CG Q2 2025: Record Fees of $323M Up 18%, Raises FY Growth Guide to 10%
- Robust Fee Growth: The company delivered record FRE of $323 million up 18% YoY and raised its full‐year FRE growth guidance from 6% to 10%, driven by strong organic momentum across multiple platforms.
- High-Quality Capital Markets Revenue: Consistent growth in capital markets fees—achieved without taking balance sheet risk—demonstrates effective operating leverage and positions the firm for further expansion in a friendly macro environment.
- Expanding Wealth & Product Innovation: Momentum in the wealth channel with strong performance in products like CAPM and CPAP, aided by strategic global partnerships (e.g., with UBS), underpins the potential for diversified future revenue growth.
- Underwhelming fund performance: The discussion on CP7 revealed that its net IRR remains around 8% and that it is not expected to be the firm's best performing fund. This suggests that delayed carry triggers and subdued performance fees could hurt future revenue growth.
- Dependence on improved macro conditions: Several Q&A responses emphasized that much of the fee growth—especially in capital markets—is contingent on an improving market environment. A failure to see such macro improvements could negatively affect fee-related revenue.
- Evolving growth trajectory in key segments: Management indicated that the historic “step function” growth in areas like ALP Invest and secondary funds may not continue at the same explosive pace, potentially challenging the sustainability of organic fee expansion expectations.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Full Year FRE Growth | FY 2025 | no prior guidance [N/A] | 10% | no prior guidance |
Full Year Inflows | FY 2025 | no prior guidance [N/A] | $50 billion | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
FRE Growth and Margin Improvement | Q4 2024 and Q3 2024 calls highlighted strong FRE growth (nearly 30% YoY, record FRE earnings, and margins of 46%-47%) | Q2 2025 call reported record FRE of $323 million (up 18% YoY) and a record FRE margin of 48% with consistent year-to-date growth | Consistent improvement with record margins and sustained growth across periods. |
Capital Markets Revenue Expansion | Previous calls in Q4 2024 and Q3 2024 emphasized record transaction fees, diversification into asset-backed finance and infrastructure, and a balance sheet–light revenue model | Q2 2025 call detailed the development of a strategic, high-quality, non–capital-risk revenue stream with organic growth opportunities | Continued strategic focus leading to steady organic growth and diversification of revenue streams. |
Wealth Channel Expansion and Product Innovation | Q4 2024 and Q3 2024 discussed record wealth inflows, headcount expansion, new wealth solutions (e.g. Cap M), and the planned launch of a private equity product | Q2 2025 call highlighted significant momentum driven by global repositioning, flagship fund development, and an upcoming CPAP product launch | Enhanced innovation and global expansion with strengthened product offerings and channel growth. |
Global Private Equity Performance and Management Fee Dynamics | Q3 2024 and Q4 2024 calls noted strong fund performance with U.S. and Asia fund appreciations, operational improvements, and management fee challenges (decline in 2024, pending fee activation) | Q2 2025 call showcased strong performance in U.S. and Asia platforms, improved fee growth, significant capital returns, and robust performance metrics | Performance improvement continues with heightened fee growth and better capital return prospects despite earlier fee declines. |
Underwhelming Fund Performance and IRR Challenges | Q3 2024 and Q4 2024 calls flagged concerns with CP7’s 8% IRR and some funds underperforming, alongside discussions about volatility and public market impacts | Q2 2025 call again noted CP7’s underwhelming IRR of 8% while CP8 showed better performance with healthy DPI, alongside efforts to improve overall fund performance | Persistent challenges in IRR remain with mixed signals as some funds lag while others show improvement. |
Macro Environment Dependency for Revenue Growth | Q3 2024 emphasized factors like election certainty, Fed policy shifts, and favorable market conditions indirectly supporting revenue (also noted some market noise in Q4 2024) | Q2 2025 call featured improved market sentiment, accelerated deal activity, and progress from tariff/tax negotiations, positively impacting revenue outlook | Shift toward a more positive macro outlook driving elevated revenue growth and improved market sentiment. |
Global Credit and Asset-Backed Finance Opportunities | Q4 2024 and Q3 2024 highlighted robust Global Credit growth (22% increase, new asset-backed finance transactions) and early stages of asset-backed finance opportunities with sizable AUM | Q2 2025 call reported strong Global Credit performance with FRE up by 37% YoY, a 40% increase in asset-backed finance AUM, and new strategic partnerships in fintech | Consistent high-growth trajectory with strategic partnerships enhancing both Global Credit and asset-backed finance opportunities. |
Increased Expenses and Margin Pressure from Aggressive Investments | Q4 2024 call mentioned elevated G&A expenses due to seasonality, fundraising costs, and FX impacts, alongside investments in growth areas like Global Wealth and Credit | Q2 2025 call does not explicitly mention increased expenses or margin pressure; focus remains on strong FRE margins and growth investments [N/A] | Topic no longer emphasized in Q2 2025, possibly indicating resolution or de‐prioritization of expense concerns. [N/A] |
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FRE Growth
Q: What drives record FRE growth?
A: Management emphasized a record FRE of $323M up 18% YoY driven by strong organic growth and robust capital markets and deployment activity, bolstering full‑year outlook. -
GPE & Buyout
Q: How are GPE fees and U.S. buyout views?
A: They noted improved performance in U.S. buyout with consistent capital return and are on track to reduce management fee decline, signaling potential for fee growth in 2026. -
Capital Markets
Q: Will capital markets fees strengthen?
A: Management expects the quality, non–balance-sheet driven fee stream to benefit from organic growth and expanding market activity, projecting a higher run-rate in the second half. -
CP7 Carry Tipping
Q: When will CP7 hit the carry threshold?
A: They explained that while CP7 has appreciated 17%, carry will be driven by continued performance improving DPI; current accrued carry increased 30% year over year. -
Insurance Pipeline
Q: What’s driving insurance growth?
A: With Fortitude showing strong reinsurance results including a $4B and recent Unum closings, management is ramping up activity and maintains flexibility to deploy more insurance-based solutions. -
Credit Business
Q: How will credit platforms evolve?
A: The group is leveraging a convergence of traditional and private credit, enhancing asset‐based finance and partnering to boost private investment grade returns. -
Alpenvest & Solutions
Q: What’s the outlook for Alpenvest funds?
A: Growth is steady as larger, more consistent secondary and co‑investment funds replace step‑function cycles, with funds already showing significant oversubscription. -
Wealth Product Development
Q: How will wealth products expand?
A: There’s a clear plan to build hybrid and diversified products, leveraging global brand and client needs in both private and public sectors to capture the growing wealth market. -
Secondary Returns
Q: Can secondaries sustain strong returns?
A: Despite increased capital deployment, management believes secular tailwinds and liquidity demand will preserve the returns, given industry fundamentals remain favorable. -
Global Private Equity
Q: How will internal collaboration improve private equity?
A: Greater cross‑platform collaboration has enhanced global private equity performance, with strong U.S. and Asia results driving robust realizations and capital returns. -
Retail CPAP Flows
Q: What are CPAP product flow expectations?
A: Early indications are positive; management sees the CPAP launch as a catalyst for further wealth engagement, with advisors showing clear interest. -
Wealth Expansion Strategy
Q: What’s the long‑term wealth vision?
A: The strategy focuses on leveraging global brand, diverse platforms, and tailored solutions to capture a growing, global wealth segment, aiming for a long‑term, client‑centered expansion.
Research analysts covering Carlyle Group.