KKR posts 7% gross alternative credit returns in Q1

The private equity firm considers special situations, direct lending and mezzanine to be its core alternative credit strategies.

KKR generated a high single-digit blended gross internal rate of return across its three alternative credit strategies for the last 12 months, the firm reported on Wednesday.

That figure is across three of the New York-based firm’s main credit vehicles: Special Situations Fund II, Lending Partners II and Private Credit Opportunities Partners II. It also reported a 7 percent gross return for the flagship funds for calendar-year 2018.

KKR did not release individual fund performance figures, either for the last 12 months or since inception, as part of its first-quarter earnings.

For its other strategies, the firm saw 10 percent gross returns in the last 12 months across its most recent private equity flagship funds for North America, Asia and Europe. The same figure for Real Estate I was 8 percent, Infrastructure II at 11 percent and Energy Income & Growth at 8 percent.

It has been a year since KKR converted from a partnership to a C-corporation following the US Congress’ passage of a tax-reform package. The firm provided an update on the composition of its shareholder base from 31 December 2017 to 31 December 2018.

At year-end 2017, the alternative asset manager had 61 hedge funds and 101 broker dealers among its shareholders, and also had 151 mutual funds, five index funds and 21 other institutional investors.

Following the conversion, ownership spiked 64 percent among the investment management firms and plunged 40 percent among the hedge funds and broker dealers. Now, 202 mutual funds, 66 index funds and 23 other institutional investors own the firm’s shares, while 73 hedge funds and 24 broker dealers own KKR stock as well.

The firm’s assets under management increased from $194.7 billion as of 31 December to $199.5 billion as of 31 March. It raised $6.3 billion over the quarter across private equity, real estate and leveraged credit.

The specific strategies it is raising for include credit and real assets strategies in Europe. KKR is also making non-private equity strategies a priority in Asia. The firm expects to see a spike in fundraising numbers next year when it returns to market with some of its flagship funds, though firm management did not specify which vehicles would be launched.