With equity returns in public markets essentially flat for most of last year and bond yields at low levels, investors have been flocking to private equity and other alternative investments to boost returns.

"There are lots of pension funds and other institutions with large funds that want exposure to private equity investments," said Chris Davison, a consultant for Almeida Capital.

Private equity firms' demand for capital, meanwhile, is growing as firms are able to invest productively in larger and larger deals, Davison added.

On Monday seven private investment groups banded together to buy financial technology company SunGuard Data Systems Inc. for $10.8 billion in cash in the biggest leveraged buyout in more than 15 years. "We believe we have a level of capital that we can invest well over the next five years," said David M. Rubenstein, co-founder and managing director of Carlyle in a statement.

Carlyle invests in buyouts, venture capital, real estate and leveraged finance in the U.S., Europe and Asia in industries ranging from aerospace and transport to energy, telecommunications and healthcare.

Carlyle Partners III, the group's previous U.S.-focused fund which launched in 2000 at $3.9 billion, returned over 127 percent of capital to investors and still holds a large portfolio of investments, a spokeswoman for the group said.

Carlyle said last month it had returned $5.3 billion to investors in 2004, compared with $2.3 billion in 2003. The firm also raised $7.8 billion last year, up from $2 billion a year ago, and invested $2.7 billion, up $100 million on 2003.