Carlyle Inks $4.1 Billion Credit Line Linked to Board Diversity

(Bloomberg) -- Carlyle Group Inc. has established a $4.1 billion credit line that ties borrowing costs to how well its portfolio companies achieve board diversity goals.

The buyout firm has structured the revolver for its Americas corporate private equity funds, with pricing of the debt depending on whether they meet a previously set target of 30% diverse directors on their boards within two years of ownership.

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The three-year facility will serve as a subscription line for the funds, providing Carlyle with cash that may be immediately used to fund acquisitions. The money would then be repaid once capital is called from the funds’ investors, a Carlyle representative said.

It’s the largest environmental, social and governance-linked facility of its kind in the U.S. and the first to exclusively focus on board diversity, Carlyle said in a Wednesday statement.

“We are improving outcomes with an innovative financing vehicle for our corporate private equity funds that directly supports the firm’s ongoing commitment to increasing board diversity,” Carlyle’s Chief Executive Officer Kewsong Lee said.

Carlyle previously spelled out measures meant to promote diversity and inclusion in its workplace. In July, it said it wanted 30% diversity on boards of companies controlled by its private equity group by 2023. The firm said Wednesday its research over the past three years indicates that its portfolio companies with two or more diverse board members have seen average earnings growth of 12% greater per year versus those lacking diversity.

Bank of America Corp. is leading Carlyle’s facility, which is backed by a consortium of global financial institutions, according to the statement. The firm has about $246 billion of assets under management as of Dec. 31.

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