Carlyle Group had $216.9 billion in assets under management as of March 31, down 3.2% from the prior quarter and down 2% in the year ended March 31, 2019, according to the alternative investment firm's first quarter financial results.
The first quarter of 2020 started off well with solid earnings growth, with the firm raising $7.5 billion in new capital in the first quarter, Carlyle co-CEO Glenn Youngkin said during Thursday's earnings call.
Carlyle executives, however, removed all prior financial guidance because of the uncertain nature of the impact of the novel coronavirus on the firm's current and near term results.
As the pandemic shocked the world, Carlyle activated business continuity programs, including shifting its workforce to work from home.
Carlyle executives also moved to classify each asset class in its portfolio according to how it was affected by the coronavirus crisis: limited impact, medium impact and high impact. The reclassification helped Carlyle executives make liquidity decisions and decide where they needed to spend their time supporting the investments that need it, Mr. Youngkin said.
Co-CEO Kewsong Lee noted that Carlyle has $74 billion in dry powder at the end of the first quarter, and Carlyle executives can afford to be disciplined and patient.
By comparison, Carlyle had $69 billion in dry powder in the fourth quarter.
Overall, Carlyle was "well-positioned before the crisis," Mr. Lee said. "Our momentum has slowed but not stalled."
However, transaction activity volume should contract for several quarters or more "until some of this uncertainty abates," Mr. Lee said. "In our experience financial buyers mark to market faster than sellers."
Investment activity will vary by asset class, region and sector, he said, noting that Carlyle executives have already significantly increased deployment in credit and see opportunities in Asia and the firm's secondaries business. However, energy is going through a structural dislocation, Mr. Lee said.
Total AUM in Carlyle's real assets business was $39.8 billion as of March 31, down from $43 billion as of Dec. 31 and a 14% decline from $46 billion a year earlier. The year-over-year decline was mostly driven by a decrease in the fair value of Carlyle's energy portfolio and was offset by $3.8 billion of fundraising.
Carlyle's corporate private equity business had $80.4 billion, down 6.5% from $86 billion in the prior quarter and down 5% from $84 billion year-over-year. The annual results were attributable to a decline in the fair value across the portfolio and $6.2 billion of realized proceeds.
Total AUM of Carlyle's credit business was $48.8 billion, about flat with $49 billion from the quarter ended Dec. 31, but up 7% from $46 billion one year ago. The year-over-year increase was driven by growth in its structured credit, credit, opportunities and aviation strategies. However, in the quarter ended March 31, Carlyle's credit carry funds depreciated, During the quarter, Carlyle credit carry funds, which excludes collateralized loan obligation, business development companies, aviation and direct lending fell 21% mostly as a result of a significant depreciation of Carlyle's energy mezzanine and structured credit funds.
