Good day, ladies and gentlemen. And welcome to The Carlyle Group Second Quarter 2015 Earnings Call. At this time, all participants' lines on the telephone are in a listen-only mode to reduce background noise. But later we will be conducting a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to introduce your first speaker for today, Daniel Harris. You have the floor, sir.

Thank you, Andrew. Good morning and welcome to Carlyle's second quarter 2015 earnings call. With me on the call today are Co-Chief Executive Officers, Bill Conway and David Rubenstein; and our Chief Financial Officer, Curt Buser. Earlier this morning, we issued a press release and detailed earnings presentation with our second quarter results, a copy of which is available on the Investor Relations portion of our website. Following our remarks, we will hold a question-and-answer session for analysts and institutional investors. To ensure participation by all those on the call, please limit yourself to one question and return to the queue for any follow-ups. Please contact Investor Relations following this call with any additional questions. This call is being webcast and a replay will be available on our website. We will refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for, measures prepared in accordance with Generally Accepted Accounting Principles. We have provided reconciliations of these measures to GAAP in our earnings release. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the Risk Factors section of our Annual Report on Form 10-K, that could cause actual results to differ materially from those indicated. Carlyle assumes no obligation to update any forward-looking statements at any time. With that, let me turn it over to our co-Chief Executive Officer, David Rubenstein.

Thank you, Dan. As we review the second quarter results, I'd like to highlight four key themes that will be apparent as walk through Bill's, Curt's and my comments this morning. First; we continue to generate an extraordinary amount of cash based distributable earnings. And therefore we are able to payout meaningful quarterly distributions to our unit holders. For the quarter, Carlyle generated $386 million in pretax distributable earnings and post tax distributable earnings per unit of $1.18 representing for these metrics 20% and 27% year-over-year growth respectively in the same period last year. Consistent with our stated distribution policy, we are declaring a $0.89 per unit quarterly distribution payable on August 27. This strong and growing cash flow has been a hallmark or Carlyle since going public. Having grown our pretax distributable earnings from $689 million in 2012 to over $1 billion for the latest 12 months period. To put our distribution another way, over the trailing four quarters our 75% payout target would have represented an almost 9% yield on yesterday's closing price. The second theme is that our Corporate Private Equity business continues to produce outstanding results. Carry fund appreciation for the corporate private equity segment was 5% for the quarter and 13% year-to-date. Fund raising and realizations remain very strong. Deployment in corporate private equity was relatively slow but disciplined in its approach. Third; because of our long track record we have demand in access of our hard cap on virtually every carry fund we have in the market. Result this quarter was $5.7 billion, up gross new fund commitment and a net $4.7 billion in inflows for the quarter. And fourth; there is considerable momentum in parts of our real estates, global market strategies and investment solutions segments namely US real estate and global energy…

Thank you, David. The question on everyone's mind is probably why aren't you investing more money? We invested $1.6 billion in our carry funds from the second quarter; we are slightly more than half of that amount outside United States. So far this year we have invested about $3.1 billion. Let me put this investment pace into perspective. Over the past eight years we have invested about $79 billion in our carry funds averaging almost $10 billion per year, which is approximately what we invested in 2014. Our annual investments have ranged from high of $14.5 billion in 2007 to a low of $5 billion in 2009. There are several factors driving this year's cautious investment pace. Most importantly we think prices in many assets classes are high. Our caution is further driven by uncertainties in Greece, fluctuations in the Chinese stock markets, continued high levels of leverage and a significant movement in energy prices. Also, with corporations struggling to find growth, they have turned to M&A to meet revenue targets while private equity activity has remained relatively muted. We believe current conditions will service catalysts for the next round of buying opportunities and while we cannot predict when all these opportunities will present themselves, the breadth of our platform and our dry powder positions us to take advantage when the time comes. During the quarter, we close two transactions of note. First, our US buyout in South American buyout funds invested in Rede D'Or, the largest hospital group in Brazil. And second, we closed our investment in AsiaSat; Hong Kong based Satellite Company where we bought GE capital's interest. We also announced several smaller growth investments in Europe and China. We invested about $638 million in real estates. We continue to find attractive opportunities in the US real estate…

Thank you, Bill. Our business is continuing to produce higher cash running with distributable earnings up 20% over the second quarter of last year. This reflects another quarter of excellent realization activity, on after tax basis distributable earnings was $1.18 per unit, up 27% from $0.93 per unit a year ago. With this quarter's distribution of $0.89 per common unit, Carlyle has announced distribution of $1.22 per unit for the first half of 2015. Turning to fee related earnings. Fee related earnings are $47 million were $33 million below the second quarter of 2014 due largely to the $28 million decrease in transaction fees reflecting our slower investment pace this year. Catch- up management fees in the current quarter were $34 million primarily from fund closings in our Europe and Japan buyout funds, our European growth technology fund, and our US real estate fund. Catch-up management fees were approximately $9 million higher than a year ago. However, management fees from our hedged fund in investment solutions businesses are in total down about $19 million from Q2 of last year due to net redemptions and foreign exchange. The net decrease in management transaction fee was offset in part lower compensation exclusive of equity compensation. Direct and indirect compensation expense is down $20 million from a year ago reflecting lower bonus pools in certain parts of our business, foreign exchange and the downward adjustments to compensation accruals made in the fourth quarter of 2014. Despite the lower current quarter compensation expense I would expect compensation exclusive of equity compensation to rise modestly over the course of the year. But as I have said before I expect no more than nominal increases for the entire over 2014 levels. The decrease in compensation expense was offset by higher general and administrative expenses in the…

In sum, for the quarter Carlyle delivered well for its investors and unitholders. Returning $5.8 billion to our fund investors and $0.89 per unit to our unitholders. We are pleased that our fund raising during the quarter and our high level of dry powder places us in a strong position to take advantage of attractively priced assets and companies when they come available anywhere in the world. And now we are pleased to take your questions.

[Operator Instructions] Our first question is from Craig Siegenthaler from Credit Suisse. Your line is open.

Thanks, good morning. First just starting on NGP 11, the fund is invested less than 5% of its available capital. And it is 2014 vintage fund but my question is given how much cheaper public equities are across the energy sector what's really holding the fund back on the investing side and do we really need to see -- across the initiative really accelerate M&A here.

This is Bill. I would say this is a good time to be careful when it comes investing in energy. We have the team and NGP remember, they have the first nine funds all went to carry. So they know what they are doing. They've been doing it for long time when energy markets are up and down. I think you are just being appropriately cautious, I know that it is necessarily function of seeing defaults in the markets that would lead to a more aggressive investment pace. Frankly, it is good time to be cautious everywhere.

Helpful. And then just as follow up. I received the details on European Partners IV they close today and I saw it was about EUR670 million more than the June 30th balance. And I see there -- a few investments made across France, Italy, and Spain. Were these transactions included in the $390million of your capital invested they had in the press release or will be invested capital balance isn't much higher given they made a few more investments here in July.

Now the investment capital have been -- the amount has been invested is between $300 million and $400 million total, EUR300 million and EUR400 million total. So far I Carlyle Partners IV.

Got it.

So $390 must be all the investments. I don't think any we've done in the last couple of months.

Thank you. Our next question comes from the line of Michael Carrier from Bank of America. Your line is open.

Thanks, guys. Curt, I think this is probably for you. You mentioned some of the cost on the fund raising side they maybe elevated in the expense level in the first half of the year. And you indicated some of the funds that have been raised were they fees were kick in and sometime between now and say the beginning of 2016. I think you quantified the expenses. Just wanted to get some color on the fee side and then just on the G&A line in this quarter, I know you said there are couple items in there. But just wanted to know maybe what's a fairly good run rate? I understand there is a lot of a thing that can pop up in there but just given that it was elevated.

Sure, thanks. Thanks Mike for your question. So first key thing to think about are fund raising cost and they are one of the items that can kind of toggle any given quarter. You need to think about our business for over a longer period of time. As I said in my prior remarks, we had about $80 million - $90 million of fund raising cost in the first half of the year -- is turned on. That relates to the $11.5 billion of capital that spending the turn on when they turns on that would equate to roughly $100 million of the additional fees all else being equal for return on today. The big piece of that to think about is in the GMS segment; with respect to the energy mezzanine second fund is already raised $2 billion of that $11.5 billion. $9 million of external fund raising cost in the current quarter were incurred for which no benefit was received in the GMS segment. Stepping to the second part of your question really in terms of total cost. So one of the things that everyone should recognize as in the current quarter or G&A expenses were roughly $94 million, up from really Q1 and up from Q2 of last year. If you look to LTM numbers, they would indicate essentially an $80 million kind of run rate in G&A. The things that kind of trip that higher run rate this quarter which may or may not occur in the future but I would think are kind of more unique are the higher level of fund raising cost. So in the current quarter compared to last year's $6 million more of external fund raising cost $13 million more compared to Q1 of this year. There are also whole number of I'd say one off small items both in terms of professional fees, some of our lease cost, some foreign exchange contract amount that we gains on last quarter that reverse this quarter, a little bit higher teen compared to first quarter, so number of small one off basis items that just cause this quarter to be somewhat higher but again if you look at kind of the run rate, I had focused back to the roughly $80 million run rate in G&A. Hopefully that helps.

Yes, it is helpful. Then maybe just as follow up, Bill. Distribution or the realization activity in the quarter was obviously very strong. And then on the deployment side you mentioned trying to be somewhat cautious or you are making sure you are making investment that are going to generate good returns. I just want to get a sense on because those are two kind of offsetting types of comments or outlook and so when you think about the distribution that Carlyle is able to generate and when you think about the portfolio that you have right now and where their performances and what can be exited, I just wanted to get some sense and I know it is difficult because it is environment based but just want to get some sense of what you think are realization that are more on the easy side, meaning you don't have to have a lot to occur to exit some of these investments versus things that could take maybe a little bit longer. And if we get more volatility in the markets that could delay things. I know it is difficult but just wanted to try to get a sense because of how strong the distribution was this quarter.

Okay. Couple of things I'd like to think about. And of course this is all related to investment pace and exits and everything else in the markets. It is clearly an easier time to sell than as to buy. And we've been doing this long time we got a pretty good record of doing it. I would say that it's a little concerning to me that the amount of invested capital in the ground it is working is actually down a little bit over the last year or so. I think it is down from like $62 billion to $60 billion or something in that range. In some ways it is De minimis fall but really that's the kind of the thing that really happens at Carlyle. Why that is happen? Well the one reason it happens is we sell $20 billion worth of assets. And that just -- that's come right after topping appreciation and no investment have a tough time offsetting that much investment. Second thing it is happening, it is hard to put money in the work right now. Now I'll tell you if I were to talk to my 750 investment professionals they tell me it is always hard to put money to work. That it is always a problem in Greece or in Italy or in Brazil or China or Russia or some other place on the planet or some industry segment or whatever. And so there they are working hard to find things. I would say that maybe things are little better and little more active than we have been. But it is still a very, very tough environment. When I look forward at the exit pace which you asked about, mostly look at let's say the quarter we just finished. The total distributions…

Thank you. Our next question comes from the line of Ken Worthington from JP Morgan. Your line is open.

Hi, good morning. Just on the hedge funds, the AUM decline this quarter and seems poised maybe to decline further in coming quarters. I guess first as you see it what are the issues? Obviously there have been some performance problems but is there maybe a greater issue with regard to either over side or ownership structure or even management selection of purpose. Two, is there something that US managers need to or maybe are able to address here and then three, how do you return that the hedge fund specific operation kind of back to growth? Thanks.

Sure, Ken. It's Bill again. I think that the -- it has been volatile and tough environment generally for investing. Sometimes I look at them and I wondered how it can be so low based upon all the volatility I see in the market. I don't think there is any kind of systematic problem with regard to our over side or the job of the people running the hedge funds are doing or governance or anything like that. Obviously the hedge funds particularly Claren Road; they had a tough time in the first half of this year. But they do have a long track record of strong risk adjusted returns, very a proven team that's been doing the job, same people that when we initially acquired 55% of the business. We are working closely with them to sustain and restore the confidence that their investors have had with them for more than a decade, hopefully we and they will be able to do that. But I don't see it as a systematic problem or anything like that, Ken.

Okay. And then growth going forward, do you buy it, do you fund raised for it, how do you grow that business?

The best and the most -- the best way to grow is to have the hedge fund perform. Hedge funds perform, they can grow themselves. People want to be in their funds. I mean hedge fund like Claren Road it had some redemptions. A year ago they were turning money away. I think they turned away $1 billion a year ago because of -- they just didn't feel that they had the market conditions or the right opportunities to put that money to work. And so these things can turn pretty quickly in terms of what might happen. But the things that were causing to turn are performance. You perform, people are happy; they give your more money. You don't perform, the opposite happens.

Thank you. Our next question comes is from the line of Robert Lee from KBW. Your line is open.

Hi, good morning. This Ann Dai calling in for Rob. So I have a quick question around solutions. It just feels like asset growth has been relatively muted in the segment, just a bit tough to get visibility into everything that's happening across different businesses there. So would you be able to give us a sense of general business trends in this segment including some of those new businesses you mentioned in the release and kind of briefly earlier on the call. And then how do you see margins progressing as you scale those various businesses and in addition can you provide any guidance around when we might be able to see op invest become a more meaningful contributor to DE.

Sure. This is Curt. So let me start and then Bill can maybe add some color. So if you look at the investment solutions business or especially over the last 12 months for its fee earnings AUM, you'll see the decline in fee earnings AUM from about $39 billion to $30 billion, about just shy of $6 billion of that was foreign exchange. And so if you keep in mind in the op invest side of that business, they are euro denominated funds and so as the euro has move, it did an adverse effect on the essentially fee earnings AUM in that cycle and you will see the same thing kind of coming through in management fees in that segment. The other thing that is going on is we are investing in growing out our liquid all strategy. So there is a new people coming online so while you might say we will -- shouldn't be seeing a comparable decrease in compensation expense in that business. We did due to foreign exchange. So as an op invests as revenue came down so did comp but it was offset by making investments in the liquid all strategy which we are investing into grow. The other piece is we are very excited about. It is really the secondaries business within that segment and we think that too can be a growth arm for it. However, you have to kind of keep in mind the back siding of op invest which had a lot of historical capital especially in the fund or fund space and some of that has actually come down and burned off and so that's masking the growth that would otherwise expecting and seen in the secondaries business. Hopefully that helps.

I wouldn't have anything to add to that.

The only other thing I would say on it is as you think about our total business, relative fee rates on the solutions business tends to be lower than in the other piece, so while we like them all this one from an AUM perspective doesn't generate the same relative amount of management fees.

Thank you. Our next question comes from the line of William Katz from Citigroup. Your line is open.

Okay, thanks very much for taking the questions this morning. Just maybe high level picture. David you mentioned that you just continue to see very good asset gathering. You are also sitting on a fair amount of dry powder. And Bill you also mentioned the challenges here so it is easier to sell than just to buy. How LPs thinking about that dynamic? Something about at what point do they start to shut off the switch of giving a so much assets just in lieu of what could be some potential worries about their return on invested capital. Or is even that conversation this point.

Right now the LP is generally having been getting a lot of money back from GPS in last year or so and they have to do something with it. And they generally think putting it in cash is not a good thing compared to committing to a private equity organization that has a firm track record. So we are seeing much more money coming into the market than anytime since really 2007-2008 period of time. Obviously, they know we can't put the money to work right away, but remember they are going into funds that have five year investment period, so they recognize that it might take some time to get the money invested. I haven't really detected in my meetings with investors that they concern about it. Their biggest concern is now where we take their money because our funds have been over subscribed and the biggest problem I have been dealing with in the last couple of weeks is trying to deal with investors to get into the funds, so I am having hard time getting in because there is too much money coming into fund. So right now they are not that worried about our investing. They have a view generally that we will figure out when it is a good time to invest and when it is not a great time to invest in. I don't think they are worried about honestly. And now maybe that could change in six months or a year something but right now I think our entire fund raising group would not say that investors are worry about that particular problem that you allude to which is that we are not getting the money invested quite as quickly as they might have preferred.

David, let me just add to that. I think I have seen statistics that somewhere in excess of 90% of the money that has ever been committed to us in our funds we get invested over the life of the fund for our investors. And there can be good times and better times to invest the money but if we wouldn't raise a fund that was let say EUR10 billion for Europe if we thought that wasn't the right amount that we get best over the investment period. So maybe we could raise that much money but this is not about the management fees and getting bigger and bigger funds, just have the funds. We are going to be pretty confident we can put the money to work. I think we are.

I think the numbers are 96% of the money we've raised say in last 10 years has been successfully deployed. So people generally think we will get it deployed. I recognize your concern but right now it hasn't been picked up by any of our investors not something we see at in the marketplace.

Thank you. Our next question comes from the line of Michael Cyprys from Morgan Stanley. Your line is open.

Hey, good morning. Thanks for taking the question. So just on the real estate you mentioned that you are pursuing some new real estate strategies, I believe core plus is probably one of them but could you just talk a little bit more about these new real estate strategies, how you are building them out, are you bringing in or looking to bring a new talent and how much are you looking to raise in terms of LP capital?

Okay. Let me address that initially. Our US real estate fund principle one is so called opportunistic fund and that one is targeting to raise and I guess we are shortly close on but it hasn't right near the closing about $4 billion which is the cap on that, that $4 billion. That's been our core real estate product. We had opportunistic funds in the Europe and in Asia. They haven't been as big or as successful as the one in the US. In Europe, we are restructuring our team, we've hired somebody new in Europe to head that team up, it previously been a Carlyle come back to us and under Adam Metz who we put it to oversee our international real estate, that person Peter Stall is working and we are working on raising, building a team and raising some capital for individual deals. In Asia, we have a team in place and we are going to look at whether we can strengthen that. So we do think real estate is important for us. On core plus is a slightly different business. Let me just address what that is for those who may not be familiar. Opportunistic is designed to get let say high net teen rates of return. Core plus is designed to get let say somewhere between 9% and 11% rates of return. That has turned out to be very interesting part of the business and I think other firms are now -- who are in the opportunistic business are also going into the core plus business. We -- I don't want to say what we are going to do in that business but I would just say it is an attractive business and I would say ultimately what we want to do is have real estate be a very important part of the firm, it has been in the past and we wanted to be important part in the future. Generally what we find is that through times of distress around the world, people like to put some money in real estate and so for a variety of reasons we think it is going to be a great growth business for a long time and we are very pleased with where we are positioned now in the US and we wanted to make sure we can do as well in Europe and Asia as we have done in the US. Bill?

The other thing I would say in terms of the team and supplementing the team, while we may add some people to team, our US opportunistic real estate team is about 100 people. So it is a big team. We talk about opportunistic in core plus like they are men are Mars and women are from Venus. They are just totally different. There isn't that bigger gap. So a lot of the skill set the people out in the market, the asset management people that we have in real estate business, they can support if you will to some greater or lesser extent, both the opportunistic side of the business and the core plus side of the business. And the leader of the core plus business that we are trying to build is an insider been with Carlyle, and they in about 20 years. And so we -- there are lot of confidence in him working with Rob Stuckey who has run US real estate for more than a decade and I think about 15 years kind of had those job so we have high hopes for that business.

Thank you. Our next question comes from the line of Brian Bedell from Deutsche Bank. Your line is open.

Hi, good morning, folks. Maybe Curt if you could just run through the additional incremental fee revenue from the $11.5 billion of carry funds. If I am doing the math on that right I am getting about 87 basis points realization rate which seem a little low, so maybe if you could just go through the next between segments of that $11.5 billion and as I think David you were talking about the fund raising efforts and what you have in the pipeline right now, how that would increase that $11.5 billion say over the near term.

So your math is good. The piece that you are missing in the equation is really the step down from the predecessor fund. So $100 million on the $11.5 billion as I make that estimate I am looking at really the predecessor funds reaching those that the respective step down that occurs. So it is just -- if I didn't take that into account I think I would be misleading. So that's why the difference.

And then on the fund raising pipeline and they are coming in too

The areas that we are likely to be pursuing in the future and I have to be careful or the lawyers who are going to come in I can say this or can say that but essentially areas that we think are attractive, I put it that way are distressed debt where we have very successful business for a long time. We would say core plus seems to real estate, seems to be an attractive business as well. Growth and energy are -- growth investments in the corporate growth investments in Asia, say growth company kinds of investments, an area where we have been in for quite sometime. We do think that infrastructure is a very attractive area. We are already in that area. We also think it has a lot of appeal as well. We are also attracted as well to energy and we still have some energy funds in the market, principally our energy mezzanine fund but that's going quite well. So we have our Annual Investor Conference in September. And while we like that at the conference which will have about 900 to 1,000 people there, we would like to make sure everybody knows how their existing funds are doing. We do tend to present some new ideas to investors, they are nice, I suspect will have some already in areas that kind of alluded to just now. If anything our fund raise reserve, I'll be busier than ever because we've got lot of funds in the market and virtually all of them seemed to be doing quite well. And so structure credit is also an area that we are quite interested in particularly in Asia. Secondaries as mentioned are also an area that we are going to be quite active in as well. So we don't lack for lot of funds to show now. I think the question is can we take all the money that we think are investors can deploy.

Right, fair, good, and $11.5 billion, how much of that is in a private equity segment?

It is primarily in private equity energy. So big piece of it is in NGP where part also your math would be in the fact that we just take roughly half of the fees so that also goes in the math. Then you have energy mezz which will be in our GMS segment. You have -- which have been be in corporate private equity and then you have a handful of other funds. But those are big components. One other area that we are tracking to which longer term is investing. Generally we think and that we've said in some of our filings. We think that sometimes some investors would like us to hold on to invest for much longer period of time for steady current yield. And longer term hold than the typical private equity. And that's an area that's quite attractive to us as well.

Thank you. Our next question comes from the line of Brennan Hawken from UBS. Your line is open.

Hi, good morning. Most of my questions have been asked and answered. Just I guess be interested to hear an update on the Carlyle indicators. There is a lot of debate about economic growth particularly in Europe and Asia. And I'll be curious what you are seeing on that front?

Okay. Well just last night I was reviewing the July indicators that we are getting ready to send out the next couple of days or so. I would say with regard to United States, they show continued growth in the 2% to 2.5% range. It is 2.5% everywhere but it is kind of 2% to 2.5% on average particularly strong parts would be residential construction; particularly weak parts would be NG related capital spending which is down about 20%. And that's big number, on a big number. So but on balance United States continuous to do pretty well. We've got some pretty sensitive data that has proven to be very highly correlated for a long period of time. In Brazil, we think it is a little weaker than what the public numbers have stated. And that the companies that's struggling a bit right now. In Europe, we see Europe is stabilized at about 1.5% growth rate which is actually little bit surprisingly strong to me and to I think my partners here at Carlyle. In China, China has I think we have been a little less optimistic in terms of they are reporting 7% growth rate, we think it is somewhat less than that. It maybe a function of our indicators or theirs or timing differences. But we think it is little weaker than that. Still the envy of the world in terms of its growth rate. My personal opinion is they spend a little bit too much time working on the stock market and not enough time working on the general economy. But they don't ask me my opinion on that. But I would say, remember, the United States is today the growth economy of the world. And other people are looking to America and I would say that generally it looks to me like it is a pretty good shape. Still not seeing a dramatic improvement caused by the fall in energy prices. Everybody talked about the fact it saved the US consumers' $200 billion. Well, I don't exactly know what are they doing with it but they know very strong growth there in consumer spending that we are seeing. But generally pretty good results of the indicators, David.

For those who may not be familiar with what we are referring to the economic indicators. We have several hundred companies that we own on behalf of investors who have significant stakes in. And so our Chief Economist Jason Thomas and others in the firm gather the data from our companies and then correlate with macro economic factors and generally can come up with a pretty good view on where the economies going. And we often are asked by our investors to give some insights in the economy and we often use this data as appropriate. Sometimes economic policy makers ask us for our insights as well and we share that when it is appropriate. So it has been something we found that they are very useful device and I think it is a pretty good indicator for us about where economies are going. So we do tend to look at it quite carefully.

And just on that 2.5% in the US, thanks for that. Is that a number that you are saying strengthening or is that fairly stable, what is the expectation around that?

It has been stable for I would say the last 9 to 12 months. It changed a little bit for example manufacturing seems to be a little weaker particularly those energy related CapEx has been down. Consumer durables are little less than the 2.5%. Retail sales data in the public were down slightly in June. I think they are down about 0.6% net of inflation. We are actually seeing a little stronger than that. So it varies across the various parts of the market. Once again residential construction is very strong.

Thank you. Our next question comes from the line of Michael Kim from Sandler O'Neill. Your line is open.

Okay, good morning. And maybe just from a P&L perspective one of the dynamics couple of your peers has been talking about is sort of potential step up in earnings as they transition from first time funds to subsequent vintages without the need for a lot of incremental cost. So I know your models are bit different but does seem like a fair amount of capital rising is coming from next vintage fund. So just trying to get a sense of that potential dynamic there beyond sort of the upfront fund raising cost that you highlighted earlier.

Sometimes what we are trying to do is not just go back to our existing investors but to develop new channels that hopefully over many years will come in, in many different funds not just the one that we might be focused on that particular time. So we do use organizations that provide so called feeder funds, they are once we debt to cost to fair amount of money to do to use but they give us individual investors who are quite significant addition to what we might get from sovereign well funds or public pension funds. So lot of the cost deals with some of the feeder funds and we do think that's a good channel to use. Now we have not been going to non accredited investors that have not been what we've been doing generally. These are credit investors that are rounded up by organizations like those who on the phone now as part of their business. And sometimes they cost a little bit more than regular fund raising with cost. And as you suggest we have a different model. We've raised a lot of different funds. And some of them are second or third generation and maybe they are little bit more cheaper, a little cheaper to raise but on the other hand they tend to be much bigger in size and so costs are maybe higher than sometimes a first fund might be. Curt?

Yes. David as you pointed in your remarks before -- we are raising our next generation mid market fund, US real estate NGP funds of much larger sizes to 100% larger where we were before including energy mezzanine. And we are optimistic with respect to our debt distressed funds. All of those will translate into higher profitability as we pointed out especially once we get the fund raising cost behind us.

If we were paying money to get people in the funds that we couldn't really raise it would be one problem but these funds are over subscribed. We are just trying to diversify our investor base a bit which I think maybe in times when it is harder to raise money, it will come in good step. But right now we are really laying the ground work for many years into the future.

Thank you. Our next question comes from the line of Patrick Davitt from Autonomous. Your line is open.

Hey, good morning, guys. It is obviously been increasing focus on sign off for obvious reasons. Could give us I guess the market value of our end ground capital there or some idea of how exposed are you there because it doesn't look like you have any large public but I suspect there are some private.

So if you - in our release we provide that data five to funds back in the corporate private equity segment pages you will see by fund the committed capital cumulative invested capital and then you also where we show essentially remaining fair value by fund and then one another, their percent invested in carry. So we can go through and spells out Asia Partners III for example worth $2 billion of remaining fair value in the ground at 1.4x mark in. You can just kind go through there and you will see that Asia funds, a good portion of that, not all but a good portion of that is within China and rest of Asia.

Do you have a kind of a broad guideline 75% or 50%--?

May be 50% if you like an estimate.

Thank you. Our next question comes from the line of . Your line is open.

Hi, good morning, everyone. I just wanted to quick touch on you guys, did the $7 million common unit offering at the beginning of June. I think they make a lot of sense asking about the float is but I think the stock close to -- is off close to 15% and 16% since then and clearly not like you are draw any corollary there any but probably fair to say wasn't as well received by the market as you might have hoped. Do you look forward still float is one of the areas where you have some room come relative to peers. Are you guys thinking about using any additional means to increase your float over time?

There is nothing to announce right now on that. But obviously we recognized we have a lower flow than many of our peers and I think a bigger float is generally a good thing, but we have no plans right now that announce anything or anything that we can talk about on this phone call. But generally wanted to give our internal people some liquidity and because most of people in the firm what they do with their liquidity is they put into our carry funds and lot of them wanted to invest in some of the funds. But right now I think we are happy with where we are.

[Operator Instructions] And that's all the questions that we have in the queue at this time. So I'd like to turn the call back over to speakers for closing remarks.

Thanks, Andrew. And thanks everyone for joining us on the call today. Should you have any follow ups, feel free to give investor relations a call. Otherwise we look forward to talking to you next quarter. Thank you.

Ladies and gentlemen, thank you again for your participation in today's conference. This now concludes the program. And you may all disconnect your telephone lines. Everyone have a great day.