Non-public fairness big Carlyle Group is changing its chief govt Kewsong Lee, who will go away the New York and Washington-based group simply two years after he was appointed in July 2020.
The exit throws the $376bn group’s management into renewed upheaval because it navigates a more difficult funding atmosphere, with unstable markets and a pullback in commitments from institutional traders.
Lee’s exit, introduced on Sunday night, got here as his contract negotiations with Carlyle reached an deadlock. Lee, who was named co-chief govt in 2017 alongside Glenn Youngkin, was given a five-year contract that expired on the finish of the yr.
As a substitute of constant to barter, Carlyle mentioned its board of administrators had determined to not renew Lee’s contract. After it knowledgeable Lee of the choice, he determined to step down instantly.
“Each the corporate’s board of administrators and Mr Lee mutually agreed as a part of their discussions that the timing is correct to provoke a seek for a brand new CEO,” mentioned Carlyle in a press launch.
Lee’s sudden departure marks one other impromptu change in Carlyle’s succession planning past co-founders William Conway, David Rubenstein and Daniel D’Aniello, who created the agency in 1987.
Not like opponents corresponding to KKR, Carlyle has struggled to establish its subsequent technology of management. Lee served as co-chief govt alongside Youngkin, a cut up function that was speculated to resemble the joint management of Conway and Rubenstein in the course of the agency’s ascent right into a publicly listed business big.
Nevertheless, Youngkin determined to retire on the finish of 2020 after friction grew with Lee, plunging Carlyle’s succession plan into turmoil.
Lee took over sole management of Carlyle because it recovered from the shock of the coronavirus pandemic, which had brought about the agency to file steep losses as efficiency flagged in lots of its funding funds.
Underneath Lee, Carlyle’s enterprise rebounded as he plotted the agency’s growth in credit score and insurance-related investments below new handpicked management. Lee additionally set a goal of elevating $130bn in new cash by 2024, with a lot of the fundraising targeted away from Carlyle’s conventional company buyout enterprise.
In second-quarter earnings launched in late July, Carlyle had made it greater than midway to Lee’s goal, which he insisted the agency would hit. Nevertheless, fundraising within the agency’s buyout unit has slowed. Within the second quarter, its new flagship fund raised simply $2.2bn.
On the similar time, Carlyle expanded shortly elsewhere, placing a partnership with insurer Fortitude Re that introduced in $48bn in new property final quarter.
In an interview with the Monetary Occasions in late July, Lee emphasised Carlyle’s diversification from non-public fairness buyouts, through which the agency first made its identify below Conway and Rubenstein.
“The most important share of our fee-earning property below administration is now related to world credit score,” mentioned Lee, dismissing fundraising challenges in Carlyle’s eighth flagship buyout fund as “previous information.”
“It’s a really completely different agency than only a few years again,” he mentioned. “Now we have been intentionally diversifying our enterprise.”
Cofounder Conway, who for many years oversaw Carlyle’s non-public fairness investments, will turn out to be its interim chief because the group searches for a brand new chief govt.
Conway mentioned he was “grateful” to Lee for his efforts to “place Carlyle for the long run”.
Lee mentioned he was “grateful for the chance to construct the agency with an extremely proficient and dedicated workforce”.