NEW YORK (Reuters) – Private equity firm Carlyle Group wrote down the value of the investments in its buyout fund Carlyle Partners IV by 13.8 percent during the fourth quarter, a source who has viewed the figures said on Tuesday.
Carlyle Partners IV is a $7.9 billion fund raised in 2005 for buyout investments in the United States, according to a press release Carlyle issued at the time. Carlyle recently raised $13.7 billion for its buyout fund Carlyle Partners V.
The 13.8 percent figure refers to unrealized — i.e. not yet sold — privately held investments. When including publicly traded investments, the writedown was 14.8 percent, the source said.
When including gains from realized investments in companies such as car rental firm Hertz Corp and machinery parts firm AxleTech, the writedown was 8.8 percent, the source said.
Carlyle declined comment on the figures.
Private equity firms are obliged for the first time this year to value their companies as if they were to sell them today, rather than years in the future when they may be sold.
Those that have publicly traded funds, or are themselves listed, report figures to the market. Other private equity firms report numbers direct to their investors.
However, it is hard to do an apples-to-apples comparison of different firms’ figures as the methods used to calculate the asset values may not be exactly the same.
Kohlberg Kravis Roberts & Co’s [KKR.UL] Euronext-listed KKR Private Equity Investors (KKR.AS) said on Monday the value of its portfolio was 30 percent lower than the previous quarter.
Blackstone Group (BX.N) said on Friday it wrote down the value of its private equity portfolio by 20 percent for the quarter.
For the fourth quarter the Standard & Poor’s 500 Index .SPX fell 22.6 percent and for 2008 it fell 38.5 percent.
Carlyle, which has numerous funds invested in areas from energy to infrastructure, announced on Tuesday it raised its second mezzanine investment fund, Carlyle Mezzanine Partners II, with commitments from investors totaling $553 million.
According to a Carlyle presentation dated December 2008 obtained by Reuters, the target on the fund was $600 million.
Carlyle raised $436 million for its first mezzanine fund in 2006. Mezzanine is unsecured debt that sits below bank loans and above equity on a company’s capital structure.
Carlyle Mezzanine Partners Co-Head Leo Helmers said in a press release that the lack of debt financing alternatives in the market provides CMP “an opportunity to get very high risk-adjusted returns in its mezzanine portfolio”.
Mezzanine has gained new luster as private equity firms find it harder to access the easier, cheaper lending options that they had relied on. (Reporting by Megan Davies, editing by Matthew Lewis)