Bloomberg News

Carlyle Has $203.6 Million Profit as Holdings Increase

November 08, 2012

Carlyle Group LP (CG:US), the private-equity firm that went public in May, posted a third-quarter profit as the value of its holdings rose.

Economic net income after taxes, a measure of profit excluding some costs, was $203.6 million, or 66 cents a share, Washington-based Carlyle said today in a statement, without providing a year-earlier figure. Analysts had expected (CG:US) earnings of 67 cents a share, according to the average of nine estimates in a Bloomberg survey.

Carlyle, like competitors Blackstone Group LP (BX:US) and Apollo Global Management LLC (APO:US), has diversified its business beyond traditional leveraged buyouts to bolster real estate and credit investments. The firm has been the most active U.S. private- equity buyer this year, agreeing to acquire at least $17 billion of assets, according to data compiled by Bloomberg. That includes deals for Getty Images Inc. and DuPont Co.’s auto-paint business during the quarter.

“We remain cautiously optimistic that the combination of very low interest rates, the strengthening housing market, and the benefits of significant domestic energy discoveries will provide a catalyst for stronger U.S. economic growth over the medium term,” co-founder William Conway said on a conference call. “To put it bluntly, we believe that the best place in the world to invest today is the United States.”

Carry Funds

The value of Carlyle’s corporate private-equity funds increased 5 percent during the quarter, compared with 7.1 percent at Blackstone and 6.1 percent at KKR. Together, all of Carlyle’s so-called carry funds, including those focused on buyouts, growth capital, real estate, energy, distressed debt and mezzanine lending, gained 3 percent.

Carlyle fell (CG:US) 0.7 percent to close at $25.42 in New York. The stock is up 16 percent from its May 2 IPO, when the company raised $671 million.

Buyout holdings at private-equity firms affect economic net income, or ENI, because the metric depends on quarterly mark-to- market valuations of those investments. Accounting rules require the firms to value their portfolio holdings every quarter.

Carlyle’s distributable earnings, a measure of profitability, fell 15 percent to $206.3 million from $243.8 million a year earlier. The company said it will pay a distribution of 16 cents a share to public investors on Nov. 30.

Assets Rise

Assets under management increased to $157.4 billion from $156.2 billion at the end of the second quarter as holdings appreciated and Carlyle raised additional capital. The firm said it garnered $3.4 billion during the quarter and has raised $9.4 billion so far this year. It has $39.4 billion of committed capital yet to be invested, or so-called dry powder, including $15.6 billion in its corporate private-equity group.

Blackstone, the largest so-called alternative-asset manager, said last month its assets under management surpassed $200 billion for the first time.

Carlyle’s latest buyout fund, which it began raising in the first quarter with a target of $10 billion, has $3.7 billion of commitments so far, chief financial officer Adena Friedman said today on a call with investors and analysts. Carlyle’s own executives had pledged at least $700 million to the pool as of the second quarter, according to regulatory filings and a person familiar with the fundraising.

Carlyle, like other alternative-asset firms, reports profit that doesn’t comply with U.S. generally accepted accounting principles. The quarterly profit under those rules, known as GAAP, was $18.6 million, or 40 cents a share.

Private-equity firms pool investor money to buy companies, using mostly debt, with the intention of selling them or taking them public later for a profit. They typically charge an annual management fee of 1.5 percent to 2 percent of committed funds and keep 15 to 20 percent of profit from investments.

To contact the reporters on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net; Saumya Vaishampayan in New York at svaishampaya@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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Companies Mentioned

  • CG
    (Carlyle Group LP/The)
    • $32.86 USD
    • -0.30
    • -0.91%
  • BX
    (Blackstone Group LP/The)
    • $32.79 USD
    • -0.09
    • -0.27%
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