Carlyle Profits Suffer as Private Equity Sector Founders
July 27 2016 - 7:50AM
Dow Jones News
Carlyle Group LP's second-quarter profit declined as its buyout
funds' growth slowed and its hedge fund arm again weighed on
performance.
The Washington, D.C., private-equity firm on Wednesday reported
a profit of $6.1 million, or seven cents a share, down from $30.6
million, or 34 cents a share, in the year-earlier period.
Carlyle's economic net income, a measure of profit includes
unrealized gains in the firm's portfolio, was $115.1 million, or 35
cents a share, down from $180 million, or 55 cents a share, a year
earlier. Analysts had forecast 31 cents a share, on average,
according to a Thomson Reuters poll.
A stock-market selloff in the wake of the U.K.'s vote to leave
the European Union slowed the appreciation of private-equity firms'
holdings in the second quarter. Since then, stocks have recovered
since and interest rates remain at historic lows. The rich
valuation environment has led market participants to question
whether private-equity firms can find acquisitions at attractive
prices.
Carlyle's private-equity portfolio appreciated 4% during the
period, less than its 5% gain in the year-earlier period. That
compared with a 4.5% rise in KKR & Co.'s funds and Blackstone
Group LP's 2.5% advance in its private-equity holdings.
In Carlyle's global market strategies business, which includes
alternative assets like hedge funds, holdings fell 2%, weighed down
by energy debt. Carlyle's hedge-fund business has had a
disappointing stretch, marked by outflows and poor performance at
funds such as Claren Road Asset Management LLC. In May, Mitch
Petrick, longtime head of the unit, stepped down.
Carlyle's distributable earnings, a measure of cash profits
available for payouts to shareholders, were $288 million, or 84
cents a share, down from $386 million, or $1.18 a share, a year
earlier. Carlyle said it would pay a 63-cent dividend, versus 89
cents a year earlier.
The firm's assets under management fell to $175.6 billion from
$192.8 billion a year earlier and $178.1 billion at the end of the
period quarter.
Carlyle's shares closed at $17.26 Tuesday, and were up 11%
year-to-date.
Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com
(END) Dow Jones Newswires
July 27, 2016 07:35 ET (11:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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