Alternative asset management
The Carlyle Group (CG) competes primarily with alternative asset management firms for client assets as well as attracting talent in order to manage funds. The company pitches against its competitors across business lines, regions, distribution channels, and financial markets. Investors are attracted mainly on the basis of a diversified product line, the performance of funds or separately managed accounts, the pricing of products, and relative positioning.
Carlyle’s major competitor Blackstone (BX) manages $333 billion in assets and has attracted funds through diversification as well as strong performance. Its other major competitors, like Apollo Global Management (APO) and KKR (KKR), manage $163 billion and $98 billion, respectively.
Carlyle is also competing with business development companies to attract new client funds. The company’s Global Market Strategies competes with hedge funds, distressed debt funds, mezzanine funds, and collateralized loan obligations or CLO issuers. In the company’s real estate segment, competition also comes from real estate development companies. The company also competes with a fund of funds, investment advisors, and market makers like Goldman Sachs (GS).
Traditional asset management
Alternative asset management firms have to continually produce higher returns than traditional asset management firms in order to match the risk and return profile. Clients generally are not willing to take on higher risk for marginally higher returns. Carlyle’s major competitors in traditional asset management are BlackRock (BLK), which manages $4.72 trillion in client assets with a major focus on exchange-traded funds or ETFs, mutual fund companies like T Rowe Price Group (TROW), and other major asset managers forming part of the Financial Select Sector SPDR Fund (XLF).
In emerging markets, Carlyle faces competition from local firms, especially in China and India. Local firms provide customized solutions and have a thorough understanding of various asset classes.