Thank you for standing by, and welcome to Carlyle Group’s first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star-one-one on your telephone. I would now like to hand the call over to Head of Public Investor Relations, Daniel Harris. Please go ahead.

Thank you, Latif. Good morning and welcome to Carlyle’s first quarter 2023 earnings call. With me on the call this morning is our Chief Executive Officer, Harvey Schwartz, and our Chief Financial Officer, Curt Buser. Earlier this morning, we issued a press release and a detailed earnings presentation which is also available on our Investor Relations website. 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. We have provided a 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. I’m going to begin with a quick discussion of our results and then hand the call over to Harvey. For the first quarter, we generated $193 million in fee-related earnings and $272 million in distributable earnings, with DE per common share of $0.63. We raised $6.8 billion of new capital and deployed $3.8 billion in capital across our carry funds. Our accrued carry balance remains at a robust $4 billion. We declared a quarterly dividend of $0.35 per common share. We know it’s a busy morning, and as we already have a long queue, please limit yourself to one question and move back into the queue for any additional follow-ups. With that, let me turn the call over to our Chief Executive Officer, Harvey Schwartz.

Thanks, Dan. Good morning and thank you for joining us today. It’s great to be here with all of you. Some of you I’ve worked with in the past, and others, it will be great to meet you soon. There are three things I plan to review today: our first quarter performance, the macro environment and our general outlook, and lastly, I’ll end with some initial thoughts on my first 80 days here at Carlyle. First with regards to our performance, let me be clear - we’re not pleased with our first quarter results. Curt will walk you through the details, but our activity levels and investments, realizations, and fundraising were more muted than our prior expectations. We continue to navigate one of the most complex financial markets in recent memory, which is clouding the near-term outlook and impacting market sentiment. It’s our expectation these effects will last throughout the remainder of the year and impact both FRE and distributable earnings. That said, importantly we are confident that Carlyle is well positioned for when market stabilizes and activity levels ultimately pick up. We don’t invest and we don’t run the firm quarter to quarter. The firm has a long history of successfully investing through all cycles. We have a leading private equity business with a long-term track record, a fast-growing global credit business, and a higher-performing investment solutions business. We have $381 billion of assets under management and $73 billion in capital available to deploy across strategies and geographies, and we have longstanding, very deep relationships with the largest and most sophisticated global investors. There is substantial and very attractive white space for Carlyle to continue to grow our platform which alongside a disciplined approach to running the firm will ultimately expand margins, expand FRE, and grow distributable earnings. Shifting now to the macro environment, for the past 30 to 40 years, there have been several mega trends at play. These mega trends underpinned economic activity: a long-term downtrend in interest rates supporting an upward trend in equity markets and asset prices broadly, markets benefiting from historically low inflation, and increased globalization and technological innovation allowed global economies to thrive. Today for the first time in many investors’ lifetimes, some of those trends are slowing or even reversing. The cost of capital has gone up. Discount rates and cap rates have increased and are pressuring valuations, as well as expected returns. Of course, this shift in trends will take time to work through global markets and asset prices. Adding even more complexity, while the banking system in the U.S. and abroad generally have healthy balance sheets from years of capital building, they are now tightening underwriting standards and regional banks, following recent stress, are likely to face increased regulation and capital requirements. In my experience, this will almost certainly lead to a further tightening of lending standards, dampening the pace of economic activity. While companies are not raising capital at the same frequency as prior years, their core needs haven’t changed. They need capital to grow and capital to refinance liabilities. This is where our global credit business is taking share from traditional lenders, and just this week you will have seen Fortitude announce a major reinsurance transaction that will accelerate the growth of their business. For our LPs who require help managing their portfolios in this complex environment, our global investment solutions business is well positioned to meet this demand and continue to grow the platform. The important point to remember is that Carlyle has operated through significant market dislocations before. We remain actively engaged with sellers, buyers, and capital providers around the world - we’re very front-footed. We certainly don’t invest for any single quarter or year. We raise capital and we invest for the long term. The opportunities across asset classes, regions, and sectors are growing increasingly more attractive as markets remain volatile and uncertain. While we remain cautious on the near-term environment, we also are beginning to see opportunities to put a huge amount of capital to work that will help drive long-term performance and asset growth. This is an exciting time to be an investor in global private markets. I’ll close with some thoughts since I’ve gotten started in my new role. I spent the past few months meeting our people and getting to know our investors around the world. Carlyle is an iconic brand, one I’ve admired my entire career. We have an experienced and talented team of professionals who are up for any challenge, and that team is a big part of why I’m here. Our culture is strong. It reflects the 35-year history of the firm and is made up of a group of talented, smart, hard-working, world-class professionals who care deeply about our firm, and we are committed to being a fiduciary for our clients. We are in an industry that is growing and there is massive long-term potential for Carlyle. Everything starts with investment performance, and our firm was built to provide the highest level of care to our investors and to capture the significant opportunities that continue to emerge. Throughout my career, I’ve been a believer in disciplined growth. As we grow, we are also working to identify areas where we can instill more discipline around our operations. This approach will deliver returns for our shareholders and fund investors alike. It’s an exciting time for the industry and for Carlyle, and I’m very excited to be here and be part of it. With that, I’ll hand things over to Curt to provide a more detailed breakdown of the quarter.

Thank you, Harvey, and good morning everyone. I want to start with an outlook on three particular areas that complement Harvey’s comments and put our financial results in context with the current macro environment. First with respect to fundraising, we continue to expect to raise more capital this year than we did last year, though the composition of that fundraising has skewed further towards global credit and investment solutions and less from corporate private equity. Over the balance of this year, we expect to see CLO issuance resume in addition to incremental fundraising for a number of credit products, as well as raising capital in our secondaries and co-investment strategies and investment solutions. While we believe that we will attract a significant amount of capital for our next vintage of buy-out funds, we no longer expect these funds in the aggregate to be the same size as their predecessors and now expect to see a decline in buy-out fund sizes across most geographies. Second, as you heard Harvey indicate, we expect that the slowdown in capital markets activity will result in a muted level of near-term realizations, pressure on capital markets transaction fees, and lower performance-related earnings. That said, we continue to have $4 billion in net accrued carry and believe the firm’s ability to monetize that carry will be strong over the next few years. Third, our 2023 outlook. Given uncertainty in current market conditions, including the impact from a slower transactional environment and a lower buy-out fundraising outlook, our 2023 FRE is likely to be modestly below last year. While we expect to see top-line fee growth this year, we also expect to see continued investments into our teams and businesses. We will be disciplined managing our expenses while at the same time ensuring the firm is well positioned to grow over time, notably across our global credit platform, extending the capabilities of our capital markets team, and supporting continued growth at Fortitude. Now let me dig a bit deeper into the major drivers of our results. Fee-related earnings of $193 million increased 6% over the first quarter of 2022. Top line management fees of $506 million were up 11% year-over-year, with the strongest growth in our global credit platform through a combination of organic growth and the impact from strategic transactions last year. Fee earning assets under management of $271 billion increased 29% from the first quarter last year, driven by $28 billion of fundraising over that same timeframe alongside strategic transactions completed last year. Two days ago on May 2, Fortitude announced an agreement to reinsure $28 billion of life and fixed annuity products. This Fortitude transaction is a great example of its strategy to become a preferred solutions provider to large global insurers as it leverages its strong balance sheet and broad capabilities to pursue growth. Fortitude expects to close this transaction in mid-2023, pending customary regulatory approvals. When the transaction closes, Carlyle’s fee-earnings assets under management will increase by the amount of the reinsurance transaction as part of our strategic advisory services agreement with Fortitude, and over time we expect about 20% of the general account assets related to this transaction to be directly invested into Carlyle investment strategies. The impact of this transaction was included in our updated fee-related earnings outlook for the year. Fee-related performance revenue of $29 million in the first quarter was down from $45 million last year as the contribution from core plus real estate was muted in the first quarter, while global credit fee-related performance revenue was up more than 30%. Looking forward to the second quarter, we expect to benefit from a substantially higher level of fee-related performance revenue in global private equity. This is because we expect a significant step-up in the crystallizing of gains next quarter in core plus real estate, which will then moderate in the following quarters. As we have previously noted, we expect to generate significant revenues in this line item every year, though certain quarters throughout the year will be higher than others. Also keep in mind that fee-related performance revenue’s compensation expense, which is captured in our FRE compensation line, will vary directly at about 45% of revenue. FRE margin was 35% this quarter, down modestly from 36% in the first quarter of last year. While total fee revenues were up 7% compared to last year, FRE expenses increased 8%, leading to the margin compression. For the full year, we expect FRE margin to be modestly lower compared to 2022. Longer term, scaling the firm and operating effectively remains a key priority, and we expect to see FRE margins resume their upward trend in 2024. Moving on, our portfolio continues to perform well relative to choppy public markets, with overall portfolio appreciation of 2% in the first quarter across our carry funds and appreciation of 7% over the past 12 months. This is well higher relative to a 9% decline in the MSCI All-Country World Index over that same time period. Our global credit carry fund portfolio rose 3% in the quarter and is also up 7% over the last 12 months, while our corporate private equity portfolio was up 1% in the quarter and 3% over the past year. Appreciation in our infrastructure and natural resources portfolio was flat in the quarter amidst volatile but range-bound energy prices, but this portfolio is still up 24% over the last 12 months, and appreciation in our global investment solutions funds was up 5% in the quarter and 7% over the past year. A few other quick points. Equity-based compensation expense of $57 million increased from $41 million in the first quarter last year as an elevated level of equity grants to employees and our new CEO grants in February began to impact results. We expect to see this expense tick higher in the second quarter and then remain at an elevated level. We repurchased $100 million in shares in the first quarter, and as of March 31, our board of directors reset and increased our repurchase authorization to $500 million. Our balance sheet remains solid, over $1 billion in cash and nothing drawn against our $1 billion revolver. We have the flexibility to remain opportunistic if prospects arise to deploy our valuable capital. As we have said before, our DE effective tax rate is likely to be volatile on a quarterly basis, and this quarter it was lower than normal, but we still expect it to average around 20% on an annualized basis. In sum, while there are some short-term challenges, we are optimistic long-term and see opportunities for growth and value creation. With that, let me turn the call back over to Harvey, who would like to make a few closing remarks.

Thanks, Curt. Before we move onto Q&A, I wanted to reiterate that while there are near-term challenges, there is tremendous long-term opportunity for the firm. The overall positive trends in the industry and the strength of our brand and our people - well, these are the reasons why I’m here. It really is quite a privilege to be part of this team and part of this firm. Let me turn the call over to the Operator so we can take your questions. Again, great to be here with you.

Our first question comes from Glenn Schorr of Evercore. Please go ahead, Glenn.

Hi Harvey, good to talk to you again.

Hey Glenn. Glenn, you’re just breaking up a little bit.

Sorry. Good to talk to you again. I’m curious - you know, it’s a little bit of a unique situation, but new CEO, I heard some of your previous comments. I’m curious how you’d describe, maybe in layman's terms, what are you here to do. I saw the quote in the beginning of the slide deck of continuing to expand and diversify the platform. I heard your comment about substantial and very active white space for Carlyle, so I was wondering if you could expand on that a little bit. Thanks.

Okay, well Glenn, it’s good to hear your voice, even a little garbled, but nice to chat with you again. I hope you’ve been well. Maybe I should back up for a second and before I get directly to your question, I should just talk a little bit about why I’m here and how I got here, and that decision-making process. As I said in my remarks, I’ve known about Carlyle for my entire career. It’s an amazing brand. I know the power of an amazing brand. Since I met with the founders, we clicked immediately, and as I got to know the people, I knew the talent in the organization and the investing prowess, and then really when I looked at the valuation gap between our firm and other firms, it just didn’t make any sense to me, and so the decision to be here actually ended up being quite easy and, as I said, really quite a privilege for me to be part of this team and part of this firm. Now I’ve been here, I don’t know, give or take 80 days, the team reminded me, and I sort of jokingly, or I refer to it sort of in my own Carlyle immersion course, I’ve just been spending time with our LPs, spending time with the teams, getting to know everyone, and probably more importantly giving them a chance to get to know me. In terms of the white space, there’s just a lot of opportunity for us. We have businesses like global credit, which have been growing very quickly. We’ll continue to grow those. There’s the private wealth space and real estate, one of the highest performing real estate teams, there’s a lot of interest there, and our solutions business. You know, when you go around the firm, there’s a lot of energy to grow these businesses. Now it’s early days for me, but I can tell you the enthusiasm and the energy is real. Did we lose you, Glenn?

No, thanks. I thought we were limited to one question. I appreciate it, Harvey, thanks.

No, I just thought maybe I lost you. No, you are limited to one question, Glenn.

Thanks. Good to hear you.

You too.

Thank you. Our next question comes from the line of Bill Katz of Credit Suisse. Your question please, Bill.

Okay, thank you. I think it’s a bad connection as well. First of all, Harvey, congratulations.

We can hear you, don’t worry.

Very good. Congratulations and welcome.

Thank you.

Maybe just to build on your last set of responses to Glenn’s question, can you sort of tie together, maybe as you look at some of these bigger picture opportunities, maybe the top one or two things you’ll be most focused on as you look out over the next year or two, and relative to your discussion of disciplined growth, can you tie that into Curt’s comments about FRE guide down on expenses and where that expense growth may focus? Thank you.

My approach to business has always been centered around disciplined growth, which is also the perspective of our team and the firm as a whole. I don’t have favorites; I believe in growth for its own sake. We have ample resources, and we will address the demand for our solutions business as it arises. If there’s a desire to expand our private wealth services, we recognize that many people want access to Carlyle and our investing capabilities. Some initiatives may take longer than others, but my focus is not on prioritizing just one or two areas. As a team, we will tackle these opportunities thoughtfully without rushing. I’m not in a hurry, and our focus will be on executing excellently, regardless of how long it takes. The opportunities ahead are clear.

Harvey, I’ll address the second part of Bill’s question regarding FRE and the updated guidance. We have been concentrating on increasing FRE, which is a crucial priority for us. The opportunities that Harvey mentioned will drive our progress. Let’s take a moment to recap our journey. We increased FRE by 40% in 2022, and over the last five years, it’s grown approximately fourfold. We are well-positioned for continued growth in the coming years, but this year will not be one of those growth years. This year is more about catching up and getting things on track. The market environment is complicated, as Harvey noted in his initial comments. M&A volumes are around half of last year’s figures, IPO activities are slow, and U.S. leveraged loans have significantly decreased compared to previous years. This overall decline affects our earnings and our ability to generate transaction fees, which in turn impacts our performance revenues. The lower activity levels will affect realizations and even our fees at Fortitude. Our variable rate influences these too—when Fortitude performs well, we benefit financially, but mark-to-market adjustments can lower returns. Currently, we are seeing a lower level of performance, which has influenced our perspective on this year. However, we remain optimistic about the long term. There are numerous opportunities for growth ahead, and we will maintain a disciplined approach as we navigate the rest of this year, striving to exceed our current performance.

Okay, thank you both.

Thanks, Bill.

Thanks, Bill.

Thank you. Our next question comes from the line of Alexander Blostein of Goldman Sachs. Your question please, Alexander.

Great. Hey, good morning everybody, and Harvey, good to hear from you as well.

Hey, Alex.

Hey. Sticking with maybe some of the bigger picture kind of initiatives, as you look at areas of growth for Carlyle over the next couple of years, the firm has a really healthy balance sheet, to your point, on generating a substantial amount of cash flow. How are you approaching the capital return framework for the firm, and how are you thinking about inorganic opportunities within the context of the white space that you’ve talked about?

Yes, the white space list I mentioned is not exhaustive. You noticed the announcement of the Fortitude transaction, indicating significant growth potential for the capital markets business. Our strategy will emphasize patience and excellence in execution. You're correct to highlight the strength of our balance sheet; Curt and the team have done an impressive job in structuring it, which was one of the factors I considered before joining the firm. Our cash flow generation is robust. Ultimately, it all boils down to math. We have a cost of capital, strong cash flow, and considerable opportunities ahead. Therefore, we intend to be disciplined in how we utilize our capital while also focusing on growth, being thoughtful in our capital deployment. In the current market environment, you should expect us to maintain exceptional discipline.

Great, that’s helpful, thanks.

Sure.

Thank you. Our next question comes from the line of Brian Bedell of Deutsche Bank. Your line is open, Brian.

Hi, thanks for taking my question. Welcome, Harvey.

Hey Brian, nice to meet you.

Nice to meet you. Just your comment about the valuation gap that you see at Carlyle, and the enormous opportunity to close that valuation gap, I realize there’s a lot of things to invest in and a lot of white space, and that will create longer-term pressure on expenses; but as you think longer-term about the franchise in closing that valuation gap, how do you think about potentially changing the compensation structure to align more with some of the peers that have a higher FRE margin, and then how do you think about whether that is one way to do that as opposed to just scaling various businesses?

Hey Brian, it’s Curt. Let me start and Harvey can add in. Look - our compensation structure, we use the combination obviously of cash, carry, equity, and you’ve got to be very careful when you move the cheese. We think very carefully about how all this is set up and how we incentivize our people. The alignment that we have in place does a couple of things. First, it aligns with FRE growth and we’ve had very good growth over the past four or five years in FRE. Second, it aligns with carry generation and performance for our LP investors - very important that we drive LP performance, and the carry that we’ve thrown off, $1.5 billion net realized carry in ’21, a billion dollars last year, that provides a lot of capital as well for the balance sheet, so that alignment is important and keeping people kind of focused on the long-term trajectory of shareholder value. The equity awards obviously kind of play into that. All of those things matter, but you’re right - we continue to evaluate how it could be better and drive further things. When we have something to announce in terms of a change, we’ll be sure to make sure everybody is aware of that, but nothing new to announce today.

The only thing I would say, because you mentioned the valuation gap, when I look at the valuation gap and when I was doing my diligence, I didn’t look at it and say, oh, we want to be this firm or that firm. I just knew that it screamed opportunity because I know the power of the brand. What we’re going to do is I think what you’d hope we’d do - we’re going to listen quite carefully to our LPs, we’re going to evaluate our strength internally, and we’re going to marry those efforts together to make sure we deliver to our LPs, we drive growth, and we use our capital along the way. In terms of incentives, I think Curt captured it perfectly. We want our people to be incented, we have fantastic talent here. We want to attract the best talent, we want to retain the best talent, and so all these things are the way that we’ll think through the compensation, and listen - we want to make sure people get paid for performance. That’s how I’m thinking about it philosophically. It’s too early to comment on any specific changes, but I like Curt’s language about the cheese - I don’t think that was a prepared remark, by the way, we probably wouldn’t have put that in a script, but I think he captured it well.

Yes, that’s great color. Thank you so much.

Thank you.

Thank you. Our next question comes from the line of Brian McKenna of JMP Securities. Your question please, Brian.

Thanks. I believe it’s me, Brian McKenna, but good morning all and welcome Harvey.

Hey Brian.

Hey, how are you? It’s great to see the Fortitude deal get announced a couple of days ago, but Curt, can you just remind us about the fee arrangement for Fortitude and then how that evolves over time with underlying performance of that business, and then related, how does the pipeline look for these larger deals looking out over the next 12 to 18 months, and does Fortitude have incremental access to capital for some more deals moving forward or will they have to look to raise some additional capital?

Thank you for your question and your comments about Fortitude. We're really proud of the team's accomplishments. Our release shows that we have about $55 billion in assets under management, plus an additional $9 billion invested directly in our funds that isn't included in that total, along with another $28 billion on top of that. The business is actively pursuing new opportunities and has a significant pipeline, and it's well-capitalized. As we mentioned before, the previous raise with our partners positioned us to potentially double our assets under management there, and we are still focused on that goal. It's important to note that these transactions are complex. Fortitude has done a commendable job navigating this and has leveraged their unique skill set and strong balance sheet to accomplish things that are not easily achieved. We're very proud of their progress and believe there is more to come. Regarding the fee structure, as an investment advisor, we earn fees based on their direct investments in our products and how we enhance their performance. This means our fees are variable, increasing with their growth and performance, which we actively support. However, the markets are challenging at the moment, which has affected things to some extent. We believe there is potential for fee growth from this lower level. Additionally, keep in mind that the new $28 billion isn't finalized yet, so its contributions will be seen later in the year once it's officially closed. I hope that provides you with some clarity.

Yes, that’s great. Appreciate it, Curt.

Thanks, Brian.

Thank you. Our next question comes from the line of Chris Kotowski of Oppenheimer & Company. Your question please, Chris.

Good morning. Curt, could you provide some insights into the private equity fundraising environment? We’ve been hearing about the denominator effect throughout last year, and the situation post-Silicon Valley hasn't likely improved it. I’m also curious about the geographical aspects—while there’s been talk about the denominator effect in relation to U.S. buyouts, we know there are two significant Asian and European funds nearing the end of their deployments with strong track records. Can you share any particular strategies or insights on how you plan to raise funds for the successors?

Hey Chris, good to hear your voice, and thank you for the question. Look, I am very proud of my partners, especially in the buy-out space and the private equity space - long, very successful track record, done a lot of great stuff over the years and fully eager to take advantage of opportunities as they are in the current environment. I think there’s going to be some really neat deals done here in the near term, and I think that creates some just tremendous opportunities also in terms of encouragement from fundraising. But look, it’s a tough fundraising environment and particularly in buy-out funds, and so based on what we see today, we think in the aggregate across all of the different buy-out funds, they’re going to be somewhat smaller, maybe a little bit the same. But in the aggregate, the dollars are going to be lower than what the predecessors were. We still think this is a very good business for us and we can do a lot. What I’m really encouraged about is the underlying portfolio, and the portfolio has really done well. Revenues are up across the PE space about 12% over the last 12 months. EBITDA continues to grow, up just shy of 10%. Margins have held up strong. From a financing perspective, there are no major issues in the PE space. Over half of the debt across the portfolio is fixed or hedged, and roughly 95% of the debt has maturities in 2025 or later. That’s all really important, because it tees us up to really generate the types of returns that we’ve done in the past and makes me very encouraged about the $4 billion of net accrued carry on our balance sheet and how we turn that into cash in the coming years. It will be a little slow this year, but feel really good about that $4 billion, and look - giving capital back to our LPs obviously is helpful and is what our teams are very much focused on. Hopefully that gives you some color, Chris.

Okay, yes. Thank you, that’s it for me.

Thanks, Chris.

Thank you. Our next question comes from the line of Rufus Hone of BMO Capital Markets. Your line is open, Rufus.

Hey, good morning. Thanks very much. Wanted to come back to the insurance transaction with Lincoln. Can you speak to how competitive that deal was, and then can you help us with what the FRE contribution from this deal might be and how quickly do you expect to be able to migrate the 20% of general account assets into Carlyle group funds and hit the full FRE run rate contribution you expect there? Thank you.

Rufus, look - I’m a little sensitive on some of these components. We’re also dealing with a public company as the seller, so I’m going to be a little careful in terms of how I answer this. But this sets us up really nicely for growth, particularly in 2024. I think the transaction - very carefully negotiated, I think our team worked really closely with the seller. I don’t want to speak too much in terms of how competitive, but we were uniquely positioned to be able to do the transaction, and especially something of this size and complexity, and really solving the needs of all parties, so I feel good about that. The amount that will directly come into our funds, some of it as quick as this year. Obviously, we’ve got to get it closed first, but you would kind of think of that mostly over a two to three-year period. But the one thing I will say is Fortitude has been pretty aggressive in terms of migrating stuff pretty quickly - you know, exclusive of this, already at $9 billion committed or invested into Carlyle strategies, and looking to do the same. First and foremost, though, we’re motivated through our fee arrangement to make sure that Fortitude does well and that we’re a good advisor to them, regardless of whether that comes directly into Carlyle product or into other types of assets. We’re seeking to help them perform really well. Thanks, Rufus.

Thank you. Our next question comes from the line of Kenneth Worthington of JP Morgan. Your line is open.

Hi, good morning. I wanted to extend on insurance. We’re seeing a much greater integration of insurance in alternative asset managers, and there are some different approaches that your peers have taken to growing insurance. You mentioned that there are opportunities to grow here. Where does insurance or the insurance opportunity fit in your priority stack for Carlyle growth, and do you think Carlyle has the credit breadth to sort of maximize this insurance opportunity? For Carlyle, Fortitude seems to be the focus of the strategy here. Does that focus on one insurance company really make sense, or to get big, do you need to broaden out the presence? A bunch there, but thank you.

Hey Ken, I’ll start and Harvey can add in. First, we serve a number of insurance investors. We’re an investment advisor, we’re not an insurance company, and so Fortitude, obviously because of our history of strategic investments with them and with our partners, that’s why we tend to in these calls emphasize that, but there are a number of insurance companies that our credit team is routinely working with for a number of products. The growth in our credit business has been fantastic. We’ve doubled FRE there, doubled the AUM, Mark Jenkins and the team have just done a super job there, and they’re very much focused on the insurance channel and taking advantage of it, and so doing a lot there. Again, you want to be always thinking about how to grow the business and grow it in a disciplined, profitable way, and they’re doing just that. In terms of Fortitude itself, as it continues to scale, I think we’ll also see more steady flows of investments coming off of that, and I think that that also will help Carlyle from a growth and planning and getting things coordinated. But I like where we are, I like kind of the breadth and I like kind of the relationship we have with Fortitude, and again Fortitude has a very deep pipeline of other opportunities and it will pursue that, and from a Carlyle perspective, we’re here to support them. They’re a separate company and there are other investors we work with. I don’t know, Harvey, if you have anything to add to that?

No, I think Curt covered it very well. I would just say again, in my first 80 days or so of being here, it’s clearly obvious the strategic power of being an investor in Fortitude and its alignment with the firm and the growth of our credit business, and so again it’s very high on the priority list but there are a lot of good opportunities. This is one of them.

Great, thank you.

Thank you.

Thanks Ken.

Thank you. Our next question comes from the line of Adam Beatty of UBS. Adam, your line is open.

Thanks very much, good morning. Welcome to Harvey.

Thank you.

Appreciate you’re taking all these questions. I wanted to follow up on the valuation gap, and appreciate all your thoughts so far this morning. But just from the angle of perception, I was wondering if there’s anything that you’ve been hearing in your discussions with LPs or investors in the stock, or even sell side or what have you, that’s just a misperception, where you’re already starting to think, hey, this is something where we’re actually not the way we’re perceived, and we just have to correct that. Thanks very much.

No, I don’t think there’s anything we have to correct. I guess I would say it like this - when I talk to LPs, and I talk to LPs all around the world, I think it’s just crystal clear the brand is way more powerful than the valuation right now, and so that’s why I say, we just have to close that valuation gap. The brand is incredible, and so we just have to work with our teams, we have to execute, we have to grow this opportunity set that Curt and I have been talking about, but the brand is great. It’s disproportionate to the valuation, and the valuation just needs to be as great as the brand.

Got it, thanks very much. Appreciate it.

Sure.

Thank you. Our next question comes from the line of Ben Budish of Barclays. Your question please, Ben.

Hi there. Thanks so much for taking the question; and Harvey, great to meet you, if only over the phone here.

Morning Ben, you too.

You know, you guys have talked a lot about the big opportunity set you see going forward, and I think on the last call, I think Curt, you mentioned that you see an opportunity for the company to grow FRE well into the double digits over the medium term. I wanted to ask about how you see private equity fitting in there, just given the step down in expectations for the current vintage of funds. What are your longer term thoughts on how that business can grow from an AUM and FRE perspective?

Ben, it's great to hear from you and I appreciate your question. Our private equity business has an extensive track record, and it's important to understand that not every vintage will perform well. Our private equity segment is quite varied. We have a real estate division that is performing exceptionally and has clear growth potential. Additionally, our focus is on expanding our infrastructure and natural resources sectors, which are also promising. Our growth capital segment has yielded excellent returns. We anticipate exploring other products that could further enhance our offerings. In terms of private wealth, despite being in the early stages, there is significant interest in these product sets. This is an area we plan to develop further in the long term. There are numerous opportunities for growth in our business, and we will remain disciplined and strategic in ensuring we are equipped with the right resources aligned with our asset base. I am very optimistic about our prospects.

I appreciate the color, thanks.

Thanks Ben.

Thanks.

Thank you. Our next question comes from the line of Chuma Nwankwo of Morgan Stanley. Please go ahead, Chuma.

Hey, good morning. Thanks for taking the question, and welcome Harvey.

Hey, nice to meet you.

Hi there, nice to meet you too. I’m standing in for Michael Cyprys, by the way - he’s just tied up on another call. Just wonder if I could go back to the Fortitude transaction and talk a little bit about the opportunity you see there with the transition of the general account assets. I think in the past, you’ve previously talked about sort of mid-teens, and now you’re talking about 20% here, so nice to see that, I guess, above expectations. I guess the question is, how should we think about that 20%? Would you be disappointed if you didn’t do better than that? Also going back to the question about white space, what products do you see those assets potentially transitioning into that you have today, and where could there be potential for more product development to increase the scope for more of these insurance assets to be deployed? Thank you.

Let me address that. Regarding the 20%, it seems you're expecting more precision than we typically have. It's approximately 20%. We're focused on supporting Fortitude in making the best decisions for itself, and if that means exceeding expectations, we’ll work together to achieve that. Conversely, if the outcome is slightly lower, that's acceptable too. We're committed to collaborating with Fortitude on this. When it comes to the incoming assets, we'll carefully determine the best approach. As I've mentioned before, we can transition some of these assets quickly, while others may take longer, but our goal is to assist them effectively. We've also discussed the potential for growth in other product areas, and I want to emphasize that we anticipate 2024 and the subsequent years to mark a return to growth in FRE. We remain optimistic about our $4 billion in net accrued carry and how it will contribute to increasing distributable earnings over the long term. I hope this answers your question.

Thank you for the color, appreciate it.

Thank you.

Thank you. I would now like to turn the conference back to Daniel Harris for closing remarks. Sir?

Hey everyone, again on behalf of the team here, Curt and Dan and everyone, just want to thank you for participating on the call. Again, for those of you I know, great to catch up again, and for those of you I haven’t met yet, I look forward to catching up with you shortly. Again, thanks for your interest. Have a great day.

This concludes today’s conference call. Thank you for participating. You may now disconnect.