According to Reuter, private equity firm KKR & Co reported a 7 per cent year-on-year decline in after-tax distributable earnings for the third quarter. This is lower than the expectations of many analysts due to a decrease in asset sales.
As per reports, after-tax distributable earnings (it reflects the cash used to pay dividends to shareholders) fell to around USD 779.7 million, down from USD 835.2 million in previous year. That resulted in after-tax distributable earnings per share of 88 cents, which was ahead of the average Wall Street estimate of 82 cents, as per LSEG data.
The private equity firm said that its net profit from asset sales plunged 34 per cent to USD 327.2 million, against the back drop of higher inflation, rising rates and geopolitical tensions. There volatility have prevented private equity firms from cashing out assets for top dollar.
Firm’s third-quarter distributable earnings dropped by 12 per cent due to fewer asset sales. However, Apollo Global Management’s adjusted net income increased by 23 per cent despite a significant decline in asset divestments.
KKR’s transaction fees from its capital market business fell by nearly 14 per cent to USD 100.2 million due to the acquisition of fewer assets. Income from investments made from its balance sheet also declined by nearly 19 per cent to USD 231.2 million, reflecting the slowdown in asset sales.
On the positive side, Global Atlantic, KKR’s insurance subsidiary, saw its earnings rise by 24 per cent to USD 210 million, benefiting from investment gains and higher cash balances.
In terms of portfolio performance, KKR’s private equity portfolio appreciated by 5 per cent, opportunistic real estate funds rose by 1 per cent, and leveraged credit funds gained 3 per cent in value during the third quarter. In comparison, Blackstone’s private equity portfolio rose by 2.4 per cent, and Apollo’s gained 2.7 per cent.
KKR’s net income under generally accepted accounting principles (GAAP) increased significantly to USD 1.5 billion from USD 32.6 million the previous year, driven by revenues from asset management.
During the quarter, KKR raised USD 14 billion of new capital, spent USD 9 billion on new acquisitions, retained nearly USD 100 billion of unspent capital and accumulated total assets under management of USD 528 billion. The company declared a dividend of 16.5 cents.
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