KKR reported record quarterly profit on Monday as the investment giant extended a strong run of asset sales and earned higher fees from managing client money, sending its shares up roughly 2%.
The New York-based company has ramped up investment exits this year and returned more capital to investors, even as higher interest rates have slowed asset sales across the industry.
"We continue to monetize investments and return capital to our clients at record levels," co-CEOs Joseph Bae and Scott Nuttall said in a statement.
The asset manager expects to return more than $40 billion to clients this year, more than 50% above its previous annual record.
"More work to be done for KKR and the industry, but considering the backdrop of 3Q that was at times slow, and at times volatile, investors should be mostly happy as KKR continues to scale across most asset classes and operating metrics," Evercore analyst Glenn Schorr said.
KKR closed a roster of transactions in the third quarter, including the sale of data center cooling company CoolIT Systems and private aviation infrastructure platform Atlantic Aviation.
Adjusted net income jumped 29% to $1.6 billion, or $1.78 per share, beating analysts' average estimate of $1.59, according to data compiled by LSEG.
KKR is poised to end the year on a strong note, with the $17 billion sale of USI Insurance Services to Aon expected to close in the fourth quarter and add roughly $2 billion to adjusted profit.
Asked about the AI ecosystem, KKR's Nuttall said the company was well positioned to benefit from the large opportunity in AI, but was also aware of the risks.
"Money will be made and lost, but we're trying to lean on our experience. So that means get out of the way where you need to, sell a bit early. It's better than a bit late, and focus on your downside, and be ready to be opportunistic if some run into trouble," Nuttall said.
KKR's seven data center platforms account for 6% of its infrastructure assets under management.
ASSET PILE HITS $800 BILLION MARK
KKR raised $25 billion in new capital during the three months ended September 30, pushing assets under management above $800 billion. Inflows were mainly driven by its credit and liquid strategies and real assets platform.
KKR, which made its name as a buyout pioneer, has expanded beyond private equity into areas including credit and real assets. It aims to surpass $1 trillion in assets by 2030.
Fee-related earnings jumped 27% to $1.3 billion, driven by higher management fees and fee-related performance revenue.
The infrastructure portfolio returned a gross 4%, while traditional private equity was flat. Leveraged credit and alternative credit composites returned 1% and 3%, respectively.
KKR repurchased $567 million of shares from June 30 through November 4 and last week increased its share-buyback authorization by $500 million.
