* Q4 post-tax ENI per adjusted share $1.64 vs Street view 91
* Q4 distributable earnings $401 mln vs $188 mln a year ago
* Most profitable quarter since Carlyle went public in 2012
By Greg Roumeliotis
Feb 19 Private equity firm Carlyle Group LP
said on Wednesday its fourth-quarter earnings rose by 216
percent to a record, as the value of its funds jumped and
profits generated from the sales of assets soared, beating most
Buoyant capital markets not only boosted the value of the
companies held by Carlyle's funds but also allowed the
Washington, D.C.-based firm to cash out on more of its
investments and return money to its investors.
"Our performance exceeded our prior outlook because some of
the exit activities that we earlier expected would occur in
future periods in fact occurred in 2013," Carlyle co-founder and
co-chief executive David Rubenstein told analysts on a
The value of Carlyle's private equity funds rose by 9
percent in the fourth quarter. Peer Blackstone Group LP
reported an 11.5 percent rise in the same quarter, Apollo Global
Management LLC reported a 9 percent rise and KKR & Co LP
reported an 8.4 percent rise.
Assets sales in the quarter included Carlyle's $1.39 billion
sale of aerospace communications company Arinc Inc to Rockwell
Collins Inc and the sale of human resources software
company Personal & Informatik AG to private equity firm
HgCapital, generating returns of 4.5 times and 6.5 times of
Carlyle's investors' money respectively.
Carlyle also completed the initial public offerings of
luxury jacket maker Moncler SpA, telecommunications
equipment maker CommScope Holding Company Inc, travel
agency CVC Brasil Operadora & Agencia de Viagens SA
and cable operator Numericable Group SA.
It also sold shares in auto parts maker Allison Transmission
Holdings Inc, television ratings company Nielsen
Holdings NV, BankUnited Inc and consulting firm
Booz Allen Hamilton Corp, which were already publicly
Economic net income (ENI), an earnings measure comprising
cash and paper profits or losses based on how funds have been
marked to market, increased to $576 million in the fourth
quarter from $182 million a year earlier.
This translated into post-tax adjusted ENI per share of
$1.64. Analysts on average expected 91 cents, according to
Thomson Reuters I/B/E/S. This was the best quarterly financial
result for Carlyle since its initial public offering in 2012.
Carlyle shares were up 3.4 percent at $36.68 in early
afternoon trading in New York. They had fallen 0.1 percent in
the 12 months leading up to Wednesday, compared to a 21 percent
rise in the S&P 500 Index.
Carlyle also said the value of seven of its funds rose
enough in the fourth quarter for them to exceed return hurdle
rates of between 7 and 8 percent. This entitles them to pay out
so-called carried interest, giving Carlyle a slice of the
investment profits generated by the funds at a time of Carlyle's
A blot on Carlyle's earnings was its real estate and energy
division, which reported a loss as a European real estate fund
underperformed and the valuation of some energy funds that
Carlyle launched with another private equity firm, Riverstone
Holdings LLC, dropped.
Carlyle has ended its partnership with Riverstone and in
2012 took over another energy-focused private equity firm,
Natural Gas Partners, for which it has high hopes.
Carlyle also runs credit funds, hedge funds and
fund-of-funds products whose divisions also saw profits rise.
But private equity continues to dominate the firm's earnings,
accounting for 80 percent of its profits in 2013.
Carlyle's pre-tax distributable earnings, which show how
much cash is available to pay dividends, were $401 million in
the fourth quarter versus $188 million a year earlier, as the
firm monetized more of its assets.
Assets under management were $188.8 billion at the end of
December, up from $185 billion at the end of September. Carlyle
announced in November it had raised a $13 billion U.S. private
equity fund, surpassing its $10 billion target.
Rubenstein also said that Carlyle had raised $2 billion from
retail investors in 2013 and expressed confidence that the two
mutual funds it plans to launch this year will be differentiated
enough to succeed in a competitive marketplace.
He declined to comment on competitor KKR's disclosure last
week that it would liquidate two funds targeting individual
investors, in a blow to the firm's efforts to widen its appeal
beyond institutional investors such as pension funds and
Carlyle's fee-related earnings were $39 million in the
fourth quarter, down 30 percent from a year earlier.
Carlyle declared a fourth-quarter dividend of $1.40 per
share. Dividends for 2013 totaled $1.88 per share, representing
75 percent of Carlyle's after-tax distributable earnings. The
firm reaffirmed its dividend policy of paying out 75 to 85
percent of its after-tax distributable earnings in 2014.