Carlyle allays software fears, private-equity deals boost profit

By Pritam Biswas and Isla Binnie

Feb 6 (Reuters) – Carlyle Group executives sought on Friday to calm investor concerns that it could suffer in market turbulence stemming from fears the technology sector will be disrupted by artificial intelligence, as it reported higher profit for the prior year.

A sharp selloff this week in software stocks spilled over to other businesses, including asset managers, prompting Carlyle to follow peers such as KKR and disclose the weighting the software sector has in its portfolio.

Executives pegged this at 6% on Friday.

‘NOT OVERWEIGHT OR UNDERWEIGHT’ SOFTWARE

As well as equity positions, asset managers include loans issued by software companies in collateralized loan obligations, which bundle the debt and repackage it as bonds for sale.

Asked on a call with analysts about CLOs, Chief Financial Officer Justin Plouffe said, “our software exposure is right on top of the index. We are not overweight or underweight.”

Credit-focused asset manager Blue Owl on Thursday dismissed fears that AI disruption could weigh on its own portfolio, in which software exposure is around 8%.

Carlyle’s shares climbed more than 7% on Friday after its fourth-quarter profit slightly beat Wall Street estimates. The share gain erased year-to-date losses racked up during the selloff and left the stock 7% higher than at this point last year.

“We’ve had disruptive technology before, and our teams are very well positioned to address these,” CEO Harvey Schwartz told analysts. 

He said he was “reluctant to extrapolate the last week’s volatility into something that becomes longer-stretched.”

PRIVATE-EQUITY DEALMAKING HELPS BEAT 

Fourth-quarter profit was boosted by income from deals at its private-equity arm and solid gains across its credit and secondaries businesses.

Distributable earnings, or profit that can be returned to shareholders, rose 13.7% from a year earlier to $436 million, or $1.01 per share. This compared with analyst expectations of $1 per share, according to LSEG data.

“2025 was a record year for Carlyle, and we significantly outperformed the targets we set at the beginning of the year,” Schwartz said in a statement. 

Cashing in on assets at its private-equity unit and global credit business pushed the company’s net realized performance revenue up to $123 million in the quarter. Carlyle also pointed to exit activity at its U.S. buyout fund, two European technology funds and an opportunistic credit fund.

Mergers and acquisitions rebounded late last year after a long downturn as lower interest rates made it cheaper to finance deals and worries over the effects of trade policies introduced by U.S. President Donald Trump began to ease.

Carlyle’s fee-related earnings increased 1% to $290 million.

Carlyle sold its stake last year in U.S. chip startup Ampere and British fund network Calastone, and took public medical supplies company Medline.

The company raised $53.7 billion in fresh capital in 2025, bringing its total assets under management to $477 billion, 8% higher than a year ago.

Inflows were mainly focused on its secondaries business, Carlyle AlpInvest, which trades in a growing market for second-hand private-equity stakes, and its credit funds.

(Reporting by Isla Binnie in New York and Pritam Biswas in Bengaluru; Editing by Shilpi Majumdar, Joe Bavier, Rod Nickel)