July 26, 2018 / 5:16 PM / 10 months ago

KKR sees GoDaddy sale boost earnings after corporate switch boosts stock

(Reuters) - Private equity firm KKR & Co LP (KKR.N) posted forecast-beating quarterly earnings on Thursday, boosted by selling down stakes in investments like GoDaddy Inc (GDDY.N) and Gardner Denver Holdings (GDI.N).

KKR also basked in new investor interest in its stock after it simplified its structure by becoming a corporation earlier this month.

Shares of New York-based KKR have risen 12 percent since July 1, when it converted from a publicly traded partnership into a so-called C-Corp, in an effort to make it easier for investors to hold stock. It closed at a record high of $27.85 on Thursday.

“Although it’s still very early, we’re pleased with the significantly increased dialogue around our stock and we’re enjoying building relationships with a broader group of investors,” Scott Nuttall, KKR’s co-president and co-chief operating officer, said in an earnings call.

Despite the change in structure, KKR remains tightly controlled by co-founders Henry Kravis and George Roberts. The lack of voting rights for shareholders excludes its stock from certain indexes from which passive investors can add KKR to their stock portfolio.

Head of investor relations Craig Larson told analysts on the same call that KKR could look next year at giving outside investors some voting rights.

“We’ll have an opportunity to evaluate that in the spring of next year and see where we are,” Larson said, when asked about adjusting KKR’s corporate governance and putting a small amount of voting rights into the shares that are publicly traded.

Overall, KKR reported a 46 percent year-on-year rise in distributable earnings for the second quarter. Distributable earnings - the actual cash available for paying dividends - totaled $404.7 million for the three months through June, up from $276.9 million a year earlier.

Blackstone Group LP (BX.N), one of KKR’s biggest competitors, reported second-quarter distributable earnings last week of $700.1 million, down from $781.4 million.

KKR’s second-quarter distributable earnings per share were 49 cents, above the consensus forecast for 45 cents, according to FactSet.

KKR, which invests across private equity, real estate and credit markets, posted assets under management of $191.3 billion, up from $176.4 billion in the first quarter.

Earnings were supported by the company selling portions of stakes in website domain name provider GoDaddy and industrial machinery maker Gardner Denver - companies in which KKR still holds large positions after taking them public.

KKR also took $729.4 million of losses related to legacy energy and credit investments, which were realized in advance of its July 1 conversion to a C-Corp.

Reporting by Joshua Franklin in New York; Editing by Nick Zieminski and Matthew Lewis

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