The third quarter has proved to be good for yet another private equity firm, as the Carlyle Group swung to profitability on the improving value of its holdings.
The firm reported $218.5 million in profit â€" or what it calls economic net income â€" for the quarter. That compared with a loss of $191 million in the period a year earlier. Economic net income is favored by the private equity industry because it factors in unrealized gains from investments.
Carlyle itself prefers to emphasize distributable earnings, which track the firm's payouts to its limited partners. And by that measure, the firm nearly doubled its year-ago performance, to $206.3 million. Still, that amounted to 63 cents a stock unit, falling short of the average analyst estimate of 66 cents a unit, according to Standard & Poor's Capital IQ.
The firm ascribed its performance to an improving environment that aided the sale of assets and an improvement in the worth of its portfolios. Competi tors like the Blackstone Group and Kohlberg Kravis Roberts have also reported similar gains that bolstered profitability.
Over all, Carlyle's assets under management rose to $157.4 billion, as the firm's holdings rose in value and investors poured in about $2.4 billion in new capital.
Nearly every aspect of Carlyle's broad platform showed improvement during the quarter. Its core private equity operations have been on something of a tear, striking a number of prominent deals, including proposed takeovers of Getty Images and the asset management firm TCW Group.
“Every component of the Carlyle engine is running strong,†David M. Rubenstein, one of Carlyle's co-chief executives, said in a statement. “Third-quarter fund-raising was solid, our investment pace was active, portfolio valuations were up and we generated substantial cash returns for our fund investors.â€
Executives have said that while the firm is not consciously trying to speed up its de al-making, many of the transactions that it has been working on happened to be completed at roughly the same time. Moreover, they point to the overall large range of funds housed under the Carlyle brand, which would naturally lend itself to more takeover activity.
And on a conference call with investors, William E. Conway Jr., another of the firm's co-chief executives, said Carlyle would continue to hunt for new investment opportunities across the globe. That is something the firm is well-positioned to do given its array of funds, including those aimed at regions like Brazil and Asia.
Carlyle's stock has risen 16 percent this year, outpacing Blackstone's 14.5 percent gain and K.K.R.'s 10.6 percent rise.
