October 31, 2018 / 10:34 AM / a year ago

Carlyle misses earnings forecasts on sluggish private equity portfolio

NEW YORK (Reuters) - Carlyle Group LP (CG.O) on Wednesday missed estimates for earnings per unit for the third quarter, as the value of its private equity investments rose less than that of rivals on the back of turbulent markets in Asia.

The logo of the Carlyle Group is displayed at the company's office in Tokyo, Japan October 17, 2018. REUTERS/Issei Kato

Carlyle, which owns assets such as British premium car service Addison Lee and U.S. entertainment services provider Apex Parks Group, said quarterly economic net income per unit came in at 25 cents. That missed analysts’ expectations for 51 cents, according to Refinitiv data, and compared with 56 cents a year earlier.

Economic net income reflects the mark-to-market valuation gains or losses on Carlyle’s portfolio and is a key earnings metric for many U.S. private equity firms.

Chief Financial Officer Curtis Buser said the “muted” ENI reflected “the impact of significant market volatility on our Asia private equity funds.”

Carlyle retains stakes in several Asian companies whose shares have fallen, with the Hang Seng Index .HSI down around 16.5 percent in the year to date compared with a slight rise in the U.S. S&P 500 index .SPX.

Overall, Carlyle’s corporate private equity funds, from which it earns performance fees, increased in value by 1 percent in the three months to end-September. Rival Blackstone Group LP (BX.N) reported a rise of 7.5 percent in the value of its private equity holdings in the same period, while Apollo Global Management’s (APO.N) private equity assets appreciated by 2.3 percent.

In a brighter spot, Carlyle’s assets under management grew to $212.3 billion, with $6 billion raised in the quarter and $26 billion raised so far in 2018. Carlyle said it expects to exceed its $30 billion fundraising target for 2018, part of a larger $100 billion fundraising goal.

“In total as of Sept. 30 we have raised $83 billion toward our multi-year $100 billion fundraising goal and are equally confident about exceeding this goal, given the funds we still have in the market and those that we expect to begin to raise over the next few quarters,” Buser said in an earnings call.

The company said it would detail its next fundraising target in 2019 and that this would likely be larger than the current $100 billion goal.

Shares were up 2.4 percent at 11:50am EST, reversing losses earlier in the session.

After-tax distributable earnings (DE) - the actual cash available for paying dividends - fell year on year to $194.7 million from $254.5 million.

Carlyle also said it would pay a quarterly distribution of 42 cents per common unit.

Reporting by Joshua Franklin in New York; Editing by Peter Cooney and Susan Thomas

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