KKR rides wave in equities to boost earnings
KKR, the private equity company, gave a record amount of cash back to investors last year after rising markets helped double quarterly profits.
The firm, co-founded as Kohlberg, Kravis & Roberts, made a distribution of $1.40 per share to shareholders for the year ending 2013, its highest level ever as a public company.
The payout was thanks to a huge rise in profits at the company. Measured by economic net income, a measure of profitability used by buyout firms, profits rose 127 per cent to $789.6m for the quarter ending December, up from $347.7m for the same quarter a year ago. Over the year, profits rose to $2.2bn from $2.1bn.
Assets under management also rose to $94.3bn from $75.5bn a year earlier.
The company’s core private equity business, which owns stakes in high street pharmacy Alliance Boots and Toys R Us, saw profits rise 107 per cent for the quarter ending December up to $368.6m.
The company said this was due to a rise in the value of companies held in its portfolio, which appreciated 8.4 percent during the quarter.
Over the year they have risen 20.5 per cent, failing to keep pace with US equities markets which have soared close to 30 per cent. KKR still has $39bn of unrealised value still to come from portfolio companies, with about one-third of that – including the Alliance Boots stake – in public securities and the rest in private securities.
“There’s a lot of opportunity to sell,” KKR’s Scott Nuttall said yesterday.