On Monday, KKR & Co Inc (KKR.N) reported a 26% decline in first-quarter distributable earnings due to a steep drop in asset sales from its private equity portfolio and lower transaction fees.
Inflation, increased interest rates, geopolitical concerns, and financial market volatility slowed dealmaking for KKR and other private equity companies.
After-tax distributable earnings dropped from $974 million to $719.3 million. However, Refinitiv data showed after-tax distributable earnings of 81 cents per share, above the average analyst expectation of 74 cents.
Asset sales profit decreased by 70% to $172.7 million for KKR. Blackstone Inc (BX.N) and Carlyle Group Inc (CG.O) also reported slower asset divestments in the first quarter.
Due to fewer portfolio company agreements, KKR’s capital markets division’s transaction fees fell 60% to $102 million.
As KKR added assets, management fees rose 18% to $738.2 million from $624.9 million. In addition, global Atlantic annuities provider KKR’s investment income grew 43% to $205.1 million.
KKR’s quarterly fund performance showed private equity up 2%, infrastructure up 7%, leveraged credit up 4%, and opportunistic real estate down 3%. Blackstone and Carlyle private equity funds gained 2.8% and 1%, respectively.
KKR’s first-quarter net income was $322.7 million under GAAP, owing to robust insurance and asset management revenue growth. Compared to a $10 million net loss in the same period a year earlier.
In Q1, KKR raised $12 billion and invested $10 billion. Dividends were 16.5 cents per share.
