Carlyle : Morgan Stanley’s US Financials, Payments and CRE Conference Transcript

The Carlyle Group

June 12, 2024

10:15 AM EDT

Page #1

	The Carlyle Group
	June 12, 2024
	10:15 AM EDT
Michael Cyprys:	All right. For important disclosures, please see the Morgan Stanley research disclosure
	website at morganstanley.com/researchdisclosures. The taking of photographs and the
	use of recording devices is also not allowed. If you have any questions, please reach out
	to your Morgan Stanley sales representative.
	All right, with that out of the way, good morning, everyone. Thanks for joining us here
	on Day 3 of the Morgan Stanley Financials Conference. I'm Mike Cyprys, equity analyst
	covering brokers, asset managers, and exchanges for Morgan Stanley Research. And for
	our next session, I'm excited to welcome John Redett, the CFO at Carlyle. As many of
	you know, Carlyle is a global alternative asset manager with over $400 billion of assets
	under management across private equity, real assets, credit, and solutions.
	John, thank you so much for joining us here this morning.
John Redett:	Mike, thanks for having us here today, and it's good to be with all of you. And as for
	historical, we've had a very good relationship with Morgan Stanley, so thanks for inviting
	us.
Michael Cyprys:	And we appreciate it. So why don't we kick off with a little bit of an introduction of your
	background and your transition to the CFO role? You've been at the firm, at Carlyle for
	many years. You stepped into the CFO role, I think it was about a year ago, actually, this
	time. How's the transition been and how are you allocating your time these days?
John Redett:	Yes, so I've been at Carlyle for 17 years. Up until I became CFO around 12 months ago--
	I think it was officially 9 months--but when I transitioned 12 months ago, my last job in
	private equity was I ran financial services private equity globally for Carlyle. And of the
	17 years at Carlyle, 16 of those have been on the private equity side of the business. So
	I've been at the firm a long time.
	And being a public company CFO was not on my list of things I wanted to do in life. But
	when we had some turnover at the CEO level, we hired Harvey, and I spent a lot of time
	with Harvey when he joined. I was the financial services expert in Carlyle, so I spent a lot
	of time with him. And the banking crisis, mini-banking crisis we had hit right when he

The Carlyle Group

June 12, 2024

10:15 AM EDT

Page #2

	started, so I spent an extraordinary amount of time with him. And I really liked the way
	he thought about the business. And it was really, in my opinion, the first time we had had
	a real world-class operator running the business. So when he asked me to be CFO, I
	jumped at the opportunity. I was quite excited about it.
	So 12 months in, I think the transition's been pretty good. I think what has enabled that to
	be quite smooth was, A, I've been at Carlyle for 17 years; I know the firm exceedingly
	well. I know all the senior people at Carlyle. And 2, I've spent my entire Carlyle career
	and my career before Carlyle in financial services. So this is just a sector I know
	exceptionally well.
Michael Cyprys:	Great. Maybe you can give us a little bit of an update on the strategy that Harvey has laid
	out. Talk about some of the progress that you've made so far.
John Redett:	Yes, so I think you just need to take a step back and more at a high level. We have made
	some organizational changes that I think create better alignment to drive growth within
	the organization. If you look at the management team in place, it's entirely new. Harvey
	has been here 15 months. I've been CFO for 12 months. We have a new COO, we have a
	new Chief Technology Officer, we have a new Head of Distribution, we have a new
	Head of Wealth Distribution, we have a new Head of Communications. So the entire
	management team is new, and I would say we've been incredibly fortunate because this
	team works incredibly well together, and that's not always the case when you make that
	amount of changes.
	So we have a new team in place. Some of the, I think, the big changes we made in the last
	12 months, and Harvey led a lot of this, was the first thing I tackled when I became CFO
	was our compensation. And our compensation structure really had not changed much
	since we went public 12-odd years ago. And most of our competitors have altered their
	compensation structure. So we spent a lot of time internally, very carefully thinking
	through a compensation construct that created better alignment among our stakeholders,
	our stakeholders being our employees, our shareholders, and our LPs. And I think we put
	forward something in the fourth quarter that really reflects that hard work. Any time you
	adjust compensation in a human capital business, you have to be careful. I think that
	change was incredibly successful, very well received, and there's an additional
	component to that in terms of how we granted stock to people that are actually driving the
	growth in the business. And that stock is tied to our stock price, which is the first time
	we've ever done that. So those were some big changes.
	We completely rethought how we think about capital as a firm. I don't think Carlyle as a
	whole really was all that analytical in terms of the allocation of capital, so that's
	completely changed. And lastly, expenses--I think the firm had just gotten a little fat, and
	it was pretty easy to find opportunities to where we were not spending money wisely.
	This was not an exercise about cutting to the bone. This was just, "Let's make the firm
	more efficient," because I do think more efficient firms are better able to respond to
	market changes and grow. And I saw that in the 35 investments I made in the private
	equity space.
	So it's a lot of change in 12 months, and I think that when you look at the financial
	results, you're starting to see that change happen. So fourth quarter FRE was a record.

The Carlyle Group

June 12, 2024

10:15 AM EDT

Page #3

	Last year, 2023 FRE was a record. First quarter FRE was a record. Our margin is in the
	mid-40s, our FRE margin. If you go back 10 years, it's probably averaged 20% to 25%.
	So these are some pretty big movements.
	So as I sit here and look at the business today, I feel very good about the momentum the
	firm has. And when I just take a step back and I look at the platform, I like the collection
	of businesses we have. I like our credit business, I like our PE business, I like our
	solutions business. I don't see any real gaping holes.
Michael Cyprys:	So you mentioned margin, you mentioned expenses, so why don't we just dive into that
	angle? I'm going to jump ahead to my margin and expense question here and instead,
	we'll come back to some other topics in a moment. So you have a 40% to 50% margin
	target for this year. Maybe just talk about some of the underlying contributors to get
	there. Clearly, you've made some changes on the compensation side, but as you look
	ahead on a multiyear outlook, maybe you can help unpack some of the building blocks,
	whether it's around the fee activations and give us a flavor for the type of expense cuts.
	You mentioned some expense cuts you've put through. Is there scope for more? Is there
	scope for more efficiency add?
John Redett:	Yes, look, this is never going to be an expense story. This is going to be a growth story,
	and we're completely focused on growth. That said, I'm running the firm like I would
	expect a CFO of a portfolio company to run the firm. Let's spend the money wisely like
	it's our money, let's operate the business efficiently. So when I look at the margin going
	forward, it's going to be a combination of the comp change we made, running the
	business efficiently, and driving growth across our three main businesses.
	We put that 40% to 50% range out there, and I realize it's a pretty large range, and we're
	operating already at the midpoint of that range, 45%. I know our margin was 47% in the
	first quarter. I think it was 43% in the fourth quarter. I think we can operate the business
	in the mid-40s for the near term. It would be my hope and intention that we could run the
	business at the high end of that range down the road, and I'm pretty confident we can get
	there.
Michael Cyprys:	So that's more like a medium-term, couple of years type timeframe to get there?
John Redett:	We're going to do it in a way that makes sense for the business.
Michael Cyprys:	Fair enough. Why don't we tick it up a notch, big picture, and maybe we could talk about
	some of the macro trends that you're seeing across the world through the lens of your
	portfolio, whether it's inflation, high interest rate backdrop. Just curious of what you're
	seeing and how that's impacting some of the portfolio company trends in terms of
	revenue and earnings growth.
John Redett:	Yes, so we're certainly operating in a different rate environment than most of us have
	been operating in for a long time. The time these rates went up was incredibly swift and
	quick. In terms of our capital structure, I would say we were very forward-leaning and
	aggressive at the beginning of this rate hike cycle, so I feel very good about our capital
	structures. I don't think we have a meaningful refinancing until '26 or '27, so I sleep very
	good at night on that front.

The Carlyle Group

June 12, 2024

10:15 AM EDT

Page #4

	In terms of looking at our portfolio, and I'll start with private equity, I would say our
	portfolio is performing a lot better today than I would have expected a year ago. And you
	can see the dilemma that [indiscernible] faces when you look at the data. And we have
	unbelievable data. We have companies we own all over the world. We employ through
	our portfolio companies, I think, 1.3 million employees. So we have unbelievable data.
	And in the US in our PE portfolio, our EBITDA's growing 10-plus percent, our revenues
	are growing 7.5%, our margins improved the last 12 months 150 to 250 basis points. So
	our portfolios are performing really well.
	When you look at our credit business, it's a very similar story. Admittedly, we probably
	go a little more higher up on the credit spectrum, but our asset quality metrics are at
	historic lows. So across the portfolio, our performance is better than I thought it would
	have been.
Michael Cyprys:	And related to that, you guys have about $75 billion of dry powder. So maybe with that
	backdrop that you outlined there from a macro standpoint and some of the portfolio
	trends, where are you seeing some of the interesting opportunities for capital to work?
	Any areas that you're avoiding today?
John Redett:	Yes, so we have $75 billion of dry powder. I think roughly half of that is in our private
	equity business. I like having a lot of dry powder as we sit here today. I think it's a good
	thing to have.
	We see opportunities across the platform. I would say in private equity, we just closed a
	Japanese buyout fund which was meaningfully larger than our last one. They've been
	very active. They've been in the news recently with some deals. We see a lot of
	opportunity there. I would say in the United States, our pipeline of opportunity has picked
	up in the last couple of months, so I'm pretty optimistic there.
	Outside of private equity, our solutions business, which is a fantastic business,
	unbelievable organic growth, they've been very active. We continue to see opportunity in
	our solutions business with secondaries, co-investment as well as NAP financing.
	And really in our credit platform, we're seeing opportunity across the platform. The asset-
	backed space continues to have a lot of tailwinds. I think that continues for quite a bit of
	time. I think there are some exciting things going on there. Our insurance business
	continues to have a lot of opportunities. The CLO market really opened up in the first
	quarter. We were very active. So I see a lot of opportunities across the platform.
	There's pockets where the pipeline's not as good as you would like it to be, but generally
	speaking, there's a lot of opportunity across the platform.
Michael Cyprys:	That's encouraging to hear that the private equity pipeline is picking up.
John Redett:	Yes, it is encouraging. A couple of months ago it was a little slow. I think we're close on
	a couple of things, so I feel pretty good. But that's very dependent on markets, and I'd say
	the DEP markets are open. The IPO market is not as open as investment bankers tell you
	it's open, but it's getting better.

	The Carlyle Group
	June 12, 2024
	10:15 AM EDT
	Page #5
Michael Cyprys:	Okay. Maybe shifting over to the exit backdrop, you had a very meaningful, large exit
	already this year. And when you look at the overall portfolio today, particularly on the
	private equity side, how much of that would you say is exit ready and you're just waiting
	for a better macro backdrop for pulling the trigger in realizations. Do you need the IPO
	market to come back in order to see meaningful exits?
John Redett:	So in our private equity business, I would say roughly half of the investments are 4 years
	or older, so we have a lot of good companies that we're ready to exit. And we have $2.2
	billion of accrued carry on our balance sheet, which is a huge number. So if the markets
	continue on their current trajectory, I think you'll see a lot of realization activity. And in
	particular in the US, we have more than a handful of companies that we're ready to exit,
	and these are good companies. So I'm optimistic, but we need these markets to continue
	to improve.
	Having the IPO market openly available, accessible, is very helpful in terms of how we
	think about exits. Oftentimes, we like to run a dual-track process. And with the IPO
	markets closed, you can't really do that.
Michael Cyprys:	And how's the pipeline today of exits as you look out?
John Redett:	It's pretty full. It's full. I feel good about it. It's full of some high-quality companies that I
	think will have some real interest. So I'm pretty optimistic for the year. It's really hard for
	me to think about it quarter to quarter, but over a longer-term trend, assuming the markets
	continue to improve, I feel pretty good about it.
Michael Cyprys:	Do you think the election could have any impact on the realization exit pipeline or the
	deployment?
John Redett:	The election's probably a multi-hour conversation.
Michael Cyprys:	What's the 30-second takeaway?
John Redett:	It's entirely possible that a lot of things slow down in and around the election.
Michael Cyprys:	Okay. Maybe shifting gears to fundraising, you have suggested that you could raise $40
	billion of capital this year. Maybe talk a little bit about the building blocks to get there
	and what gives you the confidence in $40 billion.
John Redett:	So when we put the $40 billion target out there last year, we obviously had pretty good
	clarity into it to put that out there, and we still feel very good about that number. I know
	our first quarter was lower than some people expected, but that followed a huge fourth
	quarter, so we expected it to be light. And actually, it ended up coming in exactly as
	expected, almost to the dollar. The second quarter will be meaningfully higher, so I feel
	good about that, and we still feel very good about the $40 billion number.
	So what also gives me comfort about the number is it's spread across our three
	businesses. We're not really dependent on one particular fund to drive us to that $40
	billion, $40 billion plus. So it's spread across solutions, it's spread across credit, and it's

	The Carlyle Group
	June 12, 2024
	10:15 AM EDT
	Page #6
	spread across our private equity business--our private equity business, including our real
	estate business.
Michael Cyprys:	Great. Maybe digging into some of the businesses, starting with private credit, maybe just
	give us a sense of the capability set today. You guys have been building out the private
	credit business for a number of years. Maybe talk about the progress that you've seen so
	far. Where do you see incremental opportunities to continue to build out the private
	career business?
John Redett:	The private credit business for us is a very important business. We've been very vocal.
	We want to grow this business, we want to scale this business. It's a business we're very
	pleased with how it's performed. If you look out over the last 4 years, our FRE's up 3x,
	our AUM's up 3x. So this is a business that's growing. We're very happy with this
	business in terms of how it's performed. But we also want to further grow and further
	scale the business.
	So I think when you look at the spectrum of products you want to have on the credit
	platform, we have all the credit products we need. Now there are some areas where I
	think we need to scale more, and we're focusing on those businesses. But we have an
	insurance business, we have Fortitude. We have one of the largest CLO businesses in the
	world. We have a very good opportunistic credit business. We have a direct lending
	business. We have an infrastructure credit business. And we're rapidly building a high-
	growth asset-backed business which I think is going to be a big driver of that growth
	going forward. So we have all the pieces. There are certain areas where I think we need
	to better scale, and we're very focused on that. But I think our credit platform will be a
	key contributor to our growth drivers going forward.
Michael Cyprys:	Which would be some of the areas that you're more focused on scaling, would you say?
John Redett:	I think we can better further scale our direct lending business. I think we can better scale
	our infrastructure credit business. And I would say our asset-backed business is scaling
	quite rapidly. We've gone from zero to $7 billion in 18 months, and I would expect that
	kind of acceleration and growth to continue.
	Another key driver of our credit growth is our wealth product, CTAC, which has very
	good performance. And that is a mix of what we have across the credit platform. We're
	very pleased with how that product is performing and also starting to scale. And that's on
	all the major platforms you want to be on.
Michael Cyprys:	When you think about scaling infrastructure credit, direct lending, the asset-based finance
	business, what are some of the steps that come to mind as you look out over the next 2
	years, some of the action items that you would envision taking? And would any of this be
	inorganic?
John Redett:	Inorganic gets into the whole capital allocation conversation, and we can probably hit that
	right now if you want. As I said earlier, I don't think we as a firm historically had been all
	that disciplined in terms of how utilized capital, and you could argue particularly on the
	M&A front. So we've taken a whole different approach in terms of how we think about
	allocating capital.

The Carlyle Group

June 12, 2024

10:15 AM EDT

Page #7

	And I think about capital simply on a spectrum of really, there's four things I could do. I
	can buy back my stock, I can give you a dividend, I can invest in businesses for growth,
	or I can go do something inorganic or M&A. And where I sit today, I'm happy with
	where our dividend is. I'm more than happy to invest in the businesses for growth. But
	when I look at returns, I think I'm getting a better return buying back stock than I am
	going to buy something inorganically.
	Now that could change. We might find something on the M&A front that is highly
	attractive and financially attractive, and we could pivot and do that. But we are very
	focused right now on the stock buyback. But I'm not ruling out M&A. But you should
	rest assured that if we did something on the M&A front, we will be incredibly disciplined
	and rigorous in terms of the analytics as to whether or not that works.
Michael Cyprys:	Since you brought up buybacks, first quarter was very strong in terms of buyback
	activity. What can we expect going forward, particularly here into the second quarter and
	the back half of this year?
John Redett:	Yes, so the first quarter we bought back roughly $150 million of stock. And just to put
	that into context, I don't believe we've ever bought back more than $200 million in any
	given year. So it was a significant size of a buyback for one quarter. We announced a
	large buyback in the fourth quarter. You should assume we're still going to continue to
	buy back stock.
	In the 12 years we've been public, we've actually increased our share count every year.
	Last year was the first year that we have actually shrunk our share count. And you should
	assume that we're very focused on managing dilution going forward. But I like buying
	back our stock. You should assume we're in the market, and we will continue to buy back
	stock.
Michael Cyprys:	Maybe bringing it back to the credit part of the business, want to talk about CLOs. You
	guys have a leading global CLO business.
John Redett:	We do.
Michael Cyprys:	There's been some--well, a big recovery this year, clearly, in CLOs. But there's also been
	a little bit of noise in some parts of the marketplace that's impacting some credits and
	some portfolios. Maybe just give us an update on how this business is performing and
	how you're seeing the overall credit landscape today.
John Redett:	Yes, so this is a very large business for us. I think at any given time, we're number one or
	number two in the world, so it's a very large business. It's a very high-margin business. I
	like this business. We've been at this business for 20 years, so this is not a new business
	for us. We have an unbelievable track record in this space. I think our default rates are
	roughly half the industry average, so it's a good business for us. We have a 20-year track
	record. We have a very experienced team. So I like this business a lot.
	We were very active in the first quarter. Quite frankly, the industry was active. We
	priced, I think, roughly seven CLOs in the first quarter, so it's been very active. And

	The Carlyle Group
	June 12, 2024
	10:15 AM EDT
	Page #8
	where I sit today, I think the risk of management fee deferral to us is immaterial. So it's
	not something I worry about.
Michael Cyprys:	That's encouraging. Maybe sticking with the credit side of the business, insurance. You
	have the partnership with Fortitude. Maybe just talk a little bit about how that partnership
	is evolving. Maybe just remind us around that arrangement, how that works, some of the
	key areas of growth that you see ahead. Because that's a closed block, are there
	opportunities to drive any new origination there, and how the pipeline is for M&A.
John Redett:	Yes, so we're very pleased with where Fortitude is. It's performing extremely well. We
	closed the Lincoln transaction in the fourth quarter, which is a pretty important milestone
	for us. That business, Fortitude business is up to roughly $80 billion of assets so we're
	very pleased with how it's growing. It's a unique platform. It's different than what others
	have done. We have chosen to date to go the balance-sheet-light approach. And to date,
	we've done that. Could we pivot down the road? Sure, we could pivot.
	Fortitude, to us, is a closed block business. But we could do something outside of that
	space, outside of Fortitude. So nothing locks us into doing everything within Fortitude,
	and we look at a lot of stuff in the insurance space. I spent a lot of time in the insurance
	space. So I think Fortitude will continue to be a key driver of our growth going forward.
	And I want to take a step back and look at the pipeline of just insurance broadly. I just
	look at insurance as another source of funding. I can go to the wealth market, I can go to
	the institutional market, and then I have the insurance channel, which I like a lot because
	it's more long-dated, so it's an important channel for us.
	But when I look at the pipeline of insurance opportunities, it's as robust as it's ever been.
	It's different, particularly when you look at the closed block side of the business that
	Fortitude focuses on. Historically, it's always been a pretty attractive pipeline, but it's
	been a little more centered around US opportunities. And I would say today our pipeline
	is probably more weighted towards opportunities outside the United States, which is great
	for us because we've done a couple of deals outside the United States.
	So the pipeline feels good, I like the trajectory of Fortitude, and we look at a lot of other
	insurance opportunities inside and outside of Fortitude.
Michael Cyprys:	And what might lead you to pivot to a different type of arrangement? How do you think
	about that?
John Redett:	Well, we talk about balance-sheet-light versus balance-sheet-heavy all the time. But I'd
	say we're very happy where we are today with the balance-sheet-light approach. But
	there's a lot to like about having an insurance business that provides flow to you, and we
	do look at those opportunities and will continue to look at those opportunities.
Michael Cyprys:	Are there any meaningful ones left in the marketplace?
John Redett:	Oh yes, oh yes. I know there's some commentary out there that the market's completely
	picked over. I'm not so sure I'd agree with that. There are opportunities.

	The Carlyle Group
	June 12, 2024
	10:15 AM EDT
	Page #9
Michael Cyprys:	Okay, fair enough. Maybe shifting gears over to capital markets, you've mentioned
	aspirations to bolster your capital markets capabilities. Maybe talk about the progress
	there. Where would you like to get to as you look out over the next couple of years and
	what the roadmap looks like to get there?
John Redett:	So to me, this is like--I would describe it as low-hanging fruit. Having spent my career at
	Carlyle in private equity, I never once thought about capital markets, and that's how
	disjointed the capital markets effort was at Carlyle. Harvey came in and really
	emphasized to people that capital markets revenue is critically important. It's part of our
	strategy. It's part of our growth. We are compensating people differently based on those
	sources of revenue. It's incredibly high margin. And I would expect that business--it's
	fully embraced internally. I never hear questions about it. Everyone's onboard. We
	compensated people at year end for that, and I think that was an eye-opener to people in a
	good way. I think our capital markets revenues were up 50% to 60% quarter over quarter.
	So we get the message. We're delivering. I would expect that revenue to continue to
	accelerate as markets improve, and I think it could be meaningfully higher than it is today
	in a better market environment.
Michael Cyprys:	And as you're building out the credit businesses, there are also opportunities as well. How
	do you think about that?
John Redett:	Infrastructure, asset-backed, big capital market fee generators, parts of Fortitude. So I do
	expect, assuming markets continue to stay where they are or improve, I do expect to see a
	pretty meaningful uplift in that number over time. And again, it's very high margin to us,
	and it's more of a non-balance sheet approach to it versus some of our peers.
Michael Cyprys:	Okay. Private wealth channel represents significant opportunity for the industry and for
	Carlyle, and you guys have a few products in the marketplace. CTAC you mentioned
	earlier, and CAPM, another one on the solution side. Maybe just talk about the traction
	that you're seeing, how you're thinking about scaling this from here as well as the
	distribution resources that you're putting up against the opportunity.
John Redett:	Yes, so I think the wealth opportunity is enormous for our industry, and I think it's an
	enormous opportunity for Carlyle. I still think it's very early days. I think this plays out
	over a long period of time, and the market opportunity is massive. The wealth market is
	massive. There's a generational change in wealth that's going to be massive, and the
	penetration of alternative products in the wealth space is minimal. So there's a lot to like
	about the market. And we've been focused on the market for years. We've raised $50
	billion in the wealth market over the last 10 years.
	So we have two products in the market. We have CAPM, which is our secondaries
	product, and we have CTAC, which is our credit product, and we'll have a private equity
	product in the market at some point next year. So CTAC's been in the wealth channel the
	longest of all our products. It's really starting to ramp. It's on all the right platforms.
	CAPM, which is our AlpInvest solutions product, really is just going live on the large
	platforms real time. And we learned a lot in terms of how we distributed CTAC in the
	wealth space. And we've taken that knowledge and applied it to how we distributed the

The Carlyle Group

June 12, 2024

10:15 AM EDT

Page #10

	CAPM product. So I'm pretty optimistic that will ramp up quite quickly. And I think the
	secondary product in particular is a great wealth product. If you look at the net returns,
	the diversification, the lack of a J-curve, I think it's going to really have a lot of interest
	from the wealth channel. So I'm pretty happy about that.
	And I said earlier we'll have a private equity product on the market next year. We're
	probably going to take a different approach to where we're not just going to flood the
	market with products. We're going to focus on making sure we have the right products in
	the market and focus on making sure we have good performance in these products. And
	over time, we might add products where we see demand. But this time, hopefully this
	time next year, we'll have all three products in the market.
	I think brand is really important in this channel. And I don't know how you could argue
	against that. One of your competitors just did a study on the alternative asset managers'
	brands, and Carlyle is ranked second in terms of reputation. And I think that is going to
	enable us to really accelerate our growth in this channel. It's just maintaining that strong
	brand.
Michael Cyprys:	Maybe talk about the distribution resources that you're putting against this opportunity.
	How do you think about that? What are some of the steps you're taking, and do you feel
	you have enough at this point?
John Redett:	Yes, so we have a new Head of Wealth. He started, I want to say probably about a year
	ago. I think he started roughly the same time I started as CFO. And he's done a lot to
	accelerate our presence in that space. It is certainly, when I look at adding headcount
	across the platform, it is certainly an area where I am very open to adding headcount. I
	think a lot of people don't really understand the sales process for these products. It's
	people-intensive. And you have to go out there and educate the Morgan Stanley sales
	forces of the world about the product, and that just requires boots on the ground. So it's
	an area where we've added headcount to, and I would expect we will continue to be
	adding headcount to that wealth distribution team for the foreseeable future. I'm happy to
	do that.
Michael Cyprys:	And you mentioned a private equity product coming next year. Maybe just talk a little bit
	about how you envision that product working versus, say, the CAPM product that you
	have as a secondary solution and how your private equity product might compare versus
	some of the others that have come to the marketplace of late.
John Redett:	Yes, I think we're still in design mode on the private equity product, and it's good to be in
	design mode when there's other products out there. But it will be a product that basically
	gets allocations from our various private equity businesses across the globe, so Japan,
	Asia, Europe, US. It will probably be a little bit US heavy because that's where our
	biggest private equity business is. But exactly what it looks like, TBD. It could even have
	a component of a solutions product in there.
Michael Cyprys:	And as you look out on the 5-year view, how do you think about the broader product
	roadmap into the private wealth channel? You have a broad range of capabilities at
	Carlyle. What else could make sense over time?