(Reuters) – Private equity firm Carlyle Group LP (CG.O) said on Wednesday its fourth-quarter after-tax economic net income surged to $347.2 million from $6.4 million a year ago, as the value of its holdings was buoyed by the wider stock market rally.
With the S&P 500 rising 6.1 percent in the final three months of 2017 in its best quarterly performance in two years, corporate valuations rose, boosting the value of Carlyle’s private equity funds by 8 percent and allowing it to book hefty profits.
Carlyle rivals Apollo Global Management LLC (APO.N) and Blackstone Group LP (BX.N), which reported earnings last week, also saw similar gains, disclosing appreciation of 9.1 percent and 6.8 percent in their private equity funds, respectively.
Carlyle did not comment in its earnings statement on this month’s bout of stock market volatility and the impact it could have on the valuation of its holdings in the first quarter of 2018. It is scheduled to hold a call with analysts and investors later on Wednesday.
Carlyle’s fourth-quarter economic net income per adjusted unit came in at $1.01, well ahead of analysts’ expectations for 62 cents, according to Thomson Reuters I/B/E/S. Economic net income reflects the mark-to-market valuation gains or losses on Carlyle’s portfolio, and is a key earnings metric for U.S. private equity firms.
“We had record activity across several dimensions during 2017, deploying $22 billion into new investments and raising $43 billion of capital across the platform,” co-Chief Executives Kewsong Lee and Glenn Youngkin, who took over from co-founders David Rubenstein, William Conway and Daniel D‘Aniello in January, said in a statement.
Distributable earnings – the actual cash available for paying dividends – totaled $155.8 million in the quarter, up from $7.4 million a year ago. The firm said its board of directors approved a quarterly distribution of $0.33 per common unit.
Private equity firms are coming off of a bumper year for fundraising, with the industry attracting a record $453 billion from investors in 2017. Washington DC-based Carlyle was no exception, as its assets under management reached $195 billion at the end of 2017, up from $174.4 billion the previous quarter.
Carlyle, whose assets span private equity, real estate and credit funds, also said it had taken a net charge of $42 million in the quarter on its deferred tax assets and tax receivable agreement liability due to the new U.S. tax rules passed by Congress late last year.