Carlyle's dismantling of the US consumer investment team

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Carlyle's dismantling of the US consumer investment team

Carlyle Group Inc., one of the world’s largest and most diversified global investment firms, is retreating from bets on US consumer brands as the firm reorganizes its private equity business in the country around core sectors such as financial services and technology. The alternative asset manager is dismantling its US consumer, media and retail investing team, according to people familiar with the matter. Carlyle also asked four dealmakers focused on those bets to leave in the past week, saying these investments are no longer central to its buyout strategy, one of the people said.

The decision to pull back from US consumer bets will result in job changes or eliminations for almost a dozen staff, the people said. While some will shift to other teams, others will remain to oversee existing consumer, retail and media investments. The firm will continue to make such investments in Europe and Asia.

The changes were “necessary to position our platform and team for the future,” especially given “increasingly challenging investment trends” in the US consumer sector, Americas Corporate Private Equity co-heads Sandra Horbach and Brian Bernasek said in a memo to employees last week.

The US consumer team invested in brands including skateboard and street wear business Supreme and headphone maker Beats Electronics, with a growing portfolio that gave the firm new cultural cachet. Still, Carlyle’s investments in buzzy companies that targeted a younger demographic spurred debate at a Washington firm better known for bets on chemicals, industrials and government contractors.

The reorganization comes months after Carlyle hired Harvey Schwartz, a former Goldman Sachs executive, as its CEO. Schwartz has been looking to cut back on expenses to improve the company’s stock price, which has lagged behind its peers in recent years.

Carlyle’s private equity business will now focus its US strategy around health care, government services, industrials, technology and financial services. The firm manages $385 billion in assets across 3 business segments and 576 investment vehicles. It has more than 2,200 professionals operating in 29 offices across 5 continents.

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