10-QPeriod: Q1 FY2014

KKR & Co. Inc. Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 7, 2014For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. Inc. (KKR) reported its first quarter 2014 financial results, demonstrating robust growth and strategic expansion. The firm saw a significant increase in total fees, driven by a substantial rise in transaction fees, largely attributable to an increase in the volume and value of completed investments in its Private Markets segment. This growth was further supported by an increase in management fees, benefiting from new capital raised, particularly in the Public Markets segment, and the acquisition of Avoca Capital. While overall expenses increased, primarily due to higher general, administrative, and other expenses reflecting business growth and the Avoca acquisition, the firm managed to improve its Net Income Attributable to KKR & Co. L.P. year-over-year. This improvement was mainly driven by an increase in KKR & Co. L.P.'s ownership percentage in the KKR Group Partnerships, offsetting a slight decrease in overall investment income. The company also highlighted its continued expansion into new asset classes and geographies, notably the acquisition of Avoca Capital, which strengthened its European credit market presence, and the pending acquisition of KFN, which is expected to further diversify its investment portfolio. Overall, KKR presented a positive financial picture with strong operational performance and strategic execution. Looking ahead, KKR's financial performance will likely be influenced by the successful integration of recent acquisitions, the ongoing capital raising efforts across its segments, and the broader macroeconomic environment. Investors should monitor the company's ability to continue generating fee-related earnings, the performance of its investment portfolio, and its capacity to deploy capital effectively across its diverse asset classes. The company's strategic focus on expanding its global reach and product offerings, combined with its operational expertise, positions it to capitalize on future market opportunities.

Financial Highlights

26 data points
Beta

Net Income

$210.04M

Total Assets

$56.40B

Cash & Equivalents

$1.32B

Free Cash Flow

-$905.25M

Financial Statements
Beta
Interest Expense$34.73M
Net Income$210.04M

Key Highlights

  • 1Total fees increased significantly, primarily driven by a substantial rise in transaction fees from the Private Markets segment due to higher deal volume and value.
  • 2Management fees also increased, reflecting new capital raised in the Public Markets segment and the acquisition of Avoca Capital.
  • 3Net Income Attributable to KKR & Co. L.P. increased to $210.0 million from $193.4 million in the prior year's quarter, largely due to an increased ownership percentage in KKR Group Partnerships.
  • 4Expenses increased due to higher general, administrative, and other expenses, reflecting business growth and the Avoca acquisition.
  • 5The company completed the acquisition of Avoca Capital, expanding its presence in European credit markets.
  • 6KKR reported strong growth in Assets Under Management (AUM) across its Private Markets and Public Markets segments.
  • 7Committed dollars invested in the Private Markets segment saw a significant increase, indicating robust investment activity.

Frequently Asked Questions

Total fees for the three months ended March 31, 2014 were $302.9 million, an increase from $151.2 million in the same period of 2013. This increase was primarily driven by higher transaction fees and management fees.

Investment income decreased to $2.2 billion for the three months ended March 31, 2014, from $2.4 billion in the prior year's quarter. This decrease was mainly due to a decline in net gains from investment activities, particularly in the private equity portfolio, although this was partially offset by increased dividend and interest income.

KKR completed the acquisition of Avoca Capital, a European credit investment manager, during the first quarter of 2014, which is expected to strengthen its position in European credit markets. The company also announced subsequent events including the completion of its merger with KFN.

Diluted net income per common unit attributable to KKR & Co. L.P. was $0.65 for the three months ended March 31, 2014, down from $0.69 for the same period in 2013. This decrease was primarily due to a higher weighted average number of diluted common units outstanding.