KKR & Co saw its shares drop to a two-week low on Tuesday after its Q4 AUM fell short of analyst expectations. Despite a 15% year-on-year increase to $638bn, the alternative asset manager missed the consensus estimate of $643.4bn, according to a report by Reuters citing LSEG data.
The shortfall underscores the challenges of meeting elevated growth expectations, even as a favourable environment for deals and exits persists. Rival firm Apollo Global Management also reported AUM figures that fell below Wall Street forecasts.
KKR’s fee-related earnings (FRE) grew 25% to $843m during the quarter but still missed expectations of $852.8m. Adjusted net income, however, rose 33% to $1.19bn, or $1.32 per share, beating estimates of $1.28.
Despite strong earnings, KKR’s shares tumbled 8.5% on Tuesday, following a stellar 78.5% gain in 2024.
KKR’s capital markets business delivered a positive surprise, generating $270m in transaction fees for the fourth quarter, largely driven by private equity and infrastructure deals. For the full year, the segment crossed the $1bn revenue mark for the first time.
Performance across asset classes varied, with infrastructure funds gaining 2% in the quarter, while opportunistic real estate funds rose 1%, and the firm’s private equity portfolio remained flat.
KKR raised its earnings guidance for its strategic holdings unit, which manages long-term private equity investments. The firm plans to boost stakes in USI Insurance Services, 1-800 Contacts, and Heartland Dental with an additional $1.1bn investment.
The company now expects the unit to generate more than $350m in operating earnings by 2026 and exceed $1.1bn by 2030. In the fourth quarter, KKR raised $27bn in new capital and deployed $23bn in investments.
