Private equity firm KKR & Co LP (KKR.N) reported higher-than-expected third-quarter earnings on Tuesday as stronger energy and credit markets boosted investment returns.
KKR said it had earned economic net income of $598.2 million after taxes, compared with a year-earlier loss of $314.8 million. This key metric for U.S. private equity firms accounts for unrealized gains or losses in investments.
On a per-share basis, economic net income of 71 cents exceeded the analysts’ average estimate of 65 cents, according to Thomson Reuters I/B/E/S.
KKR said its private equity investments had appreciated 5.8 percent from the beginning of the quarter, outstripping a 3.3 percent gain in the S&P 500 .SPX stock index.
Performance fees, which clients pay or will pay after investment returns exceed an agreed-upon level, jumped to $424.5 million. A year earlier, KKR in theory had to return $162.3 million to clients because returns missed targets.
KKR, which gives its investors a fixed payout every quarter, reiterated that shareholders would receive a cash distribution of 16 cents per share.
New York-based KKR managed $131 billion as of Sept. 30, little changed from the previous quarter as cash returned to investors offset new fundraisings.
Photo: CEO of Kohlberg Kravis Roberts & Co (KKR) Henry Kravis (C) 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