Private-Equity Firm KKR Swings to a Profit as Revenue Rebounds
The buyout specialist said distributable earnings fell 23% to $652.6 million, or 73 cents a share The alternative-investments industry, mired in a slump for more than a year, may be seeing signs of recovery, KKR executives said. Photo: Sarah Blesener for the Wall Street Journal By Chris Cumming and Will Feuer Updated Aug. 7, 2023 7:00 pm ET | WSJ Pro KKR posted a profit on higher revenue in the second quarter as the buyout firm’s investment holdings recovered and the company boosted its assets under management. The private-equity firm said net income came to $844.5 million, or 94 cents a share, compared with a loss of $734.6 million, or $1.08 a share, for the same period a year earlier.
The alternative-investments industry, mired in a slump for more than a year, may be seeing signs of recovery, KKR executives said.
Photo: Sarah Blesener for the Wall Street Journal
KKR posted a profit on higher revenue in the second quarter as the buyout firm’s investment holdings recovered and the company boosted its assets under management.
The private-equity firm said net income came to $844.5 million, or 94 cents a share, compared with a loss of $734.6 million, or $1.08 a share, for the same period a year earlier.
The alternative-investments industry, mired in a slump for more than a year, may be seeing signs of recovery, KKR executives said during a conference call to discuss the results with analysts. The markets for the debt private-equity firms use to finance deals have slowed as interest rates have risen. But they may now be showing signs of improvement, the executives said.
KKR’s Scott Nuttall said the firm has recently become more active in making deals.
Photo: Victor J. Blue/Bloomberg News
“When markets are shut it’s harder to get deals done,” said Scott Nuttall, KKR’s co-chief executive. “We’ve been more active, especially recently, but there’s no doubt if the capital markets open, there will be more overall M&A activity, which will accrue to our benefit.”
KKR has about $100 billion in dry powder, or money available to invest, Nuttall said.
The firm struck a number of deals in recent months, including a minority investment in German space and technology company OHB unveiled Monday. Others include an agreement to buy pump-and-valve maker Circor International for $1.6 billion, including debt, and the acquisition of Industrial Physics, a maker of testing equipment.
KKR on Monday said it agreed to buy book publisher Simon & Schuster from Paramount Global for $1.62 billion in cash. The Wall Street Journal had reported earlier this month that KKR was in talks to acquire the publisher.
The firm last month said it agreed to buy specialty-chemicals company Chase in an all-cash deal valued at about $1.3 billion, including debt. The Wall Street Journal had reported last month KKR was nearing a deal for Chase.
Recent exits by the firm include an agreement to sell audiobook publisher RBMedia to private-equity manager H.I.G. Capital for more than $1 billion.
KKR’s distributable earnings, or profit that can be returned to shareholders, fell 23% to $652.6 million, or 73 cents a share.
The firm’s revenue jumped to $3.63 billion from $323.4 million a year ago.
Firm executives also suggested industrywide fundraising difficulties may soon ease. KKR’s assets under management rose 6% from the prior quarter to $518.52 billion. It raised $13 billion of new money in the second quarter and $54 billion in the 12 months ended June 30.
KKR has been busy launching new products designed for wealthy individual investors, a market private-fund managers have long courted. The firm has raised $1.9 billion so far for new private-equity and infrastructure funds designed for this market, which KKR sees as “a long-term secular opportunity” because these investors hold large amounts of money that isn’t committed to private funds, said Craig Larson,
the firm’s head of investor relations.Write to Chris Cumming at [email protected] and Will Feuer at [email protected]
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