Carlyle's new CEO says higher interest rates affecting investor appetite

Carlyle Group's new CEO Harvey M. Schwartz on Wednesday's earnings call said the rise in interest rates has contributed to mixed investor appetite and sentiment.

Carlyle reported $385 billion in assets under management as of June 30, up 1% from three months earlier and up 2% from a year earlier. Carlyle reported a modest increase in fundraising of $7.1 billion in the second quarter, up from $6.8 billion in the first quarter but a drop from $9.8 billion in the second quarter of 2022

It remains early days in determining the impact the shift from a decade of a zero-interest-rate policy on corporate capital structures and liquidity, Mr. Schwartz said on the earnings call.

"We're starting to see it's more difficult for our portfolio companies to pass through increased cost, reinforcing the view that the inflationary cycle has peaked," he said.

Carlyle's private equity funds appreciated 1% in the second quarter and 5% in the year ended June 30. Infrastructure and natural resources appreciated the most, 2% in the quarter and 13% for the 12-month period ended June 30.

John C. Redett, incoming chief financial officer, speaking on the same call attributed the performance of infrastructure and natural resources to "an uptick in announced transactions."

Mr. Redett, who is currently head of global financial services, officially takes over the CFO role Oct 1, replacing Curt L. Buser, who is retiring after 20 years at Carlyle.

Carlyle reported a $98 million net loss under GAAP in the second quarter, compared with $101 million in net income under GAAP in the first quarter and $245 million in net income under GAAP in the second quarter of 2022.