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Buyout firm KKR to hike dividend payout; earnings disappoints: Reuters

Private equity firm KKR & Co LP (KKR.N) said on Thursday it will raise its quarterly dividend payout from the end of March by a cent, after posting lower-than-expected fourth-quarter earnings, hurt by unrealized losses in its buyout investments.

New York-based KKR, which managed $129.6 billion as of the end of December, said it was raising its dividend payout to 17 cents a share from 16 cents from the first quarter of this year.

KKR gives its investors a fixed payout every quarter.

Gains in the U.S. stock market in the past year have buoyed the returns for some buyout firms, although stubborn weakness in various business segments including hedge funds have dented overall performance.

KKR’s rival Carlyle Group LP (CG.O), for example, reported sharply lower-than-expected earnings on Wednesday, weighed by losses in its hedge funds.

KKR earned an economic net income of $339.2 million after taxes in the fourth quarter, which translated to 40 cents a share, compared with analysts’ forecasts of 43 cents a share, according to Thomson Reuters I/B/E/S.

Economic net income is a key metric for U.S. private equity firms that accounts for unrealized gains or losses in investments.

In a statement, KKR said it had earned less carried interest in the final three months of 2016 due to a lower level of net gains in its private equity investments. Carried interest is a cut of the profit that KKR keeps after generating returns in excess of an agreed level for its clients.

For the fourth quarter, KKR said its private equity returns rose 3.4 percent, roughly in line with gains in the benchmark S&P 500 stock index. Its buyout investments gained 11.9 percent for all of 2016, beating a 9.5 gain in the S&P 500 over the same period.

A breakdown of KKR’s buyout investments showed weakness in its energy, infrastructure and U.S. real estate holdings were a drag.

Photo: CEO of Kohlberg Kravis Roberts & Co (KKR) Henry Kravis (R) departs after meeting India’s Prime Minister Narendra Modi at a breakfast in the Manhattan borough of New York September 29, 2014. Reuters/Carlo Allegri.