Buyout firm KKR to hike dividend payout; earnings disappoints

[NEW YORK] Private equity firm KKR & Co LP said on Thursday it will raise its quarterly dividend payout from the end of March by a cent, after posting lower-than-expected fourth-quarter earnings, hurt by unrealised losses in its buyout investments.

New York-based KKR, which managed US$129.6 billion as of the end of December, said it was raising its dividend payout to 17 cents a share from 16 cents from the first quarter of this year.

KKR gives its investors a fixed payout every quarter.

Gains in the US stock market in the past year have buoyed the returns for some buyout firms, although stubborn weakness in various business segments including hedge funds have dented overall performance.

KKR's rival Carlyle Group LP, for example, reported sharply lower-than-expected earnings on Wednesday, weighed by losses in its hedge funds.

KKR earned an economic net income of US$339.2 million after taxes in the fourth quarter, which translated to 40 cents a share, compared with analysts' forecasts of 43 cents a share, according to Thomson Reuters I/B/E/S.

Economic net income is a key metric for US private equity firms that accounts for unrealized gains or losses in investments.

In a statement, KKR said it had earned less carried interest in the final three months of 2016 due to a lower level of net gains in its private equity investments. Carried interest is a cut of the profit that KKR keeps after generating returns in excess of an agreed level for its clients.

For the fourth quarter, KKR said its private equity returns rose 3.4 per cent, roughly in line with gains in the benchmark S&P 500 stock index. Its buyout investments gained 11.9 per cent for all of 2016, beating a 9.5 gain in the S&P 500 over the same period.

A breakdown of KKR's buyout investments showed weakness in its energy, infrastructure and U.S. real estate holdings were a drag.

REUTERS