* Q2 post-tax ENI of 73 cents/share vs estimated 74 cents
* Q2 distributable earnings of $324 mln vs $163 mln yr-ago
* Assets under management of $202.7 bln at end-June
(Adds executive comment)
By Greg Roumeliotis
NEW YORK/LONDON, July 30 Carlyle Group LP
said on Wednesday its second-quarter earnings doubled from a
year earlier as one of its European buyout funds started paying
performance fees, highlighting the growth potential of its
private equity business in Europe.
While two U.S. buyout funds accounted for more than half of
all of Carlyle's performance fees in the quarter, the
Washington, D.C.-based private equity firm said its third
European buyout fund was now also a contributor.
That fund struggled in its first few years after it was
launched by Carlyle in 2006. It overpaid for some companies and
was then hit by the recession in Europe. But it has since
recovered and was valued at 1.7 times its investors' money as of
the end of June, almost in line with the two U.S. buyout funds.
"Europe and Japan are both priced at about 20 percent lower
than the United States. That is too big a discount," William
Conway, Carlyle's co-chief executive, told investors and
analysts on a conference call.
"I like the opportunities in Europe," he added in a phone
interview with Reuters. "The deals we're seeing now in Europe
are being done at lower multiples than in the US and I think
Conway said that so-called periphery countries Spain and
Italy were of interest but said such deals required people on
the ground with knowledge of the area, as well as sounding a
cautious tone on consumer demand.
"You have to be careful about businesses that rely on the
consumer in Italy or Spain. The consumer is still suffering
there, not everything will go up," Conway said.
Carlyle listed Spanish testing company Applus in
May, although the stock slid this week after the business warned
of slower revenue growth in its first-half results.
Like its major peers, Carlyle has diversified beyond
corporate buyouts into alternative credit, real estate and funds
of funds. Yet private equity dominates its income, accounting
for 32 percent of assets under management but 65 percent of its
earnings in the quarter.
Carlyle said economic net income (ENI), an earnings metric
that factors in the mark-to-market value of its portfolio,
soared to $318 million in the second quarter from $156 million a
year earlier, as it took advantage of a stock market rally and
buoyant capital markets to exit more of its portfolio companies.
That translated to post-tax ENI per adjusted unit of 73
cents versus the 74-cent average forecast of analysts in a
Thomson Reuters poll.
Carlyle shares were broadly flat at $34.62 at 1634 GMT
against a slight fall in the S&P 500 Index.
Carlyle's private equity fund portfolio appreciated by 5
percent in the quarter, in line with rival KKR & Co LP's
funds, but less than the private equity portfolio of Blackstone
Group LP, which rose by 8.4 percent.
Carlyle Europe Partners III, a 5.3 billion euro ($7.1
billion) private equity fund that Carlyle launched in 2006,
contributed to the earnings by starting to pay the 20 percent
share of its profits that Carlyle is entitled to in the form of
so-called carried interest.
The cash from that fund and the rest of Carlyle's portfolio,
which has 43 funds in total, contributed to $324 million in
distributable earnings in the quarter, up from $163 million a
Carlyle's assets under management were $202.7 billion as of
the end of June, up from $198.9 billion as of the end of March.
Carlyle declared a second-quarter dividend of 16 cents per
(Reporting by Greg Roumeliotis in New York and Freya Berry in
London; Editing by Bernadette Baum, Chris Reese and Andrew Hay)