Can you provide details on expected cash carry from Japan IV and Financial Services II/III while awaiting CP VII/VIII, and will future AlpInvest carry have better economics given its current low level?

Justin Plouffe noted AlpInvest's European-style waterfall makes carry difficult to predict, but returns are strong. He expects carry from Japan buyout and Europe Tech funds in the next few quarters. CP VII's DPI is over 70%, and it will continue returning capital for several quarters before realizing carry. “We've got a variety of deals that are already signed, closed or deeply in process in some of our other funds. You noted Japan buyout, you noted Europe Tech. So those are all going to come through, we would expect in the next few quarters.”

Given recent scrutiny on day-1 markups and competitor outflows, is Carlyle considering changes to its approach, and are you seeing any impact on advisor conversations?

Harvey Schwartz stated that advisor conversations remain robust and inflows are strong. Carlyle is not changing its practices, as their team historically purchases asset pools closer to par, not deeply discounted aged assets. No negative impact on advisor engagement has been observed. “In terms of any practices, we're not changing any of our practices. The industry participates in different types of asset pools. The team has always, for the most part, purchased asset pools that are much closer to par.”

Base fees were relatively flat year-over-year, but a fundraising 'super cycle' is expected. What will the profile of base fee growth look like as fundraising accelerates?

Justin Plouffe highlighted that base fees were up 4% year-over-year and 7% on an LTM basis, expecting this to accelerate. He attributed the anticipated acceleration to the 'super cycle' in fundraising for AlpInvest, private equity, and opportunistic credit, noting that past fund step-downs are now behind them. “Look, the base fees were up 4% year-over-year. They're up 7% on an LTM to LTM basis. We expect that to accelerate.”

Carlyle Group (CG) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Financials· May 7, 2026

Source: earnings call transcript

Executive summary

Carlyle Group Q1 FY26 — Strong FRE, Record U.S. Buyout Realizations, and High Inflows

Carlyle Group delivered a strong first quarter, marked by robust fee-related earnings and record U.S. buyout realizations, demonstrating momentum across its diversified platform. The firm attracted significant capital inflows and introduced an innovative capital solution for its next U.S. buyout fund, reinforcing confidence in its strategic targets despite a complex global backdrop. Management expects continued acceleration in fundraising and management fees.

Highlights

Fee-related earnings (FRE) reached $300 million with a 47% margin.
Record U.S. buyout realizations returned $7 billion to investors, more than 40% higher than the prior record set in 2021.
Attracted $13 billion of new capital inflows, including a record $6.8 billion in Carlyle AlpInvest.
Closed a first-of-its-kind investment solution anchored by a $5 billion commitment for the next vintage U.S. buyout fund.
Carlyle AlpInvest's total AUM reached a record $107 billion, up 20% year-over-year.

Concerns

Geopolitical uncertainty and splintering
Elevated redemptions in CTAC
Industry scrutiny on day-1 markups

Guidance & targets

Category	Target	Timeline	Confidence
Total Inflows	$200 billion high materiality	by end of 2028 · FY28	High
Fee-Related Earnings (FRE)	$1.9 billion high materiality	by end of 2028 · FY28	High
Distributable Earnings (DE) per share	$6 or more per share high materiality	by end of 2028 · FY28	High
Management fees growth	accelerate medium materiality	next 2 years · FY27	High
Fundraising	really accelerate medium materiality	next few quarters · FY26	High
Transaction fees	go up medium materiality	Q2 · FY26	Medium
FRE growth	mid- to high single-digit high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Carlyle AlpInvest FRE was higher year-over-year despite $13 million less in catch-up fees. Record AUM and inflows driven by broad-based institutional and wealth activity across secondaries, co-investment, and portfolio finance strategies. Next vintage funds expected to have first closings later this year. Total AUM: $107 billionTotal AUM growth YoY: 20%Quarterly Inflows: $6.8 billionNet Accrued Performance Revenues: $643 millionNet Accrued Performance Revenues growth YoY: 13%	—	—	—	$68 million FRE
Global Credit Management fees increased 6% while transaction fees were modestly lower. Quarterly inflows were led by a $1.5 billion first close of a new asset-backed finance fund. The underlying portfolio shows strong credit metrics, with direct lending nonaccrual rate of 1% and structured credit default rate of 50 bps, half the industry average. Management Fees: $147 millionManagement Fees growth: 6%Total AUM: $209 billionTotal AUM growth YoY: 5%Quarterly Inflows: $3.9 billionLTM Inflows: $25 billionDirect Lending Nonaccrual Rate: 1%Structured Credit Default Rate: 50 basis points	—	—	—	$93 million FRE
Global Private Equity FRE was in line with Q1 last year. Fundraising and realizations show strong momentum, including $5 billion in earmarked commitments for the next vintage U.S. buyout strategy. CP VII alone returned nearly $5 billion in proceeds. Expect to continue returning capital for several quarters before realizing carry from CP VII. Proceeds returned to U.S. buyout investors: $7 billionCP VII DPI: >70%CP VII Remaining Fair Value: ~$17 billion	—	—	—	$140 million FRE

CG operating KPIs by quarter

CG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Assets under management (AUM) Evergreen wealth strategies	$19B Fee-related performance revenues of $45 million in the quarter were 15% higher year-over-year, driven by growth in our Evergreen wealth strategies, where AUM now stands at $19 billion. Source: earnings call transcript	$20B We generated over $7 billion in gross sales across Evergreen Wealth over the past year, driving AUM in the strategies to a record $20 billion. Source: earnings call transcript	+5.3%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

BASF Carve-out of coatings business. $8 billion

One of two large transactions announced.

MAI Capital Management Acquisition of MAI Capital Management. $3 billion

One of two large transactions announced.

Several cornerstone investors First-of-its-kind investment solution anchored by a $5 billion commitment for the next vintage U.S. buyout fund. Provides access to fund and liquidity solution. $5 billion

Leverages Carlyle AlpInvest capabilities. Fundraising for the next U.S. Buyout Fund will launch later this year.

Risks & headwinds

Geopolitical uncertainty and splintering ongoing

explicitly unquantified

Mitigation:Carlyle's diversified platform and deep sector expertise are well-positioned to navigate the environment.

Elevated redemptions in CTAC last quarter, may persist for a little while

elevated redemptions last quarter

Mitigation:CTAC is highly diversified (over 900 names), marked daily, and offers long-term benefits. Messaging to advisors is getting through.

Industry scrutiny on day-1 markups recent

explicitly unquantified

Mitigation:Carlyle's practice is to purchase asset pools closer to par, not deeply discounted aged assets. No change in practices and advisor engagement remains robust.

What to watch in Q2 FY26

Transaction fees

Q2 FY26

Current $54 million in Q1 FY26

Target go up

Why it matters

Indicates increased deal activity and contributes to fee revenue.

In Q1, we generated $54 million in transaction fees, and we expect this to increase next quarter driven by the completion of several transactions that have already signed or closed.

Find out whether CG delivers this. Inve re-checks your case every morning.

Q&A highlights

How was the $5 billion commitment for the next U.S. Buyout Fund originated, what are the dynamics of assets and funding, how have other LPs responded, and what are the financial implications for Carlyle, including fee structure for Fund IX?

Harvey Schwartz explained the solution leverages Carlyle AlpInvest's solutions business to provide LPs with liquidity and increased U.S. buyout exposure. It's a cornerstone financing at full fees, with no impact on Fund VII/VIII, and ensures alignment through a subordinated equity portion. Other LPs have shown strong interest, indicating this is a direction for the industry.

“For the firm, obviously, and the team, it's a good outcome because it's a cornerstone financing of $5-plus billion at full fees. There's no impact. The most important thing about putting this together was obviously solving for our LPs needs, but also ensuring that there was perfect alignment with the fund and the future fund raise.”

asked by Alex Blostein · answered by Harvey Schwartz

2 min read 5 chapters

Detailed narrative

Macro Environment and Strategic Positioning

The company highlighted a complex global backdrop characterized by geopolitical uncertainty, national security concerns, and a focus on economic growth, reindustrialization, and onshoring. These trends are driving an increasing demand for private capital. Carlyle's diversified platform, spanning private equity, real assets, private and liquid credit, and Carlyle AlpInvest, along with deep sector expertise in areas like aerospace and defense, industrial, energy, and healthcare, positions it well to capitalize on these evolving investment opportunities.

Innovative Capital Solutions

Carlyle announced a first-of-its-kind investment solution, securing a $5 billion commitment for its next vintage U.S. buyout fund. This innovative structure leverages Carlyle AlpInvest's capabilities in portfolio finance and secondaries to provide cornerstone investors with both access to the fund and a tailored liquidity solution.

Management emphasized this as a 'win-win' for investors and Carlyle, reflecting a strategic evolution in client solutions and attracting significant interest from other LPs and GPs in the industry.

Capital Deployment and Realizations

The quarter saw strong capital activity, with $12 billion in realizations, marking the third-best quarter ever and a record for U.S. buyout proceeds, exceeding the prior record by over 40%. Deployment totaled $10 billion, including $4 billion in private credit and nearly $4 billion in Carlyle AlpInvest.

Notable announced transactions include an $8 billion carve-out of BASF's coatings business and a $3 billion acquisition of MAI Capital Management, both expected to close in the coming months and contribute to future transaction fee revenue.

Fundraising Momentum

Carlyle attracted $13 billion in new capital inflows during the quarter, signaling a strong start to the year. Carlyle AlpInvest raised nearly $7 billion, driven by robust demand across secondaries, co-investment, and portfolio finance strategies. Global Credit raised $4 billion, including a $1.5 billion first close for a new asset-backed finance strategy, bringing LTM credit inflows to $25 billion.

The firm anticipates an acceleration in fundraising across its platforms, entering a 'super cycle' for key strategies.

Credit Portfolio Health and Wealth Channel Strategy

The Global Credit portfolio demonstrated strong credit metrics, with a direct lending nonaccrual rate of only 1% and an inception-to-date loss rate of 8 basis points per annum over 13 years. Structured credit default rates remained low at 50 basis points, half the industry average.

In the wealth channel, Evergreen wealth strategies grew AUM to $19 billion, quadrupling in three years. Management addressed concerns regarding day-1 markups, affirming their practice of purchasing asset pools closer to par and noting robust advisor engagement despite elevated redemptions in CTAC.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.