10-QPeriod: Q3 FY2013

KKR & Co. Inc. Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 1, 2013For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. Inc. reported its third-quarter 2013 financial results, demonstrating solid performance with increased fees and robust investment income. Total revenues for the quarter rose to $220.0 million, driven by a significant increase in transaction and management fees across its Private Markets and Capital Markets segments. The company's investment income also saw a notable rise, reaching $2.44 billion, primarily due to strong performance in its private equity portfolio, which included substantial unrealized gains. Despite an increase in expenses, largely attributed to the acquisition of Prisma Capital Partners and higher operating costs, KKR maintained profitability, with net income attributable to KKR & Co. L.P. increasing to $204.7 million. Looking at the nine-month period, KKR continued its growth trajectory with total fees reaching $537.6 million and investment income at $5.25 billion. The company's diversified business segments, particularly Private Markets and Public Markets, contributed positively to these results. Assets Under Management (AUM) across the firm reached $90.2 billion by the end of September 2013, reflecting successful capital raising efforts and investment growth. The company's strong balance sheet and continued strategic acquisitions position it well for future growth and value creation for its investors.

Financial Highlights

26 data points
Beta

Net Income

$204.74M

Total Assets

$48.16B

Cash & Equivalents

$1.11B

Free Cash Flow

-$546.41M

Financial Statements
Beta
Interest Expense$25.06M
Net Income$204.74M

Key Highlights

  • 1Total revenues for the third quarter of 2013 increased to $220.0 million, up from $162.2 million in the same period of 2012, driven by higher transaction and management fees.
  • 2Investment income for the third quarter of 2013 was $2.44 billion, a slight increase from $2.40 billion in the prior year's third quarter, primarily due to strong performance in the private equity portfolio.
  • 3Net income attributable to KKR & Co. L.P. increased to $204.7 million for the third quarter of 2013, up from $127.4 million in the third quarter of 2012.
  • 4For the first nine months of 2013, KKR reported total fees of $537.6 million, a significant increase from $390.8 million in the same period of 2012.
  • 5Investment income for the first nine months of 2013 was $5.25 billion, a decrease from $7.47 billion in the prior year's nine-month period, primarily due to lower net gains from investment activities.
  • 6Assets Under Management (AUM) grew to $90.2 billion by September 30, 2013, up from $44.4 billion in total assets at December 31, 2012, reflecting successful capital raising and investment growth.
  • 7The company reported positive Fee Related Earnings (FRE) across all segments, indicating a healthy performance from its core fee-generating businesses.

Frequently Asked Questions

KKR's total revenues for the third quarter of 2013 were $220.0 million, a significant increase from $162.2 million in the same period of 2012. This growth was primarily driven by higher transaction fees, reflecting increased deal activity, and a rise in management fees, boosted by new capital raised and the acquisition of Prisma Capital Partners.

KKR reported investment income of $2.44 billion for the third quarter of 2013, a slight increase from $2.40 billion in the third quarter of 2012. The performance was mainly supported by strong unrealized gains within its private equity portfolio. For the first nine months of 2013, investment income was $5.25 billion, a decrease from $7.47 billion in the comparable period of 2012, primarily due to lower overall net gains from investment activities.

KKR demonstrated a financially healthy quarter with increased revenues and robust investment income, leading to higher net income attributable to KKR & Co. L.P. The company's Assets Under Management (AUM) grew substantially, indicating successful fundraising and investor confidence. The acquisition of Prisma Capital Partners appears to be integrating well, contributing to revenue growth. The positive Fee Related Earnings (FRE) across segments suggest strong operational performance. Overall, the report indicates a positive financial standing and a strategic focus on growth and expansion.

Total expenses increased to $455.5 million for the third quarter of 2013, compared to $446.5 million in the prior year. This increase was primarily driven by higher general, administrative, and other expenses, influenced by the acquisition of Prisma, ongoing business growth, and a one-time expense related to a closed-end fund launch. These increases were partially offset by a decrease in compensation and benefits, largely due to lower carry pool allocations and changes in equity-based compensation recognition.