Investment Banking

Carlyle Profits Drop 78% But Beat Estimates

The private-equity firm appears to have weathered market fluctuations in better shape than some of its rivals.
Matthew HellerApril 27, 2016

Carlyle Group’s first-quarter earnings beat analysts’ estimates as the private-equity firm weathered volatility in the financial markets somewhat better than some of its rivals.

Carlyle said Wednesday its economic net income, a key performance measure for private equity, fell 78% to $58.2 million after taxes, or 18 cents per share. But analysts had forecast ENI of 12 cents per share.

Blackstone and KKR, Carlyle’s rivals, missed analysts’ first-quarter estimates, reporting sharp drops in ENI as the value of their stakes in former buyout targets dipped.

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“Despite the challenging market backdrop in the first quarter, we deployed a significant amount of capital  . . . and positioned ourselves for strong performance in the coming quarters,” David Rubenstein, Carlyle’s co-chief executive, said in a news release.

As Reuters reports, the U.S. private equity industry has had a slow start this year, with investor aversion to risk reducing funding for buyouts. The value of Carlyle’s buyout investments rose 1% in the first quarter compared with 8% at the start of 2015, driving the slowdown in ENI.

But in the past six months, the group has invested $8 billion in new deals such as the buyout of data storage provider Veritas. That compares to $3 billion in the first half of 2015.

“We have invested almost $8 billion in capital from our carry funds over the past two quarters across various geographies and asset classes, and we still have $43 billion in carry fund dry powder to deploy,” Carlyle co-CEO William E. Conway said. “We are well positioned to take advantage of opportunities and deliver good results for our fund investors and unitholders.”

For the first quarter, Carlyle’s buyout and real estate funds rose 1% and 8%, respectively, in value, while the value of its energy and natural resources funds shrank between 2% to 3%.

The group’s shares have gained 12% so far in 2016, but are down 41% over the past year. They closed at $17.68, up almost 1%, in trading Wednesday.