Private equity firm KKR & Co Inc said on Tuesday that its third quarter after-tax distributable earnings fell by nearly 7% year-on-year, less than what many analysts expected, amid a decline in asset sales.
After-tax distributable earnings, which represents the cash used to pay dividends to shareholders, fell to $779.7 million, down from $835.2 million a year earlier. That resulted in after-tax distributable earnings per share of 88 cents, which was ahead of the average Wall Street estimate of 82 cents, according to LSEG data.
KKR said its net profit from asset sales dropped 34% to $327.2 million, as market volatility from higher inflation, rising rates, and geopolitical tensions have prevented private equity firms from cashing out assets for top dollar.
Blackstone Inc has reported a steeper-than-expected 12% drop in third-quarter distributable earnings owing to muted asset sales, while Apollo Global Management Inc's adjusted net income rose 23% despite a 92% plunge in asset divestments.
Transaction fees from KKR's capital market business fell nearly 14% to $100.2 million as the firm acquired fewer assets. Income from investments made out of its balance sheet fell nearly 19% to $231.2 million given the slowdown in asset sales.
However, earnings from Global Atlantic, KKR's insurance subsidiary, rose 24% to $210 million as it benefited from investment gains and higher cash balances.
KKR's private equity portfolio appreciated by 5% in value in the third quarter, opportunistic real estate funds rose 1%, while leveraged credit funds gained 3%. By contract, Blackstone's private equity portfolio rose 2.4%, while Apollo's gained 2.7%.
KKR's net income under generally accepted accounting principles (GAAP) sky-rocketed to $1.5 billion, up from just $32.6 million a year earlier, driven by revenues from asset management.
KKR raised $14 billion of new capital, spent $9 billion on new acquisitions, retained nearly $100 billion of unspent capital, and amassed total assets under management of $528 billion. It declared a dividend of 16.5 cents for the quarter.
