Carlyle’s third-quarter earnings fall 12% as asset divestments slow

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Carlyle Group Inc said on Tuesday that its third-quarter distributable income fell 12% year-on-year due to lower revenue from the sale of assets primarily from its private equity division.

This is the first quarter that Carlyle has reported results after Kewsong Lee abruptly resigned in August as chief executive of the Washington-based company when the board, controlled by its founders, unexpectedly refused to renew his contract, which was due to expire at the end of the year. Carlyle co-founder and board member William Conway was named the company’s interim CEO following Lee’s departure. Carlyle said distributable income, which represents cash used to pay dividends to shareholders, fell to $644.4 million from $730.6 million. That translated into after-tax distributable earnings of $1.42 per share, which was above analysts’ average estimate of $1.06, according to Refinitiv. Adverse market conditions marked by rising interest rates and volatility from geopolitical tensions such as the Russian-Ukrainian war have prevented private equity firms, including Carlyle, from cashing in investments for the best price. Carlyle said its realized performance income fell 24% to $764.8 million, from $1 billion a year ago, due to a slowdown in asset sales from its equity portfolio. investment. Its peers Blackstone Inc, KKR & Co Inc and Apollo Global Management Inc also reported lower earnings due to lower asset disposals and slower capital markets activity. “The markets are tougher, so it’s tougher to sell in today’s market, but compared to what you see elsewhere, we’ve done very well with strong executions,” said Curt Burser, Carlyle’s chief financial officer, in an interview. During the quarter, Carlyle said its enterprise private equity funds appreciated 1%, real estate funds rose 2%, infrastructure and natural resources funds rose 8%, while that the funds managed under the global credit were stable. In contrast, the private equity funds of Blackstone, KKR and Apollo depreciated by 0.3%, 4% and 0.3% respectively. Under generally accepted accounting principles, Carlyle said its net income fell 47% to $280.8 million, from $532.8 million a year ago, due to a 63% decline in investment income and an increase in cash compensation expense.

Carlyle invested $10.5 billion in the quarter, raised $6 billion in new capital, generated $213 million in fee income and retained $74 billion in unspent capital. Its assets under management fell 2% from the previous quarter to $369 billion due to asset sales and the impact of foreign exchange transactions which were offset by fundraising. The company declared a dividend of 32.5 cents per share.

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