KKR(US:KKR)2024-05-01 16:50Financial Data and Key Metrics Changes - Fee-related earnings per share for Q1 2024 were $0.75, up 22% compared to Q1 2023 [8] - Total Operating Earnings were $1.08 per share, and adjusted net income per share was $0.97, up 20% year-over-year [8][12] - Management fees in Q1 were $815 million, a 4% sequential increase [9] - Fee-related earnings totaled $669 million, with a FRE margin of 68%, up 700 basis points from Q1 2023 [10] - Insurance operating earnings were $273 million, reflecting elevated cash and more liquid assets [10] Business Line Data and Key Metrics Changes - The new segment, Strategic Holdings, reported operating earnings of $21 million, with expectations of $300 million by 2026 and $1 billion by 2030 [12] - Realized performance income was $272 million, primarily from secondary sales and strategic exits [12] - The private equity portfolio increased by 5% in Q1 and 19% over the last 12 months [13] Market Data and Key Metrics Changes - KKR raised $31 billion of capital in Q1, with $21 billion coming from credit strategies [15] - Capital deployed in Q1 was $14 billion, primarily in infrastructure and real estate equity [16] - The leverage credit composite was up 3% in Q1, with a 14% increase over the last 12 months [13] Company Strategy and Development Direction - KKR aims to raise over $300 billion of capital from 30 strategies between 2024 and 2026 [17] - The company expects to surpass $4.50 per share of FRE by 2026, implying a CAGR of approximately 20% [17] - KKR's diversified business model combines asset management, insurance, and strategic holdings to generate sustainable outcomes [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term trajectory, expecting $15 per share of adjusted net income in the next 10 years [18] - The company anticipates $25 billion of cash generation over the next five years, with a focus on core private equity, share buybacks, strategic M&A, and insurance [18] - Management highlighted a healthy pipeline for new deployments and a robust fundraising environment [16][18] Other Important Information - KKR increased its dividend to $0.70 per share on an annualized basis, marking the fifth consecutive year of dividend increases [14] - The gross unrealized carried interest balance increased to $6.9 billion, up 16% from the end of 2023 [14] Q&A Session All Questions and Answers Question: Insights on private equity investment activity - Management noted a healthy backlog of announced transactions and emphasized ongoing opportunities in Asia, particularly Japan [24] - They highlighted a significant increase in the private equity pipeline, with expectations for more deals to close soon [26] Question: Capital allocation priorities - Management stated that capital allocation is flexible, focusing on the highest returning opportunities without fixed percentages for each bucket [31] Question: Growth in credit portfolio - Management reported a 22% year-over-year increase in private credit AUM, indicating strong investor interest and broad fundraising activity [34] Question: Performance of Global Atlantic (GA) - Management confirmed strong operating performance at GA, with expectations for redeployment of assets into higher-yielding investments over the next 12 to 18 months [51][54] Question: Future of asset-based finance (ABF) - Management expressed optimism about the ABF market, noting significant growth potential and increased client understanding of the asset class [72]