Carlyle Group pulls down Irish fund’s cash profits

Carlyle Group, the large American private equity company, has signalled that it has started to pull down cash profits from its highly successful Irish fund, managed alongside Dublin finance house Cardinal Capital and backed by the Ireland Strategic Investment Fund (Isif).

Carlyle and Cardinal are co-managers of the €300m Carlyle Cardinal Ireland (CCI) Fund, which last month closed the €250m sale of AA Ireland, the insurance and breakdown assistance company. It previously booked handsome profits from exits at confectioner Lily O’Brien’s, Payzone and GSLS, a security company. The fund suffered a loss on Abtran, a contact centre operator.

Carlyle told investors last week that it was “realising carry” for the first time at the Irish fund. The carry or profit for the fund managers, in this case Carlyle and Cardinal, is triggered once the return for the limited partners, or investors such as Isif, has hit an agreed hurdle rate. In private equity funds, the hurdle is typically 8% per annum, and the managers’ carry is set at 20% of the total returns earned by the fund.

In the case of CCI, the carry would be split equally between Carlyle and Cardinal. Curtis Buser, chief financial officer of Carlyle, said the group was “typically cautious when we first take cash carry, as we look to minimise the risk of any future clawback”.

This indicates a high degree of confidence that the fund, which has a number of unrealised investments, will deliver. It also points to a generous return for state investor Isif.

Source: The Times