The global private equity firm KKR has continued its impressive performance by posting a record-breaking result for the second quarter of 2015. The firm has been the top performer in the private equity market in the second quarter, mainly because of a few strong portfolio performers.
The Firm’s Results
The private equity firm announced its results on Thursday. Its second quarter result increased by impressive 67% year-on-year, which was much higher increase than most analysts were expecting.
The firm’s economic net income (ENI) stood at $839.9 million. ENI went up from the $501.6 million during the same period last year. Thomson Reuters poll had predicted the post-tax ENI per adjusted unit to be at 61 cents on average, but KKR’s result gave it a post-tax ENI per adjusted unit of 88 cents.
Furthermore, the firm said its private equity portfolio appreciated 7.4% during the last three months, which is an increase to the 5% appreciation during the second quarter of 2014.
A Few Strong Performers
The firm’s results benefitted from the increase in value of some of its larger portfolio companies. Among the best performers was First Data Corp. We reported on the initial public offering just a while ago.
On the other hand, the firm didn’t make as much profit from asset sales as it did last year. Although the firm was involved in a few high-profile exits, such as the $14 billion deal to sell Biomet Inc., the orthopaedic product manufacturer, to Zimmer holdings, its overall asset sales dipped.
A year ago during the second quarter, KKR’s distributable earnings, the cash available from sales for dividends, stood at $701 million. In 2015, the number had dropped to $491.4 million. This meant the firm’s second quarter distribution stood at 42 cents per common unit.
The firm was among the private equity firms that avoided a hit due to the weak stock markets. One of the firms that didn’t fare as well was Blackstone Group. The firm reported last week its second quarter earning went down by 62%. Its profit for the period amounted to $508 million.
While Blackstone might have lost to KKR on profits for the second quarter, the firm managed to snatch another record. Its distributable earnings increased by 35% to $1 billion. Last year during the same period the firm’s earnings stood at $765 million.
Furthermore, the firm managed to raise plenty of equity in the recent months. During the last year, the firm has raised $94 billion, which is a record for both the firm and the private equity industry as a whole.
Like many other firms, KKR has been broadening its portfolio as well as its strategy to ensure a wider profit base. Private equity firms have been moving away from traditional leveraged buyouts to increase the portion of hedge fund management and real estate management.
Other big global firms are yet to post their results for the second quarter.
Private equity firms are faced with plenty of interest from investors, but the turbulent stock market is something firms need to keep an eye on.