KKR Reports Strong Earnings and Expands Ownership

by Warren Seah

Private-equity firm KKR continues to see positive growth as it recently reported a 21% increase in earnings from fees in the December quarter. This success has led to an expansion of its recurring profits and assets through full ownership of the insurer General Atlantic.

Beating Forecasts and Investor Satisfaction

KKR’s earnings slightly exceeded expectations, resulting in a 4.4% surge in stock prices during early trading on Tuesday, reaching $92.38.

The Significance of Fee-related Earnings

For alternative-asset managers like KKR, fee-related earnings are a crucial performance measure. In the quarter, the firm earned $675 million in fee-related earnings, equivalent to 76 cents per share. These earnings experienced a 10% increase for the entire year, reaching $2.4 billion, or $2.68 per share.

Distributable Earnings Show Growth

Distributable earnings after tax grew by 4% during the quarter, amounting to $888 million, or $1.00 per share. While analysts’ average forecast was for 96 cents, KKR managed to surpass this projection. Distributable earnings reflect cash earnings from operations and include performance fees along with certain noncash expenses such as performance-based compensation.

However, it’s worth noting that distributable earnings for the year saw a decrease of 13%.

Expansion through Fundraising and Asset Management

In the quarter, KKR successfully raised $31 billion for its funds, furthering its ability to pursue lucrative opportunities like direct lending. For the entire year, the firm’s assets under management grew by 10%, amounting to $553 billion. Although this is an impressive figure, it still lags behind alternative-asset rival Blackstone, which manages twice as much.

KKR’s dedication to growth and investment opportunities positions the firm for continued success.

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