KKR Q2 earnings fall 23% as dealmaking drought curbs asset sales

    • KKR has reported US$653 million in after-tax distributable earnings, or 73 US cents a share.
    • KKR has reported US$653 million in after-tax distributable earnings, or 73 US cents a share. PHOTO: REUTERS
    Published Mon, Aug 7, 2023 · 09:58 PM

    KKR & Co reported second-quarter earnings that beat estimates, despite falling 23 per cent from a year ago amid a private equity deal draught. 

    The alternative asset manager reported US$653 million in after-tax distributable earnings, or 73 US cents a share, New York-based KKR said in a statement on Monday (Aug 7). That beat the 71 US cent average estimate of analysts surveyed by Bloomberg. 

    Shares of KKR rose 2.5 per cent to US$61.67 at 8.56 am in early New York trading.

    Fee-related earnings rose 31 per cent to US$602 million during the quarter ended Jun 30, driven by strong capital markets activity and management fees.

    “We continued to execute on our growth initiatives including new product launches tailored to the private wealth channel as well as strategic activity” at the company’s life insurance and retirement unit Global Atlantic, co-chief executive officers Joe Bae and Scott Nuttall said in the statement.

    Private equity firms have been contending with higher interest rates, a difficult fundraising environment and a sluggish market for dealmaking.

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    Realised investment income from selling assets fell 58.6 per cent to US$114.7 million and realised performance income, or carried interest, fell 79.6 per cent to US$149.3 million.

    KKR’s assets under management grew 6 per cent year over year to US$519 billion, driven by US$8 billion in credit and liquid strategies. 

    Global Atlantic reported a 5.8 per cent decline in operating earnings to US$170.2 million during the quarter due to a higher net cost of insurance from adding new business, as well as higher funding costs.

    Other second-quarter highlights:

    • Uncalled commitments totalled US$100 billion at quarter-end
    • KKR’s traditional private equity portfolio gained 5 per cent
    • Its leveraged credit composite portfolio rose 3 per cent while its alternative credit assets gained 2 per cent

    KKR shares are up about 30 per cent year to date till last Friday. BLOOMBERG

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