KKR Achieves Higher Realization on Improved Activity in 2Q16


Nov. 20 2020, Updated 2:46 p.m. ET

Improved realizations

In 2Q16, KKR & Co. (KKR) saw its distributable earnings surge on exit activity in the private equity space. The company made realized performance income of $310 million compared to $258 million in 2Q15.

KKR’s realized investment income also surged sharply to $224.7 million in 2Q16 compared to $176.2 million in 2Q15. This was on the back of active monetization, with transaction activity diversified across geographies. Its major realizations during the second quarter of 2016 included the following:

  • GoDaddy (GDDY)
  • HCA Holdings (HCA)
  • PRA Health Sciences (PRAH)
  • Sedgwick LLP
  • Walgreens Boots Alliance (WBA)
  • SunGard/FIS
  • Scout 24 (G24)
  • Tarkett (TKTT)

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 debt-to-equity ratio deteriorated marginally in 2Q16 compared to 4Q15. The company’s total debt obligations and preferred share obligations stood at $3.0 billion on June 30, 2016. That was in line with the numbers for December 31, 2015. Its debt obligations included KKR Financial Holdings’s (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.

On June 30, 2016, KKR had 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 debt-to-equity ratio rose to 0.33x in 2Q16 compared to 0.30x on December 31, 2015.

KKR’s balance sheet and leverage position have 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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