Carlyle Group Inc. is reshuffling the leadership of its secondary investments business to reflect the growing importance of providing liquidity to private equity fund managers.
Michael Hacker will take over as the global head of portfolio finance, while Chris Perriello will be the global head of secondaries in the new structure. Until recently Perriello was the co-head of secondary and portfolio finance at Carlyle’s AlpInvest Partners unit. They will both manage a team of nearly 40 investment professionals across the two strategies.
“There is a distinct credit product and an opportunity to compete with some of the standalone players in the market,” Perriello said in an interview. The team will offer various forms of credit including preferred equity, structured credit and loans to general and limited partners.
The upcoming retirement of Amsterdam-based Wouter Moerel, a co-head alongside Perriello, was an opportunity to re-think the direction for the secondary business, Perriello said. Moerel will take on a senior advisory role in January before retiring when the firm completes deployment of the AlpInvest Secondaries Program VII by the middle of 2023, Perriello said.
Portfolio Finance
The move underscores the growing stature of the portfolio financing business within Carlyle’s secondary strategy, as the buyout firm seeks to differentiate itself from larger peers by taking on more complex transactions. This kind of lending could account for over $50 billion in transaction value in the next three to five years, Hacker said in the interview.
The secondary and portfolio finance group manages $21 billion of assets, compared with around $369 billion globally at the investment manager.
Carlyle began investing in transactions like preferred equity through its main secondary fund in 2018, Perriello said. By 2020, portfolio financing investments involved more debt-like structures, and the firm began pitching a new fund exclusively for portfolio finance to investors.
“It became obvious that because of the difference between return profiles of credit and equity profiles, it made more sense to have separate pools of capital,” Perriello said.
Going forward, the firm will continue to make investments through separate funds. Its secondary group will invest in general partner-led funds and in stake sales from limited partners, which are outside investors who back private equity funds.
Carlyle declined to comment on its fundraising plans for the two strategies.
Last year, Carlyle deployed $7 billion of equity capital into sponsor-led and limited partner-led secondary transactions and $1 billion of portfolio finance into credit opportunities.
