Investment giant KKR slumped to a loss in the second quarter of the year after market volatility sparked a slowdown in dealmaking and a fall in the return on its investments.
The New York firm posted a net loss of $827.9m, down from net earnings of $1.28bn in the same quarter a year earlier, as revenue dropped to $330m from $3.14bn over the same period last year.
Post-tax distributable earnings – which represents the cash used to pay dividends to shareholders – fell nine per cent year-on-year to $840m in the second quarter, down from $925.5m a year earlier. Earnings per share came in at 95 cents, in line Wall Street analysts’ estimates but down from $1.05 a year ago
The firm weathered a 61 per cent plunge in transaction fee income to $84.6m in the quarter. KKR’s asset management arm was hit by market turbulence and saw a $1.68bn loss in the second quarter compared with a $3.46bn gain in the same period last year.
KKR boss said market volatility had not had a major impact on fundraising for PE, however.
“While investors maybe take a little bit of time to get their bearings on PE in particular, that’s not really impacting much [of] what we’re seeing in terms of PE fundraise,” Co-Chief Executive Scott Nuttall said on the call, the Wall Street Journal reported.
‘Dry powder’ available for investment rose to $115bn at the end of June, up from $112bn a year earlier with around $13bn in core private equity, Chief Financial Officer Robert Lewin told analysts.
Fee-related earnings also dipped around two per cent to $461.2m, or 52 cents per adjusted share, down from $470.1m a year earlier, the firm said.
Shares in KKR plunged nearly six per cent after the update yesterday.