Carlyle returns to Q3 profit as assets recover

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Published November 08, 2012

| Reuters

Carlyle Group LP reported on Thursday a third-quarter profit, as the value of its assets increased and it cashed out on some of its private equity investments, returning money to investors.

The alternative asset manager followed the performance gains posted by peers Blackstone Group LP and KKR & Co LP , which too saw their funds appreciate in the third quarter amid a buoyant stock market and profitable exits from the sale of assets.

In the case of Carlyle, most of the boost in asset value came from its public holdings, which benefited from the stock market rally.

Carlyle's private equity portfolio rose 5 percent in value in the quarter versus a 7.1 percent rise in Blackstone's private equity funds and a 6 percent increase in the private equity holdings of KKR.

Carlyle's co-chief executive William Conway, who founded the Washington, D.C.-based firm in 1987 with David Rubenstein and Daniel D'Aniello, said Carlyle, which has been active in leveraged buyouts this year, had worked hard to invest wisely and create value for its investors.

Carlyle coughed up $1.6 billion as equity in 86 new or follow-on investments in the third quarter. It has committed to invest more than $4 billion in equity in 10 transactions that were announced in the third quarter but are expected to close in upcoming quarters.

"We believe that the United States, Europe and emerging markets - from Brazil to Turkey to China - are great places to invest right now," Conway said in a statement.

Carlyle reported third-quarter economic net income (ENI), a measure of profitability that takes into account the market valuation of its assets, of $219 million, compared with a loss of $191 million a year before.

This translated into after-tax ENI of 66 cents per common unit, in line with the average estimate of analysts in a Reuters poll of 64 cents.

Pre-tax distributable earnings, which included realized investment gains and accounted for cash available to pay dividends, came in at $206 million compared with $244 million in the third quarter of 2011.

Assets under management were $157.4 billion at the end of September, up 0.8 percent from the end of June, while fee-earning assets under management were $115.1 billion.

Carlyle shares are up 16 percent since the firm completed an initial public offering in May, compared with a 7 percent rise for peer KKR, a 14 percent gain for Apollo Global Management LLC and a 12 percent rise for Blackstone Group.

Carlyle declared a third-quarter distribution of 16 cents per common unit.

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