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Private equity group Carlyle delivered stronger than expected first-quarter results that signal the US buyout pioneer is returning to growth after three years of struggle stemming from a bungled succession and an industry-wide slowdown.
Carlyle’s quarterly fee-based earnings of $311mn increased 17 per cent in the first quarter compared with the previous year, better than analysts had expected. The group raised $14bn of new capital in the quarter and $50bn over the past 12 months, pushing overall assets to a record $453bn.
“It feels great where we are in our process,” said Harvey Schwartz, who was named Carlyle’s chief executive in 2023 after a long career at Goldman Sachs. “When you look through the strategic initiatives we set out in terms of target fee growth and margin expansion, all of that is on target.”
Profits at the New York and Washington based group’s Carlyle AlpInvest unit for second-hand private equity fund stakes almost doubled, making it Carlyle’s fastest growing business.
Carlyle’s profits were also buoyed by its private equity unit, which profitably sold down $5bn in investments including stakes in aviation group StandardAero and IT services specialist Hexaware Technologies.
However, Schwartz said that Carlyle’s dealmakers were increasing their returns expectations as the Trump administration’s trade wars cloud the economic outlook.
“[We] want to get rewarded properly for the risk we’re taking. I would expect activity levels to be generally slower across the industry,” said Schwartz. “It’s not so much that it’s a green light or a red light, it’s more a yellow light.”
Schwartz predicted Federal Reserve chair Jay Powell could quickly cut interest rates if the US central bank saw inflation data cooling towards its 2 per cent target rate.
“If this Fed needs to cut, this is a Federal Reserve that, for a very long time now, has demonstrated they can cut and they can cut quite quickly. They have a lot of policy flexibility to do that,” Schwartz told the Financial Times.
Carlyle, historically one of Wall Street’s most politically connected groups with offices and deep ties in Washington, previously employed Powell, who was a partner focused on corporate takeovers until 2005.
He said that he was growing optimistic that US Treasury secretary Scott Bessent was making progress on trade deals after setting up a meeting later this week in Switzerland to open talks with top Chinese officials.
“This is an unsustainable position between the two countries,” said Schwartz. “We can’t be in a situation where the two largest economies in the world are in a trade war without it broadly affecting the entire global economy over some extended period.”
