KKR has been renovating the Hyatt Regency Tokyo
Private equity giant KKR posted a first-quarter loss of $185.9 million, reversing a year-earlier profit of $682.2 million, as red ink tied to the firm’s insurance business was tempered by growth in asset management income and fundraising.
Fee-related earnings rose 23 percent year-on-year to $823 million, KKR said Thursday in its Q1 results. Assets under management climbed 15 percent to $664 billion, with fee-paying AUM up 12 percent at $526 billion.
The Manhattan-based fund manager raised $31 billion in fresh capital during the quarter, bringing the total raised in the trailing 12 months to $114 billion, it said.
Despite reporting its first quarterly loss in two and a half years, KKR said it was well placed to navigate the current period of tariff-driven uncertainty, with co-CEOs Joseph Bae and Scott Nuttall pointing to the firm’s formidable war chest of undeployed capital.
“Volatility can yield attractive investment opportunities, and we’re encouraged by our positioning given our global footprint, differentiated operational and investment capabilities, and collaborative culture alongside $116 billion of dry powder ready to invest on behalf of our clients,” they said.
Ramping Up in Asia
Across KKR’s fund management segments, the private equity portfolio appreciated 4 percent in the first quarter and 11 percent in the last 12 months, according to a Thursday earnings call. The opportunistic real estate portfolio rose 2 percent in the quarter and 5 percent over 12 months, while the infrastructure portfolio was up 4 percent and 13 percent respectively.
KKR co-CEO Scott Nuttall
The firm’s Asia Real Estate Partners fund, which reached a $1.7 billion final closing in 2021, had remaining undeployed capital of $368 million at the end of March, following a series of big-ticket acquisitions in the past two years.
Those deals included the $409 million purchase of the Hyatt Regency Tokyo alongside Hong Kong’s Gaw Capital Partners, as well as investments in the Namsan Green Building in Seoul and Weave Living’s multi-family platform in Japan and South Korea.
On the private equity side, KKR during the first quarter neared completion of two Japan megadeals under its $15 billion Asian Fund IV buyout strategy: the $4 billion privatisation of systems developer Fuji Soft and an exit from its investment in supermarket group Seiyu in a $2.5 billion transaction.
Tariff Impact Minimal
Officials on Thursday’s call offered assurances that KKR could ride out the tariff storm with limited damage to the firm’s strategies.
“Based on our initial findings, we estimate that 90 percent of our AUM has limited to no first-order impact from the announced tariffs,” said chief financial officer Robert Lewin.
Nuttall said the firm had seen a number of cycles and dislocations since KKR’s founding 49 years ago this week.
“In our experience, times like this yield some very attractive investment opportunities,” the co-CEO said. “The key is to use our global and diversified business model with significant locked-up capital and $116 billion of dry powder to keep investing when others are scared.”
