U.S. private equity firm KKR & Co Inc (KKR.N) said on Tuesday second-quarter distributable earnings were almost unchanged from a year earlier, beating many analysts’ expectations thanks to a rise in management and performance fees.
KKR said after-tax distributable earnings (DE) of $326 million were in line with the $327 million posted a year earlier. This translated to after-tax DE per share of 39 cents, which was greater than the 36 cents that Wall Street analysts estimated on average, according to Refinitiv.
KKR’s shares were up 1.4% at $36.30 on Tuesday afternoon.
Following similar announcements by its peers, KKR said the value of its funds rebounded alongside the recovery of financial markets from a slump caused by the spread of the coronavirus, allowing investment income to rise 37% to $1.58 billion.
KKR’s private equity funds rose 11% in the second quarter, while global infrastructure and real estate funds rose 7% and 2% respectively. Its leverage credit funds rose 11%.
Last month, Blackstone Group Inc (BX.N) said its private equity portfolio rose 12.8% in the second quarter, while Carlyle Group Inc (CG.O) and Apollo Global Management Inc (APO.N) reported that their private equity funds grew 13% and 11.7% respectively.
Under generally accepted accounting principles (GAAP), KKR said its net income rose 36% year-on-year to $698.6 million in the second quarter owing to the appreciation of its funds.
The New York-based firm said its performance fee income rose 52% to $355.4 million, as it completed asset sales including the 2.8 billion euros ($3.03 billion) divestment of German fiber-optic network company Deutsche Glasfaser to private equity firm EQT and Canadian pension fund OMERS.
In July, KKR announced that it agreed to acquire annuities and life insurer Global Atlantic Financial Group Ltd, a deal that is expected to add about $72 billion to the buyout firm’s assets under management when it is completed in early 2021.
“The retirement end market continues to grow, with an aging population creating demographic tailwinds,” said KKR’s Co-president Scott Nuttall during a conference call with analysts on Tuesday. “We expect annual net management fees to increase by at least $200 million over the next couple of years as we ramp up our work together.”
KKR said its total asset management was $222 billion, up from $207.1 billion as of the end of March, driven by strong fundraising in its flagship funds. The firm declared its regular quarterly dividend of 0.135 cents per share.