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KKR’s AUM increases 2% for quarter, 27% for year on strong fundraising

KKR co-Chairman and co-CEO George R. Roberts

KKR & Co. reported assets under management of $195 billion as of Sept. 30, up 2% from June 30 and up 27% from Sept. 30, 2017, said the alternative investment firm's earnings release Thursday.

KKR attributed the increase in the third quarter primarily to an increase in the value of its private equity portfolio and new capital raised in the firm's leveraged credit and private credit strategies. During the third quarter, KKR closed its latest flagship infrastructure fund, the $7.4 billion KKR Global Infrastructure Investors III. KKR attributed the increase over the 12 months ended Sept. 30 in part to $38 billion in new capital raised during that period.

During the quarter, KKR converted to a corporation from a limited partnership, effective July 1.

This change resulted in KKR obtaining a partial step-up in tax basis — an adjustment in the value of an asset that has appreciated for tax purposes — on some assets as they are sold or the tax basis is amortized. On July 1, KKR recorded an estimated net tax benefit and estimated net deferred tax asset of $257.1 million.

KKR's private markets AUM was $104 billion as of Sept. 30, up 1.3% from three months earlier and up 18% from a year earlier. KKR's public markets business AUM was $91 billion as of Sept. 30, up 2.3% from the end of the prior quarter and up 39% from the end of the year-earlier quarter.

KKR's fees and other revenues under GAAP totaled $491.5 million in the third quarter, up from $413.8 million in the second quarter and $355.4 million in the third quarter of 2017. Capital allocation-based income, which includes carried interest, was $638.2 million, up from $557.8 million in the prior quarter and $394.2 million in the year-earlier quarter.

GAAP net income was $640.2 million, compared to $680.4 million in the quarter ended June 30 and $153.6 million for the quarter ended Sept. 30, 2017.