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UPDATE 2-Carlyle 1st-qtr profit falls as compensation costs rise

(Adds executive quote, details on investment activities)

April 30 (Reuters) - Private equity firm Carlyle Group LP reported an 18 percent fall in quarterly profit on Wednesday as asset sales slowed and compensation costs rose.

First-quarter economic net income (ENI), a measure of profitability that takes into account the market value of assets, fell to $321.9 million.

ENI was 85 cents per adjusted unit after taxes, below the average analyst estimate of $1.01, according to Thomson Reuters I/B/E/S.

Meanwhile, distributable earnings, which includes both management fees and performance fees and shows cash available to pay dividends, rose 7.2 percent to $183.3 million before taxes.

Carlyle's quarterly distribution was 52 cents per unit after taxes versus 48 cents in the first quarter of 2013.

"Although the investing environment has grown more challenging over the past few quarters, we have been successful in committing to several exciting investment opportunities," said the co-chief executive officer, Bill Conway.

The company took in $3.1 billion from selling assets in its portfolio during the quarter, or about 25 percent less than the $4.1 billion recorded a year earlier.

In the first three months of 2014, Carlyle sold stakes in manufacturer Allison Transmission Holdings Inc, information and measurement company Nielsen Holdings NV , telecommunication equipment maker CommScope Holding Company Inc, and consulting group Booz Allen Hamilton Holding Corp. The company also sold its remaining stake in BankUnited Inc.

Carlyle invested or committed to invest $4.2 billion in the quarter, or just over half of the $8.2 billion it invested in all of 2013.

Total costs related to compensation and benefits were up 14 percent at $609.1 million. Much of the increase was tied to compensation at AlpInvest Partners and Metropolitan Real Estate Equity Management. Carlyle completed its acquisition of the two firms between the first quarter of 2013 and the first quarter of 2014.

Total assets under management rose 13 percent to $198.9 billion from $176.3 billion a year earlier. That was helped by $5.5 billion in new fundraising, up 12 percent from the $4.9 billion in new capital a year earlier.

Blackstone Group LP had a stronger quarter, with its ENI up 30 percent on solid gains in its private equity arm, which more than offset small declines in its real estate unit.

Carlyle's shares closed at $34.21 on Thursday on the Nasdaq. They have fallen 4 percent so far this year, underperforming the broader S&P 500 Index, which has risen 1.6 percent.

(Reporting by Peter Rudegeair in New York and Tanya Agrawal in Bangalore; Editing by Sriraj Kalluvila and Jeffrey Benkoe)