KKR Call Recap | Growth Signals Private Markets Recovery

What's Happening KKR's Q4 2024 earnings call reveals strong momentum across its platform, with record annual figures and an optimistic outlook for 2025 as private markets show signs of recovery.

Why It Matters

• Market Recovery: Private markets showing first signs of sustained momentum since 2022 slowdown

• Evolution: KKR's transformation from PE firm to diversified asset manager gaining traction

• Scale: Multi-asset, global approach providing resilience through market cycles

The Key Moves

• Strategic Holdings: Announced $2.1 billion investment to increase stakes in three existing portfolio companies

• Private Wealth: Expanded K-Series vehicles to $18 billion AUM, up from $7 billion a year ago

• Innovation: Two-thirds of 2024 fundraising came from strategies that didn't exist five years ago

By The Numbers

• Earnings: Q4 Fee Related Earnings hit $0.94/share (+24% YoY); 2024 FRE at $3.66/share (+37% YoY)

• Fundraising: Raised $114B in 2024, second-best year in firm history

• Strategic Portfolio: $3.7B revenue, $900M EBITDA (trailing 12 months)

• Capital Markets: Achieved $1B in revenue for first time in history

Key Players

• Scott Nuttall (Co-CEO): Leading strategic vision and emphasizing global opportunities

• Robert Lewin (CFO): Managing financial performance and capital allocation

• Craig Larson (Head of IR): Articulating firm strategy and performance to investors

Analyst Sentiment

• Positive: Strong momentum in diversification strategy and global expansion draws praise, particularly in credit and infrastructure

• Cautious: Questions persist around timing and pace of flagship fund deployments, especially in PE

• Optimistic: Private wealth growth trajectory exceeding expectations, with K-Series platforms gaining significant traction

• Mixed: Some concerns about near-term insurance earnings as GA shifts toward longer-duration assets

• Supportive: Strategic Holdings expansion viewed favorably, with analysts noting strong EBITDA generation from existing portfolio

• Watching: Interest in monetization timing and whether KKR can maintain 2024's fundraising momentum

• Constructive: Global investment opportunities drawing attention, particularly in Japan and Europe carve-out strategies

• Neutral: Questions about pace of real estate strategy evolution amid changing market conditions

Key Questions

• Monetization: Will exits accelerate in first or second half of 2025?

• Fundraising: Can super-cycle momentum continue beyond $114B raised in 2024?

• Strategic Holdings: How will new $2.1B investment impact future earnings?

• Insurance: What's the impact of GA's shift toward longer-duration assets?

Key Quotes

• "We have not been running at full pace the last couple years... but it does feel like we're picking up speed on multiple fronts" - Scott Nuttall

• "The sun is out and we're running on flat road. The conditions and forecasts are good" - Scott Nuttall

• "These businesses have high quality management teams... these are businesses that we want to own for the long-term" - Robert Lewin

The Wrap

KKR's earnings reveal a firm hitting its stride after two years of market headwinds. Management's running analogy - moving from "uphill in bad weather" to "flat road with sun out" - captures the improving environment. With multiple growth engines firing (private wealth, insurance, strategic holdings) and traditional PE poised for recovery, KKR appears well-positioned for acceleration in 2025. The key watch items will be monetization pace and flagship fundraising execution.