KKR reported a more than one-fifth rise in fourth-quarter income as the private equity group registered its most profitable year since going public, raised more money than in any other single year and returned a record amount of money to investors.

Economic net income rose from $285.5m to $347.7m, nearly double consensus forecasts, after it took profits on investments and after a rise in the value of its investment holdings.

“It was a good quarter that included decent appreciation, healthy capital raised/deployed, and robust realisations with a solid distribution,” said Michael Carrier of Bank of America Merrill Lynch.

However, fee-related earnings in the quarter ended December dropped 26 per cent to just under $86m due to an absence of big buyout investments.

In the final quarter of 2011, KKR completed the $7.2bn purchase of energy firm Samson Investment, which brought in fees as well as business for its capital markets arm that helped finance the deal.

Assets under management ended the year at $75.5bn, up from $59bn at the end of 2011. That growth reflected $11bn in fundraising, a $10bn increase in the value of the investments in KKR’s portfolios and $8bn of acquisitions, largely accounted for by its purchase of Prisma Capital Partners.

KKR took advantage of strong capital markets toward the end of 2012 to cash in on investments, returning $10.6bn to its investors. It was also able to mark up its portfolio 24 per cent, with gains particularly strong in Europe.

KKR this month raised $500m in 30-year money to take advantage of cheap borrowing costs, raising expectations it will pursue acquisitions from its own balance sheet.

In its credit business, KKR, like its larger rival Blackstone, has begun to position itself for rising rates, by shifting funds from the bond market with fixed rates to the loan market where rates float.

KKR focuses on economic net income rather than GAAP earning because the measure excludes costs associated with the group’s initial public offering, including compensation costs. It also takes into account operating performance including the current market valuation of its portfolio.

In terms of distributable earnings, a measure comparable to cash flows from operations, KKR earned $546.3m for the quarter, up from $146.5m a year ago.

KKR lifted its dividend to $0.70 for the final quarter, against $0.32 a year ago. Its shares, which have traded at a 52-week high this week, fell 0.3 per cent to $17.72 by the close in New York.

The results do not yet include the record-breaking $6bn fundraise for KKR’s Asian fund – a figure equal to what was raised for KKR’s latest North American flagship fund.

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