Carlyle, State Street said to be in talks for new venture

by Loukia Gyftopoulou and Dawn Lim

State State Corp.’s asset-management arm held preliminary talks with Carlyle Group Inc. about a potential tie-up to create a product that would combine public and private markets for individual investors.

The discussions took place in recent weeks after State Street Global Advisors approached Carlyle, according to people familiar with the matter, who asked not to be identified because the talks were private.

If the talks lead to a collaboration, it would unite one of the world’s largest money managers, State Street, with one of the biggest US alternative investment firms in a pairing that would ramp up the private-capital industry’s race for retail wealth.

“We are committed to bringing private markets exposure to individual investors,” a representative for State Street said in an emailed statement. The firm said it’s in initial discussions with several partners and no decisions have been made. 

Carlyle declined to comment.

Traditional asset managers, including Vanguard Group and BlackRock Inc., have been seeking ways to move beyond stock and bond funds into higher-margin businesses, including private equity and credit. Those shifts stand to bring private markets, once the province of big institutions and billionaires, down market to individual investors.

Private capital firms, meanwhile, have faced pressure to reach beyond institutions for new dollars, spurring a wave of partnerships.

Boston-based State Street Global Advisors, which manages about $4.7 trillion, faces an increasingly crowded market and a fee war in the index-fund products that have formed the basis of its business for decades.

Chief Executive Officer Yie-Hsin Hung has been pushing aggressively into private markets as the firm aims to innovate and shed its image as being too cautious.

The firm launched three partnerships with alternative asset managers in the past three months alone, including a collaboration with Apollo Global Management Inc. on the first-ever exchange-traded fund to bring private assets to the masses. 

Carlyle CEO Harvey Schwartz has prioritized the alternative investment manager’s expansion into retail. Shareholders are now watching how he boosts growth and shares at a firm that had historically been slower than peers to jump into the race for individual investors’ money. 

The firm raised 65% more in 2024 than in the previous year in retail-focused funds that invest over long periods.