KKR quarterly profit beats expectation on dealmaking rebound

(Reuters) -Alternative asset manager KKR & Co’s fourth-quarter profit exceeded Wall Street expectations on Tuesday, as a rebound in dealmaking activity boosted its income from asset sales.

Lower interest rates and market expectations of a more business-friendly regulatory environment under the Trump administration have resulted in an improved deal and exit environment.

KKR, one of the world’s largest alternative asset managers, said last year it expects to surpass $1 trillion in assets in the next five years.

The New York-based firm reported a 15% jump in assets under management in the quarter to $638 billion, and a 25% rise in fee-related earnings to $843 million.

Its adjusted net income surged 33% to $1.19 billion, or $1.32 per share, above analysts’ expectations of $1.28, according to estimates compiled by LSEG.

Last week, larger rival Blackstone also beat quarterly profit expectations, driven by a dealmaking rebound.

“While it was a relatively uneventful quarter, KKR continues on a solid growth trajectory even with no significant contributions from flagship private equity funds,” said Oppenheimer analyst Chris Kotowski.

Its infrastructure funds gained 2%, opportunistic real estate funds rose 1%, while the private equity portfolio was flat in the fourth quarter.

PRIVATE EQUITY BETS

KKR on Tuesday raised earnings forecast from its strategic holdings unit, which houses long-term private equity investments, and said it will boost stake in USI Insurance Services, 1-800 Contacts and Heartland Dental by about $1.1 billion.

It now expects $350 million-plus in 2026 and $1.1 billion-plus by 2030 in operating earnings from the unit.

KKR hauled $27 billion of new capital in the reported quarter and deployed $23 billion in investments.

In the last few months, it has announced a series of deals including the acquisition of a 25% stake in Italian energy group Eni’s biofuel business Enilive for 2.94 billion euro.

The firm has also been involved in an elongated bidding war with private equity firm Bain Capital over Japan’s Fuji Soft. It sweetened its offer for Fuji Soft on Tuesday.

KKR also trimmed its stake in financial software maker OneStream in November through a secondary offering.

Shares of the New York-based firm fell 5.1% to $154.65 in early trading. They had jumped 78.5% in 2024.

(Reporting by Arasu Kannagi Basil and Pritam Biswas in Bengaluru; Editing by Shinjini Ganguli)