Private equity giant KKR & Co’s strong PE presence in Asia boosted its performance in the third quarter of this year, with after-tax distributable earnings up 6 per cent year-on-year and assets under management reaching $233.8 billion during the said period.
In its quarterly report, the firm disclosed that the increase in its AUM was primarily attributable to new capital raised in its Asia PE, real asset, and private credit strategies, as well as the appreciation in the value of its private markets and public markets portfolios.
Asia comprises 30 per cent of KKR’s total PE portfolio.
Its flagship private funds – Americas Fund XII ($13.9 billion), Asian Fund III ($9.3 billion), and Europe Fund IV ($4.1 billion – delivered a gross return of 16 per cent in Q3 and 27 per cent for the last 12 months.
KKR has so far raised approximately $13 billion for KKR Asia Fund IV, which is already a record figure and the largest pan-Asia private equity fund in the world. The amount is already more than the $12.5-billion reported target for the fund.
KKR’s third Asia fund, which closed at $9.3 billion in 2017, is still actively deploying capital and has delivered a net IRR of 24 per cent.
The firm said the value of its PE portfolio appreciated by 16 per cent during the quarter, while real estate and infrastructure funds rose 6 per cent and 10 per cent, respectively.
In the earnings call on Friday, KKR’s investor relations head Craig Larson said the buyout major’s large Asia exposure “should help” the business as most Asian markets have not seen a spike in COVID-19 infections that have been witnessed in the US and Europe.
In the September quarter, the firm’s after-tax distributable earnings rose to $410.4 million, up from $388.8 million a year earlier. Net income was $1.1 billion, compared to $241.2 million during the same period last year.
Revenues also reached $1.9 billion compared to $790.5 million for the quarter ended September 30, 2019. The increase, KKR said, is primarily driven by a higher level of carried interest and an increase in transaction fees and management fees.
“KKR’s integrated business model delivered strong operating and financial performance in the third quarter and year-to-date… we have confidence in our firm’s fundamentals and our opportunities for continued growth,” said Henry R. Kravis and George R. Roberts, co-chairmen and co-CEOs of KKR.