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What Investors Can Expect from KKR & Company in 2Q17

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Part 3
What Investors Can Expect from KKR & Company in 2Q17 PART 3 OF 6

KKR’s Public Market Division to See a Rise in Fee-Paying AUM

Rise in fee-paying AUM

In 2Q17 and 3Q17, KKR & Company (KKR) is expected to witness a rise in the fee-paying assets under management (or AUM) in its public market division on the back of its private credit opportunistic fund. This fund is the successor to KKR’s mezzanine fund.

KKR’s public market division is expected to experience subdued growth in 2Q17, mainly due to falling oil prices (USO). Oil companies’ lower productions could lead to lower valuations of KKR’s oil company holdings, negatively affecting the performance of its public market division.

KKR’s Public Market Division to See a Rise in Fee-Paying AUM

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In 1Q17, KKR deployed $900 million in special situation opportunities and direct lending. The division’s revenue stood at $104 million in 1Q17, reflecting a rise of 93% on a YoY (year-over-year) basis. This significant rise in the division’s revenue was witnessed on the back of a rise in management fees to $84 million in 1Q17, compared to $76 million in 1Q16.

Peer comparison

In 1Q17, KKR’s public market division had AUM (assets under management) of $57.4 billion. Its peers reported the following AUMs in their credit market divisions on March 31, 2017:

  • Carlyle Group (CG): $29.4 billion
  • Apollo Global Management (APO): $141 billion
  • Blackstone (BX): $93.1 billion
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