The Carlyle Group on Wednesday reported a surge in fourth-quarter profit after the successful sale of several assets and an increase in the value of the assets it still holds. It is the firm’s most profitable quarter since it went public in May 2012.
The District-based private equity giant said after-tax economic net income, a popular method of measuring profitability at investment firms, increased to $576 million in the last quarter of 2013 compared with $182 million for the same quarter the previous year, according to a news release containing the results.
For 2013, Carlyle’s economic net income was $1.32 billion compared with $736 million for 2012.
Carlyle co-founder and co-chief executive William E. Conway said 2013 produced a good market to sell investments.
The investment firm “took advantage of a strong market backdrop to produce $17.4 billion in realized proceeds during 2013,” Conway said in a news release. Realized proceeds are the company’s original capital invested plus profit.
The company also reported that it plans to pay a dividend of $1.40 per share on March 11, raising the dividend for the year to $1.88 per share.
Even as it reaps profits from the sales of investments, Conway said in a conference call with analysts that finding new opportunities for investment is becoming increasingly “challenging” because competition for acquisitions is heating up. The company invested $2.2 billion in equity in the fourth quarter and $8.2 billion for the year.
“It was an outstanding quarter,” said Ken Worthington, a senior analyst at JPMorgan Chase who has an overweight on Carlyle. “They sold a lot of investments at really nice profits for their investors. That leads to big fees for them and big distributions for their unitholders.”
Worthington said the high stock prices make it “a great time for private equity” because firms such as Carlyle are able to sell their holdings at handsome profits.
“They are in a good place right now,” he said. “If there is anything not going as well, it’s the fact that they aren’t making meaningful new investments. But asset values are high, and they don’t want to buy high. They want to buy low and sell high.”
Led by co-founder and co-chief executive David Rubenstein, Carlyle continues to raise money from investors such as pension funds and sovereign wealth funds at a robust pace. The company uses that money to make investments in businesses and real estate and elsewhere. Carlyle reported raising $3.8 billion in the fourth quarter and $22 billion for the entire year compared with $14 billion raised in all of 2012.
During the last quarter, Carlyle successfully sold its investments in railroads, cable operators, sportswear firms and a media ratings company.
Carlyle Group, founded in Washington in 1987, has $188.8 billion in assets under management, according to the release.