Carlyle Is Raising $15 Billion to Create U.S. Buyout Fund

The Carlyle Group is raising a $15 billion U.S. leveraged buyout fund as the boom in private equity investing shows no signs of abating, sources familiar with the matter said on Friday.

The new fund would be nearly double the size of Carlyle's last fund, Carlyle Partners IV, launched in 2005 at $7.8 billion, which was also used for conducting leveraged buyouts in North America.

A spokeswoman for Carlyle in Hong Kong declined to comment on any fund-raising activity.

Carlyle is one of the world's largest private equity firms, with more than $54.5 billion under management and offices in 16 countries, according to its Web site.

Private equity firms are raising record sums, spurred by a surge in private equity mergers and acquisitions, which now comprise 28% of U.S. deals, up from 13% in 2005, according to Dealogic.

Private equity firms raise money from institutional investors such as pension funds and use the cash to buy or invest in companies.

Investors are keen to gain exposure to the upper echelon of private equity and buyout funds, which have a track record of returns above those of public markets.

But they all want to back the same group of top general partners, giving those funds tremendous clout to raise bigger funds and keep fees high.

General partners, hurrying to take advantage of ample liquidity, are raising more and more money from investors at a breathtaking pace.

In 2006, 712 funds were closed globally, raising a massive $446 billion among them, according to data provider Private Equity Intelligence, which is forecasting $450-500 billion will be raised this year.

The biggest funds ever closed include the Blackstone Group's $15.6 billion global buyout fund called Blackstone Capital Partners V, which could be bumped up to around $20 billion, sources familiar with the matter said.

Goldman Sachs Private Equity Group is in the process of raising a $19 billion U.S. fund called GS Capital Partners VI, according to Private Equity Intelligence.

But investing in private equity is fraught with risk. A paper by academics Steven Kaplan and Antoinette Schoar found that top funds have outperformed the S&P 500 index, but average fund returns after fees were about equal to the index.

Private equity fund managers make a 2% management charge and a 20% performance fee, and these have held steady even as fund sizes have ballooned.