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Carlyle's fee-related earnings rise, dealmaking proceeds

fall

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Citi analysts call quarter 'mixed'; shares fall 6.3%

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Carlyle's AlpInvest unit sees 22% growth in assets under

management

(Recasts story, adds background, details)

By Isla Binnie and Arasu Kannagi Basil

NEW YORK, Oct 31 (Reuters) - Asset manager Carlyle Group ( CG )

reported on Friday lower proceeds from dealmaking in the

third quarter, offsetting a rise in fee-related earnings, and

inflows of $17 billion.

The company said it expected to beat its financial

targets for the full year, but its shares fell 6.3% before the

bell as Citi analysts described July-September as a "mixed

quarter".

Inflows rose from $13.4 billion in the second quarter and

were mainly directed towards Carlyle AlpInvest, which buys and

sells second-hand stakes in private equity funds and portfolios,

and its global credit business. Total assets under management

grew 2% from the previous quarter to $474 billion.

Fee-related earnings, which are generally stable during

market volatility, climbed to $312 million, just above analysts'

average estimate of $311 million, according to data compiled by

LSEG.

But revenue from selling or refinancing assets came in lower

than that recorded during the same period last year, which

weighed on the company's distributable earnings, or profit that

can be returned to shareholders.

That metric hit $368 million, or $0.96 per share,

undershooting an average analyst forecast of $1.01.

Citi analysts said in a note that management fees and

performance fees were lower as private equity "saw a bit of an

air pocket" in the period.

Carlyle Chief Executive Harvey Schwartz highlighted growth

in its insurance business, its AlpInvest unit, as well as in

higher inflows from wealthy individuals.

"The combination of these growth engines gives us strong

momentum through year-end and into 2026," and positions Carlyle

to exceed its 2025 financial targets, Schwartz said in a

statement.

In August, the company forecast 10% growth in fee-related

earnings and inflows of $50 billion for the full year.

ALTERNATIVE INVESTMENTS

Schwartz has been working on a turnaround after the company

faced a few difficult years linked to an industry-wide downturn

and an internal succession struggle.

Carlyle's shares had gained 14% so far this year. Peers

Blackstone, KKR and Apollo, which are

much larger firms, have all seen double-digit percentage

declines in their share prices in the period.

Higher interest rates in the last few years have hampered

private equity firms' ability to maintain their time-honored

model of buying companies, working on them to increase their

value, and selling them at a profit.

Many firms that started relying on this model have expanded

strongly into so-called alternative investments - such as real

estate, hedge funds and private credit.

AlpInvest has become a growth engine for Carlyle, with

assets under management rising 22% in the quarter. The company

said in September that the unit had raised $20 billion to buy

second-hand private equity stakes.

Deal activity has picked up globally in recent months and

some blockbuster deals were struck, raising hopes for more to

come. Among them is a hotly anticipated IPO for medical supplies

maker Medline, which Carlyle owns with fellow investment firms

Blackstone and Hellman & Friedman. The deal could value

the company at $50 billion, Reuters has reported.