Thursday, February 21, 2013

Carlyle Bled Affiliates in 4th Quarter

WSJ reported on The Carlyle Group's 4th quarter report, which came in below expectations: 

Carlyle was particularly aggressive in the debt markets, where companies it owned raised new debt to pay the firm and its investors dividends totaling $1.7 billion.

"Although people can argue whether the enormous global liquidity is a good thing or a bad thing, we would be derelict if we didn't take advantage of the present situation," said William Conway Jr., Carlyle's co-founder and co-chief executive.

Derelict?  Only for those who prize greed.  Easy debt, over 2:1 debt to equity and a $1.7 billion dividend bleeding.  This speaks to the return of halcyon PEU days.

Update 2-24-13:  Here's how the dividend bleed came across in the 4th quarter conference call:

In 2012, 78% of the realized proceeds were from sale activities versus 88% in 2011. Throughout 2012, because of the strong performance of our portfolio and the attractive capital markets, some of our younger portfolio of companies issued meaningful dividends, which improved the underlying performance of our funds that were not carry-generating events. On a related point in 2012, we had more distribution activity coming from our younger funds. And therefore, 58% of the proceeds in 2012 were produced by funds actively realizing performance fees versus 64% in 2011.