Despite slower fundraising and few exits, KKR & Co. executives were optimistic Monday about the firm's ability to deploy its $106 billion in dry powder in a dislocated market and further expand its insurance companies and wealthy individual limited partnership base.
KKR is adding to its dry powder with more than 30 strategies in the market "with a great investing environment ahead of us, said Robert Lewin, a partner and chief financial officer at KKR during Monday's earnings call.
KKR's uncalled capital commitments, or dry powder, are down slightly from $108 billion at the end of the fourth quarter and $115 billion at the end of the year-earlier quarter.
KKR reported $510 billion in assets under management as of March 31, up 1.2% from three months earlier and up 6% from a year earlier.
KKR raised $12 billion in the first quarter "which is a little bit on the lighter side for us," Mr. Lewin said. In the year ended March 31, KKR raised a total of $67 billion.
Fundraising is down from the prior quarter in which it added $16 billion in the quarter and $81 billion for the year in new capital. Fundraising is also off from the first quarter of 2022 when KKR raised $26 billion in the quarter and $132 billion in the 12-month period.
KKR executives also acknowledged that exits were down and do not expect to sell assets it owns until 2024 due to "a more challenging monetization environment" that will remain soft for much of 2023, Mr. Lewin said.
Scott C. Nuttall, KKR's co-CEO, also said regarding exits that KKR is not likely to sell less assets "in an environment like this."
But, Mr. Nuttall added, "We are seeing the value of the portfolio continue to grow."
KKR reported gross returns for private equity of 2% in the first quarter and -9% in the year ended March 31. Opportunistic real estate was -3% in the first quarter and -9% in the year. Its leveraged credit composite was 4% in the quarter and 2% in the year, while its alternative credit composite earned 2% in the quarter and 2% in the year ended March 31.
This showed some wide swings from what KKR reported for the year-earlier quarter. KKR had reported private equity gross returns of -5% in the first quarter of 2022 and 19% in the year ended March 31, 2022. Opportunistic real estate had returned 11% and 30%, respectively; leveraged credit composite, -2% and 3% ; and alternative credit composite, -1% and 9%.
KKR reported GAAP net income of $323 million for the first quarter and a GAAP net loss of $258 million for the year ended March 31. A year earlier, KKR had reported a GAAP net loss of $9.8 billion and GAAP net income of $2.9 billion for the 12 months ended March 31, 2022.
