By Isla Binnie and Arasu Kannagi Basil NEW YORK (Reuters) – Asset manager Carlyle Group reported on Friday lower proceeds from dealmaking in the third quarter, offsetting a rise in fee-related earnings, and inflows of $17 billion. The company said it expected to beat its financial targets for the full year, but its shares fell 6.3% before the bell as Citi analysts described July-September as a "mixed quarter". Inflows rose from $13.4 billion in the second quarter and were mainly directed towards Carlyle AlpInvest, which buys and sells second-hand stakes in private equity funds and portfolios, and its global credit business. Total assets under management grew 2% from the previous quarter to $474 billion. Fee-related earnings, which are generally stable during market volatility, climbed to $312 million, just above analysts' average estimate of $311 million, according to data compiled by LSEG. But revenue from selling or refinancing assets came in lower than that recorded during the same period last year, which weighed on the company's distributable earnings, or profit that can be returned to shareholders. That metric hit $368 million, or $0.96 per share, undershooting an average analyst forecast of $1.01. Citi analysts said in a note that management fees and performance fees were lower as private equity "saw a bit of an air pocket" in the period. Carlyle Chief Executive Harvey Schwartz highlighted growth in its insurance business, its AlpInvest unit, as well as in higher inflows from wealthy individuals. "The combination of these growth engines gives us strong momentum through year-end and into 2026," and positions Carlyle to exceed its 2025 financial targets, Schwartz said in a statement. In August, the company forecast 10% growth in fee-related earnings and inflows of $50 billion for the full year. ALTERNATIVE INVESTMENTS Schwartz has been working on a turnaround after the company faced a few difficult years linked to an industry-wide downturn and an internal succession struggle. Carlyle's shares had gained 14% so far this year. Peers Blackstone, KKR and Apollo, which are much larger firms, have all seen double-digit percentage declines in their share prices in the period. Higher interest rates in the last few years have hampered private equity firms' ability to maintain their time-honored model of buying companies, working on them to increase their value, and selling them at a profit. Many firms that started relying on this model have expanded strongly into so-called alternative investments – such as real estate, hedge funds and private credit. AlpInvest has become a growth engine for Carlyle, with assets under management rising 22% in the quarter. The company said in September that the unit had raised $20 billion to buy second-hand private equity stakes. Deal activity has picked up globally in recent months and some blockbuster deals were struck, raising hopes for more to come. Among them is a hotly anticipated IPO for medical supplies maker Medline, which Carlyle owns with fellow investment firms Blackstone and Hellman & Friedman. The deal could value the company at $50 billion, Reuters has reported. (Reporting by Isla Binnie in New York and Arasu Kannagi Basil in Bengaluru; Editing by Shinjini Ganguli and Susan Fenton)
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