KKR swells the coffers despite dip in profits

 
Michael Bow
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PRIVATE equity firm KKR yesterday said its pot of cash available to shareholders had swelled by more than 50 per cent compared to last year, thanks to higher quarterly fees and the cash made from selling investments.

However, its quarterly results were tarnished by poorer performance figures from unsold investments.

The firm, founded by Jerome Kohlberg and cousins Henry Kravis and George Roberts in 1976, said cash available to shareholders, known as distributable earnings, rose to $446.8m (£266m) for the quarter ending March, up from $290.6m in the same period last year.

KKR, based in New York, makes its money by charging investors fees and taking a cut of any profits made by buying and selling companies.

KKR’s foray into the London stock market last month added to its quarterly fee income, the company’s chief financial officer Bill Janetschek said in a conference call yesterday.

The firm floated pets store Pets At Home in March and netted an $8m termination fee from the deal, which contributed to its total fee income.

Total fees in the quarter rose to $327.6m from $221.1m at the same time last year while realised carried interest – its cut of profits from fund investments sold – more than doubled to $193.6m.

But the solid numbers were clouded by poorer performance from its portfolio companies.

Private equity firms use a non-statutory figure called economic net income (ENI) to measure performance, and this fell nearly three per cent to $630.3m at the end of March. Rival Blackstone last week said its ENI rose 30 per cent to $814m

A fall in the value of the firm’s buyout holdings, known as unrealized investments, drove the dip in performance, plunging from $347.2m at the end of last quarter to $149m.

KKR closed up 3.3 per cent at $24.41 in trading.

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