KKR earnings surge 63% on strong capital market business

By Chibuike Oguh

(Reuters) -Private-equity firm KKR & Co (NYSE:KKR) Inc said on Tuesday its first-quarter after-tax distributable earnings surged 63% year-on-year, driven by growth in its capital markets business and public market holdings.

After-tax distributable earnings (DE) – the cash used for paying dividends to shareholders – rose to $660.2 million from $406.3 million the previous year and $355.3 million in the 2019 quarter before the pandemic. That translated to DE per share of 75 cents, which exceeded the average Wall Street analysts' estimate of 63 cents, according to financial data provider Refinitiv.

KKR and its peers have been selling assets for top dollar as the global economy bounces back from fallout of the COVID-19 pandemic.

The majority of KKR's divestments came from sales of stakes in portfolio companies, including sporting goods retailer Academy Sports and Outdoors Inc, pharmaceutical firm BridgeBio Pharma (NASDAQ:BBIO) Inc and sports-betting company FanDuel.

KKR said transaction fees from its capital markets business more than doubled to $112.2 million, up from $60.2 million in the previous year. Total realized investment income - which consists of proceeds from asset sales - rose 24% to $632.5 million during the quarter. Net income under generally accepted accounting principles (GAAP) rose to $1.64 billion from a loss a year earlier.

Blackstone Group (NYSE:BX) Inc, the world's largest private-equity firm, reported last month that its distributable earnings more than doubled, driven by asset divestments in the first quarter. Carlyle Group (NASDAQ:CG) Inc also posted a 23% rise in after-tax distributable earnings as it cashed out on more of its holdings.

KKR said it raised $15 billion of new capital in the quarter across various funds in the first quarter. Reuters had earlier on Monday reported that KKR had amassed about $18.5 billion for its latest flagship North America private equity fund, raising its biggest-ever fund in less than five months.

"We have a lot of conviction in our fundraising momentum going forward as we remain focused on our over 20 strategies

that we expect to come to market," Craig Larson, partner and head of investor relations, said during an analyst earnings call.

Private-equity, opportunistic real estate and infrastructure portfolios climbed 19%, 6%, and 11%, respectively, KKR said, adding that its leveraged credit and alternative credit funds rose 2% and 7%, respectively.

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Total assets under management rose to $367 billion from $252 billion in the previous quarter, due to strong fundraising and the closing of KKR's acquisition of annuities and life insurance provider Global Atlantic Financial Group Ltd.

KKR had $69 billion of unspent capital, as of the end of March, and declared a regular quarterly dividend of $0.145 per share. Its shares were trading at $55.88 per share, down 0.69% in late morning on the New York Stock Exchange on Tuesday.