KKR’s credit platform puts $2bn to work in Q4

The firm reached a lending milestone during the fourth quarter, despite revenue and net income losses.

KKR’s credit branch invested $2 billion, with the year-end market volatility actually benefitting the strategy, KKR chief financial officer William Janetscheck said on the firm’s fourth-quarter earnings call.

During the fourth quarter, KKR held a final close on $1.5 billion of committed capital for its direct lending vehicle KKR Lending Partners Fund III. Craig Larson, head of investor relations, said the firm is currently fundraising for both its US and European credit strategies, adding that it is fundraising for two additional strategies that will be announced within the coming weeks.

The alternative asset management behemoth ended the year with its flagship credit funds, including Special Situations Fund II, Private Credit Opportunities Partners II and Lending Partners II, posting gross returns of approximately 7 percent – up 1 percent from the end of 2017.

The firm also highlighted its plan to expand its reach in Asia, a statement that echoed the Blackstone earnings call from earlier that week, which highlighted a similar goal for 2019. This expansion strategy includes ramping up its presence in real assets and alternative credit in the region.

KKR, in its entirety, ended the quarter down in revenue and net income, which is partially due to unrealized carried interest losses during the last quarter, according to the firm’s financial results.

The firm ended the year with its assets under management and fee-related earnings up compared to end of 2017. KKR’s AUM was more than $195 billion at the end of 2018, stagnant from the third quarter, and up from the more than $168 billion AUM from the end of 2017. The fee-related earnings also climbed from more than $867 million to more than $1.06 billion during 2018.

KKR is a New York-based global asset management firm that invests in private equity, real estate and infrastructure alongside credit.