ALCHEMY PARTNERS and Carlyle Group, the prominent private equity firms, made record profits last year as the buyout industry’s disposal of businesses hit a high after three years of weak sales.

Alchemy Partners, run by Jon Moulton, managing partner, made profits of more than £540 million by selling or floating companies such as Four Seasons Health Care and the Goldsmiths jewellery chain.

In its most successful deal to date, Alchemy, which typically funds two-thirds of its leveraged buyouts with debt, made a £245 million profit on the £75 million of equity that it had invested in Four Seasons when it sold the care home chain for £775 million in August.

The £110 million sale of Goldsmiths Group, Britain’s second-largest jewellery chain, last May yielded Alchemy £50 million of profits. The disposal of Paramount Hotels generated profits of £67 million for Alchemy in July.

Carlyle Group, the American private equity firm advised by John Major, the former Conservative Prime Minister, also made a record profit in 2004, of about $3.3 billion (£1.8 billion), after selling, floating and recapitalising 71 businesses.

The disposals included the sale of Carlyle’s remaining stake in United Defense Industries, one of the key suppliers of tanks and rocket launchers to US forces in Iraq. In total, the 71 so-called exits and partial exits yielded Carlyle an average return of just under three times its equity investment in those companies.

Carlyle also invested about $2.7 billion in 107 new deals last year and raised $7.8 billion of new investment capital.

William Conway, co-founder and managing director of Carlyle, said: “This was Carlyle’s best year ever. We both invested more money than ever before and returned more money to our investors.”

Analysts said that the disposal performances by both Alchemy and Carlyle last year were among the best, if not the best, of UK and US private equity firms, respectively.

In the UK, Bridgepoint returned about €700 million (£481 million) to its investors. Bridgepoint exited 15 investments, including the sale of ALcontrol, the food and environmental testing business, which yielded tens of millions of pounds of profits, or about five times its equity investment. Bridgepoint also made tens of millions of pounds from the sale of IMO Car Wash Group to JP Morgan Partners. The latter investment represented a return of three times Bridgepoint’s equity investment.

Private equity firms sold or floated a record £22 billion of British companies last year.

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