KKR’s $59bn haul in Q2 breaks full-year 2020 record

KKR's fundraising has 'exceeded expectations' and is on track to beat the firm's two-year target of at least $100bn, said CFO Robert Lewin.

KKR has amassed $59 billion of inflows in the second quarter, surpassing the $44 billion it raised throughout 2020, and is on track to exceed its two-year target of at least $100 billion.

“Across several strategies we really have exceeded the expectations we set for ourselves at the beginning of the year,” said KKR CFO Robert Lewin during the firm’s second-quarter earnings call on Tuesday.

“It is fair to say that we feel a lot better about our outlook for the capital raise the next couple of years and that we’ll certainly be north of that $100 billion-plus number that we put out there a couple of months ago,” he added.

KKR said during its Investor Day in April that it is aiming to raise more than $100 billion of new capital commitments over the next two years. It expects to gather between $40 billion and $50 billion for private equity, up to $25 billion in credit, up to $20 billion in infrastructure and up to $15 billion in real estate.

In Q2, the New York-headquartered firm gathered $41 billion of new capital from initial closings in North America XIII, Global Infrastructure IV and Core Private Equity II, according to its earnings statement. KKR also raised an additional $5 billion in Core Infrastructure and $4 billion across several real estate strategies, the statement said.

Perpetual or long-dated capital, meanwhile, reached $130 billion in the quarter, up 6x year-on-year, driven primarily by KKR’s acquisition of Global Atlantic.

The Carlyle Group and Blackstone have also said they are ahead of their fundraising goals. Carlyle, which has a $130 billion-plus target by 2024, is “very much ahead of schedule”, and Blackstone expects to haul in close to $200 billion of inflows this year, the firms said on their latest earnings calls.

KKR’s private equity portfolio appreciated 56 percent in the last 12 months, driven by strong performance in both public and private holdings.

Total investments reached $8 billion in Q2 – of which $7 billion was invested nearly equally across private equity, infrastructure and real estate – and $12 billion over the last 12 months.

Dry powder stood at $112 billion, up 68 percent from the prior year. Assets under management as of the end of June stood at $429 billion, up 93 percent from Q2 last year.

Tapping retail investors

Asked if the retail channel is now a “fast land grab” among PE’s largest players, Scott Nuttall, KKR’s co-president and co-chief operating officer, said the firm has “not yet run into any resistance”.

“If anything, we are finding a significant and growing interest in all things alternatives and a lot of interest in the registered funds in particular,” Nuttall said.

He added that the firm is investing aggressively to tap more retail investors and has doubled the size of its team in the last 12 months.

“Part of the reason we’re encouraged is, even as we are doing that build-out in the US, we’re also investing to build out Europe and Asia and we are seeing significant engagement across private wealth and retail,” he said.

The retail channel contributed about 14 percent of capital raised during the quarter. “We don’t think we’re anywhere near our potential yet, so there’s a lot of opportunity ahead of us,” Nuttall said.

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