KKR enjoys fruitful final months as a partnership

KKR had no trouble in its final act operating under a partnership structure. The New York-based buyout shop released its 2Q 2018 earnings report as expected on Thursday, showing YoY gains in its operating performance thanks in large to selling parts of its stakes in publicly-traded outfits GoDaddy and Gardner Denver.

The firm, which officially flipped to a corporation July 1, posted distributable earnings, the amount available for shareholders, of $404.7 million in 2Q, marking a 46% YoY increase.

KKR no longer plans to disclose in earnings reports its economic net income, which gauges the mark-to-market valuation of all the firm’s holdings and is seen as the most telling indicator of a firm’s performance. However, the firm, which invests in private equity, real estate and credit, will still be obligated to report that figure to the SEC.

Meanwhile, the firm’s total assets under management jumped in 2Q to $191.3 billion, up from $176.4 billion in the first quarter. Much of that can be attributed to the firm closing its deal for FS Investments, a business development platform. With that acquisition, KKR’s business development business has some $17 billion AUM. Management fees also continued to increase, jumping to $261.5 million, compared to $229.6 million in the same quarter a year prior.

KKR announced it would flip to a corporate structure in May after US lawmakers cut the corporate tax rate from 35% to 21% late last year. So far, the move has paid off, with KKR shares jumping 29% since the announcement compared to 16.5% for Blackstone, its chief rival, per The Wall Street Journal.

The firm has continued its frantic pace all the while, striking deals to buy BMC Software for $8.5 billion in May and Envision Healthcare for nearly $10 billion in June. And this week, it took Focus Financial Partners public, selling 16 million shares at $33 apiece to raise some $535 million. KKR and Stone Point Capital have backed the financial services business since they acquired a majority stake for some $2 billion in April 2017.