In response to a slowdown in dealmaking brought on by the market downturn, KKR & Co Inc (KKR.N) reported on Tuesday a 9 percent year-over-year decline in its second-quarter after-tax distributable earnings from its firms and customers.
The amount of money used to pay dividends to shareholders after taxes, or after-tax distributable earnings, was $840 million in the second quarter, down from $925.5 million in the same period last year. This led to after-tax distributable earnings per share of 95 cents, which was lower than the $1.05 per share from a year ago but in line with Wall Street analysts’ average projections.
A significant portion of this, according to KKR, was caused by a drop in transaction fee income, which fell by 61 percent to $84.6 million during the quarter.
This occurred as a result of its capital markets business earning fees on fewer transactions. In exchange for assisting KKR’s portfolio firms with tasks including debt financing and initial public offerings (IPOs), the unit charges a fee. Additionally, it performs the role of an investment bank by assisting to arrange financing for businesses that are not owned by KKR and that pay for its services.
The Russia-Ukraine war and increasing interest rates scared markets and sapped executives’ confidence as they considered mergers and acquisitions, which caused dealmaking to slow down in the second quarter. IPOs were few because most stock market aspirants were discouraged by the volatility.
According to KKR, its portfolio of leveraged credit fell by 6% during the quarter while its private equity funds declined by 7%. Its infrastructure fund lost 1%, and its performance was comparable to that of its peers.
The largest alternative asset manager in the world, Blackstone Inc (BX.N), reported last month that its private equity portfolio fell by 6.7 percent in the second quarter, while Carlyle Group Inc’s (CG.O) corporate private equity funds were flat.
According to KKR, it invested $19 billion in new ventures, taking advantage of the economic crisis to buy assets at deep discounts. Through fundraising, it collected $25 billion in fresh money, and its private equity division’s asset sales accounted for the majority of the $723.6 million in carried interest revenue.
Due to its asset management loss, KKR reported a significant paper loss under generally accepted accounting principles (GAAP) of $827.9 million as opposed to a $1.3 billion profit a year ago.
$491 billion was the total amount of assets under administration, up from $479 billion in the previous quarter. Unused funds remained constant at $115 billion.
A normal dividend of 15.5 cents per share was announced by KKR.