KKR & Co.’s earnings benefited from an uptick in management fees, even as exits from traditional investments have slowed, as the firm continues to push into key growth areas.
The alternative asset manager reported second-quarter profit that beat analyst expectations due to fee-related earnings that increased 17%, year-over-year, to $887 million, according to a statement Thursday.
This week, KKR announced a series of new deals as it continues to diversify its alternatives offerings.
The firm revealed new details about its equity wealth fund with Capital Group, announced plans to develop a Texas data center with Energy Capital Partners, and reached deals to acquire a stake in Harley-Davidson Inc.’s finance arm and a health-care royalties business. KKR also announced its largest-ever credit fundraise, $6.5 billion dedicated to private asset-backed finance.
KKR has emphasized opportunities in wealth, infrastructure and credit, particularly as they relate to its Global Atlantic insurance business, as it seeks to hit $1 trillion of managed assets by 2029. The firm and its peers have been moving into new business areas as they look to build diversified alternative asset firms that generate steady earnings for shareholders across economic cycles.
The firm reported a 9% increase in adjusted net income to $1.1 billion, or $1.18 per share, for the quarter ended June 30, compared to Bloomberg-compiled analyst estimates of $1.13 a share.
“As we look at what’s happening here in the firm, we remain very, very active,” Co-Chief Executive Officer Scott Nuttall told analysts on an earnings call. Investors are “getting back to business as usual,” he added.
Total investing earnings remained flat during the quarter at $240 million as the firm didn’t make any meaningful asset sales.
Shares of KKR were little changed at $150.41 at 9:59 a.m. in New York.
KKR took in $28 billion of fresh capital during the quarter, with assets under management growing 14% year-over-year to $686 billion. Japan Post Insurance Co. also said it would invest $2 billion in Global Atlantic.
The firm invested $18 billion during the period, led by $9 billion deployed in credit and liquid strategies. It has $115 billion in dry powder.
For the Global Atlantic segment, earnings grew 9.8% during the quarter to $277.9 million. Analysts have been closely watching the business as some of the older, higher-yielding annuities mature and the firm repositions toward longer-term products. Executives have told analysts to expect the business to report around $250 million in profit each quarter during the next few periods.
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