Carlyle's quarterly earnings suffer from legal battle
October 27, 2016
The Carlyle Group's earmarking of $100 million "for ongoing litigation and contingencies" cut into the firm’s 3Q earnings report Wednesday. To recap, the firm faces a $1 billion lawsuit related to losses from mortgage-backed securities during the crisis. Taking out that $100 million, Carlyle posted an economic net income of $54 million, or 21 cents a share after taxes, falling short of analyst projections. However, that ENI represents a significant reversal over the loss of $128 million at this point last year. Nevertheless, it also represents a 66% decrease from the $158 million generated in 2Q.
Co-CEO David Rubenstein tried to add optimism to the news by noting that Carlyle is "at the beginning of what should be a significant, multiyear fundraising cycle." For the quarter, Carlyle’s PE portfolio appreciated 3%, with year-to-date equity invested at $12.5 billion over the past 12 months. Carlyle’s AUM fell to $169.1 billion from $187.7 billion a year earlier and $175.6 billion at the end of 2Q.
Investors weren’t put off by the mixed news. Carlyle’s shares closed Wednesday at $16.05, up 1.9%.