By Koh Gui Qing
NEW YORK, Feb 9 (Reuters) - 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 analysts' forecasts.
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 year.
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 drag.
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)