KKR Announces Intra-Quarter Monetization Activity Update for the Fourth Quarter

Rhea-AI Summary

KKR (KKR) reports over $500 million in total realized performance income and total realized investment income for the period from October 1, 2023, to December 21, 2023, driven by strategic and secondary sale transactions, dividend and interest income, and incentive fees from hedge fund partnerships.

Insights

Financial Analyst

The disclosure of KKR's monetization activity, indicating realized performance income and investment income exceeding $500 million, is a significant indicator of the company's financial health and operational success. The composition of this income, primarily from gross realized carried interest and realized investment income, along with Marshall Wace incentive fees, suggests a robust strategy in capitalizing on market opportunities through strategic sales and a strong balance sheet portfolio.

Stakeholders should note that such figures, while substantial, are not comprehensive of the quarter's total revenues and do not account for all sources of income or expenses. The lack of full context could mislead stakeholders regarding the company's quarter-end financial position. Additionally, these figures are not predictive of future performance, thus investors should consider them within the broader scope of market trends and KKR's historical performance.

Industry Analyst

In the private equity sector, carried interest is a critical component of revenue, representing a share of the investment profits that the firm earns. KKR's report of approximately 70% in gross realized carried interest is indicative of successful exits or sales of investments, which is a positive sign of their deal-making acumen. The remaining 30% stemming from investment income and hedge fund incentive fees underscores a diversified revenue stream.

However, the industry should consider the cyclical nature of private equity and hedge fund performance. While KKR's update may suggest an uptick in monetization activities, it is essential to assess the sustainability of these activities in the context of economic cycles and competitive dynamics within the industry.

Economist

From an economic perspective, KKR's reported earnings provide insights into the broader economic environment, particularly in the private equity and hedge fund sectors. The ability to generate substantial income through strategic and secondary sale transactions may reflect a conducive market for mergers and acquisitions and a healthy appetite for investment, which could be indicative of investor confidence and economic stability.

However, it is crucial to understand that such income figures can be influenced by market volatility and regulatory changes. Investors should be aware of the potential impact of macroeconomic factors, such as interest rate adjustments and fiscal policies, on KKR's future performance and the overall sector's profitability.

NEW YORK--(BUSINESS WIRE)-- KKR today announced a monetization activity update for the period from October 1, 2023 to December 21, 2023. Based on information available to us as of today, with respect to the period through December 21, 2023, KKR has earned total realized performance income, including realized incentive fees, and total realized investment income in excess of $500 million. Our monetization activity quarter-to-date is made up of approximately 70% gross realized carried interest and approximately 30% realized investment income plus Marshall Wace incentive fees. This activity is driven primarily by strategic and secondary sale transactions that have closed quarter-to-date, dividend and interest income from KKR’s balance sheet portfolio, as well as incentive fees from KKR’s hedge fund partnerships.

The estimate disclosed above is not intended to predict or represent total realized performance income, total realized investment income or total revenues for the full quarter ending December 31, 2023, because it does not include the results or impact of any other sources of income, including fee income, or expenses, and we may realize further gains or losses relating to total realized performance income and total realized investment income after the date of this press release. This estimate is also not necessarily indicative of the results that may be expected for any other period, including the entire year ending December 31, 2023.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.

Forward-Looking Statements

This press release may contain forward-looking statements, including estimated operating results from certain monetization activities. Words such as “expect,” estimate,” “will,” “may” and “believe” or similar expressions may identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those included in these forward-looking statements, and investors should not place undue reliance on such statements. These forward-looking statements speak only as of the date of this press release, and we do not undertake any obligation to update or revise any of the forward-looking statements to reflect future events or circumstances, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231221395413/en/

Investor Relations:

Craig Larson

1-877-610-4910 (U.S.) / 212-230-9410

investor-relations@kkr.com

Media:

Kristi Huller, Miles Radcliffe-Trenner or Julia Kosygina

1-212-750-8300

media@kkr.com

Source: KKR

FAQ

What is the monetization activity update announced by KKR (KKR)?

KKR has reported a monetization activity update for the period from October 1, 2023, to December 21, 2023, with over $500 million in total realized performance income and total realized investment income.

What is the breakdown of KKR's monetization activity quarter-to-date?

The monetization activity quarter-to-date is made up of approximately 70% gross realized carried interest and approximately 30% realized investment income plus Marshall Wace incentive fees.

What drove KKR's monetization activity quarter-to-date?

The activity is driven primarily by strategic and secondary sale transactions that have closed quarter-to-date, dividend and interest income from KKR’s balance sheet portfolio, as well as incentive fees from KKR’s hedge fund partnerships.

What does the estimate disclosed by KKR not include?

The estimate does not include the results or impact of any other sources of income, including fee income, or expenses, and further gains or losses relating to total realized performance income and total realized investment income may be realized after the date of the press release.

Is the estimate disclosed by KKR indicative of the results for the full quarter or the entire year ending December 31, 2023?

The estimate is not intended to predict or represent total realized performance income, total realized investment income, or total revenues for the full quarter ending December 31, 2023, and is also not necessarily indicative of the results that may be expected for any other period, including the entire year ending December 31, 2023.