KKR boosted its investments in the June quarter, putting some $23 billion to use, while wrapping up its second highest quarterly fundraising haul at $32 billion.
“So far, 2024 feels like it could be a sweet-spot year, where values are attractive and activity levels are high” Scott Nuttall, KKR’s co-chief executive, said in a conference call with analysts to discuss the firm’s performance.
Nuttall cited industry data showing the level of deal activity, including public-market listings and lending, was up meaningfully, but said the numbers understate the activity the firm is seeing, setting the stage for a busy second-half of the year.
On Wednesday, KKR reported a strong second-quarter performance, including record fee-related earnings. The prized, recurring revenue stream derived from managing assets reached $755.4 million for the quarter, up 25% from a year earlier.
Overall, revenue in the quarter rose to $4.17 billion, from $3.63 billion a year earlier, and net income fell to $667.9 million, or 72 cents a share, from $844.5 million, or 94 cents a share. On an adjusted basis, earnings available for distribution to shareholders rose to $971.9 million, or $1.09 a share, from $652.6 million, or 73 cents a share, boosted by a number of investment sales.
The third quarter is shaping up to be one of the strongest for the firm in terms of capital market fees, Chief Financial Officer Robert Lewin said. He cited some realization events in the current quarter like the initial public offering of financial software company OneStream.
“Our aggregate pipeline is as good as we’ve ever seen it, and that includes 2021, when we generated roughly $850 million of revenue [in our] capital markets business,” Lewin said.
The New York firm, which ended the second quarter with about $108 billion ready to invest, has disclosed a flurry of deals in the first weeks of the current quarter. They include a joint venture with wireless telecommunications company T-Mobile US to acquire regional broadband services provider Metronet, a roughly $4.8 billion deal to buy educational-technology company Instructure Holdings, and a deal with Carlyle Group to purchase a $10.1 billion portfolio of student loans from Discover Financial Services.
KKR, which in the June quarter became the second private-equity firm added to the benchmark S&P 500 index, ended the quarter with about $601 billion in assets under management, up 4% from the previous quarter. The firm raised $32 billion in the quarter, the second highest quarterly tally behind a record $59 billion raised in the second quarter of 2021.
Infrastructure and credit drove fundraising momentum, the firm said, adding that private equity also saw strong demand, particularly through products designed for wealthy individual investors and the firm’s U.S. middle-market strategy. The firm started fundraising in June for its latest North America private-equity flagship fund.
Private equity accounted for about $3 billion of money invested in the quarter, firm officials said, adding that they expect the pace to ramp up in the second half of the year, with some $9 billion of investments expected to close by year’s end.
KKR shares were up more than 3% recently at $123.69.
Connor Hart contributed to this article.
Write to Maria Armental at maria.armental@wsj.com
https://www.msn.com/en-us/money/companies/kkr-says-2024-could-be-a-sweet-spot-year-as-it-ramps-up-investments/ar-BB1qYs5c
