| NEW YORK, April 24
NEW YORK, April 24 Private equity firm KKR & Co
LP on Thursday reported a 3 percent year-on-year drop in
first-quarter profit due to a lower appreciation of its
investments, overshadowing a near-doubling in fees it received
for managing assets and doing deals.
The drop in KKR's earnings, however, was much less than most
analysts expected, and the firm's first-quarter dividend, up 59
percent year-on-year on higher proceeds from asset sales, also
exceeded most analysts' forecasts.
KKR's private equity funds appreciated by 4.5 percent in the
quarter, more than the wider market but less than the 7 percent
appreciation of peer Blackstone Group LP's buyout funds
in the same quarter and the 5.9 percent appreciation KKR saw in
the first quarter of 2013.
Economic net income (ENI), KKR's headline earnings metric
that takes into account the mark-to-market valuation of its
assets, was $630.3 million in the first quarter of 2014, down
from $647.7 million a year ago, the New York-based firm said.
This translated into after-tax ENI of 82 cents per adjusted
share versus the average 52 cents forecast by analysts in a
Thomson Reuters poll.
KKR's principal investments, which originate from its
balance sheet, accounted for 51 percent of its first-quarter
earnings, while its private funds accounted for 38 percent. Its
credit and hedge fund investments accounted for the rest.
Huge by industry standards, the size of KKR's balance sheet
is the legacy of the firm's merger in 2009 with KKR Private
Equity Investors, a fund vehicle whose listing KKR transferred
to New York from Amsterdam in 2010.
That balance sheet is expected to grow further with KKR's
$2.6 billion acquisition of its specialty finance company KKR
Financial Holdings LLC, on which KFN shareholders are
set to vote on April 30.
Fee-related earnings, which account for management and deal
fee revenue, were $151.7 million in the first quarter, up from
$88 million a year ago.
Assets under management totaled $102.3 billion at the end of
March, up from $94.3 billion at the end of December, following
KKR's acquisition in February of European credit investment
manager Avoca Capital.
KKR disclosed it had completed fundraising for its first oil
and gas asset-focused Energy Income and Growth Fund, amassing $2
KKR announced a first-quarter dividend of 43 cents per
share, up from 27 cents in the first quarter of 2013.
The firm, which was founded in 1976 by Henry Kravis, George
Roberts and Jerome Kohlberg, declared a new payout policy in
April 2013 and promised to distribute 40 percent of its balance
sheet income as a dividend every quarter.
(Reporting by Greg Roumeliotis in New York; Editing by Mohammad