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How Did KKR’s Distributions Look in 4Q16?

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Nov. 20 2020, Updated 11:48 a.m. ET

Distributions amid performance

KKR & Company (KKR) has managed higher realizations over the past few quarters as reflected in its higher distributions to limited partners or investors. The company managed realized performance income of $527 million and after-tax distributable earnings of $390 million in 4Q16. Higher realizations can result in better distribution among limited partners across various funds.

The company saw $503 million of realized carried interest (or realization income) in 4Q16 as compared to its performance fees of $241 million.

Limited partners providing funds to alternative asset managers demand better returns and distributable earnings. Thus, KKR will have to maintain higher realization and distribution rates.

In 4Q16, KKR’s major realizations during the quarter included Far East Horizon, Walgreens Boots Alliance (WBA), Tarkett (TKTT), and PRA Health Services. The sales of Rundong, Galencia, and US Foods are pending and expected to be completed in 1Q17.

KKR’s realized investment income rose to $167.1 million in 4Q16 as compared to an investment loss of $176.4 million in 4Q15. This rise was on the back of exits from profitable holdings.

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

  • Apollo Global Management (APO): 38%
  • Carlyle Group (CG): 52%
  • Blackstone Group (BX): 34%

By comparison, KKR’s total debt-to-asset ratio was 47.6%, in line with industry peers in the iShares US Financials ETF (IYF).

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Declining leverage

KKR’s leverage ratio in 4Q16 improved as compared to the previous quarter. The company’s total debt obligations and preferred share obligations stood at $2.8 billion on December 31, 2016. The company has $3.4 billion in cash and short-term investments.

On December 31, 2016, KKR had an undrawn $1 billion revolving credit facility. The company also carried an undrawn $500 million revolving credit facility for its capital markets business.

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