--Carlyle funds down 2% in value, public holdings down 10%
--Revenues dropped 90%, reversed $107 million in performance
fees
--Raised about $4 billion for its latest U.S. buyout fund
(Updates with details of financials throughout)
By Amy Or and Saabira Chaudhuri
NEW YORK--The Carlyle Group (CG) swung to a second-quarter loss
under the so-called economic earnings as revenue plummeted, dragged
down by the performance of its funds.
The combined value of funds in which it shares profits declined
2% in the second quarter, with its publicly-listed holdings down
10%. The Standard & Poor's 500-stock index ended the quarter
3.3% lower.
Carlyle managed $156.2 billion in assets at the end of the
second quarter, down from the $159.2 billion at the end of the
previous quarter but up substantially from the $108.0 billion a
year ago. About 70% of its assets are generating fees.
In the second quarter, Carlyle recorded a economic net loss of
$57 million, down from a profit of $237 million a year ago. Revenue
plunged 90% to $61 million. During the quarter, the private equity
firm reversed $107 million in performance fees it had booked
previously, on depreciation impacts.
Private-equity firms and the analysts who cover them generally
view economic net income as a preferred measure of performance
because it includes unrealized gains and employee compensation
while excluding continuing costs related to the firms' initial
public offerings.
But distributable earnings, a measure of cash flow to investors,
was up 29% at $115 million over a year ago, largely driven by stake
sales in public companies Kinder Morgan Inc. (KMI) and Triumph
Group (TGI).
Under generally accepted accounting principles, the company
reported a loss of $10 million. It didn't provide a year-earlier
figure. In the year-earlier period, Carlyle was still a private
partnership and income attributable to Carlyle Holdings was $371.7
million.
Carlyle, which went public in May, said its fundraising and
investing momentum remained intact: About $4 billion was raised for
its latest U.S. buyout fund as fundraising continues, and $1.4
billion deployed among 20 deals in the second quarter. The firm
also made six new investments, worth a total $1.6 billion, since
the beginning of July.
"Our recent investments reflect the choice opportunities we see
today as well as our long-term investment horizon," Carlyle's
Co-Chief Executive William Conway.
A notable recent deal was the $800 million investment it made in
Genesee & Wyoming Inc. (GWR) to fund a $2 billion acquisition
of RailAmerica Inc., which combines the two largest short line and
regional rail operators in North America.
The firm is also bidding for the performance-coatings unit of
DuPont Co. (DD). The Wall Street Journal, citing people familiar
with the matter, said Carlyle outbid rivals Apollo Global
Management LLC. (APO) and KKR & Co. (KKR) with a $4.8 billion
offer, but a deal has yet to be finalized.
Carlyle listed on Nasdaq after an initial public offering in May
of more than $600 million, in which it priced its shares at $22
apiece. The stock, after an initial dip to $20, has since
rebounded. The shares closed 1% higher Tuesday to $24.47 and were
unchanged in premarket.
Write to Amy Or at amy.or@dowjones.com
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