KKR First Quarter Misses Forecast

KKR & Co posted earnings for the fourth quarter that were weaker than had been expected after losses in hedge fund and credit investment offset a solid return on its private equity holdings.

The last amongst the private equity businesses to announce results for 2019, KKR ended a run of sluggish performances in the sector as buyout companies battled the rising costs in funding and the turbulent markets related to finances roiled by the plunging prices of oil.

The economic net income or ENI, which accounts for any unrealized giants or losses, for the first quarter at KKR increased by 53.3% to over $70.5 million from the same period a year ago.

That in turn translated to ENI a share of 8 cents, which missed forecasts of analysts for 27.2 cents.

Like certain peers, KKR announced it stepped up the pace of its new investments as an uncertain financial market is presenting good opportunities.

The company invested a record amount of its cash into infrastructure and credit investments during the fourth quarter, said co-CEOs George Roberts and Henry Kravis.

Known over eight years ago for its mega corporate takeovers of multi-billion dollars, the private equity industry in the U.S. had started 2019 on a very slow note.

Dealmaking is way down after the financial markets for loans and high-yield bonds that fund the buyouts have ground to almost a halt as investors and banks alike shun the risky deals.

Underscoring the difficult conditions in the market, KKR’s hedge fund and credit investments posted performance losses for more than $17.8 million during the just ended fourth quarter, swinging from $23.4 million in gains that were unrealized in 2017.

Yet during the same time, the private equity arm of KKR enjoyed a strong rise of 48% in unrealized performance income to reach $344.6 million, which was the strongest performance amongst its peers during this quarter.

Founded by Kravis, Roberts and Jerome Kohlberg in 1976, KKR based in New York managed $120 billion at the end of 2018.

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