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Inside Carlyle Group's 2Q17 Results

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Part 3
Inside Carlyle Group's 2Q17 Results PART 3 OF 8

Why Carlyle’s Credit Division Saw a Fall in 2Q17

Carlyle’s net performance fees

In 2Q17, Carlyle Group’s (CG) Credit division saw an increase in its net performance fees to $8 million, compared with $5 million in 2Q16. The company’s CSP III fund appreciated by 5%, while its CSP IV fund saw an appreciation of 8%. Over the past 12 months, the division’s carry funds have appreciated by 11%.

Why Carlyle’s Credit Division Saw a Fall in 2Q17

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Carlyle’s Credit division saw a substantial YoY (year-over-year) fall in its ENI (economic net income) in 2Q17. In 2Q17, the division’s ENI stood at $1 million, compared with $12 million in 2Q16, mainly due to a fall in investment income from $11 million in 2Q16 to $2 million in 2Q17.

The division also witnessed a YoY fall in its FRE (fee-related earnings) in 2Q17. In 2Q17, the division’s FRE stood at -$2 million, compared with $1 million in 2Q16, mainly due to a charge of $6 million from a legacy commodities issue.

Fundraising costs also contributed to the decline in FRE. In 2Q17, as a result of lower fee-generating AUM (assets under management), the division saw lower management fees, which led to a decline in FRE. The division’s fee-generating AUM in 2Q17 stood at $25.2 billion, compared with $28.7 billion in 2Q16.

Return on assets

In 2Q17, Carlyle Group’s (CG) return on assets stood at 0.03%. Peer alternative asset managers (XLF) saw the following returns on assets in 2Q17:

  • KKR & Company (KKR): 0.56%
  • Apollo Global Management (APO): 7.57%
  • Blackstone (BX): 4.23%
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