Newspaper article International New York Times

Carlyle Will Buy Back Stock after Profit Falls 59 Percent ; Top Executive Counters Perception That Boom in Private Equity Has Ended

Newspaper article International New York Times

Carlyle Will Buy Back Stock after Profit Falls 59 Percent ; Top Executive Counters Perception That Boom in Private Equity Has Ended

Article excerpt

The Carlyle Group said it would buy back $200 million worth of shares for the first time in its history as it announced fourth- quarter earnings.

The Carlyle Group has announced its first stock buyback as it tries to counter the perception, heightened by turbulent markets, that the boom in private equity is over.

The private equity giant, based in Washington, reported that profit in the fourth quarter -- a measure that includes gains that have not been realized -- fell by 59 percent, to $73 million, compared with the same period a year earlier.

The gain amounted to 24 cents a share, lower than the 31 cents a share expected in a survey of analysts by Thomson Reuters.

"Carlyle had a strong 2015 amid challenging markets," David M. Rubenstein, the co-chief executive of Carlyle, said Wednesday. The firm will buy back $200 million worth of Carlyle shares, he added, because despite Carlyle's history of strong performance, "the equity market currently ascribes little value to our diversified investment platform."

Turbulent markets have put a damper on Carlyle's stock price, which has fallen by more than half over the last year. Carlyle's problem is not unique, and other private equity executives have gone to great lengths to tell shareholders that their firms are undervalued. In January, Stephen A. Schwarzman of Blackstone told investors "right now you are getting Blackstone on sale." And Leon Black of Apollo Global Management called his firm's stock market valuation "an absurdity."

With the price of oil down sharply and global markets flailing, the rich performance fees that Carlyle receives on its investments have slowed. Those fees are driven in part by the buyout firm's exit of these investments by listing them in the public markets -- which have been fewer in number.

In the final quarter of the year, Carlyle said it made $4 billion on proceeds from sales of 140 investments in portfolio companies. …

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