Carlyle, Ares, Blue Owl post Q2 results

Carlyle records net loss, attributes it to investment loss on Fortitude Re.

A number of publicly owned private asset managers disclosed their second quarter earnings in recent days, among them Carlyle Group, whose report reflects a slump in earnings – though less of a slump than many expected.

Washington, DC-based Carlyle had a Q2 net loss of $98.4 million, or $0.27 a share. The company’s statement attributed the loss to “a $104 million investment loss related to the dilution of our interest in Fortitude Re, as well as the reversal of unrealised performance allocations”.

Fortitude Re is a reinsurer that Carlyle acquired in June 2020.

CEO Harvey M Schwartz, who was appointed in February, did not speak specifically to the Fortitude loss in his statement upon release of the earnings numbers. “As a leadership team, we are intensely focused on delivering performance excellence for our investors and driving long-term shareholder value. We are taking action to mobilise teams around priority areas to drive disciplined growth and I am confident Carlyle is well positioned for the future.”

Carlyle’s AUM increased 1 percent during the quarter to $385 billion, due both to new capital raised ($7 billion) and appreciation in the carry fund portfolio. Fee-earning AUM was flat, though, at $271 billion.

Carlyle’s global credit operation has a total AUM of $152 billion – a 1 percent increase over Q1 2023, and a 4 percent increase year to date. The increase was driven by CLO issuance, as well as fundraising.

Carlyle’s AUM in private credit amounts to $24 billion, while its liquid credit AUM comes to $51 billion.

Los Angeles-based alternatives manager Ares Management reported that its net income had risen to $144.5 million in Q2. That equates to $0.75 per share of Class A and non-voting stock. The corresponding numbers for Q1 were $94 million and $0.49.

Ares also disclosed that total gross new capital commitments were $17.4 billion in Q2 2023, with $12.8 billion of them coming from Ares’ credit group. The largest component of that is for European direct lending ($5 billion).

Ares CEO Michael Aroughetti said in a statement: “With private capital taking a more significant share of investing activity, we are well positioned to continue sourcing attractive investment opportunities across our global footprint.”

The report noted that AUM at the close of Q2 was $377.6 billion, and total fee-paying AUM came to $242.4 billion. In Q1, these figures were $360.3 billion and $233.9 billion, respectively.

The net inflow of new capital in Q2 was $16.5 billion, up from $13.5 billion in Q1.

Blue Owl, founded just two years ago in New York, said its total fundraising for Q2 was $2.9 billion. Its credit platform accounts for $1.5 billion of that, real estate $1.1 billion and GP strategic capital $200 million.

In Q1 2023, Blue Owl raised $3.8 billion in capital commitments. Blue Owl broke that down into $1.9 billion for direct lending and $1.5 billion for real estate, with GP capital solutions accounting for the remainder.

Its net income was $12.9 million in Q2, amounting to $0.03 per share of Class A stock. This is up from $8.3 million and $0.02 respectively in Q1.

The co-CEOs of Blue Owl, Doug Ostrover and Marc Lipschultz, said in a statement that they believe Blue Owl is “very well positioned to continue to thrive in the current landscape, having been built around permanent capital and predictable, recurring revenues”.

In a management shuffle in May, Lipschultz was elevated to co-CEO alongside Ostrover. Craig Packer, president of the company’s Blue Owl business development companies (previously known as Owl Rock), and Marc Zahr, head of the real estate division, were at the same time elevated to be co-president alongside Michael Rees. There were rumours that Rees was unhappy with the arrangement, though he addressed these rumours in the earnings call on 1 August, reassuring investors that he is committed to Blue Owl, as reported by affiliate title Private Equity International (registration required).