KKR & Co. Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Summary

KKR & Co. Inc. (KKR) reported its financial results for the quarter and nine months ended September 30, 2019. The company experienced a notable increase in Assets Under Management (AUM) and Fee Paying AUM (FPAUM) across its Private Markets and Public Markets segments, reaching $208.4 billion and $153.0 billion, respectively, for AUM and FPAUM by the end of the third quarter. Total revenues for the nine months ended September 30, 2019, saw a significant increase to $3.16 billion, up from $2.57 billion in the prior year period, largely driven by a substantial rise in Capital Allocation-Based Income, which increased by 45.1% to $1.85 billion. This growth was primarily fueled by higher carried interest and general partner capital interest, reflecting the strong performance and appreciation in KKR's private equity investment portfolio. Despite the revenue growth, Net Income Attributable to KKR & Co. Inc. Class A Common Stockholders decreased to $1.46 billion for the nine-month period, down from $1.49 billion in the prior year. This decline was mainly due to higher income tax expenses, increased compensation and benefits, and higher interest expenses, partially offset by the growth in capital allocation-based income and a reduction in net income attributable to noncontrolling interests. KKR continues to demonstrate robust fundraising capabilities and strategic growth across its diverse investment strategies, positioning it for sustained AUM expansion and fee generation. The company's balance sheet also reflects significant investments, with total assets growing to $57.6 billion as of September 30, 2019.

Key Highlights

• 1Total Revenues increased by 22.7% to $3.16 billion for the nine months ended September 30, 2019, driven by strong Capital Allocation-Based Income.
• 2Capital Allocation-Based Income grew by 45.1% to $1.85 billion for the nine months ended September 30, 2019, primarily due to higher carried interest and general partner capital interest, reflecting positive investment performance.
• 3Assets Under Management (AUM) increased to $208.4 billion and Fee Paying Assets Under Management (FPAUM) rose to $153.0 billion as of September 30, 2019, indicating continued fundraising success and asset growth.
• 4Net Income Attributable to KKR & Co. Inc. Class A Common Stockholders decreased to $1.46 billion for the nine months ended September 30, 2019, from $1.49 billion in the prior year, impacted by higher tax expenses and operating costs.
• 5Compensation and Benefits expenses increased by 22.0% to $1.58 billion for the nine months ended September 30, 2019, largely due to higher carried interest compensation reflecting improved investment performance.
• 6Total Assets grew by 13.6% to $57.6 billion as of September 30, 2019, compared to $50.7 billion as of December 31, 2018, primarily driven by increases in Investments and Cash and Cash Equivalents.
• 7Debt Obligations increased to $25.3 billion as of September 30, 2019, from $22.3 billion as of December 31, 2018, reflecting new debt issuances to support business growth and operations.

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