Fee-Related Earnings Per Share: Q1 stood at $0.75, marking a 22% increase compared to Q1 2023.
Total Operating Earnings: Reported at $1.08 per share for the quarter.
Adjusted Net Income Per Share: After tax was $0.97, up 20% year-over-year.
Management Fees: Reached $815 million in Q1, a 4% sequential rise from the last quarter.
Net Transaction and Monitoring Fees: Amounted to $152 million, with $116 million generated from the Capital Markets business.
Fee-Related Compensation Ratio: Maintained at 17.5%, aligning with the target range.
Other Operating Expenses: Saw a reduction by 4% compared to Q1 of 2023, totaling $145 million.
Insurance Operating Earnings: Stood at $273 million for the quarter.
Strategic Holdings Operating Earnings: Reported at $21 million, driven mainly by dividend activity.
Future Guidance
Capital Raising Efforts: Expect to raise over $300 billion from 2024 through 2026 across various strategies.
Forward-Looking Earnings Estimates: By 2026, aims for $4.50-plus per share of FRE, $7-plus of total operating earnings per share, and $7 to $8 per share of adjusted net income.
Longer-Term Financial Targets: Expect to achieve $15-plus of adjusted net income per share within the next 10 years, with around 70% of these earnings being more recurring in nature.
Cash Generation Forecast: Anticipates generating over $25 billion of cash over the next five years, with plans for strategic deployment across core private equity, share buybacks, strategic M&A, and insurance.
Trends, Market Conditions, Sentiment
Investor Engagement and Confidence: Strong, as evidenced by the significant capital raised and planned future raises.
Market Opportunities and Strategies: Focused on Asia, corporate carve-outs, infrastructure, direct lending, and opportunistic asset-based finance.
Investment and Deployment Activity: Highlighted by a healthy pipeline in private equity and credit, with notable upcoming transactions and continued interest in direct lending and asset-based finance.
Strategic Holdings Growth: Expectations for increased dividends and operating earnings contribution from strategic holdings in the long term.
Insurance and Credit Synergies: Continued synergistic benefits between KKR’s asset management services and Global Atlantic, particularly in credit and potentially in real estate and infrastructure.
Notable Quotes
”The M&A market is coming back…we are starting to see this impact all of our businesses.” - Scott Nuttall, on the improving climate for investments and exits.
”Over the next 5 years, we also expect $25-plus billion of cash generation…across 4 key areas.” - Robert Lewin, highlighting the strategic areas of capital deployment.
”While we have experienced a lot of growth, it feels like we are just getting started.” - fronting KKR’s optimistic outlook and ambitious growth targets.
”Our business model is built to drive compounding earnings over a very long period of time…we can achieve our outlined targets without having to build anything new.” - conveying confidence in the sustainability and scalability of KKR’s current business model.
