KKR lifts dividend, economic net income rises

PHILADELPHIA (Reuters) - Private equity firm KKR & Co LP (KKR.N) raised its dividend and said fourth-quarter earnings rose nearly 39 percent amid stronger investment returns.

Economic net income, a measure used by private equity firms like the Kohlberg Kravis Roberts & Co parent to report earnings, was $714.6 million in the fourth quarter, compared with $515.3 million a year earlier.

KKR also lifted its dividend to 29 cents per unit, up from 15 cents in the third quarter. That brought total distributions for 2010 to 60 cents per unit, the firm said.

"We continue to show great progress in the two areas that drive our business: investment performance and capital raising," the firm said in a statement. "Our private equity funds returned 33 percent for the year, significantly outperforming the S&P 500 return of 15 percent, while each of our credit strategies also beat benchmark indices."

KKR, one of the world's biggest private equity firms, has investments in retailer Dollar General Corp (DG.N) and hospital operator HCA Holdings Inc, which plans to go public.

Co-founded by Henry Kravis and George Roberts, the firm listed on the New York Stock Exchange in July, following rival Blackstone Group LP (BX.N), which listed in 2007.

ASSETS UNDER MANAGEMENT RISE

KKR said assets under management were $61 billion as of December 31, up 16.8 percent from the end of 2009.

KKR has investments in retailer Dollar General Corp (DG.N) and hospital operator HCA Holdings Inc, which plans to go public.

Private equity firms typically exit their investments through an IPO or trade sale and KKR is in the process of taking some of its investments public. It was an investor in Nielsen Holdings (NLSN.N) which debuted in January and has another portfolio company, Toys R Us Inc, waiting in the wings.

Exiting investments partly drives profit, which feeds through into distributions to shareholders.

Blackstone, KKR's arch-rival, said earlier in February that fourth-quarter economic net income, or ENI, was $513 million, up from $329 million a year earlier.

Blackstone said the value of its private equity portfolio rose 3 percent for the quarter and 29 percent for the year.

NEXT FUND

KKR has just started raising money for its latest buyout fund, which has a target size of $8 billion to $10 billion according to a recent publication by the Oregon Investment Council, which committed $525 million to the fund.

Investors had been anticipating a new KKR fund for more than a year, but did not expect it to be close to the size of the global $18 billion buyout fund it raised in 2006.

KKR's shares have risen about 54 percent since their listing on July 15 2010 when they opened at $10.50.

Shares of KKR were up 0.2 percent, or 3 cents higher, to $16.15 in early afternoon trading.

(Reporting by Jessica Hall, editing by Gerald E. McCormick, Derek Caney and Tim Dobbyn)