KKR & Co. (KKR) 8 Feb 182017 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to KKR's Fourth Quarter 2017 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following management's prepared remarks, the conference will open for questions.

As a reminder, this call is being recorded. hand Relations over for to Head Craig like Investor of KKR. would the to call Larson, I Craig, please go ahead.

Thank you, call. us. earnings quarter fourth Glenda. Welcome Thanks to for our XXXX joining

website or section and to we'll by not over like figures to course We'd remind to in kkr.com. these results. our to which we forward-looking the everyone and be at refer to release, Janetschek, of joined performance. like the This call, quarter morning, and XXXX refer to year to am the And QX is filings we'll for our the The our a previous measures a our which quarters, Please fourth I our Co-President statements supplementary press will usual, for guarantee we our As was us. Investor call that available related GAAP strong events statements. CFO; also finish non-GAAP Scott year full that a reported which have future referring Nuttall, Co-COO. cautionary reconciled Center Bill factors posted The on call. on SEC are contain do on strong presentation

FRE, significant We year and record per turning reported full $XXX DE hear and which $X.XX after-tax came $X.XX by Capital earnings in quarter million, more X begin XX% compared of had the $XXX you'll full supplement. economic after-tax and year over income performance Markets, adjusted as million fees was by into within growth experienced XX%. in as respectively. at million looking terms book with for AUM, $X statistics earnings earnings adjusted full the management XXXX. on a value per $XXX million fee-related XX%, metrics unit Fourth quarter, of And unit. going translates up that unit, ultimately up $XXX few in page billion, per We firm after-tax a the are and particularly This unit, continued in minutes. Let's of they driven strong of our the power growth drive a the after-tax of as was XXXX up for quarter the These in both ENI to in which about to $X.XX we bringing forward. track or of to in well we distributable or our net basis, $X.X came important and year as are billion, to at closely, FRE per $X.XX other

capture things find on on overall, model going we first is as evaluate economics and new progress more do Bill that to our Now, investments existing to are going there do. and to two to well. monetize use update our attractive raise investment from that generate performance, our capital, we performance five I'm need investments, you we We the to everything cover the three. remaining need

across investment the basis. terms XXXX our X We had Equity, our blended asset look funds shows three performance, please our page XX% performance performance flagship a in our on a take Private of deck of strong at In In classes appreciated XXXX. across funds. flagship that

funds terms II investment but appreciated And for our as balance finally, Estate, with Mezzanine in the portfolio and the we mature in Energy X%, our Situations of in assets funds and saw And XX%. the was Infrastructure XX% quarter, well, for credit, performing flat strategies real sheet, strong more our in flagship and year Our are Real XX%, respectively. up Special particular. performance

(sic) includes Estate investment alternative moment, of commitments in I'll [Private as in inflows close Real the credit into SMAs. Private our funds, well new to our Credit capital. to as quarter, core the Opportunities] a of raised final Credit touch we CLOs second billion Turning fourth which fundraising strategy, and This $XX and on Opportunistic

becomes direct four paying sight is We've we rate inflows as-invested for from future XX% on year. full-year, and on see billion progress our up the contributed of XX%, up year-end, weighted AUM can management billion supplement. QX. which fee towards average dry at points, fee capital nearly AUM on page and we capital at commitments an had the you of $XX XXX as of XX% basis have basis line And X, fundraising to note These a of Looking of a approximately respectively, providing powder paying the growth. that approximately fee page $XX momentum strong, with at organically-driven

growth In of terms really factors. main drivers three of were AUM the in there XXXX,

benchmark first and Americas performance Asia Equity raise II for billion at we XII fundraising Asian the is funds, NAXI The of to us strong committed saw The III. successor helped capital Private $XX.X activity. and

REIT the and been fund, we expand focused have are partnerships let first you'll from we've fit real our initiatives. thought. funds traditional billion well In strategy, our back which opportunistic $X closed in in me last Fund, profile. The this newer that strategic in QX, on several investment billion finalized our performance businesses capital. of with this than fund, our new longer-term strong dedicated second And, a didn't we growth for sheet. recall a active two of partnerships $X.X is with Real balance long-dated, any on on billion In have of our the nature recycling. years And as today commitment funds. including core finally, we scaling $X.X Americas, number class QX, our listed Five real estate as May. of in the that ago, on a have But we Credit made We've European Estate an estate significant progress we multi-asset

in veterinary new estimated capital As in of a raised these reminder, our and fee traditional operator investment an investment the the told, fund for core second periods the first investment We of the XXXX and the investment carry strategic business our our investment in billion about And than December, core of hospitals. a insurance an private billion were right USI, PetVet, closed quality focuses in core partnerships and on XXXX, brokerage hold high $XX investments. $XX business. each in longer commitments. in second investment markets with quarter with in opportunities our have third-party on responsible All we announced core on

which On billion will in and December. we the $X BDC Trust, account our we the receive permanent for incentive permanent listed transaction our close capital Combined, today more fees. capital that FS we REIT And have which they management and increase and front, Corporate than Capital if when from in this we of announced November.

the of $XXX our and At $XX incremental AUM time, increase and Capital which also to paying accelerates expect through We least by to contribute year. that Markets credit profile billion platforms, million. close transaction, the growth expect an midway in the fee at run an we annual rate our should fees

have XX% talk turn opportunity on our levels fundraising efforts increase off that, driven turn augment the and our business, has diversification fees. terms, our five page third, to Bill AUM while help when Markets our Bill. which credit over can it in will and closes, You it with by to going if almost FS that earn I'll our greater as about within performance Capital to the activity see strategies, is assets our a And shortly. will And increased across attractive AUM as maintaining transaction,

made to well, We billion, our I'll is and investment new direct we in Thanks, invested the across thing start the Craig. investments businesses geographies $X.X with do which deployment primarily find from in sit need Public strategies. coming $X.X quarter. third and special Markets billion opportunities. lending fourth was

billion. The European On two the infrastructure Infra $X.X Private II. largest invested contributors we out Market of investments side, were

We $X Asia. balance in invested two-thirds deployed America billion with and Equity, also the in Private in North

focus several level year, billion, nearly coming continue $XX deployed We where opportunities Equity. of investors. across our investing with were debt billion, over delivered underwrote over For Asia, also offers, submitted opportunities. our in $XX a significant we in our and to billion year We PE activity financed from large with busiest on Japanese $X to we portion business. carve-out monetizations, the investing active to co-invest Private the see transactions corporate exit Shifting we infrastructure, ever infrastructure in a had sizable of a particular full fully

and from our in For secondaries, cash resulting Pharma the On a carry. including our blended Foods, exit were investments PE billion cost. quarter, number and US of our a the final X.X basis, Gland completed Visma times exits we in at in exited over $XXX done

in page Looking and contributed turn $XX thing capital the at $X.X our model we of to balance which Capital billion roughly the business, $XXX AUM, use is our from our well a revenue. segment. funds markets, investors And, for which sheet, QX to of to the Please supplement, to capture quarter distributed Equity full and our finally, Markets Markets year, of our of capital greater our growth do in all carry. to activities. investors, turn realized our firm billion last million for the need record over profiles Private the of of Capital was generating economics X

syndication more year, X seeing we're momentum firm. of progress financing is The has and in model categories. our to pleased the team than XXX in the KKR-led and with be five geographies, doubled, the Page of the with our we're the across and power revenue investments. results continued summarizes equity, supplement our the fundamentals over evident in core full and for in third-party and and across KCM all For executing active transactions. debt

to Before it thinking discuss KKR's I want briefly corporate on over structure. I turn Scott, to our

have that our earnings C-Corp. release, from our potential are may you board and management the structure seen today the in senior a As to analyzing announced a of conversion impact partnership we've members

So, of that shareholder find are than traditional difficult at when for that is lower to our look there ownership partnerships institutional the our we some And most corporations. heard own. what considerations? time are base, investors publicly-traded some We've

there's after-tax are us this a Offsetting think lower for appeal an we reported broader So to to audience. opportunity earnings.

we're for earnings, a taxed are as level. times or income XXXX, tax lower, at would rate, numbers, significantly most Today, and approximately at if try so whether $X.XX the at trailing the the in been passage corporation already the X.X as earnings fee-related these income XX% our assumed per unitholder and reported beginning our investment unit, basis. the we of reform frame would corporate tax help restructured to interest have for trading on compared corporate change a estimated structure impact and we carried the to adjusted roughly part, a after-tax year. streams $X.XX reported of are or taxed To our Our most a the ENI we the

and need else equal, created attributes tax to percentage-wise in approximately considerations as will for members, are price. And on we and expansion, a being a move conversion. would turns analyzing We, initial two the lower with a I'll DE we over management updated the the of see breakeven given board And our that, all dilution we forward. basis, Scott. together with turn team, stock keep be you it all multiple carefully to So likely variables as

everybody, thanks, a of and to of distraction kinds Bill, away. outcomes, we for a to joining main digest. AUM, mark-to-market you, take numbers information you of are messages information from balance There's today. our lot two Thank runs There at lot you. our we volume a sheet. the of risk Every call being outcomes, cash want throw the The quarter of

about on own So back our be the want that you how a In and would stock. to business idea as spend our how of think few at look matters. we thought you I it tell owner to really a largest we and quarter this investors what and light, minutes good we KKR with step

First, X page please deck. look the of at

been has rapidly. AUM growing Our

than rate the same more you the the As with we're And upside can FS over before XX% businesses, four is our slide, on see Even which a the ahead. today. tailwinds businesses industry growth size a of of exciting, industry from of annual these Said the largely here decade, markets significant beginning average we relatively last the and see over XX% lot we a of potential to fast-growing faster time. with in the years lot growing with period growth and a our simply, for are secular small last the the end are Equity non-Private given and scale transaction. share that's market rate launched over

slide flip Now X. to

have also see, management with newer scale. AUM. business from Markets And XXXX have this have strategies alongside to even rapidly can revenues growing been begun our grown non-PE And our threefold to you Our again fees increase faster, from XXXX. fees we've along of growth, remember, as as our our Capital seen

particular, increasing life has growing but Now and been recycling the we've or capital of or XX duration also assets. years permanent not please very have capital strategic a turn XX. either assets, of to our long that Strategically, expected more. partnership slide In we only raising focused focused on our on

can more when good billion you made of from with the $XX year, see assets we've than transaction, impact last slide, As our FS you doubled $XX if in billion, on and progress, the particular to include these attributes $XX billion. the

we we value on significant And, potential book look this further for of metric the Here see again, basis. capital share scale firm. other per finally, a the is type marked at to

or believe is at business we We to our volatile value can with mark-to-market continue just While not and The particularly don't for our how of per we look our here. get lot we do up unit feel capital, cash raised basis. used we good over is We is that. outcomes. The we our about share to is had marks. are look pretty well, key value we It's line to at businesses open happy XXXX with as ENI our per bottom business, questions. a on is it a book was these feel good that important model and all is get how Operator, you metric aligned book paid performing believe permanent year, nice a We run continued progressing. long-term well-positioned XX%. on it to to of much $X fairly growing do step from We and and for a to we year and investments we're three scale it last paid it very we simple our improvement year how on growing fundamentals back where Last a go all. when from us. and how we

our Glenn you. line the ISI. Thank And Schorr question from first comes Evercore of from

Your open. line is now

a Thanks lot. Hi.

on if thought not how thinking – a made? I'm How and to knew point turns. the I you the process. feels lot analyze does all process decision the did of conversion now, finish it part yours you'd final to a it – you appreciate The words, actually curious you'd to the similar at is you I like get because the like work Just think thought clearly now. on my do get world two

important We let Hey, seriously to we final talked This actually considering board to members decision, once to make it thought and they Glenn. will to decision. make we have know and Bill. what you communicated just is talking decide you. we're the are do, was our advisors That be to to right that that it sure

an have we board Glenn, Yeah. We'll we're for the you to trade-offs. all next call, in analyzing actively the working with wanted but just update that share

a the balance piece same or fund? at time balance into best sheet. sheet to the going on that ensure mentioned one It your unitholders, analysts pieces $X shot. you're Okay, is adding quickie, One on billion forward? Is that $X.X fair. the from is worth a the was And it raise you balance KKR slug and coming a of economics sheet diversification way for us, billion better whether to a

Yeah.

I you whether a underlying it we're as, think correct, either could situation, a in it's of fund or, strategic in through in making way, in a last an question, think of this an coming investment alongside partnership. bespoke company, couple partners more that

see talked step could kind we investment I end maybe the the little the bit same background to in we this underlying we bit find return a And time, that up we the risk fit mean a investment, like, a strategy. fund a back yes, I but So second. a into of it's about but them to that are be net is with exposure what past bit for core we'd traditional we managing. long own that a lower lower lot of like than normally have would and where for businesses great We'd a that opportunities stable.

passed for So them. proper those asked doing home why we historically a kind on opportunities. several times, we've we have that of didn't ourselves After

this actually created we be pursue opportunities. And able so strategy those to to

a invest incremental, in to to two, $X USI the like-minded So we investment making us some investment just alongside large found balance off sheet, and this. we'll billion partners, be then the

And so pays comes where fee the that's management a and billion from a both that carry. $X.X

the we'll we're that way our sheet in investment over in it's some will adding direct is order of capital. you incremental economics the an exposure that to off implicitly this. we'll So time, it get the be the do perhaps head third-party about content here, balance increase should count equity importantly, already making no think and terms of monetizing from And thought

Thank you very appreciate much. it. I

you. Thank

you. comes Chris Thank of our question line Wells next Harris from from the Fargo. And

now open. Your line is

viewed is themselves many as discounts the benefits, track I mixed Why to book BDC guys. but performance good trade to and private a grow of the ones tax Hey, of a have credit? at vehicles structure public value. kind understand Thanks. the the record respect Yes. way with had to

So that, if great. on bit little you can elaborate be it a would

Scott. Sure, a of of BDCs asset Happy at that. makes to Credit that lot our a the you'd making is way strategy investments think classes. tend lot to it Look, Chris. we're part seen have that duration in our underlying that the that The look Private in It's we as having other sense. I do of not platform

So maybe duration, three a year longer. a a assets type have lot bit the may two, of

episodic the of as nature. know, you off. the private duration as We capital We end with relatively teams on virtually. But funds invest what road the you up that They their assets, of result we so, And have raise do have a happens typical continuously, run raising them. them. short

a to lot more a the as capital about funds. over underlying of what's to more having that sense for episodic proper makes so activity, funding supplement thought us structure to time we've base And the permanency

and raise with you a say lower probably at kind creative is a cost, of capital all longer-term other be can the permanent I'd else equal. financing The more structure thing

So over another use drive we to risk-adjusted can investors better reason net think that's to structure we that time. returns

at trade when of investors dividend a BDCs discount. premium are temporary. yield primary permanent they at The key, to earn our us both when Credit there right. the trade generate at to funding the the see are right There And in have and scaling is Private premium. you'll more You to times required that's our parts experience, to focus. times the trade at But book and to them a model a the

view, Chris, remember, of these a manager And be assets. point KKR of from the to are we going

better because we on for nothing than will bring these And permanent is managing forget. let's not be investors. to capital, there assets those So

As we origination continue grow from that view point dovetails our into credit trying to an business, grow our strategy. Capital Markets to quite of well

you. Thank Okay.

you. Thank

And from of Suisse. Craig our question line Thank next you. the from comes Credit Siegenthaler

(USA) - Your line is Craig Securities now LLC open. morning. Credit Suisse Good Siegenthaler Thanks.

take So I a If in to little converted, come thinking really probably your more would guys your this I about partnership your you convert. help indexes, re-rated wanted to are imagine of but I some Or one time, decision really to back this just added here bit C-Corp. might isolation? was mean of to peers case higher,

we're is LLC Craig asking into Suisse certainly all and next (USA) this forward it. to this. variables we'll Got mentioned account We quarter. Siegenthaler in that - report considering Again, Credit tuned. stay just we're Securities you back take Bill. Craig, seriously We'll remarks prepared going

just about we what's cycle Okay. year. rate modeling here? thinking you've growth about in Capital think with much to to the seen, growth the From here. also but way And future I'm XXXX, just really, Markets looking then the run where at coming perspective, and how then, a And thinking really are business about also the right strong

chime Well, as The run from tough share, let investors has bit model could and as the in you to both third-party later, thing point, that that I I'll is give a geographically. that well expanded little it's a rate. Scott on only

business XX% ago. that few KCM roughly could as the for see XXXX. $XXX nascent You a came was of third-party. years And that from million concerned was far number, a That as

$XXX when U.S. million, it of XX% roughly you at that outside came look addition, from In the

well. Markets had Capital XXXX in It's platform for we've its Everything around so worked hitting years. quite stride. really eight And

those would And if would that so, the through look I at you XXXX, be numbers. old say XXXX

continue things, what do but should grow enterprise number a that model, new I'm that expect willing to as not use. would to KKR we we number and share would As you you an more I should there be

Scott. Craig. Hey, It's

Just a I couple things on. add would

scale Private have of our changed Credit we Some the fundamentally have. effort One things in business. that is the

been of to we in capital has A up business will lot have large business. that rapidly. that more the FS, of opportunities. even the So, our show with third-party But partners, pursue growing part new now

market opportunities really together, large more case to third-parties. component. seeing these And for have actually underwrite to in tends large the few And to think And scale that scale. component a $XXX of plus underwritings in That so a a five one ago. debt because than working parties be us, have tend begets the do we past. the even That and is was we lead also larger hold to syndication not where we're that you'll us for this syndication three can million actively years deals business our

think what we in in can function as FS. work side is a the we there change do with together So third-party we step

firm. Second the thing just model we're is better the across I'd say using

past syndication Q-Park not as portfolio in year IPOs, new you So companies last in really syndications. corporate the ago needle, doing either. also big had look of And doing of infrastructure case had had the those big particular talked a with secondaries. underlying Last But one years you and doing normal situations. Japanese was there about activity We carve-outs in if the example a the European year, of couple our you financings, at transactions. equity equity moved terms transactions then prime was with what that what was you

the to globally. the are actively. businesses It we're Equity, model importantly, Markets quite just our and, that spread firm used but Private be So seeing across now Capital newer using now

keep something I look zone of a on that longer think year, why helpful. And of do our to a so no when those things should quite Craig you Siegenthaler in to we're Securities But as predict something you - Scott. the is terms mind at we're not LLC revenue Thanks, X, in level million page this going in think XXXX. it higher. $XXX chart (USA) Suisse but Credit bit in revenue Very we for

you. Thank

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number we Bill, and what obviously XXXX. give we new you weren't a call C-Corp would contemplating this would done Good Typically is for goes probably policy But because this if number we have going or question, on are new hand-in-hand. be. what new go going what the distribution once then they the dividend will from decide we structure, hand-in-hand, communicate we we a to will do corporate

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you don't take...? Why

the the on any new from Private partnerships. start X, that's fees well in Infrastructure, we BDCs include don't funds, in course, with episodic the Private to to partnership incremental that that? a and where and to billion in be our on strategic platforms European it's And CLO a look Growth in strategies capital mentioned list the this terms and in our Bill, would of Lending worth the would and look Europe, would include hedge And that we of include capital raise Craig. Europe. fund continuous have as it's $XX the we you business, Why would areas Markets this. Equity to I that an and more as Energy the as-invested if Public basis, about leverage U.S. management think would AUM U.S. of in be And, so Income Markets, remembering, pays activity in I page and basis. addition credit standpoint, fee back management strategies,

generating as will we fees and paying increase that you begin million occurs. And that associated pending then with in as transition correctly. the $XXX see – revenues also $XX And on FS billion So transaction those will management a make of that in once assets. mentioned it investment we'll investments that fee

of remain a just in couple robust that, we fundraising to Bill. to environment. mean add thoughts Yes, I a

If of billion. you really during four year, over just the over you our last of team. Fund we II base where it, investor young about $XXX was step our while had think strategies, or a years, businesses, we lot the way Fund by in a raised if time, that back I, quarter type period And growing were the also and investing from we've sales

as So investment performance. generating suffice it to here we say from we feel good about go where we keep can

the taking Okay. questions. Thank much for very you

Thank you.

our line from Deutsche Brian comes from the Bank. of you. question next Thank And Bedell

is now line Your open.

very Thanks much. Great.

on even to be move you would XXXX have forward a the for technically like if C-Corp, a it it your XXXX, one possible for that, and appreciate to is I more the to – or do Just Is that -decides it review. event? like decision to

point happen view, and would do happen technical we could From if it, a to it of in decided XXXX.

And then was just helpful. that. Okay. maybe on Great. broadly all for Markets Scott, on Capital strategy. color, that the Thanks That

five business banks? substantially say, banks? – with Given five league evolved over years, the of or the business how that that as think the that XX% investment is next Capital will say, it to component third-party pretty three compete Markets – few half it evolving a of over lot third-party, As more growth in should how in you and much be you now definitely Capital be the think And has be investment about more out, including Markets. the thinking the about last we in ways about years, the business your years different of compete terms traditional three could with to of

more good capital our Capital They've help on we're with our trying business not a say, we're first the lot resources to business do. our drive having really got the investment than a help What investment and facilitate business. a compete is focused It's Brian. more in activities lot of I'd Markets returns question, banks. off, and we investment

transactions when and ends for (XX:XX) entire a three so do were firm. It and at transactions help or could those, of year also transactions, new us we size the European speak and drive our allows equity The we're infrastructure So syndication right example not billion. when do. up that to looking $X control last the and hands the otherwise the transaction, can maximize for we we'll economics that was two of fund in debt

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for lot to investing our activity is third-parties We Private Credit but also third-party flow a that businesses. businesses drive of time other spending and are, working though, helping with

of with especially sponsors. financial in XXXX, was third-party activity, So the a lot

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originate we we'll won't XXX% credits a hold will and we and those we syndicate sometimes Sometimes to piece third-parties. of

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helpful. super a get I'll in Thanks. That's back Great. the for follow-up. queue

Thanks, Brian.

KBW. Thank you. comes from the question of next line from Robert Lee And our

open. now line Your is

Thank you everyone. morning, good and

potential beat as part about of the Sorry curious. a Maybe, to corporate guys see Bill, this, part again, your C-Corp to any there change? horse of or just internal to that over structure kind of I as any thought conversations accounting but changing is benefit Method you

good a it's and around. interesting It's point. Rob. that We actually No, kicked

structure, we potentially reaching thinking decide our as if lot about to be out things new corporate going to investors. a again, of to So, we're change we're

use how decision and the opposed that that address would to Method real really I a because less continue Method reporting. business true II, our reality look the that say whether did And or is as one shows we're we of so I the performing. that II Method to volatile. to was would what the And that suffice the things not And say and true at to made mark-to-market was economics is take going of

opportunities in sense And say, with envision you kind you of channel? your soon. that's other BDCs, But of up or thoughts channel more beyond spearheading some have Great. give or maybe what you coming this us you I'm with on interested maybe shifting a could getting Okay. see broadly, into, dovetailing venture – worth joint FS how Just that an update kind initiatives the the gears, then of just maybe retail FS maybe high and or net the your of where heading.

take to happy Sure, that.

got terms we've of net several broader different question, approaches. in the retail So really worth high

net The their we firm to and spends the high offices time of team have a which, family inside worth first talking individuals. that all

strategies with different number they world we're are got around approach, a and the a the families working direct of of variety and us we've what of So across with investing do. where parts we

of channel. We the also a list platform relationships in have long

as sales banks, of we this through third-party think worth sell product their net high where platforms So our force.

quite And so rapidly. growing been also that's

and a work partners. also direct, both we'll platform, on conducted a there's being there's So of are those now basis. then global with And

more of others a be at could needs few on time is spend here and strong do. to retail of a better structures audience their we in in thousands these a have of a penchant running They focused out to best have and investors. to be. KKR capabilities FS at good that hundreds people inside of ever are lot have think only KKR selling to of are great that. we there's administering, what hundred They permanent and have inside capital that what built class that an than they hope example We being

are be six combined so we And will channels we in be will can BDC our capabilities marry where that we existing a can two something are together products we And differentiated. talking and partnering with their to on vehicles. now what create path the about them find a other

do for come think but money we to retail from say And of probably that's opportunity channel I'd given of a a that. that, up. kind will we on us. in the more years coming go FS probably start five, it in broadly we from that So worth expect raise and is ago, any with net is to standing more XX% quarter now this high XX% six went growth I

taking my questions. Thanks Great. for

Thank you.

you. Thank

question Davitt comes our And Research. the of Autonomous you. from Patrick Thank from line next

open. Your line now is

guys. One and morning, the one. be that last more will C-Corp Hi. Good the hopefully on

concerned felt maybe don't shareholder the The something that to this like seem trade-off thinking other is as structure, the and different be of Is there about comps about you or shareholders to about. about current the shareholders your base opinion concerned be seem pretty like actually makeup current which their differently?

Patrick, a I've of in is as it's of written some it is points been But, sharing terms for by Craig. our and of all think time peers of relates that I shareholders nature about on. your topic guess suffice as I their their now. But don't conversion. But we thought and you have a account this the being shareholder point a difference, in that has as I factors think a of potential to of peers whether base. our never us. to into comment there say And view through to course, tough view shy with we're taking

quick Okay. are pretty of follow-up, an needle-mover much idea big Thanks. my us as was it's you And National given million the could give just of now it much up. the how actually shares in XX how Vision funds? a Because

Virtually all.

Yes.

a think fund that as investment, I of Patrick.

lot from number? that third-parties of So in a there's million not co-invest XX

Not that aware of. I'm

Okay.

But that information in But be KKR's held you at. honestly about that's ownership, a on sheet, clear, front. to have balance not the don't driving I fund, in National Vision you're if when think what is

that but co-invest There's a that. to in GP commitment to fund, no addition there's

Thanks. Great.

Thank you.

from And you. our question comes from next O'Hara Thank line Gerald Jefferies. of the

is now open. Your line

tax for the revenue other bit the XX to over impact how maybe little direction a you the earnings, years out your of next from pivoting talk little going in about could structure? recognizing the a looking bit corporate the obviously mix be next but change in a C-Corp is Perhaps conversation, Bill, Thanks. couple Great. in factor, or months the could current

between down were our anywhere to be what a you to because corporate X% went rate the was rate to down X%. with and a remain PTP, X% from between and would XX% tax structure, a and X% we from corporate effective would that step level roughly XX%, look that In take then when the probably XX% corporate XX%. the discounted reported, to so in of Under anywhere we And in a at current if XX%. current rate structure, ranges that historically

Okay, a looks just respect composition, bit what's sheet perhaps million, I I to you $XXX can helpful. didn't but if right? with missed And quarter-over-quarter or talk my that over really numbers if other driving a quarter-over-quarter, other up cash this of about to for here bit, catch energy balance just follow-up a little up as down looking kind apologies it's the And significantly. maybe just up, like it, have little

Sure. And the about specifically we're talking other. page XX,

That's correct.

is that fall that number And into above. actually what's naturally securities liquid category in any up don't

we suffice And time number say that from portfolio. all are and actively to as they liquid try so securities this moves time up to that our to manage

to would the first seeing in be sitting in but based securities. be it And So somewhat next cash, in down again, activity we're wouldn't liquid upon I that quarter number expect quarter. the

you Thank my Okay. taking questions. for

Sandler line Thank of question Disdier you. the And next comes from from our Andrew O'Neill.

now line is open. Your

gentlemen. morning, Good Hey.

on yet PetVet, of... from thinking this the detail so then then transaction just piggyback kind on XXXX, far side, about in be seen activity and quarter? perspective fee to Aricent, before, thus And visible realization and not activity announced Pets, or provide able closed thinking around a you also some to So any Patrick's but closed, Capital you've question spreads Markets of the would comments Unilever

sort balance fee taken with performance bifurcate separate do income to that what has of the has do income XXXX what and place. for two sheet of answers. activity into I'll sort to has One question and really other

to been that, going million. from an stand all we the is talk the assuming don't Away of as cash so be income we point generation here close, have And fee income. $XXX today, announced from investments view that about generally roughly

assume management earnings, If you rate specifically your Markets look you could start, fee-related Capital to at very activities. arm are question, of income in be, certainly going on More the that far run intra-quarter, not you that Capital and of give fee the quarter-to-quarter, off embedded number to that fees to basis. the to is like the the just say quarter a our a number We're what than to-date. Markets the would deployment enterprise so nice other KKR a somewhere monetization final is somewhat

associated $XX then on that's average weighted basis the the associated the the then And from moved fee Private is each much billion between I'm then, that new how build? And able with if to quarter, and rates I last correct, up of guess money understood. so continuous versus you XXX the would it, stratify Got of capital point and Public, billion fee, and commitments be buckets? $XX.X

those AUM AUM. in question, turns keep we AUM specifically And paying more we have $XX and build. fee deploy the is very points, $X mind XXX in But Markets. $XX your other earlier, Markets in to that the of it, to billion into mentioned continues number about that we in of billion And same. the Craig think Private then Well, is XXX as that that you shadow points billion both that the and categories basis Public basis is when raise

Markets income. Public capital in capital roughly it's the Markets basis locked or a and it's Public XXX points. again, of is And, performance lot up fee receive whether a Private we long-dated, Markets, management not So where about or in

much. Got very it. Thanks

Thank you.

Merrill question comes from And Michael of America our from of next the Carrier line Lynch. you. Bank Thank

Your line now open. is

Needham Hey. for Good is Mike in Mike morning. This Carrier.

can management First, just on third-party a return and more details billion, like, when fees the stuff? core on then, provide investment And ultimately fees targets and or show. you the strategy, $X.X rate the carry few on

Sure, Mike, Scott.

Let's break it down.

would Return sheet, balance that $X.X the in third-party So, expectations $X.X $X the capital of first, from coming you've so billion, is our billion. teens. – got billion be on is

that we if of So management burdened balance is investment generates the and not can expect the terms $X about take, strategy. on capital, by blend mid-teens mid-teens, mid-teens, or not total it profile. to then kind so can generate billion we commitment the of or a we ROE in The we're like in think and PE, XX% obviously ourselves, economics the plus on high we sheet carry to fees more way because give figure to return third-party you'd the teens XX% think

The for share. built we've in we're but share what a construct funds that publicly not going with fund normally see some economics in not third-party you'd innovations in are to that we're to line going with core they

business, $XX hedge you've progress you made forward? good The seemed reasonably kind unusually a for fees That like high year the it right. that had one reflect were what at $XX is that I going They bit with a of in kind in does that just little for Public other like on incentive sounds like only it line Is expect million funds? Markets. was All So high Okay. or million. the good. of

is this Michael, Bill. Yeah.

have that and partnerships of that have incentive in, As we PAAMCO land think with strategic fees in funds, said hedge all Prisma Capital about in we invested December. other historically, funds we the the typically the June, when in come them, either with you certain hedge

activity of the no Prisma five third plus in that quarter, there strategic you'll actually million some incentive in with other total. is, really second in point an see and partnerships, first the this what PAAMCO just all are and generated quarter. view, So again $XX activity fee quarter, that's around from the And what

– standout Wace Marshall Yes, particularly say the I'd year. had a good

Okay. Thanks.

Thank you.

from Thank you. of question And Sachs. comes next Alex Blostein our line Goldman the from

now open. Your line is

morning, Good everybody. Hey.

morning. Good

earlier I wanted to follow the of you one on to up questions. ask around guys capital management, just

guess quarter-over-quarter. think So I of depending is I obviously carry on But hear if you Accrued up up. on the dividend, kind I at picking I C-Corp. exit clearly look XX-ish-percent the activity,

NAXI are doing of II, extremely or it's both well. larger Some funds, whether the Asia

back that special, sheet balance Whether a for it to table of the more of the C-Corp new fact think pending sort conversion? in is or or of we're on all guess it's returning about retaining systematic on So of we as or buybacks in shareholders? all terms that sort still anything about you're thinking capital you I cycle realization the guys, early kind

from XXXX decision table on and And back continue capital made of balance to taking manage it's than buybacks. some to we the conscious sheet to the in it, to to conversion, Well, time but that pending way two out is the about different of and pay managers. think things. we and back was the regular is use One time that a the that way way C-Corp other excess lot our put when do business a predictable on you that compound alternative asset in capital distribution our

that's... has a to so change we And don't changed I and go think if won't but probably anything C-Corp

go C-Corp. we If

Right.

Yes, all clear. Bill, you. another for quick follow-up

on ENI. conversion would I it lower would be impact obviously than say think heard you from C-Corp under be a I the potential DE

actual retain retain if DE going cash would since business? like obviously converted, some that's were sense to be those of Sounds of blockers, the convert. the will guys what the, the you you dictate Any of will if benefits, to some of the – rate tax flows

predict. vis-à-vis we cash appreciation as going too hard C-Corp No, we couple would little portfolio amount we we in assets that we taxes only a the on get those just actually accrue mentioned point first than rate assets stepped-up. become a about sold were the we TDE, And of The that that years, taxes tax to Alex. that if far the would would talking were be actually the That's is lower ENI. to the Make sense? over when would do lower, of

Yes. Thanks so much.

our you. of the Cyprys question Thank from Michael from Stanley. next line And comes Morgan

open. now is line Your

$XX income million, about Hi. little taking just the the a I Good just in a seen morning. quarter. recent for question. wanted looked in interest we've more pace the dividends Thanks elevated that at They to bit quarters. ask and above little the

Just should from how think curious forward we run what that about here? and a drove going pace good rate

on that an up would up showed you elevation and And you Hey, funds and are in it we the or the recaps co-invest to couple through those on were economics the use I fund each a carry that had every flowed be certain Michael. in likewise, sheet, What the $XX would anywhere for is rate $XX between have million the are interest should to What there ownership that again, as anywhere in the and that our I a in of that And right. vis-à-vis fact in the income. dividend. in run $XX quarter. We $XX extent run us million, saw our have But, balance might rate dividend again to ended as happening number a we between million. million in particular done say quarter anomalies only number. this

for moving talk here, understanding trying this Just get a balance all much on how Thanks you about the that. the quick follow-up around quarter, Thanks. it. pieces and deployed Got sheet. balance just better in balance the just sheet? sheet of as from was a the to And can monetized terms

our as commitments standpoint normal to quarter underlying We funds from I that what the were of particularly is Sure. In in the GP invested would I anything and the drawdowns had monetizations activity. funds. abnormal we normal then don't call itself, from out there think alongside

there particularly pretty realizations, So you nothing deployed equivalent. look is that capital out. at And I'd and call they're actually if

So as of we as we quarter. kind invested the sold much in

in other roughly what in million. at Real million. That's at are those far earlier $XXX at an if Private a Assets, as that look bit a where on you asked, sheet roughly number assets of down balance you you the the when a realized take a $XX were X, investment, to look quite about of And increase in $XXX drill the bit modestly Equity, from look million. Credit, was more, as of all strategies gains the about Right. deployment you And other the quite TDE, modestly, total than But everything little up increase uptick referenced where look on being see page is they you you little the at off point up that saw that you net view, quarter-over-quarter.

you. Thank Great.

Thank you.

have a from Brian the we question And line you. from Thank Deutsche Bank. follow-up of Bedell

Your line is now open.

Great. Thanks for taking follow-up. my

if range or core on $XX this Some It you I pace first, growth of just and of is strategy. a view could the AUM, guess, thinking around of turning of broadly, on sort generating the was of answered. investment of paying more that fee a billion comment commitments about potential two more of separately. And bit couple growth little a think about the of strategic bit differentiation the outlook core just over you of long-term sort different of years. fees the the areas partnership strategy strategy. for and maybe And how a next broadly, then those little investment

actually the capital off then billion deployed. earlier the Scott. the to capital Scott yet of the take And that I'll core a $X.X Bill. – one and is breakdown and fee earn from at had away is and to look paid you to billion of capital second get This the was Brian. fees, raised $XX one mentioned going is I'll when Hey, we're as commitment first that's pass

XXX that Private the set So capital, two, deployed roughly get again, anywhere three And at Markets. would about that in $XX years four. talking we're Markets again, we Public and will points, basis between assume and billion, remaining aside,

the second them I'd a say at on look we bit differently. do question,

an investor we to when And period plus of tend So talking say the long-term what with there to are recycle partnerships time. a so strategic profits for recycling, have ability be partnerships, and percentage that we is underlying about we of are very capital, and of the somewhere beginning the across The those strategies Equity, Real the to usually those partnerships partnerships firm expected range, in some duration Private Assets Credit. to of broad-based XX-year XX that end. invest mix there's extended in

we the it's with today of XX the that's two not us a pass to And the strategic is where between something period recycling that that particularly $X that That XX-years And as that firm where aggregate bit very that partnership on that's is strategic aspect create in investment distinct. does can long-term does be which made an is The the investment them. we're be ability expected investment. in is that core the was we on the talking with strategy to the or to we billion powerful there case can our also have have close that We visibility that so And our USI, perform to on, we have to having strategy pursue. mentioned XX-year we but I scale now have an clear, used partners in focused more. then happen about $X.X capital definition. obviously and for hold is us. partnership It but but longer-term that billion

that have longer-term you put Is together, hold. strategic which strategy core, recycling, a just it's it for So is slightly the if distinct less billion It's core partnerships $X.X but from all clear? it so.

Yes. That's helpful. extremely

next prospect say think Just you the substantially? type three maybe this, attractiveness can of again partners as and and something business it over this think the that look enter extend years, say, about this in growth that more long-term with is to the you of structure, you of

years before Not years core, Yes. to alongside be answer is we to do makes the it see to say the case probably deploying expectation the to are that, take several size. long deployment time. each. a to but over for base the there say that where continuous more tend and out three something that say capital. Strategic we slightly create forward. They next figure is a or that money from other and complex. wouldn't looks. expand more want pace I'd will are that five to we'll different highly the get capital how strategy partnerships We'll and several a go to going scale invested on They basis. scale things continue dollars dedicated hopefully I'd from next sense billion They be over then to point we in

so of on given with several of And moment, working any the partners firm. at we're those close

more So continuous in much versus that's nature core.

great. so helpful. That's Thank That's you much.

you. Thank

Craig question-and-answer today. to for I that our concludes call closing And remarks. like turn the Larson session for you. to would back Thank over

Thank everybody. look you you, giving We forward update quarter. an to next

great program for you Everyone gentlemen, a may and the and Ladies day. disconnect. you conference. thank your participation have concludes now in today's This