Carlyle AUM ticks up for quarter, year

Carlyle Group reported $230 billion of assets under management as of Sept. 30, up 4% from $221.4 billion as of June 30, and a 3.7% bump from $221.8 billion from Sept. 30, 2019.

On an earnings call Thursday, CEO Kewsong Lee emphasized that Carlyle executives are focused on increasing the company's fee related earnings, which are the difference between fee earnings, including management and transaction fees, and operating expenses. He said Carlyle has increased fee-related earnings by "scaling our largest fund platforms while carefully managing expenses."

Carlyle's fee-related earnings were $118.7 billion as of Sept. 30, up 9.1% from $108.8 billion from the third quarter 2019.

Mr. Lee also attributed the AUM increase to fundraising, with Carlyle raising $5.5 billion in the third quarter to a total of $18 billion since January. Most of the capital was raised by the firm's global credit and investment solutions units — made up of customized portfolios and its co-investment/secondaries subsidiaries for private equity and real estate, which Carlyle has been building over the past several years.

Among highlights for the quarter, Carlyle and T&D Holdings in June completed the acquisition of 76.6% interest in insurance company Fortitude Group Holdings from American International Group for $2.2 billion.

"By the end of this year, Fortitude will have rotated or committed to invest approximately $4 billion of capital into Carlyle funds, with more expected in 2021," Mr. Lee said. "The funds raised from Fortitude are attractive because of the recurring, permanent-like nature of this capital."

As of Sept. 30, Carlyle had $74 billion available for investment, an 1.4% increase from $73 billion at the end of the prior quarter.

Carlyle's largest business by AUM, corporate private equity, had $85 billion in assets under management as of Sept. 30, flat from $84.3 billion as of June 30 and an 1% increase from $84.1 billion from the end of the year-earlier quarter.

Global credit had $53 billion of AUM as of Sept. 30, up 6% from $50 billion as of June 30 and up 10.4% from $48 billion at the end of the third quarter of 2019.

Investment solutions had $52 billion of AUM as of Sept. 30, a 10% increase from $46.9 billion at the end of the second quarter and up 16.7% from $44.8 billion at the end of the year-earlier quarter.

Real assets had $40 billion of assets under management as of Sept. 30, flat from $40.2 billion in AUM as of June 30 and down 10.9% from $44.9 billion as of Sept. 30, 2019. During Carlyle's second quarter earnings call in July, Mr. Lee had attributed the real asset portfolio's year-over-year AUM decline to its energy portfolio.

On Thursday's call, Mr. Lee noted that investment exposure to the energy sector is "purposely structured to be ring-fenced in a few industry sector-focused funds, and as a result, much of our private equity and private credit portfolios have very limited exposure to energy-specific investments."

Carlyle's GAAP net income attributable to The Carlyle Group Inc. common stockholders was $295.5 million in the third quarter. Carlyle reported that its GAAP results include a principal investment loss) of $621 million from a Carlyle investment fund purchasing additional interests in Fortitude from AIG. The loss is driven by the contribution of Carlyle's existing 19.9% investment in Fortitude into the fund, and then accounting for the investment based on the net asset value of Carlyle's limited partnership interest in the fund rather than a direct interest in Fortitude.