MW Carlyle's slower fee growth draws questions as private-equity firm's stock falls

By Steve Gelsi

Carlyle is targeting 6% growth in fee-related earnings, which would be slower than the growth in 2023

Carlyle Group Inc.'s stock fell 5% on Tuesday after the private-equity firm signaled a slowdown in its fee-related earnings growth in 2025, as it leans on its private-credit arm to increase its profit.

Carlyle Group $(CG)$ said it expects fee-related earnings - a key data point for private-equity firms that trade common stock - to be 6% in 2025.

That's a much slower growth rate than the 28.6% growth it reported in 2024, but better than its 2023 FRE growth of 3%.

Based on 6% FRE growth in 2025, Carlyle Group would report $1.17 billion in FRE for the current calendar year. That's slightly below the FactSet consensus estimate for FRE of $1.21 billion.

Carlyle Group also said it expects its FRE margins to be at similar levels as 2024 but added that it may outperform that forecast with help from its global wealth and credit businesses.

"We do see the potential for upside driven both by opportunities and market environment," Chief Financial Officer John Redett said on the firm's conference call with analysts.

However, a "more modest decline" in the company's earnings from its global private-equity business is expected in 2025, compared with a 7% drop in the fourth quarter.

Goldman Sachs analyst Alexander Blostein asked for more details from Carlyle on its FRE growth and queried what would offset the modest decline in its global private-equity business.

Redett said Carlyle plans to "aggressively" invest in businesses where it sees growth, including wealth, credit and its solutions business, which includes secondary and co-investment funds, as well as asset-backed securities.

The moves may help Carlyle exceed its target for 6% FRE growth in 2025, he said.

Including Tuesday's moves, Carlyle Group's stock is down 3.2% in 2025, while the S&P 500 SPX has risen 3.1%.

For the fourth quarter, Carlyle Group's earnings of 92 cents a share missed the FactSet consensus estimate of 95 cents, while its revenue of $1.03 billion beat the consensus analyst expectation of $961.6 million.

-Steve Gelsi

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February 11, 2025 12:32 ET (17:32 GMT)

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