KKR's Fee Related Earnings Jump 37% as Fundraising Hits Record $34 Billion
KKR (KKR) grew fee related earnings 37% year over year to $1.2 billion in the second quarter as new capital raised hit a record $34 billion and assets under management climbed to $796 billion.
KKR & Co. (KKR), the alternative-asset manager spanning private equity, real assets, credit and insurance, reported Fee Related Earnings of $1.2 billion, or $1.32 per adjusted share, in the second quarter, up 37% from $886.8 million a year earlier, with the trailing-twelve-month figure rising 19% to $4.2 billion. The growth was driven by management fees, which rose 26% year over year to $1.25 billion, pushing total asset management segment revenues up 49% to $2.76 billion from $1.86 billion. Fee Related Performance Revenues surged nearly fivefold to $254.7 million, though the jump partly reflects a disclosure change moving K-Series Private Equity realized performance fees into that line from Realized Performance Income starting this quarter.
Private Equity remained the firm's largest engine, with segment assets under management up 19% year over year to $254.7 billion and management fees rising 32% to $491.3 million, aided by fundraising for Asian Fund V, Arctos Keystone Partners Fund I and K-Series Private Equity. Real Assets grew even faster on a fee basis, with management fees up 35% to $417.8 million as AUM rose 18% to $210.9 billion on strength in Helix Digital Infrastructure and Global Infrastructure V. Credit and Liquid Strategies lagged, with AUM up just 1% quarter over quarter to $330.8 billion and new capital raised falling to $9.1 billion from $14.3 billion a year earlier, while Fee Related Performance Revenues in that segment dropped to $6.4 million from $17.7 million.
Firmwide AUM grew 16% year over year to $796 billion and Fee Paying AUM rose 15% to $638 billion, underpinned by a record $34 billion of new capital raised in the quarter, up from $28.0 billion a year earlier, and $133 billion over the trailing twelve months. KKR's February 5 agreement to acquire Arctos Partners for an initial $1.4 billion, adding roughly $15 billion of AUM, closed May 4; Arctos assets grew to $20 billion by June 30 and are now folded into the Private Equity business line, contributing directly to that segment's fundraising and AUM gains this quarter.
Total Operating Earnings rose 29% year over year to $1.5 billion, or $1.68 per adjusted share, with the trailing-twelve-month figure up 19% to $5.5 billion, a gain primarily due to Fee Related Earnings growth. Adjusted Net Income climbed 40% to $1.5 billion, or $1.63 per adjusted share, with all per-share figures across FRE, TOE and ANI marking records for the firm.
Investing Earnings told a more mixed story. Net Realized Performance Income nearly doubled to $211.9 million from $109.3 million, and Net Realized Investment Income rose to $191.3 million from $130.9 million, lifting Total Investing Earnings 68% to $403.2 million. Transaction fees, however, declined 11% year over year to $178.2 million from $199.6 million, a divergence from the broader fee-income acceleration and a reminder that deal-closing activity has not kept pace with fundraising.
On a GAAP basis, net income attributable to KKR common stockholders rose to $660.1 million, or $0.70 a diluted share, from $472.4 million, or $0.50, a year earlier, even as total investment income fell to $661.4 million from $1.19 billion. The gap was bridged by a swing in noncontrolling interests, which moved from a $776.2 million charge in the prior-year quarter to a $19.9 million benefit this quarter.
KKR's insurance business, built around Global Atlantic, generated Net Investment Income of $1.95 billion, up 9% year over year, though Net Cost of Insurance rose faster, up 11% to $1.47 billion, reflecting business growth and higher funding costs. Insurance Operating Earnings edged up to $288.2 million from $277.9 million, aided by roughly $40 million of investment realizations. Strategic Holdings, KKR's permanent-capital vehicle for controlling stakes in operating companies, more than doubled segment earnings to $67.1 million from $29.1 million, boosted by a new $30.1 million Net Realized Investment Income line that had no prior-year counterpart.
KKR maintained its regular quarterly dividend at $0.195 per share, holding capital returns steady even as record monetization activity generated the realized gains behind this quarter's earnings beat.
The results position KKR's fee-earning franchise as the primary driver of profitability, with Private Equity and Real Assets fundraising offsetting a slower Credit and Liquid Strategies segment, while insurance funding costs and a pullback in transaction fees mark the areas management will need to watch as the second half unfolds.