Good day, ladies and gentlemen, and welcome to The Carlyle Group's Second Quarter 2018 Earnings Conference Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] I’d now like to turn the call over to Daniel Harris, Head of Investor Relations. Please go ahead.

Thank you, James. Good morning, and welcome to Carlyle's second quarter 2018 earnings call. With me on the call today are our Co-Chief Executive Officers, Kewsong Lee and Glenn Youngkin, and our Chief Financial Officer, Curt Buser. This call is being webcast and a replay will also be available on our website. We will refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided reconciliations of these measures to GAAP in our earnings release. Any forward-looking statements made today do not guarantee future performance and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our Annual Report on Form 10-K that could cause actual results to differ materially from those indicated. Carlyle assumes no obligation to update any forward-looking statements at any time. Earlier this morning we issued a press release and detailed earnings presentation with our second quarter results, a copy of which is available on our Investor Relations website. Let me quickly summarize the results for the quarter. We generated $58 million in Fee Related Earnings and $115 million in Distributable Earnings in the second quarter with DE per common unit of $0.29. Economic income in the second quarter was $272 million with after-tax ENI per unit of $0.69. Our Distribution for the quarter will be $0.22 per common unit. Also this morning we announced the acquisition of 19.9% stake in DSA Reinsurance from AIG, which Kew will discussed in more depth during his remarks. To ensure participation by all those on the call, please limit yourself to one question and return to the queue for any additional follow-ups. With that, let me turn it over to Curt Buser.

Thanks, Dan. Carlyle results in the second quarter demonstrate continued progress in growing our business and driving sustainable earnings growth. Our funds performed while, we grew Fee Related Earnings, increased accrued carry and we remain on track to achieve the goals we have laid out for this year in 2019. Specifically during the quarter our carry fund portfolio appreciated 5% with particular strength in a Real Assets and Investment Solution segments. We invested $3.5 billion with more than half of that deployed outside corporate private equity. We raised $12.3 billion in new capital and we realized proceeds of $7 billion in our carry funds. Our quarterly financial results reflect our focus on growing Fee Related Earnings. We generated $58 million in Fee Related Earnings in the quarter nearly triple the FRE generated a year-ago and we expect FRE to continue to grow over the next few quarters. We now believe we will exceed our $75 million quarterly target by the fourth quarter of this year. In fact today we see the potential for fourth quarter FRE to be around $85 million on a run rate basis. During the second quarter we activated management fees on our newly raised U.S. and Asia Buyout funds. Contributing to the $41 million increase in base management fees compared to the first quarter of this year. These two funds along will drive incremental net management fees of over $20 million in the third quarter. Catch-up management fees which have not been significant of over a year contributed $12 million in the quarter. Our strong fundraising results drove total fundraising related expenses to $37 million, $18 million higher than the first quarter of this year. Cash compensation expense in the quarter was $17 million less than this year’s first quarter. Although, equity-based compensation expense increased $12…

Thank you, Curt and good morning everyone. To pick up or Curt just left off, we are making good progress across the entire business. And as you will hear from Kew, we are also excited about the DSA re-announcement this morning. I want to highlight two big picture takeaways from the quarter. First, fund raising momentum remains strong and we are head of our targeted pace for two thousand and 2018. As a result, our new and larger funds are driving growth in the Fee Related Earnings. And second, our funds continue to perform well, generating our highest level of accrued carry positioning us for increased future realized performance fees. So first on our fundraising momentum, we have raised a record level of new commitments, $52 billion over the past 12 months. And even though we had fairly high expectations for 2018, we are raising more capital at a faster pace than originally anticipated. We now expect to raise about $30 billion for the year, up from our prior estimate of $25 billion, which would bring us by the end of the year to about 87% of the way towards our $100 billion target. At the same time, some portion of the capital we are raising this year is being pulled forward from what was originally planned for 2019. We recently finished fundraising for the latest vintages of both our Asia and U.S. buyout funds. In Asia, we have one of the best investment teams in the entire region, one that has consistently delivered great performance for our fund investors over the last two decades. And in the United States, our private equity team is moving from strength to strength. As we have just finished investing our six-fund and now raise the largest fund in Carlyle’s history. Along with the…

Thank you, Glenn. Earlier this morning we announced that Carlyle has entered into a definitive agreement to acquire a 19.9% strategic equity stake in Fortitude Group Holdings, the parent of DSA Reinsurance Company Limited, a re-insurer wholly-owned by AIG. In connection with this deal DSA Re also entered into an investment management agreement whereby $6 billion of assets will be committed into a variety of Carlyle investment strategies. Over the past few years we have explored several options to increase our exposure to managing assets in the insurance space, which is a growing global market of about $15 trillion. Our partnership with DSA Re and AIG helps in this regard by extending our investment capabilities into the insurance sector. DSA Re as a Bermuda based Reinsurance Company with $36 billion in GAAP reserves as of March 31, 2018. The company manages a diversified and season portfolio of life annuity and general insurance policies. The average duration of DSA Re reserves is 12 years and about a quarter of those reserves have over a 30-year life. In other words this partnership has the potential to provide long-term sticky sources of investable assets for Carlyle to manage. Given DSA Re primary responsibility to satisfy the obligations it has made to its policyholders. Carlyle's ability to generate attractive long-term risk adjusted returns will help DSA Re grow its capital base, maintain healthy capital ratios and prudently manage risk. Let me provide more details on the transaction itself and in the process give you additional commentary on why we believe this is an attractive opportunity for Carlyle. We will fund our acquisition of the 19.9% equity interest with an upfront cash payment of $381 million to AIG and an additional payment of $95 million in approximately five years. We will finance this transaction with…

Thank you. [Operator Instructions] Our first question comes from Bill Katz with Citigroup. Your line is now open.

Okay. Thank you very much for taking the question and good morning everyone. So just maybe picking up on some of the last area in terms of the insurance opportunity, thanks for some of that guidance. I guess maybe taking that guidance a little bit further. I apologize, but a bit of a multipart question. You mentioned accretive there was – help us out, so the time between FRE, the revenue is down, maybe the FRE impact, what kind of hurdle rate you think you need to add in terms of the carry? And then more broadly, how quickly do you think you could scale this opportunity with some other type of either similar deals or scaling this one as well? Thank you.

Sure, Bill. First of all with FRE, I think I just laid it out in terms of our estimate. Once the $6 billion is allocated over and gets fully invested, we do think it's about $50 million in annual management fee revenue that comes from that. And I just want to point out there's very nominal amount of incremental expenses that will be needed to be added as a result of this transaction because the vast majority of these assets are being managed by existing teams on our platform. In terms of the hurdle rate, nothing has changed there. The hurdle rates apply as are normal terms. And so we're quite confident that should we perform as we have in the past that we will be able to generate performance fees. In terms of the timeframe, this will take about 30 months to bring in those assets as we work in partnership with DSA and AIG. And then finally, I think your last question was scaling and other types of things like that, I'm chuckling a little bit. We've got a lot of work to do to just get this thing closed and then get this thing carved out. Clearly this platform if prudently managed is a great platform for future growth and if that happens, Carlyle and AIG will benefit. I think right now that we've got our hands full just getting this thing going and deriving the benefits from this particular transaction.

Okay, thank you.

Thank you. Our next question comes from Patrick Davitt with Autonomous Research. Your line is now open.

Hey, thanks for the question. I guess to the third point on how to make money from the insurance vehicle? I guess on appreciation of this the stake, would there be planned I guess over the long run for it to become an independent company? And how would you expect to fund future acquisitions to the extent they come into play?

Good question. In terms of independent company, clearly AIG is set this company on a path for independence and we in conjunction with AIG and DSA management. We will figure out what the ultimate path is for this entity. Is it a possibility that it becomes public or is it a possibility. It diversifies its shareholder base, obviously that that could be scenarios that could happen. Again right now, we've got our hands full just getting this thing carved out and working with management team did to get it all set up. So that was the first part of your question. And then in terms of funding, the great – it's a very large company. And it generates a lot of cash and our current assumption is that it will be so funding as it relates to its growth.

Thank you. Our next question comes from Ken Worthington with JPMorgan. Your line is now open.

Hi, good morning. I apologize, this a little bit pie in the sky. But Glenn and Kew, you guys have been in the top seats for six months or so, things seem to be going really well. Fundraising seems to going well. Performance is going well. The firm seems to be as well positioned as I've seen it, you guys as a public company and you’ve given us an awful lot of details on how well things are going during the call? But from a higher level, like how are you using this position of strength to position Carlyle for the future? And the move to One Vanderbilt seems like a subtle, but maybe important example here. What other sort of changes are you making like from reporting lines to empowering certain positions to efficiency, capital structure like, what else are you doing and thinking about behind the scenes that might not have come in the details that you've given us during the call?

Ken, thanks for that question and by the way thanks for the accolades at the start of it. We'll let you join our team. We are really focused on executing against what we told you all were executing against. We're focused on driving investment performance and you can see from the quarter that that continues to actually demonstrate itself in our results that we're focused on finishing our fundraising goals. As we've said, we're focused on building a credit business and we are focusing on growing FRE. And all the things that you hear us talk about just underpin those goals and there's no massive shift in strategy. We're just executing against what we've told you all that we would execute against. As Kew had said in an earlier call we were focused on insurance sector and here we are executing on the insurance sector. So I don't mean do not give you a whole detail plan, but we're just doing what we said we were going to do and I think it's going well.

Okay. Thank you very much.

Thank you. Our next question comes from Michael Cyprys with Morgan Stanley. Your line is now open.

Hi, good morning. Thanks for taking the question. I guess just changing topics on Real Assets record quarter for that division. Can you just talk a little bit out more about what's driving that success there can we expect this sort of degree of ENI in the segments you repeat in the coming years ahead and how should we thinking about long-term earnings power in Real Assets. So it's really seems to be getting a lot of momentum here?

Yes, thanks Mike. The Real Assets segment as Curt said had a good quarter, but it's also had a good year and we do see good momentum there. And as you know our Real Assets segment really has a number of components energy, infrastructure, and real estate and we've just seen good performance from all of them. I think the key to the success over the course of the last year has been underpinned by the scale of the business that we've been able to obtain by the investment performance. I have to say both the real estate and the natural resources portfolio continue to go from strength-to-strength the natural resources business as you saw was up 9% in the quarter, it's up in the high-20's over the course the last 12 months, the real estate business was up 5% in the quarter and that's just good underpinning. I think the second thing that we've done as we've built just great teams and these teams continue to find good things to do. And I think finally we have a long-term vision of continuing to build the sector. And so as Kew and I continue to chart the path you'll continue to see us invest behind the sector, grow this sector. And we think it will continue to be a good performer force.

Great. Thank you.

Thank you. Our next question comes from Mike Carrier with Bank of America. Your line is now open.

All right. Thanks guys. Maybe just a question on FRE, so good look this quarter, Curt you mentioned $85 for the fourth quarter in the run rate. I'm just longer-term I think when we look at you know Carlyle in the past you had probably a little bit more cyclicality year than some appears you guys have been you know much more focused on trying to drive that growth and maybe sustain it. Just wanted to get you some sense on how are you looking at FRE over the longer-term maybe what are you putting in place either to may be sustain the level or mute some of this that we've seen in past. And encouraged if you have any color on the catch-up fees and like the fundraising cost just over the next few quarters, that's helpful as well? Thanks.

Hey, Mike thanks for that. So you're right. So there have been some natural cyclicality in the business and we are focused very much on that. And that's where really kind of the growing both kind of scale, growing our global credit business, really the transaction we just announced, all of these will help to under support really kind of a core level of much higher results and much higher Fee Related Earnings and we've historically done and minimizes cyclicality that you've seen. I think it will always be some cyclicality in the business so to say to say it will eliminate is probably leave you in the wrong place. What you're really pleased about is what we've already seen in FRE growth and what we've seen and what we're expecting here in the next couple quarters you're going to see that continue to go up and that's factoring in the continued fundraising that we have been and it's factoring in really everything else from an expense standpoint from a catch-up management fee standpoint very little from – I would say from historical perspective $12 million during the quarter mostly in Real Assets $8 million. We'll see some going forward, but it really remembers it always comes back to when tacking back from when you turned on the fees originally. So the catch-management fees I think will be you know somewhat helpful, but it's really not going to be a I don't think a big driver going forward. Fundraising costs look I think as we are focused on that along with of our expenses in terms of managing fundraising costs, but we're going to see FRE continue to grow and we think we'll hit that $85 million number by Q4. So I'm feel and really good about how we underpin things on a go forward basis.

All right. Thanks a lot.

Thank you. Our next question comes from Robert Lee with KBW. Your line is now open.

Great. Thanks. Good morning, everyone. Thanks for taking my question.

Good morning, Rob.

Good morning. I mean clearly fundraising have been exceptional for you and many of your peers, and going even faster than it anticipated, but I’m just curious are there any strategies or products where maybe it’s been more of slog or LPs have been more resistant. And then maybe as a second part to that mean that you and the industry have been enjoying such robust capital formation. What can kind of – what do you – as you look ahead, what are you kind of concerned about or think about that kind of dampen the party so to speak if you look ahead over the next couple of years?

Well good morning, Rob. It's Glenn. First, the fundraising success over the course of the last year as all of you know is driven by a number of factors. The first is great performance and the industry has performed and Carlyle has really performed. And as a result, our LPs around the world are increasing their allocations and it's not just one category of our LPs. We're seeing it across the board with increased allocations and strong support across product lines and across the globe. So no single category of our investors are driving this, no geography is driving this, it is just across the board uplift. I do think that of course not everything gets raised as easily as everything else and one of our key factors is launching new products into the market and you've heard about some of the new things we're doing in credit and natural resources. And those new funds of course take a little extra lift because they're new. And so when you're raising fund seven or fund eight or fund five, it’s just a much longer track record, and so new stuff takes a little extra lift. And then finally, I think the key for our industry is just to continue to perform. You heard me mention in my remarks, this 500 basis point to 1000 basis point premium to public markets and it's not going to be every quarter, but over a long period of time the industry and particularly Carlyle has to continue to outperform. And so that's where you see us really investing in our internal capabilities to do that. And the good thing is we have a high degree of confidence, we can continue to do that.

Thank you.

Thank you. Our next question comes from Brent Dilts with UBS. Your line is open.

Hi. Good morning. Could you guys just talk about where you think we are in the credit cycle and how you're balancing growth in the credit segment with that?

Hi. Great question, Brent. I think you can't talk about the credit cycle without having some sense for what's happening in the real economy. And clearly everyone is focused on trying to understand kind of what inning we are with the current economic expansion. And from my perspective, it feels like we're in the later innings not in the first few innings. But having said that, the growth that we're seeing and the underlying health of the economy that we're seeing globally not only United States, but in Europe and in China continues to motor along. And right now, when we look at our portfolios be it on the private equity side, but also as we track very carefully all the loans and all the credits we have throughout our credit platform, our performance continues to stay on track and delinquencies and defaults are kind of in line with what we want them to be. And so it's one of these things where everyone is worried about the credit cycle per se. I'm kind of much more focused on and the institution is much more focused on the underlying real economy which still seems to be supportive. I would also point out that with the recent volatility that everyone has seen, we are starting to see some pushback with respect to terms spreads and softer terms with respect to credit, meaning there is some discipline that we're starting to see coming back into the market. I'm not saying that that's a trend, I'm just saying we've observed that there seems to be a little bit of a flattening out of spreads as opposed to compression and pushback on terms as opposed to just a constant terms just continue to get worse. So I don't know that's helpful color to you, but we clearly are on the later stages, but everything we're seeing right now seems to jest the real economy is still performing steadily and well.

Okay, great. Thank you.

Thank you. Our next question comes from Gerald O'Hara with Jefferies. Your line is now open.

Great, thanks. Circling back to the insurance platform for a moment and picking up on the comment that would be self funding with respect to future growth, clearly realizing its early days, but perhaps you can elaborate a little bit on what that growth opportunity looks like either by industry or perhaps geography, and perhaps some of the market dynamics there that make it attractive? Thank you.

Sure, Gerald. It is early days. So let me try to give you a sense. First of all, let's keep in mind, DSA – and there's a really good cultural fit here with respect to AIG and the partner, and the management team of DSA quite talented that that we are truly focused on doing what's best for DSA and ensuring that our policyholders of DSA well taking care off and that risk is managed prudently and capital is managed prudently. So that goes without saying. With respect to where there could be growth, if you take a step back, there is a $15 trillion market of reserves and in many cases, these books of business are orphaned and tying up enormous amounts of capital on insurance companies' balance sheets. And what DSA intends to do and it's a very well positioned platform to do that with this talented team, with its global footprint and with its very diversified in season portfolio, what it's very well positioned to do is go engage in dialogue with the insurance sector to provide a solution, which is a comprehensive solution, not only from a reinsurance capacity perspective, but also in an investment perspective to take on those liabilities in a more efficient way than the current owners of the liability. So it's an enormous market. It's very different what we're doing and what others are trying to do. We do think that there is real growth here, but I don't want to get ahead of ourselves. We need to get this thing carved out. We need to work in partnership with AIG and DSA. We need to get this thing stood up. We need to rotate assets into Carlyle and get the $6 billion working. And I'm sure as we go through all this that there will be ample opportunity in a prudent way for us to find real ways to grow.

Great, thank you.

Thank you. Our next question comes from Glenn Schorr with Evercore. Your line is now open.

Hi, thanks very much. Maybe just a follow-up on Investment Solutions, performance was awesome. You talked about some closings in AlpInvest. But maybe just a little more color on what's going on behind the scenes there?

Glenn, it's Glenn. Thanks for that question and the Investment Solutions group really is performing well, as we have kind of highlighted over the last few quarters, there's been good momentum from the investing side there. Their returns are strong. They particularly have seen the secondary business gain some momentum here from an investment pace standpoint over the course of the last quarter or so. The co-invest business continues to be strong and we're really seeing some good movement in the real estate secondaries and co-invest business, so all good. I well highlight and I think Curt made a comment in his remarks that there is a legacy set of assets that came from the original owners of AlpInvest. That will continue to bleed off and so the fee earning AUM number and the AUM number will continue to highlight for you all that that those assets are burning off, and we are replacing them with what we think are very attractive assets that we manage. But underlying performance continues to be good and we will continue to give visibility on that as such agreements burns off.

And the secondaries business is competition heating up at all? We've just seen some other funds open across the board. I don't know if that has any direct immediate impact on bid as spreads as you have taking on new business, just curious on secondaries specifically.

Yes, well, the secondary business like all asset classes is competitive. There's a lot of capital that's been raised. To remind you that the Alpinvest funds of $6.5 billion, secondaries fund which they closed last year. And it's a competitive market. I will say the Alpinvest team has a very unique approach. They aren't buying single LP positions, but they are doing far more big deals, recapitalizing GPs, structured deals and they are competing well and the returns are good.

All right. Thanks very much Glenn.

Thank you.

Thank you. Our next question comes from Brian Bedell with Deutstche Bank. Your line is now open.

Great. Thanks very much. Good morning. Hey just two part question, one for Curt just on the FRE bill this week go into 2019 appreciated with guidance is getting that run rate up to $85 million in the fourth quarter. As you think about the trajectory of funds you're moving into fee-paying AUM in 2019 verses a lot of the different investment initiatives, that you have global credit. Should we be thinking of - sort of a little bit more of the investments spend given your success in the business as sort of a counterweight to growing that $85 on a quarterly run rate since 2019 or do you expect that $85 to move up. And then just on one follow-up question for Kew on the insurance and thanks you for going into a lot of detail in that, but you did mention how you think you're differentiated in your effort first and the others may be you can go to little more detail on that? Thanks.

Brian, thanks. Look we remain focused on FRE and as we've given guidance we've also been careful to use terms like run rate. And so trying to really kind of signal not like peak numbers and cyclicality and the like but really kind of what can we sustain and generate. And so the $85 million is a number that I feel comfortable with and I also feel comfortable if that's a good number to kind of think about on a sustained basis. It is a number of things that will drive growth here in the near term as we've already seen U.S. in Asia and you’ll get the full quarter impact next quarter you're about the big fun we've not completed raising that we've not yet turned on the fees for that and so that's going to be another big contributor to growing fees. We have a number of other products that are in the market and as those turn on. They will also contribute in those are across really all of the segments. Our global credit business is really going to also contribute. We have a number of new products there and we're going to continue invest. Now the caveat but I want to put in as just as Glenn remarked on investment solutions, on the legacy run off there could be some near term pressure on FRE is there and there could be some near term pressure on global credit, really as you know we continue to invest or we really think that’s going to be a nice trajectory to long-term. Overall although that FRE number until really good about and that takes into account all of those items that I just mentioned on a total basis.

Hey, Brian. In terms of differences - we're just very different we're not consumer facing at all. We don't need to set up origination or distribution channels or deal with wholesale channels to originate policy from the end consumer. So we're not consumer facing. And our DSA is a very broad and diversified book of business it's not monocline. It's an upper range of both P&C life product lines. As well as it's just extremely global. So I'm not so sure you can really compare apples and oranges we're just different what we like about what our platform is all about is that, first and foremost this is a season book of really long tail, long duration liabilities and it sets up a really great path for potentially sticky assets to come and to Carlyle in the future. And the platform itself it's a real one of the leading companies in the in the industry. And so I'm not trying to avoid your question at all I'm just trying to point out. It's just very different the $15 trillion market is humongous and we just have a differentiated in a different way of approaching how we can extend our investment management capabilities into that sector.

And just the timing I guess it's hard to access completely because it's a huge market and it's a lot of [indiscernible] news in that direction. But do you sense there's an urgency on the part of insurers to do more of these types of arrangements or are they more thoughtful and [indiscernible] long-term growth dynamic?

My perspective is that there is a lot of interest from the C level down in the insurance sector as to how do you free up capital and manage capital more efficiently, and how to take care of these types of liabilities in a fashion that is very favorable to policyholders. That is a huge need that a lot of companies in the insurance sector quite frankly have faced forever, but the pressures of a low yield investment environment for a prolonged period of time juxtaposed against regulatory and rating agency regimes in terms of capital consumptiveness of supporting the investments and these books of businesses, it's just a moment in time when I think you'll see a prolonged period where insurance companies are going to be looking for holistic solutions with trusted partners to figure out what to do with these types of long duration reserves.

Great. Thanks very much for that color.

Thank you. [Operator Instructions] Our next question comes from Alex Blostein with Goldman Sachs. Your line is now open.

Great. Thanks. Good morning, everyone. Just going back to the discussion around FRE and scale, I guess looking at the $85 million that you highlighted for the first quarter, feels like you guys will be 20% plus of Re margin, when you get to the point you stop fundraising and investing in the business. So I guess looking out a year plus months through the fundraising cycle, how do you guys think about FRE margins over time and what do you guys think they could go? And then I guess more specifically, does that $85 million include any contribution from the DSA transaction through FRE? Thanks.

Alex thanks. So first the $85 million does not include anything from DSA in that number, so that is incremental. Now regarding FRE margins, specifically we have a lot more further work to do on FRE margins before we really commit to a target. I'll remind you what I said, last quarter talked about prior high of about 23%. If you look at the numbers, this quarter we're at 17% and I fully see it’s getting back to that 23% and pushing through that, probably pushing through that sometime in 2019, but not yet committed to putting a new number on the page. We need more work to do. Look, things like growing the credit business DSA Re, other things that we're working on hopefully will be additive.

Thank you. Our next question is a follow-up from Patrick Davitt with Autonomous Research. Your line is now open.

Thanks for the follow-up. Will the DSA assets flow into new funds as they raised or kind of co-invest from some sort of separate account vehicle? And to what extent should we think about it as excremental to money you probably would have raised already? I guess in other words just replacing money you could have raise from another LP at some point?

Hey Patrick. It’s Kew again. That's a great question. Suffice it to say, we’re pretty sensitive to understanding the difference between incremental versus cannibalization. And I think it's fair to say, through in essence and SMA like structure, we believe that a significant portion of the assets we manage on behalf of DSA will really be incremental. So let me leave it at that and a large portion of this is going to be dependent on exactly what rotates over, exactly what asset classes it goes into et cetera. But we're quite cognizant of the important issue you raised, and we feel very good about the way we have structured how we will be able to deploy the assets that come over to us.

Thank you. Our next question is also a follow-up from Robert Lee with KBW. Your line is now open.

Great. Thanks for taking my follow-up. I'm just curious, I mean I haven't heard too much commentary about it certainly on this call – recent calls, but in the past you did talk about expanding the PE franchise into what I guess you could call core PE in a more long-dated PE and I think the same thing in real estate. Could you maybe just update us on some of those initiatives and you kind of thinking of them and how they're going?

Sure. Sure, Robert, great question. So yes, Carlyle was one of the first – it’s not the first firm to get into the long dated private equity business. We launched Carlyle Global Partners. One – although it didn't have a one at the time because it was the first fund. But we launched Carlyle Global Partners several years ago and it's now done in so well that we are imminently about to launch Carlyle Global Partners II. And it's a fund that has close to $3 billion already invested into the ground and we have some very happy limited partners and we see increasing demand from our LP base to allocate into a longer dated type of a strategy in a very complementary way to traditional buyout strategy. So on the private equity side, we feel we're very well positioned and are in fact trying to scale that strategy up. Clearly, you've also heard what we've done in other asset classes, CPI, which has raised over $1 billion already, $1.6 billion I believe is – and it's an open ended fund. It's a form of permanent capital. It targets inability to find not really core, but core plus rates of return and real estate with the benefit of a capital base, which allows it to hold these assets for a much longer period of time. Clearly, our BDCs got a lot of permanent capital in it. BDC-1 is already public. As you know the leverage ratios just changed to the total asset and AUM power so to speak of that franchise only has scaled up. And then initiatives like that from a permanent capital perspective are terrific, but to your first question, on just longer dated and longer oriented assets, I think initiatives that we've put in – that we got started several years back on the private equity side and real estate side are actually doing quite well and continue to scale up.

Great, thank you.

Thank you. And our next question is a follow-up from Michael Cyprys with Morgan Stanley. Your line is now open.

Hi, thanks for taking the follow-up. Just wanted to circle back on the flagship fund that you’re raising, if you could just talk to how the economics in terms on those funds differ from the prior generation, maybe in terms of some of the step down dynamics fee to – anything any color you could share there, would be helpful? Thank you.

Sure, yes. Hi, it’s Kew. And thanks for that question Mike. Without getting into fund by fund details, let me just kind of laid out like this. We feel great about the fact that we are raising our flagship funds. On a fee basis that's comparable without real degradation of our weighted average fee from our previous fund. And if anything I would say, the softer terms in terms of periods and resets et cetera are all the same or in some instances better. So you should assume and obviously our carry rate hasn’t changed. You should assume the economics and the structure are the same or in some instances a little bit better than what we've had in the past.

Okay, thanks. End of Q&A

Thank you. I’m showing no further questions in queue. So I'd like to turn the conference back over to Mr. Harris for closing remarks.

Thank you all for your time and interest today. If you have any follow-up questions, feel free to reach out to Investor Relations and we look forward to talking to you again next quarter.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you very much for your participation. You may all disconnect. Have a wonderful day.