KKR AUM jumps on record $16 billion fundraising

KKR & Co. on Tuesday reported $221.8 billion in assets under management as of June 30, a 7.1% increase from $207.1 billion as of March 31 and up 8% from $206 billion in the previous year's second quarter.

KKR attributed the growth in AUM in part to fundraising. The firm raised $16 billion in the second quarter, a record quarterly amount, mainly from its Asia private equity, Asia infrastructure, core plus real estate and dislocation strategies. Through March 31, KKR's average new capital raised per quarter through March 31 was $7.3 billion.

Increases in fundraising and appreciation of KKR's portfolios was offset by distributions to limited partners in its infrastructure and private equity portfolios and redemptions in funds managed by strategic partners. KKR had $67 billion in uncalled commitments, up 18% from June 30, 2019.

In July, KKR announced the acquisition of retirement and life insurance company Global Atlantic Financial Group. When the deal closes — expected in early 2021 — KKR will manage Global Atlantic's assets as well as use Global Atlantic's distribution networks for KKR's investment strategies as well as create new products alongside the insurer.

KKR expects the Global Atlantic acquisition to increase AUM by 33% to $294 billion, as of June 30, with insurance assets set to rise to $101 billion from $28 billion and perpetual capital to climb to $91 billion from $19 billion.

Some 40% of KKR's capital is in perpetual capital or long-dated strategic investor partnerships that recycle capital and profits over 20 to 30 years. KKR executives expect perpetual capital to grow further from ownership of Global Atlantic, through organic growth and opportunities to expand, including acquiring other insurance companies, said Scott Nuttall, KKR co-president and co-COO, on Tuesday's earnings calls.

The Global Atlantic acquisition is also in line with one of KKR's strategic focuses to take advantage of the growth of the retirement business with aging populations. This focus is resulting in KKR's focus on insurance, high net worth individuals and other retail investors.

KKR is also continuing to build its Asian business, adding infrastructure, real estate and technology growth equity strategies. In the year ended June 30, KKR's AUM in Asia grew to $30 billion in infrastructure, real estate and its fourth Asia private equity funds from $19 billion solely in private equity a year ago. KKR executives believe that its Asian business will become as large as its North American business in coming years, Chief Financial Officer Rob Lewin said Tuesday's call.

KKR had $124.8 billion in private markets assets under management as of June 30, up 9.5% from $114 billion as of March 31 and an 11.4% increase from $112 billion at the end of the year-earlier quarter. KKR's public markets AUM was $96.9 billion, up 4.2% from $93 billion at the end of the previous quarter and up 3.5% from $93.6 billion as of June 30, 2019.

GAAP net income was $698.6 million in the second quarter.