KKR execs vow to ‘keep investing’ amid global economic distress
KKR will not pull back from its strategy in the face of worldwide market volatility, said co-CEO Scott Nuttall. In fact, the firm expects to be even more aggressive.
The global private-equity and investment company – and owner of Global Atlantic Financial Group – KKR reported first-quarter earnings and met with Wall Street analysts Thursday morning.
Thursday was also KKR’s 49th birthday, Nuttall said by way of affirming founder Henry Kravis’ approach to down cycles.
“The firm has seen a number of cycles and dislocations,” Nuttall said. “In our experience, times like this yield some very attractive investment opportunities. The key is to use our global and diversified business model … and $116 billion of dry powder to keep investing when others are scared.”
Data released Wednesday showed the U.S. economy contracted during the first quarter for the first time in three years. President Donald Trump’s push for punishing tariffs is roiling markets worldwide.
Rob Lewin, chief financial officer, said an internal assessment finds a limited impact on KKR from the tariff battles.
“We estimate that 90% of our AUM has limited to no first-order impact from the announced tariffs,” he explained. “Importantly, this figure does not include identified mitigating measures that we are actively implementing. Specifically, our core private equity portfolio and our strategic holding segment are not expected to have any material impact from tariffs.”
There will likely be “pockets of exposure” across the KKR credit portfolio, Lewin added.
“We believe the opportunities, and we really do think this is a credit pickers market, will outweigh the downsides,” Lewin concluded. “So, while we expect there will be individual instances of direct tariff impacts in parts of the portfolio, based on how we understand tariffs today, we feel well equipped to manage these challenges.”
In Other News:
Annuity business. KKR has owned Global Atlantic for more than a year and the insurer is a powerful asset for the firm. GA finished 11th in total 2024 annuity sales with nearly $15 billion. Executives said they expect annuity sales to continue uninterrupted by any economic chaos.
“A good portion of our fundraising comes through Global Atlantic,” Nuttall said. “We expect annuity demands to be largely unaffected in this environment, and it could be positively impacted as investors focus on safety and quality.”
Quarterly Snapshot:
- Launched two public-private fixed income solutions for individual investors in April with two equity-oriented strategies expected to be launched in 2026.
- Fee-related earnings grew 23% to $822.6 million.
- At quarter end, there was $64 billion of committed capital with a weighted average management fee rate of approximately 100 bps that becomes payable when the capital is either invested or enters its investment period.
- Total operating earnings increased 32% over the last 12 months primarily driven by the growth in Fee Related Earnings.
- Global Atlantic AUM totals $197 billion, of which $146 billion is credit AUM. Ivy and other sponsored reinsurance vehicles total $47 billion of the $197 billion.
Management Perspective:
“We’ve announced over ten billion of investment in the last four weeks, and we have significant pipelines across our businesses. So, you should expect to continue to see us investing in this environment. No doubt some sales processes may be delayed if this continues, but it is times like this where we see the benefit of being very global.”
– Co-CEO Scott Nuttall
By The Numbers:
- Total Segment Earnings: $1.39 billion ($1.15 billion in Q1 2024)
- Adjusted Net Income: $1.03 billion ($864,000 in Q1 2024)
- Earnings Per Share: Adjusted net income per share of $1.15 ($1.03 in Q1 2024)
- Assets Under Management: $664 billion, up 15% year-over-year
- Dividend Declared: $0.185 per share of common stock, up 6%
- Stock Price Movement: Stock was up 1.7% at midday Thursday to $116.24 per share
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