Carlyle’s chief executive resigns after breakdown in contract talks

Private equity giant Carlyle Group is replacing its chief executive Kewsong Lee, who will leave the New York and Washington-based group just two years after he was appointed in July 2020.

The exit throws the $376bn group’s leadership into renewed upheaval as it navigates a more challenging investment environment, with volatile markets and a pullback in commitments from institutional investors.

Lee’s exit, announced on Sunday evening, came as his contract negotiations with Carlyle reached an impasse. Lee, who was named co-chief executive in 2017 alongside Glenn Youngkin, was given a five-year contract that expired at the end of the year.

Instead of continuing to negotiate, Carlyle said its board of directors had decided not to renew Lee’s contract. After it informed Lee of the decision, he decided to step down immediately.

“Both the company’s board of directors and Mr Lee mutually agreed as part of their discussions that the timing is right to initiate a search for a new CEO,” said Carlyle in a press release.

Lee’s sudden departure marks another impromptu change in its succession planning beyond co-founders William Conway, David Rubenstein and Daniel D’Aniello, who created the firm in 1987.

Unlike competitors such as KKR, Carlyle has struggled to identify its next generation of leadership. Lee served as co-chief executive alongside Youngkin, a split role that was supposed to resemble the joint leadership of Conway and Rubenstein during the firm’s ascent into a publicly listed 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 over sole leadership of Carlyle as it recovered from the shock of the coronavirus pandemic, which had caused the firm to record steep losses as performance flagged in many of its investment funds. Under Lee, Carlyle’s business rebounded as he plotted the firm’s expansion in credit and insurance-related investments, setting a target of raising $130bn in new money by 2024.

In second-quarter earnings released in late July, Carlyle had made it more than halfway to Lee’s target, which he insisted the firm would hit. However, fundraising in the firm’s buyout unit had slowed. In the second quarter, its new flagship fund raised just $2.2bn.

Cofounder Conway will become Carlyle’s interim leader as the firm 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 “thankful for the opportunity to build the firm with an incredibly talented and committed team.”