Jacques Chappuis out as head of Carlyle’s Solutions Group

Carlyle Group announced Tuesday the head of its Solutions Group, Jacques Chappuis, stepped back into a senior advisor role after leading the group since early 2013.

Chappuis is being replaced by Lauren Dillard, the current chief operating officer and chief financial officer of the Solutions Group.

Solutions, with $49 billion in assets under management, comprises AlpInvest Partners, Metropolitan Real Estate and Diversified Global Asset Management, a fund of hedge funds. The three units comprise 118 fund of funds and hundreds of employees.

Solutions is one of Carlyle’s four main business units, the others being corporate private equity, real assets and global market strategies.

Chris Ullman, a spokesman for Carlyle, declined to comment.

Solutions has had turnover under Chappuis’ tenure. Departed executives include Doug Lee, former managing director in Metropolitan Real Estate who headed capital markets; Thomas Spoto, who co-led co-investments at AlpInvest; Tjarko Hektor, former co-head of the secondaries team at AlpInvest; Scott Hamner, former AlpInvest partner; Ken Bloomberg, former AlpInvest principal; and Elliot Royce, former co-head of AlpInvest’s fund investing group.

Other departures include sales Managing Directors Reidan Cruz and Neil Collins. Cruz left in September after less than two years working on sales and marketing in the Solutions Group, while Collins left after about two years on the sales team for Solutions.

Most recently, Jordan Bradley, a principal in the fund investment group at AlpInvest Partners, announced he was leaving at year’s end, according to sources and a “friends and family” email. AlpInvest, owned by Carlyle Group, will not directly replace Bradley, according to a person with knowledge of the firm.

Bradley worked at AlpInvest since 2006, starting as an associate and moving into the role of principal in 2013. It’s not clear if Bradley is leaving to take another job. He didn’t respond to a connection request on LinkedIn.

Bradley was one of three principals focused on fund investing in the United States, along with Eric Hanno and Joseph O’Connor. A managing director, Marek Herchel, leads fund investing out of New York.

Fund investing overall is led by Maarten Vervoort. Other fund investing managing directors include Tatiana Chopova, based in Amsterdam, and Wendy Zhu, based in Hong Kong, according to AlpInvest’s website.

Declining fees

Fee-related earnings in the Solutions Group declined in the third quarter to $3 million compared to $8 million in the same time period last year, Carlyle said in its third quarter earnings report. On a “last 12 months” basis, fees came in at $14 million in the third quarter, compared to $36 million for the prior LTM, Carlyle said.

Economic net income, a measure that includes realized and unrealized gains, was $4 million in the third quarter and $19 million on an LTM basis, compared to $50 million for the prior LTM, Carlyle said.

Carlyle attributed declines to “foreign currency impacts on management fee,” as well as basis step-downs, redemptions and realizations.

Performance in the funds has been positive. Solutions Group funds in their commitments periods were generating a combined 18 percent net internal rate of return and a 1.2x multiple as of September 30, according to Carlyle. The recent AlpInvest Secondaries Fund V, which closed on $750 million in 2013, was producing a net 26 percent IRR as of Sept. 30, according to the earnings report.

Overall, Solutions funds were generating a 12 percent net IRR and a 1.5x multiple.

Pulled funds

AlpInvest pulled two funds off the market this year after receiving tepid interest from limited partners, sources said.

The group stopped raising AlpInvest Mezzanine Opportunities Fund V earlier this year in favor of building separate accounts with select investors, sources said. The fund, launched in the summer of 2014, had been targeting $500 million for mezzanine investments as well as buying secondary stakes in mezzanine funds on an opportunistic basis, one of the sources said.

Instead, AlpInvest secured commitments for the mezzanine platform through managed accounts and was seeking new ones, sources said.

AlpInvest also pulled the Global Energy Plus Fund, which had been targeting $500 million for investments in energy secondaries in funds and assets in energy, power and select infrastructure and natural resources opportunities, one of the sources said.

The Global Energy fund was headed by Managing Director Justine Gordon, who leads the energy and infrastructure practice within AlpInvest’s secondaries team.

It’s not clear why the Global Energy fund was pulled or if it collected any commitments.

Action Item: See AlpInvest’s most recent annual report: http://bit.ly/2134Wnn

Photo of Jacques Chappuis courtesy of Carlyle Group