uploads///Balance sheet

KKR Expected to See Subdued Realized and Investment Performance


Nov. 20 2020, Updated 12:11 p.m. ET


Difficult markets resulted in weaker realization for alternative asset managers. The lower churning of capital resulted in lower redeployment into strong avenues. In 1Q16, KKR & Co. (KKR) saw its distributable earnings decline due to lower bookings. The company had a realized performance income of $99 million—compared to $308 million in 1Q15.

KKR’s realized investment income also fell sharply to $35 million in 1Q16—compared to $231 million in 1Q15.

KKR’s peers posted the following debt-to-asset ratios:

  • Carlyle Group (CG) – 48%
  • Blackstone Group (BX) – 28%
  • Apollo Global Management (APO) – 65%

In comparison, KKR’s total debt-to-asset ratio was 16.5%. It was the lowest among its alternative investment peers that form part of the iShares US Financials ETF (IYF).

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Moderate leverage

KKR’s DE (debt-to-equity) ratio deteriorated marginally in 1Q16—compared to 4Q15. The company’s total debt obligations and preferred share obligations stood at $3.0 billion as of March 31, 2016. That was in line with the numbers on December 31, 2015. Its debt obligations included KKR Financial Holdings’ (KFN) debt obligations of $657.3 million and 7.4% Series A preferred shares worth $373.8 million. The company had $1.5 billion in cash and short-term investments.

As of March 31, 2016, KKR has an undrawn $1 billion revolving credit facility. In addition, it has an undrawn $500 million revolving credit facility for use in its capital markets business. KKR’s portion of total uncalled commitments to its investment funds was $1.9 billion. Its DE ratio rose to 0.32x in 1Q16—compared to 0.30x as of December 31, 2015.

KKR’s balance sheet and leverage position remained moderate. The company is using debt financing to fund some of its acquisitions in order to take advantage of lower interest rates.


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