm, which manages $426 billion in assets, is likely to find Europe more challenging than the U.S. Even some of its bigger rivals that have long established a foothold there are taking longer to raise money. The main challenges are risk aversion — many European investors prefer to keep most of their money in cash, according to a study by Morningstar Inc. — a fragmented market with different languages and various levels of regulation in each country.
Blackstone’s ECRED fund, which launched in October 2022, managed about €500 million ($539 million) in assets at the end of last year, according to company documents. In contrast, its U.S.-focused BCRED fund, launched in 2021, has roughly $50 billion in total asset value.
“It is a long-term strategy for this firm to be committed to the wealth space in Europe,” Carlyle’s Clifford said.