KKR Boosts Earnings Forecast for Its Long-Term PE Bets

KKR & Co. raised its forecast for earnings from long-term private equity wagers and announced that it will increase its ownership in three investments.

The firm is boosting its stake in USI Insurance Services, 1-800 Contacts and Heartland Dental by a total of about $1.1 billion, KKR said Tuesday in a statement disclosing fourth-quarter results.

That will lift operating earnings at its strategic holdings unit by $50 million to at least $350 million next year and by at least $100 million annually to $1.1 billion by 2030, the alternative asset manager said.

Taking a cue from the business model of Warren Buffett’s Berkshire Hathaway Inc., KKR just over a year ago created the strategic holdings unit to house investments in companies that it aims to keep for roughly a decade or two. That’s a sharp departure from the asset-light model that many rivals are taking in their investing units. And while the division is small now, it’s a big piece of KKR’s plans to more than quadruple earnings per share over the next 10 years.

“As we start 2025, we are leaning into our business model — asset management, insurance and strategic holdings,” KKR Co-Chief Executive Officers Joe Bae and Scott Nuttall said in the statement.

KKR’s adjusted net income increased 33% to $1.2 billion, or $1.32 a share, beating the $1.28 average estimate of analysts surveyed by Bloomberg. Fee-related earnings rose 25% to $843 million, and assets under management increased 15% to $638 billion.

Shares of KKR fell 2.5% to $159.12 at 8:51 a.m. in New York.

Founded in 1976 by Henry Kravis, Jerome Kohlberg and George Roberts, KKR has grown beyond its private equity roots into an alternative-asset management giant with strategies including buyouts, credit, infrastructure, real estate and insurance.

Capital Markets

Its capital markets unit, which arranges debt and equity financing for companies, generated a record $1 billion of fees for the year, up from $577.6 million in 2023.

Total fourth-quarter investing earnings, or income from selling assets, rose 52% to $399.4 million.

Private equity and infrastructure both generated 14% returns for investors during 2024, while the firm’s opportunistic real estate portfolio gained just 4%. Leveraged credit rose 10% and alternative credit gained 12%.

Shares of New York-based KKR returned 83% over the past year through Monday, outpacing its biggest peers, including Apollo Global Management Inc., Blackstone Inc. and Carlyle Group Inc.