KKR(US:KKR)2023-08-07 17:48Financial Data and Key Metrics Changes - Fee-related earnings per share for Q2 2023 were reported at $0.67, with after-tax distributable earnings at $0.73 per share [3][5] - Management fees reached $749 million, with total fee-related revenues of $967 million, reflecting a 7% increase from the previous quarter and a 25% increase year-over-year [4][5] - Fee-related earnings totaled $602 million, showing a 10% improvement from the last quarter and a 31% increase year-over-year [4][5] Business Line Data and Key Metrics Changes - Realized performance income for the quarter was $149 million, while realized investment income was $115 million, leading to total asset management operating earnings of $752 million [5] - The traditional private equity portfolio appreciated by 5% in the quarter and 2% over the last 12 months, with inception-to-date IRRs for flagship funds at 22% [6] - The insurance segment generated $170 million in pretax earnings, with a pretax ROE of 14% to 15% [5][6] Market Data and Key Metrics Changes - The infrastructure portfolio increased by 2% in the quarter and 10% over the last 12 months, indicating strong global performance [7] - The company raised $13 billion in the quarter, with assets under management increasing to $519 billion and fee-paying AUM to $420 billion [8][9] Company Strategy and Development Direction - The company aims to enhance the durability and recurring nature of revenues, with management fees doubling from $1.4 billion in 2020 to $2.9 billion over the last 12 months [12][13] - Focus areas for growth include insurance and private wealth, with significant initiatives in partnerships and product launches [14][17] - The company is strategically positioned to leverage its $100 billion of dry powder for future investments [20][63] Management's Comments on Operating Environment and Future Outlook - Management noted an improving operating backdrop and expressed confidence in the potential for significant and sustainable growth in earnings per share [21][23] - The company anticipates continued scaling of recurring revenue businesses and expects to monetize embedded gains as market conditions improve [20][62] Other Important Information - The company has introduced broad-based employee ownership programs at over 35 companies, impacting over 60,000 employees [10][11] - The company has executed a stock buyback program, repurchasing approximately 6 million shares at an average price of less than $50 per share [21] Q&A Session Summary Question: When do you expect to have the first close for global infrastructure investors V? - Management indicated that they see a high level of activity and strategies in the market but did not provide specific timelines for individual fund closings [25][26] Question: Are buybacks becoming a bigger part of the story going forward? - Management confirmed that share buybacks will continue to be an important part of their capital allocation strategy, alongside other growth initiatives [28][31] Question: Can you provide more color on KPAC and its performance? - Management highlighted the long-term opportunity in alternative investments and noted that they raised $1.9 billion across new strategies, exceeding expectations [33][36] Question: What is the outlook for the insurance business? - Management explained that the decline in ROE was due to a strategic repositioning towards more liquid securities, which was deemed a prudent decision [39] Question: Can you discuss the demand for core private equity? - Management noted significant organic growth in core private equity AUM and expressed optimism about future fundraising opportunities [41][44] Question: What is the current state of the capital markets environment? - Management observed signs of improvement in the capital markets and expressed hope for increased monetization opportunities in the coming quarters [50][62]