Behind The Carlyle Group’s Investment Solutions Division
Rise in FRE
The Carlyle Group’s (CG) Investment Solutions division saw a rise in its fee-related earnings (or FRE), from $5 million in 3Q16 to $6 million in 3Q17. This YoY (year-over-year) rise came on the back of a rise in management fees. However, an increase in fundraising and compensation costs negatively impacted FRE.
Interested in XLF? Don't miss the next report.
Receive e-mail alerts for new research on XLF
The rise in management fees is mainly due to a higher average fee rate. In 3Q17, Carlyle’s Investment Solutions division reported net performance fees of $7 million. In 3Q17, funds in the division rose 3%. However, on a last 12-month (or LTM) basis, funds in the division rose 14%.
The Carlyle Group has an enterprise value of ~$6.0 billion. Let’s look at the enterprise values for some of its peers (XLF):
- Apollo Global Management (APO): $7.2 billion
- KKR & Co. (KKR): 26.8 billion
- Blackstone Group (BX): $31.1 billion
Economic net income
Carlyle’s Investment Solutions division has witnessed a rise in economic net income, from -$3 million in 3Q16 to $15 million in 3Q17. The YoY rise was mainly due to investment income, net performance fees, and FRE.
The division also saw a rise in its fee-generating AUM (assets under management), from $28.1 billion in 3Q16 to $30.3 billion in 3Q17. This YoY rise was due to the negative impact related to outflows and realizations, offset by inflows. However, the division’s fee-generating AUM was positively affected by favorable markets and foreign exchange.