Tariffs Effect On Carlyle

With 453 billion USDs of assets under management as of 31 March 2025 Carlyle Group Inc is one of the leading alternative investment management firms.

164 billion USDs of Carlyle's assets under management are in private equity, 199 billion USDs in private credit and 89 billion USDs in Carlyle AlpInvest, which is also doing private equity. 282 billions USDs of Carlyle's assets insurance solutions by product type.

It is clear that tariffs stand to affect Carlyle most by disrupting Carlyle's private equity and private credit business. This could happen if tariffs invoke a recession which raises interest rates and disrupts Carlyle's private equity business by hindering Carlyle's ability to borrow cheaply via high yield debt with which to finance the leveraged buyouts it purchases. 

Along the lines of private credit Carlyle's business could be disrupted by tariffs if the 7% to 14 % interest rates at which Carlyle lends to mid-market businesses via its private credit assets under management shoot up to 10 % - 17 % for example. This could make borrowing prohibitively expensive for growing mid-market companies and thus decrease Caryle's private credit business volumes.

In the long run, Carlyle stands to gain from tariffs disruption, according to Wolfteam Ltd.'s projections and estimates.

After the tariffs invoked chaos, Carlyle will go on displacing banks from high-risk lending and from the tariffs upheaval Carlyle will raise its high yield and bank debt volumes together with banks to purchase distressed assets in leveraged buyouts. After the tariffs shock subsides leveraged buyouts will boom again, in Wolfteam Ltd.'s view driven by firms' desire for growth. 

Here are Carlyle's first quarter 2025 financial results:

 REVENUES
Fund management fees $ 523.6 $ 586.1 $ 2,066.0 $ 2,250.6
Incentive fees 26.2 43.2 100.1 150.5
Investment income (loss), including performance allocations (83.9) 159.8 (211.6) 2,498.1
Revenue from consolidated entities 164.9 133.4 613.1 600.1
All other revenues 57.6 50.6 225.7 211.2
Total Revenues 688.4 973.1 2,793.3 5,710.5
EXPENSES
Cash-based compensation and benefits 221.9 218.4 985.4 872.0
Equity-based compensation 108.3 103.5 303.0 463.1
Performance allocations and incentive fee related compensation (72.8) 171.4 925.2 1,605.7
General, administrative and other expenses 147.7 173.6 640.6 691.5
Expenses from consolidated entities 124.6 113.5 450.0 553.8
Interest and other non-operating expenses 31.0 27.8 125.2 117.5
Total Expenses 560.7 808.2 3,429.4 4,303.6
Net investment income (loss) of consolidated funds (7.0) 6.1 (3.7) 37.1
Income (loss) before provision for income taxes1 120.7 171.0 (639.8) 1,444.0
Provision (benefit) for income taxes 21.9 12.4 (116.6) 293.1
Net income (loss) 98.8 158.6 (523.2) 1,150.9
Net income attributable to non-controlling interests 33.2 28.6 120.3 66.1
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ 65.6 $ 130.0 $ (643.5) $ 1,084.8
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ 0.18 $ 0.36 $ (1.78) $ 3.03
Diluted $ 0.18 $ 0.35 $ (1.78) $ 2.95
Margin on income (loss) before provision for taxes2 17.5 % 17.6 % (22.9) % 25.3 %
Effective tax rate 18.1 % 7.3 % 18.2 % 20.3 %
Net performance revenues3 $ (84.2) $ 51.5 $ (1,331.6) $ 789.9
Carlyle First Quarter 2025 U.S. GAAP Results