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How Carlyle’s Private Equity Segment Performed in 4Q17

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Net performance fees

Carlyle Group’s (CG) Corporate Private Equity segment generated net performance fees of $260 million in 4Q17, driven by the segment’s carry funds, which saw an appreciation of 8%. In 2017, the segment garnered net performance fees of $878 million, while the segment’s carry funds witnessed an appreciation of 32%.

In 4Q17, the Corporate Private Equity segment reported fee-related earnings (or FRE) of -$17 million. This loss was mainly because of the segment’s fundraising expenses, which amounted to $31 million. In 4Q17, the segment witnessed fundraising amounting to $19.1 billion. The segment hasn’t started charging management fees related to this fundraising amount.

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Total AUM and realizations

In 4Q17, the Corporate Private Equity segment saw realizations amounting to $3.4 billion, which reflects a marginal decline compared to 4Q16. In 4Q17, the segment saw deployments of $3.6 billion while in 2017, deployments were $11.1 billion.

The Corporate Private Equity segment’s total assets under management (or AUM) stood at $72.6 billion in 4Q17. The segment saw a substantial decline in the distributable earnings (or DE) from $191 million in 4Q16 to $73 million in 4Q17. The segment’s economic income in 4Q17 stood at $249 million compared to $71 million in 4Q16.

The free-cash-flow yield of Carlyle Group stood at 8.5% on an LTM (last-12-month) basis. Peers (XLF) Greenhill (GHL), CBRE Group (CBG), and KKR (KKR) have FCF yields of -9.8%, 5.1%, and 9.8%, respectively, on an LTM basis.

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