The Carlyle Group LP is bulking up to capitalize on what it sees as a growing trend — outsourcing alternatives portfolios.
Carlyle Group is the first alternative investment manager to set up a group to invest across multiple asset classes using third-party funds in addition to its own.
Other alternative firms such as The Blackstone Group LP, Apollo Global Management LLC and KKR & Co. LP are investing sizable discretionary separate accounts for institutional investors, also called strategic accounts and separately managed accounts. But Carlyle is the first to span multiple strategies and managers.
Carlyle's offering will be much broader than a typical fund of funds that invests only in third-party funds in a single asset class or strategy. This puts Carlyle at the vanguard of firms invading consultants' turfs.
This one-stop-shop strategy “plays off the trend of outsourcing,” said David Fann, president and CEO of TorreyCove Capital Partners, San Diego, a private equity consulting firm.
“The first wave was outsourced CIO; it is logical that the second wave of outsourcing will be the alternative investments as it requires expertise, access, and a harder to recruit skill set,” Mr. Fann said.
In its new business unit, dubbed Carlyle global solutions, Carlyle executives say they are getting ahead of a wave in which investors will be handing over large chunks of their alternative investments portfolios. Carlyle will have discretion to invest across private equity, real estate and hedge funds — in Carlyle funds and third-party funds. (Carlyle executives would not identify the firms with which they plan to invest.) Coming soon, Carlyle expects to add energy and infrastructure to that mix.
“We are one of the very few asset managers that combines private equity, real estate and hedge fund-of-funds capabilities,” said Jacques Chappuis, managing director and head of Carlyle global solutions in New York. “The advantage (for the client) is to manage a portfolio with a common objective where we have the ability to manage across asset classes.”