Carlyle Group posted its highest distributable earnings in nearly four years and told analysts it was preparing to launch a new slate of vehicles to potentially boost its fundraising in the coming quarters.
The Washington-based firm on Wednesday reported inflows of $16.8 billion in the three months ended June 30, up from $13.4 billion in the same period last year. The new commitments included a $5 billion anchor investment in its latest U.S. buyout fund, $5.8 billion for its credit business and $4.5 billion for its AlpInvest secondary arm.
But firm executives say they are on the cusp of a new fundraising cycle of flagship funds including secondaries, credit opportunities and a midmarket defense-focused strategy.
The first half of the year was "one of the best halves we've ever had in terms of organic inflows," with nearly $30 billion in inflows, said Justin Plouffe, the firm's chief financial officer, on a Wednesday conference call.
Firm leadership said ordinary investors -- a key source of private-equity capital in recent years -- continue to back its funds, with inflows up over 60% compared with last year's second quarter. Like other alternative-asset managers, Carlyle earlier this year was hit with significant redemption requests for its private-credit fund.
Carlyle in May announced a partnership with AllianceBernstein Holding and Brookfield Asset Management to develop products for defined-contribution plans such as the 401(k), though firm leadership said Wednesday that might not start to ramp up until sometime next year.
Nonetheless, Chief Executive Harvey Schwartz said the firm expects to hit its goal of raising $200 billion in fresh money over the next three years, which it laid out earlier this year. The firm's assets under management rose 4%, to $485 billion, by quarter end.
"We've come into this supercycle where all the flagships are raising money," Schwartz said.
Overall, Carlyle Group reported quarterly net income of $224.8 million, or 37 cents a share, compared with $328.1 million, or 87 cents a share, a year earlier. Profit that can be distributed among shareholders climbed to $472.3 million, or $1.07 a share, from $431 million, or 91 cents a share, a year prior.
Carlyle's revenue fell to $1.12 billion from $1.57 billion a year earlier, but still beat analysts' forecast of $924 million, according to FactSet.
Carlyle also invested $14.3 billion in the latest period and recorded $6.7 billion in realizations in its carry funds. Fee-related earnings jumped to $357.7 million from $323.3 million in the year-earlier period.
The firm's share price was down about 2% in afternoon trading. It is down more than 18% on the year, joining its private-markets peers that have seen double-digit share-price declines over private-credit jitters and concerns about their software holdings.
Like other alternative-asset heads have done in recent days, Carlyle executives struck an optimistic note on current economic conditions. Schwartz said global economic activity was fine despite disruption caused by war in the Middle East.
He cited in particular the growth potential in the firm's new defense-focused business, noting that many of Carlyle's earliest deals from its founding in 1987 were in the sector.
"We're the only large-scale firm that has a history of this practice," Schwartz said. "We're seeing huge demand from [limited partners] that have interest in this space, and we're seeing lots of deal flow."
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