The Carlyle Group CYL.UL has started fundraising for a new global financial services buyout fund that is seeking to top its previous $1.1 billion fund, which is now almost fully invested, a person familiar with the matter said on Tuesday.
With about 90 percent of its first financials buyout fund spent, the private equity group is looking for more firepower as Europe's financial crisis and higher capital requirements for banks offer new investment opportunities, the source said.
The new fund, Carlyle Global Financial Services Partners II, has a minimum commitment threshold for investors of $10 million and intends to fundraise for more than a year, according to a filing with the U.S. Securities and Exchange Commission.
Carlyle, which is preparing for an initial public offering in 2012, is one of the private equity industry's most prolific fund managers, with more than $148 billion of assets under management in 89 active funds and 52 fund of fund vehicles.
Carlyle's financial services group is headed by former UBS investment banker Olivier Sarkozy, half-brother of France's President Nicolas Sarkozy and a flamboyant New York socialite with a masters in medieval history from St. Andrews University in Scotland.
The California Public Employees' Retirement System, a major investor in Carlyle, had made 1.2 times its $94.1 million contribution to Carlyle Global Financial Services Partners I as of June 30, according to a performance report by the pension fund. The first fund launched in 2008.
The financial crisis which began in the summer of 2007 has weighed on private equity returns in the sector. The $7 billion financial firms fund raised in 2006 by the private equity firm founded by former Goldman Sachs banker J. Christopher Flowers is down about 60 percent, a source told Reuters in November.
However, J.C. Flowers' latest fund, which raised $2.3 billion in 2009 and has invested about half the money, is doing much better and is currently up about 30 percent, according to the source.
Investments of Carlyle Global Financial Services Partners I include Bermuda-based Bank of N.T. Butterfield & Son, Florida bank BankUnited (BKU.N) and Boston-based asset manager Boston Private Financial. BankUnited shares rose as much as 9.3 percent on the day of their debut when the bank floated in January.
Earlier this year, Carlyle participated in the $1.5 billion auction of Regions Financial Corp's (RF.N) Morgan Keegan brokerage and investment banking unit, sources familiar with the matter told Reuters in October.