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Carlyle Group said fee-paying assets fell in its fourth quarter, underlining the challenge facing chief executive Harvey Schwartz in reviving the private equity pioneer.
The US buyout group has been trying to boost growth and profitability under Schwartz in a bid to catch up with larger US-listed rivals Blackstone, KKR and Apollo Global, following years of underperformance and internal turmoil.
But while its peers’ fee-earnings assets rose anywhere between 8 and 15 per cent in the last quarter of 2024 compared with the same period the previous year, Carlyle posted a 1 per cent fall in those assets to $304bn, dropping below analyst forecasts polled by Bloomberg.
The results demonstrate the scale of Schwartz’s task in turning around Carlyle, even as many of his initiatives begin to show early signs of success. Shares in Carlyle slid more than 5 per cent in early trading in New York on Tuesday.
Carlyle’s declining fee-paying assets were in part the result of modest fundraising results during the year when compared with its peers. The group raised $40bn in new capital in 2024, up about 8 per cent from the previous year, versus fundraising hauls by rivals that exceeded $100bn and were at, or near, record levels. Carlyle’s assets were also hit by a $6bn change in the value of assets it manages for its insurer Fortitude, due to rising interest rates.
However, Carlyle benefited from resurgent activity in financial markets, which allowed it to list large investments including aviation group StandardAero. The company notched up $10bn in asset sales in the fourth quarter and almost $30bn for the full year. Those asset sales caused fee-earning assets to fall during the year.
Carlyle said it had also raised $23bn in cash during the year on which it had not yet started earning fees, an increase of 50 per cent from 2023.
The results offered signs that Schwartz is beginning to deliver on a mandate to increase momentum in key businesses, including buyouts, private loans, property deals and so-called secondary funds that buy private equity fund stakes.
The group generated $287mn in fee-related earnings in the fourth quarter, an increase of 13 per cent, narrowly beating analyst forecasts. Those earnings, a proxy for the profits shareholders can expect from predictable management fees, exceeded $1.1bn in 2024, beating a goal Schwartz set in February last year.
The former Goldman executive said that he expected similar fundraising results in 2025.
Schwartz highlighted rising performance in the group’s US buyout business, which recorded $5bn in gains across its two most recent funds and will begin marketing a new flagship fund later this year.
However, Carlyle’s performance in European buyouts has been poor, weighing on the returns and growth of its private equity business, the biggest contributor to its profits.
Some projects that Schwartz has championed, such as an internal debt and equity underwriting operation, made big gains in 2024.
Carlyle said its capital markets business generated a record $80mn in quarterly transaction fees for arranging financings, a more than 100 per cent gain from this time a year ago.
“Carlyle delivered a strong 2024, meeting every financial target we set,” said Schwartz in prepared remarks.
