February 6, 2019 / 11:54 AM / 11 days ago

Carlyle expects 26 percent jump in 2019 fee earnings

(Reuters) - Private equity firm Carlyle Group LP said on Wednesday it expects to grow the amount it earns from management fees by more than a quarter in 2019, as it wraps up a $100 billion fundraising push.

The logo of the Carlyle Group is displayed at the company's office in Tokyo, Japan October 17, 2018. REUTERS/Issei Kato

For the forth quarter, Carlyle said pre-tax distributable earnings (DE) - the cash available for paying dividends - totaled $211 million, up from $156 million a year earlier.

This was boosted by fee-related earnings (FRE), comprising primarily fees paid by investors to participate in Carlyle’s funds, which surged to $175 million, from $27 million a year earlier.

Net of one-off positive factors such as $32 million in insurance recoveries, quarterly FRE was around $90 million. Full-year FRE was $350 million.

“We currently expect full-year FRE to be about $400 million for 2019, a 26 percent increase from 2018, exclusive of the insurance recoveries,” Chief Financial Officer Curt Buser said in an earnings call.

Helping FRE has been a fundraising drive, with Carlyle having aimed to raise $100 billion in new capital by end-2019 from 2016. Carlyle said it is 90 percent of the way to that goal and expects to raise $20 billion across several strategies in 2019 to exceed the target.

Despite the bullish outlook, Carlyle’s stock was trading down around 0.9 percent at 10:47 EST, a slightly deeper dip than the broader market.

Carlyle’s assets under management rose to $216.5 billion from $212.3 billion in the prior quarter and were 11 percent higher than 12 months earlier.

Like peers, Carlyle has said it will no longer focus on economic net income, a non-GAAP metric traditionally used by private equity firms to measure bottom-line performance.

Under generally accepted accounting principles (GAAP), Carlyle reported a loss to common unitholders of $16 million. This echoed peers Apollo Global Management, Blackstone Group LP and KKR & Co, which last week reported GAAP losses on the back of turbulent financial markets.

The benchmark S&P 500 index had its biggest quarterly loss in more than seven years at the end of 2018, hitting private equity firms that use public peers to value private investments.

Carlyle said its corporate private equity funds depreciated in value by 2 percent in the quarter. This was better than peers, with KKR, Blackstone and Apollo reporting declines of 8.3 percent, 2.9 percent and 10.9 percent, respectively.

Reporting by Joshua Franklin in New York, additional reporting by Aparajita Saxena; Editing by Shreejay Sinha and Susan Thomas

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