Private equity giant Carlyle Group replaces chief executive Kewsong Lee, who will leave the New York and Washington-based group just two years after his appointment in July 2020.
The exit throws the leadership of the $376 billion group into further upheaval as it navigates a tougher investment environment, with volatile markets and a decline in commitments from institutional investors.
Lee’s exit, announced Sunday night, came as his contract negotiations with Carlyle were at an impasse. Lee, who was named co-chief executive in 2017 alongside Glenn Youngkin, was given a five-year contract which expired at the end of the year.
Instead of continuing to negotiate, Carlyle said his board decided not to renew Lee’s contract. After informing Lee of the decision, he decided to quit immediately.
“The Company’s Board of Directors and Mr. Lee have mutually agreed in their discussions that the time has come to initiate the search for a new CEO,” Carlyle said in a press release.
Lee’s sudden departure marks another impromptu shift in Carlyle’s succession planning beyond co-founders William Conway, David Rubenstein and Daniel D’Aniello, who established the company in 1987.
Unlike competitors such as KKR, Carlyle has struggled to identify its next generation of leaders. Lee served as co-chief executive alongside Youngkin, a shared role that was meant to resemble Conway and Rubenstein’s joint leadership during the company’s rise into a publicly traded industry giant.
However, Youngkin decided to retire at the end of 2020 after friction grew with Lee, throwing Carlyle’s succession plan into turmoil.
Lee took sole leadership of Carlyle as it recovered from the shock of the coronavirus pandemic, which had caused the firm to post steep losses as performance weakened in many of its investment funds.
Under Lee, Carlyle’s business rebounded as he planned the company’s expansion into credit and insurance-related investments under new hand-picked management. Lee has also set a goal to raise $130 billion in new money by 2024, with much of the fundraising focused away from Carlyle’s traditional buyout activities.
In second-quarter results released in late July, Carlyle had met more than half of Lee’s target, which he insisted the company would meet. However, fundraising in the company’s buyout unit has slowed. In the second quarter, its new flagship fund raised just $2.2 billion.
At the same time, Carlyle has been expanding rapidly elsewhere, partnering with insurer Fortitude Re that brought in $48 billion in new assets last quarter.
In an interview with the Financial Times in late July, Lee highlighted Carlyle’s diversification from private equity buyouts, in which the company first made a name for itself under Conway and Rubenstein.
“The largest share of our earning assets under management is now associated with global credit,” Lee said, calling the fundraising challenges of Carlyle’s eighth flagship buyout fund “old news.”
“It’s a very different business than it was a few years ago,” he said. “We have deliberately diversified our activities.”
Co-founder Conway, who for decades oversaw Carlyle’s private equity investments, will become its interim chief as the group searches for a new chief executive.
Conway said he was “grateful” to Lee for his efforts to “position Carlyle for the future.”
Lee said he was “grateful to have the opportunity to build the business with an incredibly talented and committed team.”