KKR & Co. (KKR) 3 May 182018 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to KKR's First Quarter 2018 Earnings Conference Call.

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

Following management's prepared remarks, the conference will be open for your questions. And as a reminder, today's call is being recorded. to Investor call Relations like Larson, to now of Head for would hand over the Craig I KKR. Craig, please go ahead.

to for Thanks, Thank Welcome our XXXX quarter Amanda. earnings you, everyone, joining us. first call.

our refer joined reconciled by which to our Scott We'd As usual, measures Co-President that on Bill also Co-COO. we'll I'm and everyone in kkr.com. are non-GAAP CFO; or Janetschek, and on Nuttall, to remind figures GAAP call will forward-looking like the This our at Center section performance. which do available to which press is Investor events call not contain statements future the release, guarantee

please So, website be call. referring like our importantly, previous cautionary for quarters, course to we've over that factors we'll the supplementary filings of our related refer posted the these on And to to statements. a SEC presentation

year. you've announced we've X a to press a likely corporation structure a change this the seen July from As our corporate partnership release, effective in in of

Scott our you On conjunction that, this first and over Bill first I'll I And the being related then, made the go some with to of through the And the review behind Bill details is the year. conversion conversion. through Scott. morning, will the with going in rationale results transaction. to for changes to call will then quarter and walk the it turn

been like minutes and and we're everybody, these be on business what it call we're our We to our few attractive overcomplicate easy think thanks, a rapidly today. We've because our returns. to going being topics, and generating for going Craig, strategy to model. and on is why. we brief. growing Thanks, spend I'm doing And I'm

however, line fundamental price, not with stock our in has Our performance. performed

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go investors elsewhere. many So

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on dividend per our Following per the on conversion, the we unit X.X% price. year, yield set stock to the based share at $X.XX about current a expect or

this C-Corp level dividend percentage should The is be main expect a theme, simplification. performance universe. hear, of making easier buying and We by to we're grow easy we'll for three you other over with being believe We as a a broader the market, the above become the to time To buy yield will own, with large we to annually. revisit changes.

the day, value will per matter: total and balance book so in which our sheet many talk to helpful, we're most. to what we way and AUM; have mark-to-market metrics, which may too our hard out we First, management really four earnings, been our our compensation; distributable simplify that we given equity-based the about believe to are day standpoint there business portfolio. of know that our and less we going be in running as results. Historically, ourselves metrics to fees; share, DE many reflects From effort it have define the matters

focus total focused our Instead, underlying distributable cash carry how we paid going and not paid today, be This balance our which our share, consistent accrued earnings, will investors with our we be want the XX-Ks our discussing means we about and based get get outcomes. we to it on carry fund calls. reflect it will we We be pay sheet paid talk mark-to-market. metrics on to and We will per in when on value does going from that get metric realized pay is on these the not ENI going hence, forward. and our what we earnings. marks be how shows on people, X forward. we're looked our those We like you through four generate by Page do discuss included fund really but our show highlighting have will profit ENI So, and XX-Qs, results we people the up will we DE. will be our it investors just in which book as our lens. not with

can We earnings. will returns of of our consider our on management are how as be per a book funds, all drivers you in our fees, our distributable and also trajectory our are which basis, AUM, which and important reflect investments the discussing value share our will performing mark-to-market

give DE to through a going we're you quarter. Second, detail

share fix us result periodically sold what impact to going with We easier everything lot fewer quarter's and be We can on and make that surprises We earnings. to on will and have will We do easier to the that. understand. cover. a we hard make hope DE can we This you model. want distributable have in to should that to know we

compensation. simplify the accrue and to way we Third, our talk about going we're

is approach Our complicated. today

We no compensation performance. have on to a compensation sheet plus attributed ratio fees, balance on explicit stock compensation and ratio grants separate carry, a

total comprised realized in total been. This well. we our as historically, is been balance Low sheet where compensation segment compensation So revenues realized of we In income. segment will as as where change we to in XXs and we're employees. have load the XXs to for simplify about expect a comp have percentage the low carry no going normal equity-based relative percentage so compensation fees, overall include revenues, ratio of environments, a compensation of

we'll be approach XXXX to easier in to to we come we new model you to ratio we example, down. This scale, how compensation understand basis, over expect were this continue And will together. The For and should think help at on discuss time, as expense, this XX%. it all of up we And that we're program by and $XXX to buyback about so repurchase and shares. our million we're our this, of how compensation, our DE. tie which part to authorized also report as our increasing is biggest to far discuss

We expect to help stable our share use count compensation-related keep and grants. the buyback equity to offset

compensation that summary, we're focus total detail with grow So, simplified dividend distributable following on program. expect with through book conversion buyback earnings a per simplified to and DE a larger quarter; a AUM, time; a management annual in value reporting and making changes: C-Corp share; the $X.XX over we accrual; fees, a

great team. a and culture have We business

our reflects all us we're going with that. I'm easier intention the with turn that, understand, own, that over is And stock Our buy today of announcing it to changes to so to to over time Bill. make and

I'm through supplement. start the of walking related conversion. of Thanks, Scott. the to details I'm the page some going to on X by

is As be Scott tax-free conversion is mentioned, transaction. X going the structured to to July effective a and become

annually quarter, XXXX. will be a paid of in scheduled instead shareholders tax final common partnership K-Xs we that per the period will a K-X, day $X.XX in quarter XX share. dividends will third one and XX. totaling $X.XX a unit through will of as Form second last expect be January the be related per And be There Starting will to June pay distribution the to June Our mid-August. X receive issued for

of the financial taxed the rate. In for at terms our fee-related most of a the tax conversion, part, are, impact earnings corporate already

conversion we These at corporate are So years described XX on earnings and estimates deck. realized these assets income supplemental increase our rate lower expect carry those the the over the income assumptions balance on are change are help streams first years. impact numbers, for whether sheet to distributable in and based due in or page approximately interest rate from our our of that taxed X% To is tax to structure to creating will a few five step-up next level. sold. assets carried the partial be over will as accrued we expect The our time try to the tax and today on the effective investment XX% frame unitholder

addition, expect some taxes which conversion is XX amortized cash goodwill over to we the it years. as In create reduces

couple you conversion a a both Finally, any planning the to meaningful we to tax going to items, around effect related economic discussed, has to all neither the see changes C-Corp, are other of company. impact that our on

to that share. and book DE approximately First, for from in purposes investments. expect we sheet been realize through and are million of energy mark-to-market losses quarter, some largely old per These second ENI have already value the $XXX legacy balance credit investments

definition DE tax marked realized were down although realized purposes. losses, been the not Our and of all have for these gains yet already, investments losses and includes

share per are our a has for taxes We book our or quarter. conversion. are will To currently the flow it actual cash but zero income they be still through realizing this unitholders' second these on pay flow, we as the value prior losses clear, on ENI, cash that partnership impact save to

The to our mid-May filing second some in in management see change of that related senior relates to company. you'd the a shares

will Approximately in an to we our price these As $XXX transfer be from time. market don't charity any our will for worth you conversion the to none management executive we trigger (XX:XX) our to million company charity to This to of our management give mid-May, for SEC to no by to And Form million to prior filing sale make proceeds the give we near-term plans is these shares to X ultimate near C-Corp, to term. have over be unit part the but This the shares clear, donation team so being the Essentially, shares go of be officers. on filing is to XX charitable are to consequence. shares shares. a it, advantageous happen primary will planning an sold transfer will time. report over want there offer earmarked an into surprised. opportunity for conversion current of of with based will the have in shares team and vehicles tax All

Form And key buy on over the million other soon, for are Day shares being offer announced I executive you we've discuss be be Page We So will and shares let the anytime changes we this, X officers own. shares from XX before are selling hosting time. of charity make New None in quarter one planning to to donated any announcement X in changes are me easier None going that will us will understand, that repeat and these July is to X filing an see not of sold. summarizes shares. the a York. these mid-May, company first takeaways today. results, primary Investor believe to

on $X.XX Shifting quarter's $XXX this $X.X results. supplement review per adjusted we to billion unit We page X over for trailing soon at back after-tax the months, quarter, or and million get gears, or earnings the after-tax the let's $X.XX XX turn details. you in reported DE a to per of unit. So, with will distributable adjusted And basis. of came

strong million and the XX-month prior period. billion, net into contributing $X.XX quarter fees brings year-over-year over ENI XX% trailing quarter basis, was and of LTM $X.X income earnings from after-tax quarter First up earnings. $XXX million, up a $X.XX per economic fee-related with which and unit, on Management to respectively. $XXX million XX% That after-tax of were another translates fee-related to comparable $XXX earnings fee-related the for

markets Continued strong within was capital a driver. performance key

and as experienced track AUM which year-over-year other nicely fee-paying growth were AUM, as of up on terms In book metrics quarter-over-quarter of unit, value per in basis. all and we closely, both we both a well

everything our drivers. overall do. believe to model continue attractive of Craig investment five we ultimately do that find by and on things touch well: use We generate new all our raise that to is that monetize more investments, capital, existing capture performance, the performance need driven from we these to now will economics Craig? investments, five

Bill. Thanks,

over our In funds terms ahead supplement XXX a points across the X look there. basis Indices on funds. basis a LTM blended performance, X,XXX S&P private page basis, Please World the that's profiles an start of performance the let's approximately our timeframe. appreciated equity, of XX% three this and flagship our MSCI take at investment of that flagship In on

up strategies our Special has asset And the Estate, plus over X% months. mature II you up with Index performance Special Real the up performing in Our page and Sits II the HFRX in for XX% and Energy to in we declined Infrastructure, has of more funds appreciated respectively. and sheet, was compared credit, And particular. Special X% funds on basis. trailing it's Mezz are XX Sits months saw The XX%, terms fund LTM XX%, an investment as see and X, Sits the the and over XX% on portfolio figure in last our XX% our Mezzanine quarter, real our balance XX in well, flagship strong

billion capital in $XX a $X infra of connection the new fund of leverage quarter, already was partnerships secular size and raised billion in XX SMAs raised scale. Turning In example flagship infrastructure strategy trailing largest credit The billion we a over of of This as $XX first most that's strategic growth our were two a to the infrastructure the inflows raised times from as the billion this recent platform opportunities. over contributors. have quarter continued we to in strategy The continued where we number of see well long-term is our public key with markets, where fundraising, a we've contributor an next $X our is raised our fund. great months new initial capital.

private markets, strategy. special also the we impact fee-paying Asia figures approximately Also, geographies to contributed of in public $XX This a as approximately investments, $XX made as-invested of become to despite $XX activity. quarter markets quarter. billion the active anchored average primarily equity going which XXX businesses out coming over to at our in was Shifting capital result quarter's deployment weighted deployment both we're billion the of in new inflows direct not level in at results. across April a a And in next transaction $X.X and that billion rate of lending from invested do by billion across of number $X.X additional first $XXX have core an of opportunities. of commitments we investment we a invested points. QX from of end, that's closed the with billion, basis basis FS Private $X.X In of on billion, quarter's sits. on quarter sizable reflect as healthy is invested in capital X, million in which well And fee-paying dry up powder investments and AUM

across Moving healthy activity to to business. continued see our a monetizations, private exit equity we've of level

the at For the carry blended several million which our over resulted quarter, QX. two secondaries $XXX a in times we basis, completed PE On in of with cost. sales a exits in done coupled approximately number cash strategic were

Scott mentioned, through we detail give As DE quarter. will the additional

and that finally, or expect is approximately As close are we stand or here that of And second we unit. today, in closed impact the distributable the after-tax monetizations per quarter to million $X.XX DE $XXX thing we of is last well model all need capital our markets capture to to use our greater the AUM, economics do our from firm of investors and balance activities. sheet the for

momentum pleased ready firm. your the to you with that then with the Since if us a we're queue progress model revenue Amanda, capital and in for the investments was seeing necessary, executed the of our queue we're fundamentals results, question in markets would for the our again Page is that, start our And XX% the and our well XX power from number is actually Bill address. question. as there remain mentioned sizable, PetVet. active core are in debt-related the and transactions, any to activity items to we're Approximately earlier. ready as Air summarizes the as supplement the questions. as financings was across Medical of the yourself In one and five has X follow-up, activity well return for that continued helpful categories other year. first with the The of to evident pretty team business people to we'd of ask with Our limit coming that approximately across QX, that, largest components to broad-based. related the if we're be And

you. Thank

is Our first of from of Siegenthaler Credit Suisse. line Craig question the

Suisse Siegenthaler Your line is morning. Craig Suisse open. Thanks. LLC It's - Good Credit actually Credit Securities (USA) Siegenthaler, Craig here.

Craig. Hey,

are corporate I rights. Good or no Credit - believe (USA) just morning, Siegenthaler wanted governance. follow-up and governance there index Suisse So, to to voting the corporate Craig. adds I on changes Craig LLC Securities

what the or for you qualify your was just wondering additions allocate into float XXXX? for I to Russell index rights voting the plans So and some objectives could are

Craig. Hi,

it's – me Let Craig.

Let begin. me

First, just box, not be from clear, to will, taxation a are checking you if the standpoint. we

we're your XX corporation doing from be our a standpoint. into partnership we to million of the stock. should be is think the categories into index helpful this what and So To of question, actually I that fall demand we'll conversion in least will us a in an for at think shares natural answer two broad result indices eligible and

first the those market The of are indices. total

that over eligible year have single one inclusion So market indices. consider share ours, guidelines be some in that inclusion. of than for currently more a won't their like are there share their But companies are past in S&P changed index more with for companies class would indices, class, total the example, an and providers, than have their

the that's second are So the first CRSP off benchmarked And data. category. are that those of

beta pool. we shareholders The we've engage their our value CRSP that we've all and at announced we and with largest of I the a perspectives. has of you equities Security been And considering actually own a smart think that company. of of are to us the the it's listen Center So a quarter all so of of end don't thoughts for publicly-traded shareholders from stands Prices, time, like are standpoint, data. actually so most most there's the partnership, Vanguard benchmarked of that had those beta, areas clear off the U.S. really XXXX relevant as trillion the are I number since being that and dialogue I our we year-end, CRSP Research a XX% to think exceeded at versus alignment. strategies. last for indices we've of smart proven rights that Employees think the again, of incremental interesting think And first when to a $X in conversion, when And asset this piece for equities, voting And specifically

So, It EPS right? for Craig change sell-side going works you're and framework in Craig. see from distributable Great total going color, if one we'll Suisse But just what the us, LLC moving and to clear, be (USA) quick structure away forward, nice just that's And that (XX:XX:XX) to Call Credit makes we sense. the send future ability have should First Siegenthaler now to follow-up. to ENI. was this the the certainly, the - think Securities forward,

to press not correct. Yeah. ENI Craig, report ENI that's after-tax going or We're in our release.

think figure I first that publish because to press when the I comes release not Craig in So, out be be release. metric that LLC would notes earnings of going Credit less equity-based comp Securities (USA) the Suisse figure a Siegenthaler to to Craig. distributable when you ENI know need want that - press earnings Thanks, is the

Thank you.

Research. next line Patrick the question from Davitt Our comes Autonomous of of

is line open. Your

Good that it it you break little and to to morning, could of price-to-book bit for that default guys. framework my was earnings stream? for of to not your anymore, given Hey. kind mask cause out Could an of a concern that the looks decision the higher just giving value a you're investors more like this the doing, value without stream talk about stock extra kind which

the is Bill. This the not contemplating of Patrick. Hey, reporting stream. We're income changing

will be income. we reporting So, still fee

that it ratio to doing, going one thing that three in a sheet where as this compensation monitoring earnings. point earlier, opposed TDE But and to will The We of we're performance of and we Scott is be from will one transaction talking income about a having all basis on basis. be referenced to an still balance reporting opposed fees, places. ENI as be fees, compensation view

guess, be to? So a going – there won't there expense I I'm is, separate what but

revenue... (XX:XX:XX) be There'll

...up on top.

Yeah.

be is than we below. there expenses down report how it going No And to right now. difference

be another still I think way, mean, Patrick, – said calculate able fee-related I to a because number... you'll earnings

Okay.

going ...off what forward. to report we're going

Right, (XX:XX:XX). I sense think it makes

expenses. report or and compensation, compensation include point, this comp. and occupancy to X page out one go We'll belabor number Patrick, is operating other you we which give just stock-based So, report which we'll will page ENI the to is when X, TDE, be if will

Thanks. right. All

Thank you.

Thank you.

of KBW. next question Lee the of comes Rob Our from line

Your line is open.

congratulations Great. and Good the morning, pulling Thanks. guys, trigger. on

Good morning, Rob.

questions. I guess two

think think DE we is specifically to we it, growth is be starting linked one how return capital good. But about First that's to be think growth and maybe in the hard or sense change – construct of is at to get say you're of and going be dividend. maybe a that understand and should or not time. it is the talking about to policy that management the of over that to fast? the a – – $X.XX closely to more but trying component as Just which time, should think I going going how to over little of thinking I fee bit you

way, this be of today view, is dividend growth continue It way, distribution continue And from that, historically to a it excess and excess new about fee the onto a thought think old put and and value. about and pay we out think take reasonable Rob, we've to the want sheet capital the future compound grow balance unitholders, but we to focused that book our Hey, earnings Bill. about to as dividend. to way want it our we on maniacally is management not will point we the way

Okay, great.

because higher maybe tax you're mean, kind or a able what big – that how because degree as did in the role an influence as had that of much really conversion follow-up, just losses you're to decision? was of thing able recognize some benefits that tax fact more much a your call good to the to it's really a balance as sheet a a in of that rate? play basis maybe that some Just creates you transition to that allow I ease anything, and not to strategy a but to get have curiosity let's and kind this, larger losses, the point you it, how but step-up

Hey, Rob, Scott. it's Zero.

background. the you more bit Let maybe a little me give just –

you do had losses maybe impact planning no made with to broader process. tax But the It for balance convert. decided do to bit just York Exchange. we sense Stock the recognizing now give million. thought we on is sheet have been When $XXX partnership for traded share AUM. the on nearly of about once just We all $XX to anything years to billion color the a eight to almost that New little zero had listed, we or So, background we've publicly of

per value $X. now was book Our share about It's $XX.XX.

bigger So, this a is much discussion.

Our stock company. same at has really price grown pace as just our the not

eight help you our So, new to many progress. we've back investors we thought working out and lot lasting the back, after really a funds honestly, you. spent effort, operationalize worked reporting of articulating But We think years clear it's last to tried offices and K-Xs. with story about with sort mutual of out not changes. we've why. if And went find of them eight of we've We worked years to made on

going is So, back been on. process simplifying about thought we're our coming what's where this and really stepping from is

investing invest about the in can level the have of out, not going, we as PTPs. equity none is or if buy markets in the been which best think will capital to been you smart passive beta indices, PTPs. high over it's where So, flows going U.S. sort of XX% And cannot

buy could not capital words, XXX% existing in other XX% or buy can't flows of and net us not So, virtually of us. would

back we of So, been no it's wonder hard. it's stepped kind and way

pond a small leak catching why anything. and weren't in So, us clear we've it fishing a kind slow with of we been became wondering to that

to their big might nearby, there's was all we think, our fish bait, they good was what had a like to pretty moving then, a ocean over what's started ocean clear our largest that was advice. it shareholders, that lot we the moving that ocean. consistent so thinking a about then, And virtually So we And the do idea. asked of

before And It's like long we're so, any what cost, said associated there's do a be term. term But very really or nothing tax built of risk planning for the got keep coming it's move, else. really for And thing And with own. we it. to there's the that to anything place building want that long we're we've like that's what we the to from background. and the easier really to confident with It's I right moving.

shareholders And to go now to try in partners so us find we're who what and and building. believe out and going we're

And own people We're in long-term XX% We're the place focused annual the on remember we flow so equity the of just value for always firm. to the cash creation. running company. not

so in this service is. of long-term is is value and change focus And equity we where our that value, creation think creating which

and is no So the a answer. longer to answer your short question that's

Thank I it. you. appreciate

Thank you.

you. Thank

Our next America. of of Bank the question Carrier line of Michael from comes

Your line is open.

Thanks, guys.

first strong. it's the question been but Just U.S. your have maybe on flagship couple guys – only in just not have market. of don't fundraising, not coming this very quarter, you quarters, last the fund in -you And the

trends have to for outlook. newer are Just like is maybe lot your – these more there positive it than even strategies relative wanted the just alternatives, expected. some newer to get a the We lot a of but even would better sense on what's of then driving buckets, it seems know peers, garnering and we

XX been right; very for Thanks the busy Mike. Hi, you're has months compliment. us. It's for And Craig. a it

As capital over figure new billion. is that raise I $XX said,

little has a that come equity color and infrastructure you private give from bit of to $XX billion of Just private of come that, that, strategies. markets. on from XX% And our has core

are those think people three not a So couple you're that think years ago. we even or of mind for been front probably right, when have of of of two ones those, may I

diversified. a partnerships. strategies, actually within is billion lending $XX is the that and It's public well $XX credit markets billion across fundraising The number opportunities, as strategic partner of other really strategies, as SMAs,

worth lending and continuous areas CLO a active more business, U.S. an and equity, the energy private income and from remembering look currently in rate on about you where in that standpoint, of Europe on and management as-invested leverage a And it basis, basis infrastructure, at terms standpoint a that billion Europe, and fund fee-paying episodic we're XXX finally, as become we fee-paying of have we partnerships. well as points. the the includes where $XX credit this basis standpoint just platforms a capital U.S. European in average to BDCs raise will capital In both think and it's addition our the to weighted is includes growth, fee AUM and an direct as the then model, from hedge of

granularity. that of the all So, is

at think slide think if whole, guess you to slide we we've the And back granularity I point where think there your XX the we I'd over you trends is are last other an in to of continue. think be XX step I trends secular very I a fundraising, that alternatives presentation. going take as that's we're done all that those months you the secular in the point are in – and is and look from taken. a well fortunate what the are to industry When we that

as a where you've and as rate the continued mean I continue double-digit long to framework, So, very look an this term. we gain the we share. are to nicely. us seen for continued with opportunities excited various the could us for And continue the have for us, we over and expectations whole think continued when it keep of at to scaling continue grow you what areas that that to And grow industry when does industry think to we've in about

add I'd a lot is there's you been, several last we Hey, years, I thing about the billion. Michael. what's Fund dynamic think think four over look at years. where only The Fund But if of It's you particularly been I, exciting Scott. if is we've II $XXX last raised

base It's base. phase to about while think while up able our of expanded a we've going talk it been we've the also but years. And We early materially startup do can investor number really we so, through course eight businesses that of last our for different Xx growing here. materially. over investor it the enough, And and don't grow from that we

So, pretty XX I slide think a several and continue feel But it's businesses especially we've tells investors, to of more these the to now a scaled combination number story grow But well. things. come. there's we we of optimistic the

Thanks All right. guys.

Thank you.

Thank you.

next from Evercore. the is Glenn of line of Schorr Our question

open. is line Your

Kaimon is Glenn Schorr. Hi. for This Chung

what portfolio than on (XX:XX:XX) better some came Just growth? holdings, expected get it the company would drove want color and this what given I have like quarter, performance to your trends underlying revenue of just maybe a EBITDA stronger and sense in the

you Go don't Why ahead, Craig. take that?

Sure.

the you the of at in portfolio, they private our when quarter. Kai, X.X% equity the in were performance publics look down So,

in both as was where portfolio the overall and S&P a both positive. a The the right. XXX were That's whole you're MSCI quarter So, down.

So, that portfolio did from standpoint. from market overall portion the strength the in come a private

and revenue the of and across of trends and portfolio your part to equity statistics and on portfolio see remaining revenue on across global quarter low-double-digit the basis, And the value. the weight the the go EBITDA the revenue EBITDA as fair the remained percentage through On continuing growth every best growth we're apples-to-apples growth can private an we we broad portfolio terms we those consistent. and as second a EBITDA, look question portfolio. on have basis In across

So, global it's trends a continued nice to on basis. see these

performance but quarter. a Yeah. it's some Basically, on when strong the multiple operational at whole, operational performance offset the contraction it look you

three and XX your Got it. you sheet last last cycle? ROE wouldn't like what and recall with could If XX% the Why high your your next manager even the follow-up, that do so about balance I years. over is it's was model correctly, I be if XX% for been over asset expectation months, a –

ask again? you first your Could of the question part

XX% last where higher, be that go? Just your the wouldn't you three do about years. been to has over and that ROE Why expect XX%, just maybe

Are you on talking return equity?

Yes.

Yeah.

I have businesses over we significant are carried what that mean, those in now up. on not time, is we'd capital to focused do our the continue go and be – generating is yet Okay. A lot of that I'd interest. of equity. non-private over say, we're strong do half we fact what to expect potentially

mature, drive will we to will that return change, expect up, equal. else all equity for As overall which they the continue on enterprise the

grow. this in got So, attractive we'll we're Day. together equity be be more But that performance, when on at Investor to reason and, the to July optimistic continue return we've with the talk all about will

if per and value of in part at I of the I a the the what AUM the when left-hand are you some for X book top the our left-hand page in most us of Kai, think firm, of unit. Like, see page think, second, important power look for you're two earnings think statistics part bottom X I the talking And about. you

fundraising, power of And so, that firm couple had the over AUM but when of the look the my the you we're success increased unquestionably think years, earnings of lot I and in at last mind we've our has a deploying still that capital.

if hand should performance follow part that you standpoint, bottom-right So, a we're suit successful from see (XX:XX:XX).

on, at is at you but up way the it's in this look in not the to pile right. And quarter. the particular actually growing, you look when book value All quarter, X% just when

just, longer it quarter, But more in X% again, challenging up very we a was Now, on market. focus the term.

think at and when still an results XX pretty of of ROE of So, LTM basis you of view, look March view an TDE from from ENI the December ROE they're point as an and XX, I point attractive. as on the a

Thank you.

you. Thank

Devin Securities. question with Ryan line next the from Our is JMP of

line open. Your is

Hey. everyone. morning, Great. Good

morning. Good

Devin. Hi,

one M&A secondary decision curious I I'm guess drivers M&A maybe And potential in little conversion? currency. we around or heard of a the past actually if read-through And comment first a appetite whether can that's kind question bit here, more for be then like it is conversion sounds you targets. the of making expand maybe the any behind post is there something from on attractive should implication the you've whether and

M&A units Scott. the heard currency. we that an the Thanks, are Devin. say It's I'd attractive past answer not have short PTP is in

it's that currency. something say And been has told past. it been in the than just have So, broader we M&A I'd

more to PTP. do that of flexible very C-Corp types that's we other a there's financing as could difficult as think now I do a

you thing. that efforts but flexibility there's good a scale to imminent, to is our to we more point would So, as globally continue nothing

the And had will of be the a where those came as – we've case. up no longer some that where roadblock conversations

So, we'll to now at more time opportunities pursue and – from larger valuable aggressively. having the ability focus the we would is be to primarily real a where currency M&A have looked we those have still, organic growth time but

a but like then there just sounds another follow-up, It there. just Great a still quarter the great is it's And positive. for capital color Terrific. a bit I about outlook Okay. this than may markets. be I think difficult. a But spoke higher still bar potential know quarter, was really year the something And great quite XXXX. But high last we last year. being and

our just the now. and model reason? Should So, that is still as business XXXX trying better like think for even what thinking kind right looks we something to of backdrop was be as maybe or for about year it about last between good some XXXX and or

XXXX. business, and and so so the the new, did per bigger I don't capital our new capital guidance have se markets this every you from to XXXX than it, being when single Europe, in Devin. today third-party you irons and more give zero. your lot where much in that in to really to about growing to in Asia starting in focused is to a say want want is able because are and we a different, think but think don't Bill. on about U.S. and the particularly fire now Hey, in we reference XXXX gone in we're This ground when markets XXXX We way from quarter But now we we've much transact

capital of prospectively. So, I'm business the markets cautiously our progress optimistic on

quarter's excess in three this million. you look if came For from talk you In business. of an another quarters look at the which in release, actually million at press quarter, the excess of with when – $XXX is number and $XXX example, this solid this XX page XX% a you quarter page about third-party on when reflecting we're

lot infancy its traction was And only an couple a so, getting of years in stages of area in we're ago. that a

guidance So this, how saying but to we're that optimistic a very me to our going business. markets not long-winded way model we're to you give as of around capital

I'd Thanks, try. it, figured Appreciate Yeah. Bill.

Nice try.

Thank you.

line Katz the of Our Bill Citigroup. of next question comes from

open. line Your is

this one perhaps. the maybe very for just for Okay. Bill, Thank much you question you morning. taking

about could think rate or call of next way normalization you amortization schedule any the As rate planning it of so sort few of rate years C-Corp, that sort about sort your can how (XX:XX:XX) be that think years as you to as that or are – and things other you tax of the tax XX-some-odd-percent, tax should I'll next type a exit out dilution, you we sense the of it would couple the the there the will? is over there look if of the is over do

is color to allocated time how to being transaction be what Hey, to you And very either known I amortization a will question. but high-level the will Bill, until because good over now, with or honest that that's step-up assets could not closes. give carry you, to change be is or that

we Over simply even term. our this certainly which near it's average, grow about The right it reduce So, for transaction in on is been has unitholders, tax taxes our very rate now, tax-free that, will think get to the though step-up about will TDE I a time, it XX%. do X%. way

assets the would perspective, few isn't after as at investing assets start that selling really carry of to crystallized quarters, we those few a we next once be then we be first a years. could we XX%. pay the sold ramp go and be over in to so, that in And or up once Once tax C-Corp, going those go TDE we're C-Corp, once it lot there from and assets,

X% is at So, way we'll at and we're updated the we'll along the now way keep be going five we're what to XX%. think years, think over suggest to about you about it, and and

go number what is you until But the for So, purposes, every I'd even to year, tell that We incredibly it's by we modeling And going XXX what be would points. our use, that's of Again, going up back that to assume linear. hard rate basis you recommend not and effective July. tax Bill. predict. to it's envelope is then, can't

just follow-up, That's just Okay. Maybe helpful. quick technical. one

things of of be that more to date abreast of the occur? going that quarter, everyone to as through you're is mentioned on standard pace to going going DE You or keep idiosyncratic be release as go you your sort of a is

And what's update to more is Bill, idiosyncratic quarter-to-date occur. through point the and as about what and to get clear, providing of quarter, sense incremental been realized to exits be some happening Probably carry. gains that for realized talking we're

of the to we So you a that's like the these on over on just keep doing quarter. the we'll opposed course be quarter calls, sharing updated as call. it the that just you stuff we'll with through do Much

Right. in this And, Bill, remember we're together.

going is to to we're going report this prospectively. So be how

And that everyone certainly We'd advice information quarter-end. us as of so, couple to a quarters. around covers crisp take any sort try possible of for to this we'll to the out from try input or love as get

very you Okay. Thank much.

you. Thank

Thank you.

Our line next the question Sachs. from of of Goldman Alex Blostein is

open. is line Your

morning, Good Great. guys.

Good morning.

Good morning.

Good morning. first. Quite question another of technical sort

was for past calculation back what's that's think aggressive see So So, it but off guess, are we that, to two, I one. you we more in I market share how on $XXX think you times know to you guys just of? could I to about maybe step a in of guys as taking about the million equity kind count largely the the starting right share the count guess guys sort C-Corp, planning I dilution, of number as authorization, volatility, offset part fully And, of that? part be the jump DE going use

the second second. one Okay. the I'll first and cover first, one

use have focus million to have say But shares buyback actually are this granted the and again, to on we're that it we we are going that we to We're in ability employees to to we We're increasing that roughly relates already relates buyback any right to size $XXX we going to is the that million. to it also as availability today not just increasing our to authorized. make in dislocation, As that the of opposed to market public. the that we $XXX buyback, said historically what we're now, new there's What sure place. to nothing diluting as disruption. so sort market react have had in buyback about

when have aggressive I be ability there. opportunity would the we say, to Alex, is the

$XXX was including at over that if time, look between which tax for at it was the And average So, or we $XX cancellation. $XXX done, and somewhere price back bought $XX. you retirements million million

expect and continue. to think So, when market I should to tended in that you we've lean is there opportunity the

is count it as we far of the press for information lay you out to then release, And eligible is. what you as we TDE adjusted unit relates page XX if give use distribution share as the concerned, at where what look to

our increase occurs from movement those state April shares be count and see aren't being should And so, that, When much shares December about you'll think But in the that way steady you October. don't why XX way share of XX. see – total are vested, and where modest in for shares in that's March to to a vested. that the as quarters

And conversion. Got it. from that. question the I Thanks strategic second for guess, just guess the away more, I

how mind activity the part to FS a importantly, I see a that that on what out sort the I (sic) synergistically, at of help as guys you Investments] us of as it? FRE of kind As would perspective one business perspective? being is capital to guess with of minute business, related look spending as rest the might management it can particularly [FS get guess the Investment closed I KKR can expect more contribution grow you you the fee And both market I remind earlier, whole now from and the and guess of

report a includes from and Alex. pickup first right capital the we've second. to expect we'll announced them. rate fees. and details any really $XXX with release be we're let handle full Square. to than with take quarter after only be fees, the Bill. But more run now, excited less partnering approximately we additional don't new or million. a transaction that quarter with but not income happy I'll clear got And that managing put to the of more When to the on the FS, is that on Franklin the management incentive would JV be We give next that press we'll be Scott that Sure, but out This and basis, progress said that and of we FS didn't now I'll be out it give

biggest the we're look, is of end the of terms private the the just credit in is benefits, partnership scale. of with Where risk a larger I'd best So strategic in which of at the number I'd say the second seeing question, market. reward provides us say

players when that that billion, talking there's small in can million of just to space. come you're lot more So a but the that's $X end, into competition $XXX there's compete not been about transactions

which that combined BDC So other roughly the we're plus $XX largest space. we pools billion have, is the now amongst that in with platform, the

thus what we're partner partners, have we our result already and pursuing. means private team so what And underwriting partnership origination markets. that we're far a is FS private the more investment high opportunity syndication that's And just And and more meaningful markets of a seen transactions. be teams, aggressively our private is of at up a credit as including though to for in capital tick large-scale able credit closed. what to And do capital even credit with pursuing our terms for we've level, origination

taking for questions, Great. guys. Thanks the all

Thank you.

Thank you.

question Brian Bedell line next of from the Deutsche Our is Bank. of

is line Your open.

questions my asked more a I and Great. on Thanks. totally that, but Good been folks. think conversion. just C-Corp answered, congrats Again, of course. have morning, Most on makes sense, couple of

this talking you earnings this, think recited two about you're you Bill, on hurdle be, think, sort last to do call, I I the multiple of, breakeven move a would turns. sort where of, the rates and thought

Just want to go back.

expecting high-XXs what be would time. that and case, want something that. I $XX about of overall, that's where of, to I imply the multiple would ought that And would Were your you think right. consensus that ENI in on to you thinking to the stock around the around think be successful. sort of view if – just see of were was stock this that the would as if kind timeframe you

this really prospectively dilution color. X% last ENI rate view, mean, want perspective going to is to a a about because think effective a an X%. has it gave tax about on not from is and to compared from you changed way nothing point of I little ENI we're focus to the be I our similarly you we when quarter quarter mean, if or

And go XX%. perspective, from ENI will number an that so, up to

So, to ENI the XX%. perspective see about going you're an from dilution

to taxes that to that have that for going the to to point So about cash at if dilution do ramp better we to multiple what better. what we're view, the going could actually a figure you we're stock a time, go to when a be to up up over math is out think only is about From because time. TDE on ramp will again, our you that the difference the going you it's over price And now are dilution is going only be But right X%. pay they should little the lot – fact is. of X%, going XX%, dilution see from

in But to from be the standpoint need saying we to believe you'd the clear, to stock. for Brian, stay have on is increase is stock call. about an were we're what last where as talking what a what multiple to expansion opposed the That's it

our we're per in it's do the based TDE, shows though think page after-tax is XX, given I it articulating even page expecting on I dilution near on XX. up share low-single-digit worth think again. term focus TDE to And

conversations taxed a multiple a trading fee-related balance C-Corp. And are earnings. about haven't our as as Our we earnings already sheet historically, had of

tax what on carry rate the happens of this balance to really, So, sheet of and on question you're kind down gains.

So partners the is opportunity line – is believe our build about interesting, and this like-minded long-term we for near-term bottom the firm to more is but shareholders. but much find more us we have and the

compensation to be changes your it. got whether may on do. the wanted conversion currency operational not may M&A, it think more change or anything and to sort currency. it if in follow clear right. you Got as a think better to attractive Clearly, that, just is characteristics? more then lead And you but firm do maybe it, the it acquisitions have across you just obviously because on I All other changing, the strategy of to way Does about you any

No.

thing from. on we revenues where this percentage do realized simplify segment I basis think a the of total discussed, to trying only we're low-XXs comes and that's is as

So, a we're as packaging what opposed just we've to making change. more simply been doing

Right, much. that's Thanks very great. Great.

Thank you.

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

line open. Your is

I to Great. change still guess would taking conversion, in you the effectively decision with back of this switch or more to at I think really fashion, in point structure consistent permanent about structure, And suppose one my this as comments of adverse (XX:XX) some should Thanks we for future? should topic question a in about on partnership you the more thinking term? tax have ability a morning. the your recent long the are the

your very a We but were is is we get to Gerry. Bill. We'll converted actually C-Corp, and plan unconvert, really to to have we C-Corp, to be This ability but Hey, question, if do would to this. shareholder be we answer specifically, that, brief technically, approval. on there a to an

that little Okay. Fair switching to believe on in a the fundraising, fund, of the strictly helpful. bit existing the you you back global about first or on for infrastructure looks perhaps enough. bit then breadth? you. that fund, billion LPs maybe versus That'd noted size. a And kind U.S. follow-on on talk I opportunity close $X Thank Can in touching demand elaborate set like? little for the new focused Is it and be potentially gears

Hey, Gerry. It's Craig.

we have been decade. the give think specialization. of Two lot the (XX:XX) operational a establishing looking is, And complexities, proven about is fundraising. we've I protection. we're or the I One, on we as answer standpoint, of delivering that's as as some that situations infrastructure, a of platform – risk-based. and fundraising disciplined, midst of we've a with questions, infrastructure that a can there results to for we capabilities navigate in the think are for we a as three remember. it's think downside piece whether from we unique attractive think partnership can't critical We're To sector a focus whole about very creative our things details it's Just third where definition lot globally of whole,

cases, of a with we turn in found I and it can we, think situations simple. something into number have complexity

in So, have raising the been for I recognized we capital that think that they've LPs that to-date. to-date, we've are, helpful have those us things raised and that

be Yeah. the firm look we've answer and for a funds to to at funds investors your to way seen quarter the is firm. new new broadly, these to if to you the or I'd of our strategy global is say the recent in a half maybe question that strategy the more the

to So, expand continue, the said we as investor before, I base.

taking for Thanks. questions. my Thanks Okay.

you. Thank

Thank you.

is the Wells Chris from question of of Harris next line Fargo. Our

open. is line Your

Thanks, guys.

around we So, it's of but if that is sort year-to-year, from I metric on your that metric if focusing we bump the information here quite still implying lot new DE should slide a annual on be appreciate look X, can growth rate. at primary a and X%

you because need drive a than seems valuation might So, growth just more like to, to get of kind that you it as wondering, think do a you consistent that want C-Corp? you higher guys rate can the here

You're talking bottom the slide about DE right on X?

Correct.

Yeah.

you Chris. to I you'd have So, think through what's to going kind of there, – parse got on

in So private the we because vehicle. early was KKR the kind really of especially, time, merged XXXX there the came how you into public XXXX, remember period reverse of, public, a KPE years, we through basically

of XXXX equity at into so, particular, a private period to there's we an the in there, were coming of through from were monetizing gains price. just that where kind And time out attractive we crisis balance in happened XXXX of merge sheet investments in that

is chart, component, more the management gain upper see lumpy and most what harvested. going going of kind and those been of on a you'd elevated transaction gains then what's going period. And up, see fee see you'd have of balance disaggregate you carry in an if you'd that So, right, fee sheet outsized up, now

much you kind a bottom growth of see in that, if So, rate faster normalize the for you'd right.

sheet fees. non-private to our can the opportunity of to I we a grow we're carry. And to said equity way lot at yet in as of outsized of before, continuing run the dollars rate grow latent And be gains. is in steady there the then, believe and now. that We starting particular. now as more continue in it ground balance we And that we cash just a are is our is generating our of period management going A look to in so, businesses, carry opposed aren't think to lot carry

a see the equal. talking you're we'll of all we're walk going to a at And to you. we're all about of be think really point great now we of cash faster else sheet. amount forward But, forms what revenue, through you So, is that to balance July, fee, detail forward in with going three trajectory where going going much carry, a

Okay, great. Thank you.

Thank you.

Thank you.

Our of O'Neill. the from is Sandler of Disdier next line Andrew question

open. is line Your

everyone. afternoon, or Morning right. All

the but like just July. on to can you So seems over term, you're I sure be it still if understand long it tactical not, you focused and Scott, I'm or nature until in alluded not –

a off think on I tied assets thinking see taxes, as think realizations step-up tax I lock-up of leakage So then saving they're timeframe two, then of cash the too? in of holstering, and Data have realizations about tax that more kind or the commentary and to growing we accrued you step-up a is sheet shorter value of taking in First there? and that or lowering imply may does I rate the the least dynamic at kind at mean, carry around advantageous not thereby losses the assets could And thereby legacy that incentive unitholders book DE balance been of may

that things investment, planning the point Andrew; of taxes. force this isn't optimizing wouldn't doing. hold your to what some make to we're like unnaturally we we it investment, we do. certain that save to just we to we've conversion, Tax can is try only Bill. about driver Once important, but Hey, we're anything Data, decided is But First that this

be company, the doing So and in the around unitholders model, for that that and be our business that's proactive we'll plan extent the around now saving June in business we model what can XX accordingly to between sure. comes taxes first and for

thing Everything between July be that Yeah. to course. course X. normal we only is expect we're telling today normal than and other is what The you now

So to no changes our approach. other

I follow it. $X.XX DE, the million or on Got that or then, quick of, post-tax up, And pre-tax? is think one $XXX

quarter... this For

Yes.

se is post-tax and tax paid no or that's balance pre-tax really on carry sheet because is per there It earnings.

Got it. you. Thank

you. Thank

you. Thank

Michael of from question is Cyprys line next the Our of Morgan Stanley.

open. Your line is

Good Hi. thanks and question. morning the taking for

entire conversion C-Corp like sticking the it the structure. with Just sounds topic, you're converting

opposed changing that the legal elsewhere. confirm as Just that there wanted there as entity right which you're saw to a you heard we I structure just entire filing C-Corp to

What make taking that are What us understand need do of So, you of effect that you just curious entails? happen? sort you changes help what actions make could that to change? to if to sort

Craig. Mike. Hey, It's

itself the the So, a – public actual to converge partnership from a is conversion to is corporation. company converting

taxed and a to doing a we're as entity not not what box as So, we're the corporation, keeping we're be public the is checking but electing not partnership.

to converting to a entity public Conversion a Certificate with a that, will partnership file itself, the And from change. So, again, in alongside corporation. effect is Delaware of we that

In that just maybe balance the just the about types extent a this curious sheet attractive in context and thinking Okay. to the overall past, your now, compound to more you the and or less and you it compounding attractive post-tax. pre-tax there? or on, would balance make be able follow-up sheet. sheet and of that investments conversion, what How strategy you'd make strategy And impact to of would would your the be does thinking it impacts off the be how balance

on on no thinking. it business to running No we than June the changing how overall X in going running different July We're be were XX.

Okay. Thanks.

Thank you.

Thank you.

of line Our Lee is of Advisors. Omega question from Cooperman next the

Your line is open.

changes the very was didn't getting talk And I'd you Data. to is which owner you the of buy KKR impression with make I the want be First morning. to speak to suggestion you consistent larger on owner I a announced this money as that clear, Thank to an of even much. both spends and an like side. anybody

not include dual-class You basically will fundamental Data pond to is wanted of any and more. ocean to Scott, leaky S&P comment, they a to in an because stock index voting has you basically voting have from the line made not First an shares and price the no performing you is for elimination reason in suggestion move with that take leaky there's My performance shares, a ocean. that dual from said that to a will pond the

excellent impact. an has it's listening. you an major take pond not you from ocean, be and investment dual-voting leaky job I Frank because for would interested, shares a to eliminate for in is guys Bisignano Thank you for it like its on and and a advisement move salutary think an why done us, I'd So, in Data, very (XX:XX:XX) First to

First No, appreciate on thank I and you, partnership Lee. KKR your Data. And both

chat love Frank have Data. First and all topics, you certainly we shared and about your the have for it's at. but to one, aligned But Happy thank view at comments. partnership done that you including and team at, your on about we'll think a something any wonderful and looking look we're the completely continue to I with to and job you chat it with

you. Thank Okay.

care. Thank you. Take

you. Thank

Our Davitt is from Patrick line Research. of of Autonomous next question the

Your line open. is

that and the Data, PE balance guys. on portfolio. the on is to big because for there's of point such it I you'd but ownership sheet? understand the balance better anything Hey, the the marks My Thanks mark First gap lot drove question two than a there's different sheet between differential a if the follow-up. curious expecting versus I was just on a was

Patrick? in Which investment particular,

No. expecting. It The broadly. be better I balance was to than seemed sheet, a lot

performance the The sheet? of balance

when performance... So, the at you look

Yeah. Yeah.

at earlier the look it a WMIH. about nice But couple XX take investments nice can a about release, was USI, a mentioned that a up was increase it with that you that have the We PE with page X.X%. when the increase you about performance the being fund ...we talked up press we on show was X%. of see of

size the sheet, balance you of the quarter. across look But more at actually, had investments relatively all we sheet better on significant a down this mark-to-market all platforms, the at a the some way basis than And that well. again, on all I the all or benchmark quarter top look from looking did equity so, when large when and balance positions importantly, performed at credit, the this on take to left of private I'm

quarter had equity, Patrick. in credit, a It PE We the lot good real quarter in good assets, Yeah. just growth around, all investments. a a in was of

position, a And USI private right? is

It Yes. is.

allowed Yeah. something there to up that much? that that step Was changed so

held through really say, happening But Well, and it comment be go don't it we've we off. wrote our valuation better specifically we of company portfolio something when process. must for the details months part good nine it to on suffice if we

a of couple made (XX:XX:XX) acquisitions, If Patrick. USI

Thank you.

Thank you.

session. conclude does Thank like to you. I would Mr. And the this turn Larson. time, the back call at Craig question-and-answer to this over

see hope if X at July And for our with have us again. phone you. you, everybody call. everybody, thank directly any Investor additional Thanks, follow-up our we to Please, thank obviously, joining Amanda, you Day. And questions.

program. thank the for today's gentlemen, conclude conference. and Ladies in your you participation This does

great disconnect. now have Everyone, may You a day.