Omen-watchers have been scrutinising the announcement that Carlyle Group Co-Chief Executive Officer Glenn Youngkin is stepping down and retiring for signs of trouble in the private equity firm, or in the industry as a whole.
Key man and succession issues are perennial in private equity to the extent of having clauses written for them in limited partner agreements. But Carlyle is broad and institutionalised enough to raise no questions about its investment prospects after Mr. Youngkin’s departure at the end of September, leaving Kewsong Lee as the sole CEO.
It’s not like Mr. Youngkin had to bow out to take the blame for any recent underperformance. Quite the reverse.
Carlyle’s first-quarter results showed the firm beating Wall Street profit estimates, with distributable earnings surging 73% year-on-year to US$175 million, though it did lessen the value of its portfolio because of the impact of the coronavirus crisis.
Carlyle marked down its private equity portfolio 8% for the quarter, albeit less than the 21.6% reduction at rival Blackstone Group. Carlyle’s stock more than doubled during 2019. After plunging in March, the price has recovered near to its January 2020 highs.
Although Carlyle warned of further impact from the coronavirus in its second-quarter results, it’s hardly alone in this. Even as the firm warned of a potential slowdown in limited partner commitments and fundraising, it closed its $2.3 billion Japan fund in March, and according to Bloomberg, is now seeking to raise a $2 billion Growth Equity Fund targeting mid-size opportunities in North America.
Meanwhile, Indian news media quoted Carlyle’s Hong Kong-based Managing Director and Co-Head of Asia Buyouts Greg Zeluck predicting a substantial uptick in deals in the subcontinent over the next five to seven years.
Carlyle, in short, looks well positioned across the board.
David Rubenstein and Bill Conway, Carlyle’s co-founders and executive chairs, are still very much around, and both paid tribute to Mr. Youngkin in the company statement announcing his departure.
Mr. Youngkin’s decision seems to have been triggered more by personal factors – not necessarily unrelated to Covid-19. “As the world continues to face so many challenges today, and as Carlyle is well-positioned, now is a natural point to focus my full-time efforts on community and public service efforts that I believe can make a meaningful impact,” he said in the statement.
Speaking on CNBC at the World Economic Forum in Davos in January, Mr. Youngkin rated environmental, social and governance, and stakeholder capitalism as “incredibly important”, noting that Carlyle started sustainability initiatives about nine years ago and “we’ve really been on this bandwagon for nine years”. It’s likely that he will continue to push such issues after his exit.