KKR sees growth in credit in fourth quarter
KKR saw its assets under management across credit and liquid strategies rise by 12 per cent year-on-year to $245bn (£195bn) in 2023, with direct lending and asset-based finance seeing the most activity in the fourth quarter.
The New York-listed investment firm said that this figure comprises $123bn of leveraged credit, $48bn of asset-based finance, $38bn of direct lending, $10bn of strategic investments and $27bn of liquid strategies, pertaining to hedge fund partnerships.
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Its latest results also revealed that new capital raised in that segment of the business in the fourth quarter of last year was driven by inflows at its insurer subsidiary Global Atlantic, direct lending in the US and Europe, and CLO formation.
KKR invested $6bn across its credit and liquid strategies in the fourth quarter, bringing the 2023 total up to $15bn.
Its leveraged credit business saw returns of 14 per cent, while its alternative credit investments returned 10 per cent during the year.
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The firm reported just under $1bn in fee-related revenues from its credit and liquid strategies last year, and more than $72m of fee-related performance revenues.
KKR – which is traditionally known for its private equity business – now has five per cent of its holdings in alternative credit and seven per cent in leveraged credit.
Private equity houses are turning to private credit for yield as they battle a prolonged decline in dealmaking.
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KKR’s overall business posted after-tax distributable earnings of $888m in the fourth quarter, a four per cent increase that beat analysts’ estimates.
Fee-related earnings rose by 21 per cent during the quarter to $675m thanks to growth in management fees and KKR’s capital markets unit.
