Carlyle Group reported a strong increase in fourth-quarter earnings, driven by strong investment performance in some of its businesses and higher commission-related income.
The Washington DC-based company reported net income of $647.6 million, or $1.77 per share, during the period. That compares with net income of $518.8 million, or $1.44 per share, a year earlier.
Like arch-rival Blackstone, which reported results last week, Carlyle’s property business led the way in performance, returning 11%, roughly in line with the S&P 500.
The company’s private equity portfolio appreciated by 6%.
Carlyle’s distributable earnings in the fourth quarter, or the portion of earnings available for return to shareholders, hit a record $902.8 million, or $2.01 per share. That compares with $236.9 million, or 64 cents per share, a year earlier.
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The company said its board approved an increase in the annual dividend to $1.30 per share from $1 previously.
Carlyle shares fell 5.8% in morning trading amid a broad market sell-off.
Under Managing Director Kewsong Lee, Carlyle has focused on expanding businesses such as credit investing that generate stable management fees, which have traditionally been more valued by investors than brokerage fees. more volatile performance.
Fee-related revenue increased 20% to $174.5 million, with remunerated assets under management increasing 14% to $193 billion. Total assets under management reached $301 billion, up 22% year-over-year.
On a Feb. 3 call with analysts, Carlyle executives said they expect fee-related revenue to grow another 20% in 2022.
Shares of Carlyle and its private equity peers posted strong gains in 2021 but faltered in the first weeks of the year as investors fret over rising interest rates, which are rising the cost of borrowing for leveraged buyouts and can hamper fast-growing portfolio companies.
Despite the company’s growing reliance on management fees, Carlyle is still more exposed to performance fees than many of its competitors. This can cause his stock to fluctuate more when the market goes down.
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Lee expressed confidence in Carlyle’s ability to sustain fee-related revenue growth.
“We enter 2022 with strength and a better platform than ever before,” he said. The Wall Street Journal.
He said the market did not appreciate that Carlyle is now a larger and more diverse company than it was before.
Lee cited the company’s asset management business for insurance companies as a key source of growth, especially through mergers and acquisitions. He said Carlyle could also use its balance sheet to enter into transactions that would take it into new fee-generating areas, particularly in credit and its business building portfolios on behalf of other investors.
On Feb. 3, Carlyle said its credit unit would buy iStar Inc.’s triple net rental business for about $3 billion, including debt. The company said the deal would take it deeper into mortgage lending and offer the potential for products aimed at individual investors, a hot area of the market where Carlyle has lagged behind its peers.
Carlyle, which last year set a goal of raising $130 billion in fresh capital by 2024, raised $51.3 billion in 2021, including $11.4 billion in the fourth quarter.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
This article was published by Dow Jones Newswires