01—Abstract
Summary
Summary of the 10-K filed February 27, 2015. Cited figures are marked; the original filing is the authoritative source.
KKR & Co. Inc. filed its 2014 10-K on February 26, 2015, reporting on its performance and financial condition as of December 30, 2014.
The report highlights KKR's diversified business model across private markets (private equity, real assets) and public markets (credit, hedge funds), supported by a global capital markets business. The company emphasized its long-term investment approach and value creation strategy. Key financial metrics indicate significant assets under management (AUM) and fee-paying AUM across its segments, with notable growth in fee-related earnings (FRE) and transaction fees contributing to overall revenue.
The company's strategic acquisitions of KFN and Avoca Capital in 2014 were highlighted for their contributions to expanding its credit and energy capabilities. Investors should note the company's emphasis on generating attractive risk-adjusted returns, its alignment of interests with fund investors through significant capital commitments, and its commitment to maintaining a strong global platform. The report also details the company's risk factors, including market conditions, regulatory changes, and competition, alongside its capital structure and distribution policy, which aims to return distributable earnings to unitholders.
02—Key points
Key Highlights
- KKR reported strong growth in Fees and Other revenue, primarily driven by increased transaction fees and management fees, alongside revenue from consolidated oil and gas producing entities.
- The company completed significant strategic acquisitions in 2014: KKR Financial Holdings LLC (KFN) and Avoca Capital, strengthening its credit and energy platforms.
- Total Assets grew to $65.9 billion as of December 31, 2014, up from $51.4 billion in the prior year, reflecting the impact of acquisitions and investment growth.
- Net Income Attributable to KKR & Co. L.P. decreased to $477.6 million in 2014 from $691.2 million in 2013, influenced by a decline in net investment gains.
- Private Markets AUM stood at $61.5 billion and Fee Paying AUM at $47.3 billion as of December 31, 2014, demonstrating continued scale in its core private equity and real assets businesses.
- Public Markets AUM increased to $37.1 billion, driven by acquisitions and new capital raises, indicating strategic expansion in credit and hedge fund solutions.
- The company maintained a robust capital structure with $1.1 billion in cash and short-term investments on a segment basis and access to significant credit facilities.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 27, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Interest Expense | $317.19M$99.62M | +218.4% |
| Net Income | $477.61M$691.23M | −30.9% |
05—Questions
Frequently Asked Questions
What was KKR's financial performance in 2014?
In 2014, KKR reported total revenues of $1.11 billion from Fees and Other, an increase from $762.5 million in 2013. Net Income Attributable to KKR & Co. L.P. was $477.6 million, a decrease from $691.2 million in 2013, primarily due to lower net gains from investment activities. Assets under management across all segments continued to grow, reaching $98.6 billion by year-end 2014.
What were the key strategic developments for KKR in 2014?
KKR completed two significant acquisitions in 2014: KKR Financial Holdings LLC (KFN) and Avoca Capital. These acquisitions were strategic moves to expand KKR's capabilities and presence in credit and energy markets, respectively, and contributed to the growth of its Public Markets and Private Markets segments.
How did KKR's AUM and FPAUM perform in 2014?
KKR's total Assets Under Management (AUM) grew to $98.6 billion by December 31, 2014, up from $94.3 billion in the prior year. Fee-Paying Assets Under Management (FPAUM) also saw growth. Specifically, the Private Markets segment reported $61.5 billion in AUM and $47.3 billion in FPAUM, while the Public Markets segment reported $37.1 billion in AUM.
What is KKR's distribution policy?
KKR intends to make quarterly cash distributions that are expected to constitute substantially all of the cash earnings of its investment management business, 40% of the net realized investment income of KKR (excluding KFN), and 100% of the net realized investment income of KFN. These distributions are subject to available cash, business needs, debt obligations, and other factors, and are declared at the discretion of the Managing Partner's board of directors.
06—Continue