Carlyle Group’s preliminary valuations of the funds from which it earns carried interest increased 1% in the quarter and rose 15% in the year ended Dec. 31, down from an increase of 3% in the third quarter of 2014 and an increase of 19% for the 12 months ended Sept. 30.
The rate of the increase in valuations was also down compared to year-prior valuations when carry fund valuations increased 6% in the fourth quarter of 2013 and rose 20% for the 12 months ended Dec. 31, 2013.
The smaller increase in valuations is mainly attributable to Carlye Group’s real asset portfolio, which lost 8% for the quarter and lost 2% for the year ended Dec. 31. Within the real asset category, real estate increased 8% for the quarter and rose 18% for the year; natural resources lost 8% for the quarter and lost 13% for the year; and the legacy energy return was -17% for the quarter and -12% for the year.
By comparison, real asset valuations were up 2% for the third quarter of 2014 and 7% for the 12 months ended Sept. 30. Within the real asset carry fund portfolio, real estate was up 4% in the third quarter and up 10% for the year ended Sept. 30; natural resources was up 3% for the third quarter and up 15% for the same 12-month period; and legacy energy was flat for the quarter and up 4% for the year. (Carlyle began reporting preliminary valuations of its natural resources carried fund in the third quarter when it changed NGP Natural Resources X’s characterization to a carry fund from a management fee fund, reporting its valuation as of July 1, 2014.)
A year ago, real assets valuations were down 1% for the fourth quarter of 2013 and up 1% for the year ended Dec. 31, 2013. Real estate valuations were up 1% for the quarter and up 5% for the year, and energy was down 3% for the quarter and down 2% for the year ended Dec. 31, 2013.
Carlyle’s carry funds are funds in which the firm collects a share of the profits called “carried interest,” including the buyout, growth capital, real estate, infrastructure, certain energy and distressed debt and mezzanine funds. Not included are Carlyle’s structured credit funds, hedge funds, business development companies, mutual funds and fund-of-funds vehicles.