Big Four private equity sentiment tanks on slow exits, private credit stress

Sentiment sunk to a multiyear low on the first-quarter earnings calls held by private equity's Big Four listed firms as executives discussed slow private equity exit activity and elevated redemption requests from retail investors in their private credit funds.

The average net positivity score for Apollo Global Management Inc., Blackstone Inc., The Carlyle Group Inc. and KKR & Co. Inc. fell to its lowest mark since Q4 2023, according to an S&P Global Market Intelligence analysis of language used by executives and analysts in the earnings call transcripts. Their average net positivity score came in below the S&P 500 average for the third consecutive quarter.

For each of the Big Four firms, the net positivity score assigned to their Q1 earnings call transcript was below the prior four-quarter average.

Deviating furthest from its recent trend was Blackstone, which reported $1.4 billion in quarterly net outflows from the Blackstone Private Credit Fund, better known as BCRED, as retail investors were wary of potential private credit losses and asked for their money back. Carlyle experienced elevated redemptions from a similar product, Carlyle Tactical Private Credit Fund, or CTAC.

Blackstone CEO Stephen Schwarzman downplayed the redemptions. "Despite the external noise, our institutional and insurance clients, who represent 75% of our credit platform AUM, have continued to commit large-scale capital to the asset class," Schwarzman said.

Exit outlook

Also weighing on sentiment was a slow exit market that has delayed plans to sell or take public Big Four private equity portfolio companies.

"The significant recent market volatility and broader uncertainty has had the effect of pushing out exit pipelines and slowing realization activity in the near term," Blackstone CFO Michael Chae said.

Delayed exits also threaten KKR's ability to achieve adjusted net income of $7 per share for 2026, a goal set at the start of the year. Citing war in the Middle East and the resulting runup in energy prices, KKR's Co-CEO Scott Nuttall said it might be prudent to give potential buyers of KKR assets "a little bit more time for the world to right itself."

It wasn't all bad news on the exit front. Carlyle returned a firm record $7.1 billion to investors in its private equity buyout funds in Q1, which included exits from StandardAero Inc. and Medline Inc.

AUM growth

Apollo in Q1 became the second of the Big Four firms to surpass $1 trillion in assets under management, two-and-a-half years after Blackstone passed that same milestone in Q2 of 2023.

AUM stood at record levels for three of the four firms as of the end of Q1. Carlyle's AUM declined less than 1% from the prior quarter's total to $475.42 billion, although it remained up 5% on a year-over-year basis.

Carlyle CFO Justin Plouffe said the firm was entering a fundraising "super cycle" that will bring multiple funds to market.

"We're entering a period where we think our fundraising will really accelerate," Plouffe said.

– Download a file of raw data from this story. – Catch up on the increase in private infrastructure fundraising. – Read about the dim exit outlook for private equity's software investments.

Total return performance

The S&P 500 outperformed the stocks of all four of the alternative asset managers on a total return basis between Jan. 1 and May 8, one day after the close of Q1 earnings season for the Big Four. The S&P 500 was up 8.5% over that period, while each of the Big Four firms was in negative territory, led by KKR at -19.4% total return.

Dividend forecast

The $1.16 dividend distributed by Blackstone in Q1 was the largest for any Big Four firm. Eclipse, an S&P Global dividend forecasting service, projects Carlyle's dividend will grow the most over the next year, predicting a 17% increase from 35 cents in Q1 to 41 cents in Q1 2027.