By Koh Gui Qing
NEW YORK Feb 9 Private equity firm KKR & Co LP
said on Thursday it would raise its quarterly dividend
payout from the end of March by a cent, after posting a nearly
fivefold rise in fourth-quarter earnings that came close to most
Stock market gains have buoyed the value of the holdings of
many buyout firms and allowed them to sell some for top dollar,
although stubborn weakness in various business segments
including hedge funds have dented overall performance.
Carlyle Group LP, a KKR rival, reported sharply
lower-than-expected earnings on Wednesday, weighed by losses in
its hedge funds.
New York-based KKR, which managed $129.6 billion as of the
end of December, said it was raising its fixed dividend payout
to 17 cents a share from 16 cents from the first quarter of this
KKR earned an economic net income of $339.2 million after
taxes in the fourth quarter, which translated to 40 cents a
share. That compared with analysts' forecasts of 43 cents a
share, according to Thomson Reuters I/B/E/S, and was up from 8
cents a year ago, when some of KKR's holdings suffered from
exposure to lower energy prices.
Economic net income is a key metric for U.S. private equity
firms that accounts for unrealized gains or losses in
investments. KKR cited the investment income it received from
the sale of assets for the rise in economic net income.
In a statement, KKR said it had earned less carried
interest, a type of performance-based fee, in the final three
months of 2016, due to a slowdown in the appreciation of its
private equity investments.
For the fourth quarter, KKR said its private equity returns
rose 3.4 percent, roughly in line with gains in the benchmark
S&P 500 stock index. Its buyout investments gained 11.9 percent
for all of 2016, beating a 9.5 percent gain in the S&P 500 over
the same period.
A breakdown of KKR's buyout investments showed weakness in
energy, infrastructure and U.S. real estate holdings were a
Unlike many other investors, private equity firms have the
luxury of holding on to their investments for up to 10 years or
more, giving them the choice to sit out of unfavorable markets
and selling only when prices rebound. As such, unrealized losses
do not necessarily materialize.
Shares in KKR were down 1.5 percent around midday at $18.09,
underperforming a 0.4 percent rise in the S&P 500.
(Reporting by Koh Gui Qing in New York; Editing by Bernadette
Baum and Cynthia Osterman)