The four largest listed private equity firms appear to be shaking off a difficult 2022 after a more upbeat fourth-quarter earnings season.
The average net positivity score for Apollo Global Management Inc., Blackstone Inc., The Carlyle Group Inc. and KKR & Co. Inc. brightened in the fourth quarter after three straight quarters of increasing negativity, according to an analysis of the language used by executives and analysts on earnings calls. The score for the four private equity giants nearly equaled the average across S&P 500 companies' most recent transcripts, a big turnaround from just a quarter earlier when the executives were judged to sound notably less optimistic than their S&P 500 counterparts.
Net positivity scores continued to decline for Carlyle and KRR, and all four firms posted lower scores in the fourth quarter compared to the average of the previous 12 months. That is not surprising, because private equity executives a year ago were still crowing over the industry's record 2021 performance.
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Improved performance
Apollo, Carlyle and KKR each turned in a stronger fourth-quarter total return performance, a metric that reflects both stock price movements and dividends, than the S&P 500, which was up 7.6% between Oct. 1, 2022, and Dec. 31, 2022.
Apollo zoomed ahead of the others, ending the quarter up 38.1%. Blackstone posted a negative total return performance in the fourth quarter, shedding 10.5% of its value, but it bounced back into positive territory in the new year.
That compares to a rough third quarter when the total return performance of all four was in negative territory.
All four are forecast to boost dividends in 2023, according to Eclipse, a part of S&P Global. The highest confidence in an increase was assigned to KKR due to strong fundraising and fee-related earnings.
Fundraising for private equity strategies was tougher in 2022, and fundraising is expected to remain challenging in 2023. But the large listed firms remain magnets for institutional investor capital, and all four posted year-over-year growth in assets under management.
Carlyle led the way, growing its AUM 24% year-over-year to $372.7 billion as of Dec. 31.
