The still-improving landscape for deal-making has been kind to Kohlberg Kravis Roberts, which posted first-quarter earnings of $647.7 million on Thursday, surpassing analysts’ expectations.
That profit, reported as after-tax economic net income, amounted to 88 cents a share. Analysts on average expected the firm to earn 75 cents a share, according to Capital IQ.
K.K.R.’s latest results, together with those of its rival, the Blackstone Group, signal that a relatively strong climate remains in place for private equity firms, which still draw much of their earnings from buying and selling companies. Stronger markets have also improved the value of their holdings.
Over all, K.K.R.’s portfolio grew 5.9 percent during the quarter.
“We had a good start to the year with strong returns, cash flow generation, and balance sheet income,†Henry R. Kravis and George R. Roberts, the firm’s co-founders and co-chairmen, said in a statement.
While K.K.R.’s economic net income, which includes unrealized gains from investments, fell from the $727.2 million it reported in the period a year earlier, other measures indicated strong performance.
Fee-related earnings rose nearly 20 percent during the quarter, to $88 million. The firm benefited from its ability to both buy new companies and, perhaps more important, sell existing holdings.
Total distributable earnings, which measure what the firm earmarks for payouts to limited partners, rose 77 percent, to $290.6 million.
Assets under management grew more slowly during the quarter, rising about 3.7 percent, to $78.3 billion. The increase arose from both improvements in the firm’s holdings and the reaping of new capital.
As part of Thursday’s announcement, K.K.R. said it was changing its distribution practices. Instead of paying out a single annual distribution of realized balance sheet income, the firm will dispense 40 percent of its realized balance sheet income every quarter.
The payouts will accompany the firm’s standard payments of after-tax fee-related earnings and realized cash carried interest.
