KKR(US:KKR)2025-07-31 14:02Financial Data and Key Metrics Changes - The company reported fee-related earnings of $0.98 per share, total operating earnings of $1.33 per share, and adjusted net income of $1.18 per share, marking some of the highest figures in its history as a public company [4][5] - Management fees increased by 18% year-over-year to $996 million, driven by fundraising initiatives and deployment activities [5][6] - Fee-related performance revenues rose by 45% year-over-year to $54 million, attributed to performance allocation from the offshore infrastructure K Series vehicle [5][6] - Fee-related earnings per share increased by 33% for the twelve-month period ending June 30, 2025, compared to the previous year [7] Business Line Data and Key Metrics Changes - Insurance segment operating earnings were $278 million, slightly above the previous quarter's expectations [7] - Strategic Holdings operating earnings totaled $29 million, contributing to total operating earnings of $1.33 per share [8] - Realized performance income reached $419 million, while realized investment income was $154 million, driven by public secondary sales and private transactions [9] Market Data and Key Metrics Changes - The private equity portfolio increased by 5% in the quarter and 13% over the last twelve months, while the infrastructure portfolio appreciated by 3% in the quarter and 14% over the same period [9][10] - The alternative credit composite rose by 19% over the last twelve months, indicating strong performance in credit markets [10] Company Strategy and Development Direction - The company has deployed nearly $37 billion of capital year-to-date, with a focus on private equity, growth equity, infrastructure, and real estate [12][13] - The alternative credit ecosystem, including asset-based finance, is now larger than traditional high-yield and leveraged loan markets combined, presenting significant growth opportunities [19] - The company is expanding its life sciences footprint through the acquisition of Healthcare Royalty Partners, enhancing its capabilities in biopharma royalty investing [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2026 guidance shared last year, citing strong business momentum and a healthy pipeline for deployment [26] - The fundraising environment remains robust, with $28 billion raised in Q2, and the company is ahead of its fundraising targets for 2024-2026 [18][46] - Management highlighted the importance of third-party capital and elongating liabilities as key strategic imperatives for future growth [71] Other Important Information - The company has a record of $9.2 billion in unrealized carried interest across its global portfolio, up approximately 30% from the previous year [14] - The company is actively working on a public-private equity product in partnership with Capital Group, aiming to broaden its client base [21] Q&A Session Summary Question: Update on K Series credit and fundraising progress - Management noted that K Series AUM increased from $11 billion to $25 billion year-over-year, with significant progress in private equity and infrastructure [32][34] Question: Institutional fundraising dynamics - Management indicated that institutional investors are returning to business as usual, with constructive discussions and a strong fundraising momentum [46][48] Question: Asset-based finance opportunities - Management highlighted the favorable environment for asset-based finance, citing the Harley Davidson deal as an example of companies opting for capital-light strategies [56][58] Question: Global Atlantic performance and liability elongation - Management confirmed a solid quarter for Global Atlantic with $278 million in operating earnings, emphasizing the importance of third-party capital and elongating liabilities [70][71] Question: Opportunities from 401(k) retirement reform - Management expressed optimism about potential reforms making private market investments more accessible to U.S. retirement plans, viewing it as a long-term opportunity [79][80] Question: Impact of AI and blockchain on the industry - Management acknowledged the growing importance of AI and blockchain, focusing on building smarter solutions and enhancing productivity within portfolio companies [88][90]