UPDATE 1-Carlyle distributed $6.4 bln in Q1 -source

Wed Apr 27, 2011 5:55pm EDT

* Return, distributions been improving for buyout firms

* Carlyle's distribution largest for firm in a quarter (Updates with background on Carlyle)

NEW YORK, April 27 (Reuters) - Private equity firm Carlyle Group [CYL.UL] distributed a bumper amount of $6.4 billion to investors in the first quarter, according to an investor in its funds.

Private equity firms' returns and distributions have been rising since the credit crunch when the valuations of their funds were hurt and their ability to exit investments was constrained.

Carlyle told investors about the distribution amount, the most distributed in a quarter, in a recent letter, the investor said. The amount compares with the $7.5 billion that the firm distributed in all of 2010. The investor declined to be named as the matter is not public.

The figure includes return of the original capital invested as well as profit.

Private equity firms typically exit their investments by taking them public, selling to a strategic bidder or selling to a rival private equity firm.

Carlyle took pipeline firm Kinder Morgan (KMI.N) public in February. Earlier in April, it closed a $6.1 billion sale and leaseback deal to sell most of the real estate assets of nursing and assisted living firm HCR ManorCare Inc to HCP Inc (HCP.N).

Carlyle, which has been considering an initial public offering for years, may file papers this year to go public, a source familiar with the matter has previously said.

The quarterly distribution was first reported by Bloomberg. Carlyle declined to comment. (Reporting by Megan Davies. Editing by Robert MacMillan and Tim Dobbyn)

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