KKR’s Q2 net income soars by 49% from a year earlier on higher fees

By Echo Wang

NEW YORK (Reuters) – Private equity firm KKR & Co (NYSE:) said on Wednesday its second-quarter adjusted net income jumped 49% year-on-year, driven by an increase in management, transaction and performance fees, as well as earnings from its annuities business.

KKR’s adjusted net income rose to $972 million from $653 million a year earlier. This translated into adjusted net income per share of $1.09. That was slightly ahead of the average analyst estimate of $1.07, according to LSEG data.

The New York-based firm reported record fee-related earnings of $755 million, a 25% increase from the previous year. This growth was fueled by fees generated from managing $601 billion in total assets, up 16% year-over-year, along with transaction fees from arranging financing for its own deals.

KKR reported management fees of $847 million for the quarter, while net transaction and monitoring fees totaled $223 million. Capital markets activities contributed $192 million to revenues.

The firm has been cashing out on more of its investments. It and BlackRock Inc (NYSE:) sold their 40% stake in Abu Dhabi National Oil Co’s oil pipeline network to an Abu Dhabi-based firm earlier this year. Earlier this month, KKR took financial software maker OneStream public, raising $490 million.

For the quarter, KKR reported total operating earnings of $1 billion, a 36% year-over-year increase. This metric includes fee-related earnings from its asset management unit, returns from long-term private equity holdings, and profits from its Global Atlantic insurance division.

KKR’s private equity portfolio appreciated by 4% in the second quarter, opportunistic real estate funds rose 1%, and leveraged credit funds rose by 2%.

KKR amassed $32 billion in new investor capital, marking the second most active fundraising quarter in the history of the firm, driven by inflows at Global Atlantic, opportunistic asset-based finance, direct lending in the U.S. and Europe, and collateralized loan obligation formation.

It also deployed $23 billion in investments, up from $10 billion one year ago, and declared a quarterly dividend of 17.5 cents.