Carlyle boss Kewsong Lee stepped down at the $14 bln asset manager and co-founder Bill Conway will be in charge as they look for a replacement. That’s a step back in Carlyle’s transition, argues TheRealLSL:
, Carlyle blazed the path for private equity. Founders of other firms, including KKR’s Henry Kravis and Apollo’s Leon Black, all led them until recently. Steve Schwarzman still sits atop the $123 billion Blackstone, the largest of its competitors by market capitalization.
Lee was the start of a transition away from the people who opened Carlyle’s doors. He took up his role in 2018 alongside co-head Glenn Youngkin. In July , Youngkin stepped down, and later won a bid to become Virginia’s governor. Lee has been running the firm solo since then.Lee made strides to diversify Carlyle away from being too heavily into private equity, including taking a stake in insurance company Fortitude Re and expanding the credit practice. But shareholders haven’t seen a whole lot by way of results. Since the start of 2018, Carlyle’s shares including dividends have returned around 90%, about half that of KKR.
The stock fell 6% in midday trading on Monday, suggesting shareholders were annoyed that Lee and Carlyle couldn’t at least have come to an agreement that would have allowed him to finish up his five-year term. Now, one of Carlyle’s co-founders, Bill Conway, will lead it as they search for a new CEO. That in some regards is a step back. Conway is around 15 years Lee’s senior, and his appointment suggests there weren’t other candidates ready to go.
Transitional setbacks are natural after a company has been run by its founders for decades, and something similar could happen at any of Carlyle’s competitors. Still buyout shops are becoming broader in their scope and less flashy in the assets they manage and the fees that they charge. As the alternative asset management business starts to blend with traditional asset management, it becomes more competitive, and the environment more challenging.
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