KKR’s after-tax distributable earnings fell 11 per cent year on year in the third quarter due to a sharp drop in transaction fees, but the result came in ahead of expectations.
Initial public offerings and debt refinancings, which KKR’s capital markets unit assists with, fell sharply this quarter, as the Federal Reserve raised interest rates, raising financing costs and fueling stock market volatility.
After-tax distributable earnings (cash used to pay dividends) fell to $823.7 million. According to Refinitiv data, this translates to after-tax distributable earnings per share of 93 cents, which is higher than the average analyst forecast of 85 cents.
KKR reported that income from its capital markets unit fell 41 per cent year on year to $116.1 million. Income from off-balance-sheet investments fell 36 per cent to $285 million as the firm cashed out fewer assets from its private equity portfolio amid the volatility.
KKR reported that its private equity funds lost 4 per cent in the third quarter. Opportunistic real estate funds fell 1per cent, while leveraged credit funds rose 1 per cent.
Blackstone Inc, on the other hand, reported a 0.3% drop in its corporate private equity funds and a 0.6 per cent drop in its opportunistic real estate funds.
Fee-related earnings at KKR increased 2 per cent to $541.8 million, owing to an increase in management fees as a result of strong fundraising and the completion of its acquisition of Japanese real estate asset manager Mitsubishi Corp-UBS Realty.
KKR closed $16 billion in transactions, raised $13 billion in new capital, generated $496.5 million in carried interest, and held $113 billion in unspent capital during the quarter.
The total assets under management were $496 million. The company declared a quarterly dividend of 15.5 cents per share.
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