April 24, 2014 4:52 pm

Asset sales help KKR beat expectations

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

KKR’s first-quarter earnings beat Wall Street estimates as the New York-based private equity group listed portfolio companies on the public markets and sold down stakes in companies it had already floated.

Santander Consumer USA, a provider of auto loans to subprime buyers part-owned by KKR, raised $1.8bn from its initial public offering in January. KKR also sold down stakes in NXP Semiconductor and Nielsen, the media information group. Distributions to shareholders of $0.43 per share and economic net income of $0.82 per share exceeded the estimates of the 15 analysts covering KKR who expected $0.32 in distributions and $0.51 in ENI.

KKR’s shares rose 1.4 per cent to $23.96 in morning trading in New York. Distributable earnings, a metric preferred by private equity groups that is an equivalent to cash earnings, rose from $291m in the first quarter of 2013 to $447m.

But economic net income – which takes into account realised and unrealised gains and also excludes expenses associated with stock market listings – fell from $648m to $630m, a drop KKR attributed to a small rise in the public equity markets compared with the first quarter last year.

The S&P rose 1.3 per cent in the first quarter, hampering KKR’s ability to mark up the value of its portfolio companies.

At KKR’s capital markets business, fee-related earnings rose 340 per cent to $44.5m, as a result of transactions including arranging acquisition financing for third parties including Southwire and Payless.

Assets under management rose to $102.3bn, an $8bn increase from the end of December.

KKR in December agreed to buy KKR Financial (KFN) in an all-share deal that valued the NYSE-listed corporate debt investor at $2.6bn.

KFN’s portfolio consists largely of debt securities used to finance buyouts KKR and its competitors completed during the peak deal years.

Related Topics

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments
SHARE THIS QUOTE