Buyout giant KKR reports rising management fees, lower transaction fees

By Isla Binnie and Pritam Biswas

Feb 5 (Reuters) – Investment firm KKR reported a rise in fourth-quarter income from fees it earns managing new capital on Thursday, but earned less from transactions and asset sales, while a one-off charge weighed on a key profit metric.

KKR’s adjusted net income of $1 billion for the quarter translated to $1.12 per share.

KKR said in November it would take a charge in the fourth quarter for an underperforming fund in Asia. It had collected $350 million of compensation linked to that fund which it said it would pay back.

Excluding the charge, KKR’s ANI per share would have been $1.3. Total investing earnings, which includes gains from asset sales and performance income, dropped 78.8% to $84.8 million in the quarter.

Shares of the company, which lost nearly 14% in 2025, fell 2% in trading before the bell.

Piper Sandler analysts said the figures for management and transaction-related fees and net investment income were below their estimates. The “earnings result was underwhelming”, they said.

Worries in the market about risks to private credit, compounded by concerns AI will disrupt software investment, have weighed on the stocks of alternative asset managers such as KKR.

The New York-based group said it raised $129 billion in new capital in 2025, more than in any other prior year, driven by inflows into its credit and insurance business, bringing its total assets under management to $744 billion.

Private capital firms have been operating in a challenging fundraising environment since the Federal Reserve started raising interest rates in 2022. The lion’s share of new money is now flowing to larger groups like KKR rather than smaller or newer funds.

The fee KKR earns on managing money for clients, regardless of investment performance, jumped 24% in the quarter, to $1.12 billion.

Its capital markets unit posted a 16.6% drop in transaction fees compared with the same quarter of 2024, to $225.5 million. The unit charges fees to companies within its portfolio or owned by others for helping them with transactions like initial public offerings and debt financing.

Separately, KKR said on Thursday it will acquire Arctos, an institutional investor and asset management solutions provider, in a transaction valued initially at $1.4 billion.

The investment includes a further $550 million in future equity, which is tied to KKR’s share price and certain targets being met.

Late 2025 saw a resurgence in dealmaking, which boosted earnings for fellow alternative asset manager Blackstone.

During the quarter, KKR’s traditional private equity portfolio delivered returns at 4%. Its infrastructure funds appreciated 2% in valuation.

(Reporting by Isla Binnie in New York and Pritam Biswas in Bengaluru; Editing by Arun Koyyur)