KKR earnings more than double on strong transaction fees, asset sales

Private equity firm KKR & Co Inc said on Tuesday its after-tax distributable earnings more than doubled in the second quarter, driven by a sharp rise in income from transaction fees and asset sales from its private equity portfolio.

Buyout firms have been thriving as a dealmaking boom, fueled by a stock market rally and cheap debt, has allowed them to sell assets for top dollar. Last month, Blackstone Group Inc and Carlyle Group Inc also reported that their distributable earnings doubled.

KKR’s after-tax distributable earnings rose to $925.6 million in the second quarter, up from $365.6 million posted a year ago. Its after-tax distributable earnings per share of $1.05 surpassed the average Wall Street analyst estimate of 84 cents per share, according to Refinitiv.

KKR said it invested $19 billion of its capital during the quarter for acquisitions of companies such as information technology services provider Ensono for $1.7 billion, and 37.5% of FiberCop, an Italian fiber optic joint venture, for 1.8 billion euros ($2.11 billion).

KKR said it generated $605.6 million from asset sales, including from the divestment of its stake in mixed martial arts company Ultimate Fighting Championship and the sale of workplace software firm Calabrio Inc to Thoma Bravo LP.

A surge in revenue from its investments and the booking of income from its insurance business contributed to a net income under generally accepted accounting principles (GAAP) of $1.3 billion, up 83% from $698.6 million last year.

Funds in KKR’s private equity portfolio appreciated by 9%, while its opportunistic real estate funds rose 10% in the second quarter. Its leveraged credit funds rose 2%.

In comparison, KKR’s peers Blackstone and Carlyle had reported that their private equity portfolios rose 12% and 13.8%, respectively.

KKR said it raised a record $59 billion in new capital in the second quarter, driven by fundraising in its flagship North America, infrastructure and core private equity funds.

As a result, its assets under management rose 17% to $429 billion from $367 billion in March. Unspent capital also surged to $112 billion from $69 billion three months earlier, owing to the pace of fundraising.

KKR declared a regular dividend of $0.145 per share.