Carlyle welcomes new CEO Schwartz with steep drop in earnings

Schwartz, who starts on the job on Feb. 15, is tasked with revitalizing Carlyle's stock price, which has underperformed Blackstone and other rivals such as Apollo Global Management Inc and KKR & Co Inc. Carlyle's distributable earnings, which represents the cash available to pay dividends to shareholders, fell to $433 million in the fourth quarter from $903 million a year ago.

Carlyle Group Inc said on Tuesday that its fourth-quarter distributable earnings fell 52% year-on-year, as the private equity firm cashed out on fewer of its investments amid a slowdown in dealmaking.

The decline was steeper than the 41% decline reported last month by peer Blackstone Group Inc and sets a challenging backdrop for former Goldman Sachs Inc president Harvey Schwartz, who Carlyle unveiled as its new chief executive officer on Monday. Schwartz, who starts on the job on Feb. 15, is tasked with revitalizing Carlyle's stock price, which has underperformed Blackstone and other rivals such as Apollo Global Management Inc and KKR & Co Inc.

Carlyle's distributable earnings, which represents the cash available to pay dividends to shareholders, fell to $433 million in the fourth quarter from $903 million a year ago. That translated to after-tax distributable earnings per share of $1.01, which was slightly above the average analyst estimate of 97 cents, according to financial data provider Refinitiv.

Carlyle's revenue from asset sales fell 65% to $460 million from a year ago, as financial market volatility, geopolitical tensions, inflation and worries about a potential recession prevented the firm from divesting investments for top dollar. Its fund management fees generated $512 million in income, 10% more than a year ago, as recent acquisitions, including those of credit manager CBAM and reinsurer Fortitude Re, started to pay off. That helped fee-related earnings rise 16% to $202 million. Carlyle said its total investment portfolio was flat in the fourth quarter, as private equity funds gained 1%, real estate funds fell 1%, global credit funds rose 2%, and secondary funds dropped 3%. Blackstone's corporate private equity funds rose 3.8%, while its Secondary funds fell 1.8%. Carlyle said it raised just $4.9 billion from fund investors in the fourth quarter, spent $6.8 billion on new acquisitions, retained $72 billion in unspent capital, and had $373 billion of total assets under management. It declared a quarterly dividend of $0.325 per common share.

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