The Carlyle Group Inc.

Good day and thank you for standing by. Welcome to the Carlyle Group first quarter 2021 earnings call. As is time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today. Mr. Daniel Harris, please go ahead.

Thank you, Mary. Good morning and welcome to Carlyle's first quarter 2021 earnings call. With me on the call this morning is our Chief Executive Officer, Kyu-Sung Lee, and our Chief Financial Officer, Kirk Buser. This call is being webcast and a replay will be available on our website. 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. Thank you very much. Thank you for watching. We'll see you next time. To ensure participation by all is on the call, please limit yourself to one question and one follow-up, and then return to the queue for any additional questions. With that, let me turn the call over to our Chief Executive Officer, Kyu Sung Lee.

Thank you, Dan. Good morning, everyone, and thank you for joining us today. We hope you are all doing well and that you and your families are safe and healthy. Our strong results this quarter highlight that we are making good progress against the strategy we outlined at our Investor Day in February. We are encouraged by our early results and are committed to sharing transparently our progress. Our plan is focused on accelerating the scope and scale of our investment platforms, expanding our efforts in adjacencies like insurance and capital markets, and institutionalizing the firm to drive higher incremental margins. Over the next four years, as we execute this plan, we expect to raise $130 billion or more in new capital generate at least $800 million in annual fee-related earnings, produce at least $800 million a year in net realized performance revenue, and ultimately deliver $1.6 billion or more in annual distributable earnings for shareholders, all by 2024. We had a strong first quarter, and I am confident in our ability to achieve or exceed the goals we have set for ourselves. Today, I'd like to highlight three areas of progress. First, our investment platform is firing on all cylinders. Second, our strong performance is translating into accelerating near-term results and setting the stage for growth. And finally, we continue to improve how we operate as a firm to drive sustainable and improving performance for all stakeholders. Let me start with our investment platform. On performance, simply put, our funds delivered their best quarter in the past decade. Many of our largest and most significant funds appreciated materially in the quarter. Our corporate private equity carry funds appreciated 15% in the quarter, and our investment solutions carry funds appreciated 14%. and with global credit and natural resources carry funds each delivering 7% to 8% appreciation in the quarter, we saw strength across our entire global investment platform. On new investments, deployment activity and our deal pipeline are as robust as they have ever been. Our global platform is an incredible advantage in sourcing deals, creating value at our portfolio companies and helping us navigate a rapidly changing environment. We invested $5.5 billion of new capital in our carry funds this quarter and nearly $21 billion over the last 12 months. We saw significant regional activity in Europe, further ramp up in private equity growth opportunities in Asia and the United States, and strong activity across the tech, healthcare, and consumer sectors. With respect to exits, We generated more than $6 billion in realized proceeds for our LPs this quarter, completing full sales of portfolio companies such as PA Consulting in Europe, PIB in the United States, and Wing Arc First in Japan. We took both Adotech and Ortho Clinical Diagnostics public in the quarter, increasing our public portfolio to more than $20 billion, and from that portfolio, we sold $1 billion in shares. Most importantly, our pipeline for future realizations continues to build with the maturation and seasoning of our portfolios. Finally, on fundraising, we raised nearly $8 billion in new capital in the first quarter, with investment solutions and global credit driving a majority of that activity. Early feedback is positive on several flagship global private equity funds that are returning to market. and we expect to have first closings in several of these funds over the next few quarters. It's fair to say that our strong investment performance and elevated level of investment activity positively impacts our fundraising efforts. This brings me to the second point that success in these major business activities is generating strong financial results and positions us well to produce a material increase in future distributable earnings. The strong start to our fundraising campaign increases our confidence that as we raise capital as laid out in our plan, you'll see a commensurate increase in management fees, fee-related earnings, and margins. In the first quarter, we generated $129 million in fee-related earnings, which is an increase of 30% from an as-adjusted basis last year. We continue our focus on driving FRE, and growth in FRA should really gain steam as we activate fees on large new fund closings over the course of the next several years. But the real big news in this quarter is our record net accrued carry balance of $3.2 billion, an increase of 2.5 times from a year ago. This record level of accrued carry alongside our strong investment performance positions us to see an acceleration in net performance revenues over the course of this year and beyond as our exit pace picks up. Our momentum and continued focus on fee-related earnings and our better visibility on accelerating realization activity from the growth in accrued carry all underpin our confidence in materially growing distributable earnings as we execute against our strategic plan objectives. Finally, my third point is on the continuous changes and investments we are making at Carlyle to evolve and further institutionalize the firm to sustain improved performance. We have challenged our 1,800 people to think bigger, perform better, and move faster. We are running the firm more effectively, scaling everywhere possible, and streamlining where prudent. We are focused on continuing to attract, grow, and retain the very best talent across our entire global organization and have no doubt that our results will drive meaningful value creation for shareholders. In closing, we feel great about our strategy, performance, and improving how we operate the firm. We are building on our solid momentum to accelerate growth and create lasting impact. We are excited, confident, and optimistic for what's ahead. Over to you, Kurt.