Carlyle revenues jump on strong public-market valuations, exit activity

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Revenues at Carlyle Group jumped to $1.12bn in the first quarter of the year compared to $483m in the same period a year earlier, the US buyout group reported on Wednesday, aided by strong public equity valuations and robust exit activity in Europe and the US.


However, Carlyle reported a further decline in its assets under management – from $178.1bn in the first quarter of 2016 to $161.9bn, or a 9 per cent drop, in the first three months of the year. But it represents a slight uptick from the previous quarter, where assets stood at $157.6bn.

Economic net income, a measure of profit which includes unrealised gains on investments, rose to $400m, or $1.09 cents per share, compared with $89m in the same period a year ago.

The strong performance was driven partly by a 6 per cent rise in value in its carry fund portfolio, including buyout and real estate funds on which it earns carried interest, a share of future profits with investors.

“Carlyle produced its second strongest value creation quarter since going public five years ago,” Carlyle co-CEO David Rubenstein said in the statement. “Our portfolio performed well in virtually every sector and every region, appreciating by 6 per cent and leading to a 34 per cent increase in our net accrued carry in the first quarter.”

He added: “The long term strength of the underlying portfolio supports our goal to raise $100bn in new capital by the end of 2019.”

Shares in Carlyle, led by founders Bill Conway, David Rubenstein and Dan D’Aniello, fell by nearly two per cent in pre-market trading.

The company also said it has deployed $4.4bn of capital in the first quarter and $17bn in the last year despite “a difficult environment”. It said it was well under way to raise $100bn in new capital by the end of 2019.

Carlyle expects to sell close to $4bn of assets in the coming months.

Notable acquisitions for the quarter included Atotech, a specialty chemical business and Golden Goose, the Italian fashion brand. It sold its remaining stake in NT Butterfield & Son.

Private equity groups are struggling with high valuations for assets while also being under immense pressure to deploy record amounts of capital.

Other major US buyout groups have benefitted from high valuations when it comes to selling their assets. Blackstone’s profits for the first quarter nearly doubled as it benefited from a strong seller’s market. KKR swung to first quarter profit thanks to soaring valuations.

Apollo Global Management, the New York-based private equity group, said cheap prices are still to be found despite soaring valuations in assets currently for sale.

Joshua Harris, the company’s co-founder, said his firm is “continuing to find opportunities to put capital to work, despite high valuation and low-rate environment”, during a call with analysts.

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