The Carlyle Group emerged as the latest listed private equity firm to announce a share buyback programme with plans to repurchase $200 million worth of shares.
David Rubenstein, Carlyle’s co-CEO, said in a fourth quarter earnings call that despite declines in stock prices at most listed alternative managers, he believed the decrease is not justified.
“We take no comfort in the fact that the whole alternative investment industry, despite its many strengths, has seen a dramatic decline in unit prices over the past six months,” Rubenstein said.
“We believe the market concerns about our own future earnings capacity essentially overlooks the value of our existing investments, our dry powder, our exit pipeline and our track record of strong investment performance in up and down markets.”
As a result, Carlyle is planning to buy back mainly public shares but also those owned by employees, although the firm noted in its announcement that no units will be repurchased from Carlyle’s executive officers under this programme.
Apollo Global Management also recently announced it would start a $250 million share repurchasing programme, as reported by Private Equity International.
Carlyle also reported a drop in profits in 2015. It made a gain of $397 million for 2015, 59 percent lower than 2014, primarily due to lower carry fund appreciation at 7 percent in 2015 compared to 15 percent in 2014,
The Washington-based firm also curbed fundraising in 2015, accumulating $16.4 billion in 2015, down from $24.3 billion in 2014. Realised proceeds and equity invested in 2015 were roughly in line with 2014 at $18.1 billion and $8.8 billion respectively.
Carlyle also announced that it has started putting together a long-term fund called Carlyle Global Partners.
The fund has already made $400 million in co-investments and has secured $3 billion in commitments from a limited number of well-known institutional investors.
“Carlyle has been working for the past year on creating a long-term investment fund,” William Conway, Carlyle co-chief executive, said on the conference call. “One designed to make alternative investments, which might be held for longer periods than the normal three to five years private equity hold period. We have an experienced team in place to run this fund.”
Carlyle now had $182.6 billion in assets under management as of the end of 2015 and total dry powder of $58 billion.