Private equity firm Carlyle Group LP said on Monday it had raised $1 billion for its second fund focused on buying and selling financial institutions such as wealth managers and insurance firms, almost three years after it began fundraising.
While a few smaller private equity firms also run funds dedicated just to financial companies, Carlyle is the only one among the major buyout firms to do so. Carlyle first's financial companies fund, launched in 2008, raised $1.1 billion.
Financial regulations implemented in the aftermath of the financial crisis have created opportunities for private equity funds to buy assets both in Europe and the United States.
For example, Carlyle acquired TCW Group Inc, a $127 billion Los Angeles-based asset manager, from Societe Generale two years ago, as the French bank sought to bolster its balance sheet.
Yet, by industry standards, the relatively long fundraising period of the latest fund, called Carlyle Global Financial Services Partners II, shows that some investors are still skeptical about the size of the opportunity and the challenges involved.
Carlyle's first financial companies fund had generated 1.6 times its investors' money and an 18 percent internal rate of return on a gross basis as of the end of March. Carlyle's current portfolio of fully invested private equity funds had generated, on average, two times its money and a 26 percent internal rate of return over the same period on a gross basis.
Investments of Carlyle's first financial companies fund include investment bank and brokerage Sandler O'Neill & Partners LP, Florida bank BankUnited Inc and Boston-based asset manager Boston Private Financial Holdings Inc.
Carlyle's financial companies investment team is run by Olivier Sarkozy, half-brother of former French President Nicolas Sarkozy.
Washington, D.C.-based Carlyle had $198.9 billion in assets under management as of the end of March, $64.5 billion of which were in private equity