KKR & Co LP said the fourth quarter of 2012 was its strongest yet as a publicly listed alternative asset manager, as exits from private equity investments delivered a record amount of cash for itself and its investors.
Buoyant equity and debt markets have offered buyout firms an opportunity to profitably exit some of their investments and lifted the value of assets in their funds. Blackstone Group LP also put in a strong showing with its earnings last week.
"Our private equity portfolio and our balance sheet both appreciated 24 percent in 2012, outperforming the S&P 500 and MSCI World indices by over 700 basis points," Henry Kravis and George Roberts, KKR's co-founders and co-chief executives, said in a statement on Thursday.
KKR said fourth-quarter economic net income, a measure of profitability which takes into account the mark-to-market valuation of its assets, came in at $347.7 million, compared with $285.5 million a year ago.
Total distributable earnings, which are used to pay dividends, jumped from $146.5 million in the fourth quarter of 2011 to $546.3 million in the fourth quarter of 2012.
A handful of low-profile transactions drove the rise in earnings, delivering in aggregate more cash than KKR's $6.7 billion sale of a stake in pharmacy group Alliance Boots GmbH, which dominated the buyout firm's third-quarter earnings.
The cash-outs booked in the fourth quarter included the sale of shares in discount retailer Dollar General Corp, a sale of shares and a dividend payment at hospital operator HCA Holdings Inc, and the divestment of its remaining stakes in semiconductor company Avago Technologies and chemicals maker Rockwood Holdings Inc.
KKR, whose investments include retailer Toys R US Inc and internet domain registration company Go Daddy Group Inc, said assets under management rose to $75.5 billion at the end of December from $66.3 billion at the end of September, thanks mainly to its acquisition of Prisma Capital Partners LP, a hedge fund-of-funds manager.
KKR announced a fourth-quarter distribution of 70 cents per common unit, its highest ever. It also said its had returned over $9 billion in 2012 to its private equity investors, the most in a year in its 36-year history.