* ENI per adjusted share 51 cents vs Street view 60 cents
* Distributable earnings $105 mln vs $207 mln a year ago
* On track for best fundraising year since financial crisis
By Greg Roumeliotis
Nov 6 Carlyle Group LP posted an 11
percent drop in third-quarter profit on Wednesday as asset sales
generated less cash for shareholders than in any other quarter
since the alternative asset manager went public.
While Carlyle's fund portfolio appreciated 4 percent in the
quarter, compared with 3 percent a year earlier, it did not take
advantage of favorable capital markets to exit investments to
the extent some of its peers such as Blackstone Group LP
"We have a public portfolio of about $16 billion. This is a
pretty good time to be exiting. That does not mean that we will
do secondary sales in any of those companies this quarter, but
if the time and price is right I think we will," Carlyle
co-Chief Executive William Conway told analysts on a conference
Economic net income (ENI), an earnings measure comprising
cash and paper profits or losses based on how funds have been
marked to market, declined to $195 million in the third quarter
from $219 million a year earlier.
This translated into post-tax ENI per adjusted share of 51
cents, well below the average forecast of analysts in a Thomson
Reuters poll of 60 cents.
Carlyle shares were up 1.1 percent at $30.47 in morning
trading in New York. They are up 15.8 percent for the year to
date, versus a 23.6 percent rise in the S&P 500 Index, a
75.2 percent rise for Blackstone, and a 51 percent rise for KKR
& Co LP.
Carlyle's pre-tax distributable earnings, which show how
much cash is available to pay dividends, were $105 million, the
lowest total for any quarter since the company went public in
May 2012, as Carlyle monetized less of its assets. The
year-earlier figure was $207 million.
Carlyle said it had additional portfolio companies in the
pipeline which it expects to go public over the next two
quarters, generating more performance fees for itself.
Carlyle is also waiting for its $1.39 billion sale of
aerospace communications company Arinc Inc to Rockwell Collins
Inc to be completed either this quarter or early next
year, which will boost its profits.
In addition, three more funds - Carlyle Europe Partners III,
Carlyle Asia Partners III and Carlyle Realty Partners V - are
close to exceeding the returns hurdle agreed with their
investors and being able to accrue carried interest, the firm's
20 percent slice of investment profits, Conway said.
Among Carlyle's asset sales in the third quarter were its
remaining stakes in wealth manager Boston Private Financial
Holdings Inc and financial software company SS&C
Technologies Holdings Inc, as well as secondary share
sales at Allison Transmission Holdings Inc and Wesco
Aircraft Holdings Inc.
Carlyle said it was on track for what will be by far its
strongest fundraising year since 2007 and the second-best
fundraising year in its history.
Total assets under management were $185 billion at the end
of September, up from $180.4 billion at the end of June. Carlyle
said it raised $6.5 billion in new capital from investors during
the third quarter.
It said its latest flagship U.S. buyout fund, Carlyle
Partners VI, was oversubscribed and would reach at least $12.9
billion when it completes fundraising in the next few weeks,
exceeding its $10 billion target.
Private equity firms have found it more difficult to source
deals in the United States this year due to a rally in the
capital markets fueling high price expectations in the minds of
many sellers of companies.
"I'm not worried about investing over the period of the U.S.
fund. Finding the right assets at the right prices is tough, but
this business is always tough," said Conway, who founded Carlyle
in 1987 together with David Rubenstein and Daniel D'Aniello.
Fee-related earnings were $40 million in the third quarter,
down $6 million from a year earlier due to higher fundraising
costs and other expenses, Carlyle said.
The firm said it had $51.1 billion of available capital for
deals, or so-called "dry powder," at the end of the quarter,
including $22.8 billion in private equity and $9.1 billion in
energy and real estate
Carlyle declared a third-quarter dividend of 16 cents per
share, in line with its dividend policy, which calls for 75
percent to 85 percent of its annual post-tax distributable
earnings to be passed on to unitholders as true-up dividend at
the end of the year.