The history of commerce is filled with businesses that achieved dominance but whose successes, quite naturally, did not endure. Will there be such a reckoning for the pioneers of private equity?

The venerable Carlyle Group reported strong results on Thursday — distributable earnings were up more than a fifth, year on year. Like all of its peers, Carlyle is benefiting from soaring asset valuations in the past year. The company’s shares have doubled in the past two years and its market capitalisation stands at $15bn.

Yet among its closest peers Blackstone, KKR and Apollo, it has been an also-ran for years. Each of those firms has carved out niches, well away from conventional leveraged buyouts. Carlyle, nevertheless, has bold aims to catch up.

Carlyle’s assets under management total $260bn, with $137bn from its formidable corporate private equity unit which has provided the bulk of recent profits. It is quickly trying to build other strategies, including credit and other adjacent businesses to private equity.

The firm’s 30-year record and relationships with pensions and wealth funds allow it to cross-sell products. Carlyle says that four out of five of its limited partners are invested in at least four Carlyle products. Still, Blackstone is approaching $700bn in assets and a $100bn market capitalisation. KKR and Apollo have each acquired insurance businesses to provide the backbones of their respective futures.

It may be that a rising tide together with its global reach and great brand name can propel Carlyle’s growth. But investing requires scale. The firm is at the size where it could be either a buyer or a seller. One listed rival, Oaktree Capital, decided it was worth throwing in the towel, selling itself to Canadian juggernaut Brookfield in 2019. A firm such as Carlyle could pair well with a traditional asset manager or sovereign wealth fund. It should consider its options. Most firms that slip from their perches do not realise what has happened until too late.

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