Carlyle Group LP's (CG) fourth-quarter earnings sank 41% as the
private-equity firm recorded lower performance fees and an
investment loss, sending its revenue spiraling, while compensation
expenses rose sharply.
Carlyle, one of the biggest buyout firms in the business, went
public in May. Traditionally one of the most active deal makers in
private equity, Carlyle discussed a deal to take Nasdaq OMX Group
Inc. (NDAQ) private, though the talks didn't result in a
transaction and aren't continuing, according to The Wall Street
Journal.
In December, Carlyle agreed to buy Duff & Phelps Corp.
(DUF), a publicly traded investment-banking and valuation-advisory
firm, for more than $600 million. A few months prior to that, it
agreed to buy the performance coatings unit of E.I. DuPont de
Nemours & Co. (DD) for $4.9 billion in cash in a bid to
accelerate its growth in emerging markets, particularly China and
Brazil.
Carlyle has been focusing its sights on Brazil more sharply, in
December revealing it was in talks on three acquisitions in the
Latin American nation that could be completed in the next year.
Separately, in November, it unveiled the first investment of its
new Sub-Saharan Africa Fund, one of many looking for capital and
deals on the continent. Carlyle's foray into Africa represents one
of the continent's bigger private-equity investments in recent
years.
Thursday, Co-Chief Executive Officer William E. Conway Jr. said
that during the quarter, Carlyle invested $3.3 billion in equity in
96 investments in 19 countries across 24 carry funds. The firm also
recorded $6.8 billion in realized proceeds from 155 investments
across 39 carry funds.
Total assets under management were $170.2 billion, versus $157.4
billion in the third quarter and $147 billion in the fourth quarter
of 2011.
Carlyle unveiled a quarterly distribution of 85 cents a common
unit, up sharply from its third-quarter distribution of 16 cents a
unit. Co-CEO David M. Rubenstein noted that in 2012, Carlyle raised
twice as much capital as it did in 2011, with more than $14 billion
of new capital commitments to its funds.
Carlyle reported a profit of $12 million, or 25 cents a unit,
versus $20.3 million, or 41 cents a unit, a year earlier.
Meanwhile, economic net income dropped 28% to $182 million.
Private-equity firms view economic net income as a better barometer
of performance because it includes unrealized gains and employee
compensation.
Revenue fell 9.2% to $755.3 million.
Performance fees dropped 31% to $264.4 million; however,
fund-management fees were up 13% to $263.5 million.
Carlyle recorded an investment loss of $2.3 million versus
income of $21.8 million a year earlier.
Compensation and benefits expenses rose to $376.6 million from
$146.2 million. Total expenses rose 56% to $660.2 million.
Units closed at $36.67 on Wednesday and were inactive in recent
premarket trading. The stock has risen 41% so far this year.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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