(Bloomberg) -- KKR & Co. posted a second-quarter profit that beat Wall Street estimates as the buyout firm generated more income than expected from selling assets.
Adjusted net income climbed 49% to $971.9 million, or $1.09 a share, the New York-based company said Wednesday in a statement. That beat the $1.06 average estimate of analysts surveyed by Bloomberg.
Shares of KKR rose 4.6% to $125.55 at 9:41 a.m. in New York.
Total investing earnings, which includes performance income and gains on asset sales, surged 57% from a year earlier to $240.6 million. A share sale for mobile tech company AppLovin Corp. and the disposal of its stake in Abu Dhabi National Oil Co.’s pipeline network were among KKR’s biggest deals during the quarter ended June 30.
Fee-related earnings rose 25% to a record $755.4 million, topping the $720.7 million that analysts predicted.
“Momentum across the firm remains high, and we remain confident in our team, our model and our growth prospects,” KKR co-Chief Executive Officers Joe Bae and Scott Nuttall said in the statement.
KKR, founded in 1976 by Henry Kravis, Jerome Kohlberg and George Roberts, has grown beyond its private equity roots into a one of the world’s biggest alternative-asset managers, with strategies including buyouts, credit, infrastructure, real estate and insurance. The firm aims to reach $1 trillion of assets within five years.
Assets under management totaled $601 billion at the end of June, a 16% increase from a year earlier. It gathered $32 billion of new capital, including $18 billion for real assets, stemming from the initial close of its fifth infrastructure fund, and $12 billion for credit. It raised $2 billion for private equity.
Total operating earnings were $1 billion. That metric, which was introduced during the first quarter, includes fee-related earnings from asset management, earnings from long-term private equity holdings and profit from its Global Atlantic insurance arm.
Rebalancing Boost
Taking a cue from Berkshire Hathaway Inc.’s business model, KKR recently created the strategic holdings unit to manage long-term private equity bets that generate dividends. That segment reported $40.9 million of operating earnings during the quarter.
The firm has started fundraising for its next flagship North America buyout fund.
Shares of KKR have returned 45% this year, including reinvested dividends, outperforming rivals Blackstone Inc., Apollo Global Management Inc. and Carlyle Group Inc. KKR’s stock also got a boost last month when it was added to the S&P 500 as part of the benchmark’s latest rebalancing.
Other second-quarter highlights:
- Dry powder totaled $108 billion
- Private equity generated a gross return of 4%
- Leveraged credit investments generated a gross return of 2%, while the alternative credit portfolio returned 3%
(Updates shares in third paragraph.)
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