Carlyle Group Reports $57 Million Q2 Loss as PE Industry Struggles

Carlyle Group Reports $57 Million Q2 Loss as PE Industry Struggles
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Carlyle Group Reports $57 Million Q2 Loss as PE Industry Struggles

Private equity firm, The Carlyle Group LP (NASDAQ:CG), has reported a loss of $57 million on its second quarter earnings. The firm pointed at declined growth in its core private equity investments as a major cause. The loss is reported as economic net income, a metric highly preferred by publicly traded private equity firms, including The Blackstone Group L.P. (NYSE:BX) and Kohlberg KKR & Co. L.P. (NYSE:KKR). However, the figure includes unrealized gains for investments.

Nonetheless, the loss is equivalent to $19 cents a share, way above analyst estimates of $14 cents per share. Additionally, the loss comes 12 months, after the company reported $237 million in net profits for a similar period.

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Nevertheless, the company was still able to give shareholders something to pocket, as it distributed approximately $115 million, after seeing its distributable earnings, which measure cash profits, jump 29% during the quarter, reported Wall Street Journal.

Furthermore, the firm, paid out a staggering 4.8 billion, or 2% distributions, to investors, which cut down the value of assets under management to 156.2 billion. Additionally, Carlyle Group LP (NASDAQ:CG), realized a net loss of $2 billion in foreign exchange on its assets under management. Apparently, this was a theoretical loss, as the company reports its overseas assets in U.S dollars.

The net loss was realized due to the recent rally of the U.S dollar against the euro and other major international currencies, notes Wall Street Journal. The net impact nearly swept out the new capital additions during the period, which totaled $2.7 billion.

However, according to the New York Times, Carlyle Group claims to have realized gains of $3 billion, and adds that the company raised nearly $4 billion in new capital. Co-chief executive of the firm, David M. Rubenstein, is quoted in a statement saying, “our firm, portfolio, and funds are in very good shape, despite a quarter marked by significant volatility in global equity markets and continued uncertainty in Europe.”

This indicates that the company’s general opinion is that the euro crises are not affecting its portfolio. This is well depicted by some of the other Private Equity firms.  Private equity industry firms have reported mixed results in their most recent quarter earnings; illustratively, Kohlberg Kravis Roberts & Co. (NYSE:KKR)’s profits surged, despite the economic challenges as earlier reported in our article, while BlackRock, Inc. (NYSE:BLK), the world’s biggest money management firm, reported a decline of 3% in its profits for the period to $558 million.

Elsewhere, The Blackstone Group L.P. (NYSE:BX), CEO, Tony James, believes that, alternative investments is the way to go, as stock markets stare at a possible meltdown, due to the declining economy.

At the time of this writing, The  Carlyle Group LP (NASDAQ:CG), stock was trading at $23.76 per share, down $0.71, or 2.90% decline from yesterday’s close.

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