KKR(KKR) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fee related earnings per share (FRE) for Q4 2024 was $0.94, up 24$1.32, up 32% year-over-year, also the second highest quarterly figure in history [5] - For the full year 2024, FRE per share and ANI per share were $3.66 and$4.70, up 37% and 38% respectively compared to 2023, both record annual figures [6] - Total fee related revenues for Q4 2024 were $1.3 billion, up 17$906 million, up 15% year-over-year, driven by fundraising activities and increased deployment [6] - Total transaction and monitoring fees for Q4 were $324 million, with capital markets transaction fees at$270 million, primarily from private equity and infrastructure [7] - Realized performance income was $676 million, and realized investment income was$110 million, totaling $786 million in monetization activity, up nearly 50$27 billion in capital during Q4 2024, with total new capital raised for the year at $114 billion, the second most active year in company history [14][15] - The private equity portfolio appreciated 14$0.70 to $0.74 per share, effective with Q1 2025 earnings [12] - The company is focusing on expanding its wealth management segment, with AUM across K-Series vehicles reaching$16 billion by year-end 2024, and expected to grow to $18 billion shortly thereafter [18] - Strategic Holdings is seen as a key differentiator, with plans to increase stakes in three businesses by at least$2.1 billion, enhancing future earnings potential [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the improved M&A environment and expects increased monetization activity in 2025, supported by high equity values and credit availability [111] - The company anticipates a more constructive environment for deployment and fundraising, with optimism around private equity and real estate markets [40][136] - Management noted that the business model, combining asset management, insurance, and strategic holdings, positions KKR well for future growth [44] Other Important Information - KKR's capital markets business achieved a revenue milestone of $1 billion for the first time in 2024 [23] - The company is integrating Global Atlantic fully into its operations, enhancing investment opportunities across various strategies [24] Q&A Session Summary Question: Investing outlook across the firm - Management expects an improved M&A environment in 2025, with volatility creating opportunities [48][50] Question: Update on Americas fundraise and management fee growth - The Americas private equity fund is ahead of expectations, with management fee growth expected to accelerate [57][61] Question: Strategic Holdings announcements - Management views Strategic Holdings as a differentiator and sees an opportunity to increase stakes in businesses that will enhance long-term earnings [70][72] Question: Wealth management opportunity - KKR sees significant growth potential in K-Series products and partnerships, particularly with Capital Group targeting mass affluent investors [89][90] Question: Monetization environment outlook - Management is confident in increased monetization activity in 2025, supported by favorable market conditions [111][114] Question: Asset-based finance platform progress - The asset-based finance segment is growing rapidly, with significant market opportunities identified [122][126] Question: Fundraising outlook and sustainability of drivers - Management is optimistic about continued fundraising momentum, with expectations for flagship funds to contribute more in 2025 [136][140]