Carlyle brings in record earnings after being hit hard by pandemic

The chief executive of Carlyle has hailed a turnround in the $293bn private equity group’s performance, saying it is ahead of schedule on plans to raise $130bn in new funds by 2024.

In results published on Thursday, it reported a record $731m of distributable earnings, a metric favoured by analysts as a proxy for cash flow. Its distributable earnings now stand at $1.3bn for the year, an increase of 255 per cent.

“We feel excited about the momentum we are creating across all of our businesses,” said chief executive Kewsong Lee in an interview with the Financial Times.

Lee was named sole chief executive of Carlyle 15 months ago following a long stretch of underperformance. The group was also hit hard by the pandemic. His former co-head Glenn Youngkin is running as the Republican candidate for governor of Virginia.

Realised “carried interest” — profits paid out to partners and shareholders — hit a record $534m as Carlyle sold $14bn of investments during the quarter. The group’s net accrued carried interest was $3.9bn, a drop of 2 per cent from the second quarter.

Carlyle is also quickly raising capital and making new investments. It invested $6.3bn in the quarter, including in fintech company Abrigo and Japanese renewable energy provider JAG Energy. Year-to-date investments of $20bn are up 109 per cent.

In the third quarter, it raised $22bn, putting capital raising this year at $40bn, a 124 per cent increase. As a result, Carlyle ended the quarter with a record war chest for investments of $293bn — a 19 per cent increase from the start of the year.

Overall, it generated $1.7bn in quarterly revenues and its distributable earnings per share were $1.41, up 385 per cent from this time last year. It maintained a 25 cents quarterly dividend but already announced a $400m stock buyback earlier in October.

While Carlyle’s shares have risen nearly 120 per cent in 2021, it has trailed the long-term performance of competitors Blackstone and KKR.

Its once struggling credit business has been a particular focus for Lee. “It’s been one heck of a turnround,” he said in the interview. This business was “a platform that wasn’t a platform. It was an array of fund strategies and a bunch of hedge funds.”

Since 2015, Carlyle’s credit assets under management have more than doubled to $66bn, led by investments in collateralised loan obligations and assets such as aircraft and real estate.

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