KKR(US:KKR)2020-08-04 17:10Financial Data and Key Metrics Changes - KKR's AUM grew to $222 billion, an 8% increase year-over-year [6] - Management fees for the last 12 months were $1.3 billion, up 13% [7] - Book value per share increased to $17.73, a 7% rise from the previous quarter [7] - After-tax distributable earnings for the quarter were $326 million, flat compared to Q2 last year, but up 5% for the first half of 2020 [7][12] Business Line Data and Key Metrics Changes - Management fees were $333 million, a 10% increase compared to Q2 2019 [9] - Realized performance income totaled $355 million, with over 90% of carry coming from investments outside the U.S. [9] - The private equity flagship funds returned 14% over the trailing 12 months, outperforming the S&P 500 and MSCI World indices [16] Market Data and Key Metrics Changes - KKR raised $16 billion in new capital during Q2, a record for the company [18] - The Asia private equity strategy raised approximately $11 billion, making it the largest pan-Asian private equity fund [18] - The company has seen significant growth in its Asia business, with AUM increasing from $19 billion to $30 billion over the past 12 months [21] Company Strategy and Development Direction - KKR signed an agreement to acquire Global Atlantic Financial Group, expected to close in early 2021, which will significantly increase AUM and management fees [5][25] - The acquisition is seen as a strategic move to access retirement and wealth trends globally, particularly in insurance and retail [27][28] - KKR aims to grow its management fees by at least 50% over the next three years, with the Global Atlantic acquisition expected to enhance this growth [33][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of KKR's business model amid market volatility, highlighting increased revenues and margins [30] - The company anticipates continued growth in management fees and distributable earnings, bolstered by the Global Atlantic acquisition [40] - Management noted that the current low interest rate environment could drive demand for savings products, which KKR plans to leverage [72] Other Important Information - KKR's investment portfolio appreciated by 8% in the quarter, contributing to the increase in book value per share [17] - The company has committed approximately $30 billion in investments so far this year, evenly split between public and private markets [23] Q&A Session Summary Question: Key lessons learned regarding fundraising in a challenging environment - Management emphasized the importance of communication and transparency with investors, which has enhanced relationships and contributed to fundraising success [32] Question: Progress on retail buildout and product suitability - Management acknowledged ongoing efforts in retail hiring and product development, indicating that there is still more to achieve in this area [35] Question: Outlook on fundraising timing and pace - Management expressed increased optimism about fundraising timelines, suggesting that some anticipated fundraises may occur sooner than previously expected [39] Question: Understanding margin improvements - Management indicated that while they expect to maintain a low 40% compensation ratio, there are opportunities for margin expansion post-acquisition [42] Question: Update on realization activity and portfolio performance - Management provided forward-looking guidance, expecting $250 million in carrying balance sheet gains for Q3, and noted strong portfolio performance due to strategic construction [46][47] Question: Connection between Global Atlantic and retail opportunities - Management highlighted potential synergies in distribution through Global Atlantic's network, which could enhance KKR's product offerings [54]