Kewsong Lee, Co-CEO of The Carlyle Group

Leadership Transition and Strategic Shift

• Kyu-Song Lee began his tenure as co-CEO of The Carlyle Group in late 2018, having joined the firm in 2013 after leaving Warburg Pincus.
• Lee cited three primary factors for leaving Warburg Pincus after two decades: a desire for new challenges in complex, global asset classes; readiness for a career change; and encouragement from his family.
• The industry is undergoing a structural evolution from partnership models to institutional management, driven by the scale of private capital displacing public markets.
• Carlyle's portfolio currently includes approximately 300 companies employing nearly one million people globally, necessitating a shift from "craftsmen" deal-making to institutional leadership.
• In a unique industry move, Carlyle converted from a publicly traded partnership to a corporation, implementing a "one share, one vote" model to align interests between management, employees, and public shareholders.
• Lee emphasized that while the corporate conversion reflects Carlyle's culture, long-term success will depend on performance results over the next 5 to 10 years.

Diversity, Inclusion, and Operational Strategy

• Carlyle has integrated diversity and inclusion into its core decision-making processes, asserting that diverse viewpoints are essential for sound judgment.
• As of the previous year, 60% of partner promotions at Carlyle were women, and women now lead approximately half of the firm's $250 billion in assets under management.
• The total workforce is 43% women, with additional employee resource groups established for the LGBTQ community, veterans, and other underrepresented groups.
• Carlyle operates under the strategic mantra that "every deal is a tech deal," requiring teams to assess digital disruption and technological convergence in all industries.
• To support this shift, the firm has hired dedicated resources to assist with digital strategy and has focused on upskilling its workforce to handle new business models.
• Lee rejects the notion that black-box algorithms can replace human judgment, arguing that private equity relies on partnership execution and qualitative assessment.

Macroeconomic Outlook and Investment Trends

• Lee expressed reduced confidence in the likelihood of avoiding a recession in 2019 compared to six months prior, noting slowing economic data.
• The firm anticipates a structural shift toward an extended period of low growth, low yields, and high valuations, punctuated by political volatility.
• Low-growth environments are viewed as creating specific opportunities for carve-outs and spin-offs within existing portfolio companies.
• Carlyle is increasing its focus on private credit, which is better positioned to capitalize on market volatility and shorter deal cycles than traditional private equity.
• Operational improvement remains the primary driver of returns, with 70% of Carlyle's returns historically generated through fundamental business improvements rather than multiple expansion or deleveraging.

Geopolitics and U.S.-China Relations

• Lee warns that the U.S.-China trade relationship is structurally altered and unlikely to return to pre-tension norms, drawing a parallel to the 15-year trade adjustment period between the U.S. and Japan regarding the auto industry.
• He observes a trend of "decoupling" in specific sectors, noting that the global internet economy has already split into distinct U.S. and Chinese ecosystems (e.g., Amazon vs. Alibaba).
• Lee predicts that the U.S.-China geopolitical standoff will create a dampening effect on global growth until a modified globalist framework is established.
• Despite the tensions, he notes that private capital penetration in Japan remains a fraction of other advanced economies, representing a potential growth market.

Corporate Philosophy and Career Advice

• Carlyle endorses the Business Roundtable statement on corporate responsibility, rejecting the premise that shareholder returns must conflict with serving communities, employees, and customers.
• Lee advises young professionals to develop a "tolerance for ambiguity," noting that careers and markets rarely follow linear, black-and-white trajectories.
• He stresses the necessity for junior staff to form and voice their own "point of view" rather than solely executing data-driven tasks.
• Employees are encouraged to "find their voice" by engaging actively in real-time discussions and offering opinions, rather than remaining silent to avoid conflict.