01—Abstract
Summary
Summary of the 10-K filed February 28, 2022. Cited figures are marked; the original filing is the authoritative source.
KKR & Co. Inc. (KKR) reported strong financial performance for the fiscal year ended December 31, 2021, with significant growth across its asset management and insurance segments.
The company's asset management business saw substantial increases in both assets under management (AUM) and fee-paying AUM, driven by successful fundraising and strong investment performance, particularly in its Private Markets and Public Markets segments. The acquisition of Global Atlantic in February 2021 further bolstered KKR's diversification and revenue streams, contributing positively to the overall financial results. Total revenues saw a significant increase, largely due to robust capital allocation-based income, driven by strong carried interest and general partner capital from its investment funds, coupled with the inclusion of Global Atlantic's revenue for the majority of the year.
Expenses also increased, notably in compensation and benefits, reflecting higher carried interest and discretionary bonuses tied to the firm's strong performance. KKR's balance sheet remains strong, with substantial investments in its funds and a strategic deployment of capital supporting its growth initiatives. The company continues to focus on generating attractive risk-adjusted returns for its investors while navigating a dynamic market environment, marked by economic recovery alongside inflationary pressures and geopolitical uncertainty.
02—Key points
Key Highlights
- KKR demonstrated strong revenue growth in 2021, primarily driven by significant increases in Capital Allocation-Based Income (carried interest and general partner capital) and Fees and Other within the Asset Management segment.
- The acquisition of Global Atlantic in February 2021 significantly expanded KKR's operations, contributing substantial revenue and diversification through its insurance business.
- Assets Under Management (AUM) and Fee-Paying AUM (FPAUM) experienced substantial growth across both Private Markets and Public Markets segments, indicating successful capital raising and investment deployment.
- Private Markets AUM grew to $257.0 billion, up from $148.7 billion in the prior year, driven by new capital raised and increased investment values.
- Public Markets AUM surged to $213.5 billion, from $103.0 billion, primarily due to the inclusion of Global Atlantic's AUM and increased capital across credit and hedge fund strategies.
- Net gains from investment activities for the Asset Management segment were robust, totaling $7.7 billion in 2021, reflecting positive market performance and successful realizations.
- KKR maintained a strong balance sheet with $264.3 billion in total assets and $101.5 billion in total equity as of December 31, 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 28, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $16.23B$4.23B | +283.5% |
| Interest Expense | $1.07B$969.87M | +10.4% |
| Net Income | $4.73B$2.00B | +136.3% |
05—Questions
Frequently Asked Questions
What was KKR's overall financial performance in 2021?
KKR reported a strong financial performance in 2021, with total revenues reaching $16.2 billion, a significant increase from $4.2 billion in 2020. This growth was driven by robust performance in its Asset Management segment, particularly in carried interest and fees, and the inclusion of Global Atlantic's operations following its acquisition in February 2021.
How did the acquisition of Global Atlantic impact KKR's business?
The acquisition of Global Atlantic significantly diversified KKR's business, adding a substantial insurance segment that contributed $6.5 billion in revenues in 2021 (from the acquisition date). This acquisition expanded KKR's offerings into retirement and life insurance products and reinsurance solutions, complementing its core asset management business and providing new avenues for growth and profitability.
What were the key drivers of growth in KKR's Asset Management segment?
Growth in the Asset Management segment was primarily driven by an increase in Management Fees and Capital Allocation-Based Income. Management fees rose due to new capital raised for flagship funds like North America Fund XIII and Global Infrastructure Investors IV, as well as from the inclusion of Global Atlantic's assets under management. Capital Allocation-Based Income, which includes carried interest, saw a significant increase due to strong appreciation in the value of KKR's investment portfolio, particularly in its Americas Fund XII and Asian Fund III.
How did KKR manage its expenses in 2021?
Total expenses increased significantly in 2021, largely due to higher Compensation and Benefits expenses, which were driven by increased carried interest allocations and discretionary bonuses reflecting the firm's strong performance. General, Administrative, and Other expenses also increased, primarily due to higher costs at consolidated CLOs and investment funds, increased broken-deal expenses, and higher placement fees related to capital raising activities.
06—Continue