KKR & Co. (KKR) 25 Jul 192019 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to KKR’s Second Quarter 2019 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 opened for questions. [Operator Instructions]

the for to KKR. hand of Larson, now Relations Investor will call Craig over Head I Craig, go please ahead, sir.

Thanks, quarter Michelle. us. XXXX second earnings call, Welcome thanks for to our joining

at Scott Bill to in like everyone our GAAP is call, that KKR.com. non-GAAP which our by which Co-COO. to remind joined available refer press Investor on I’m Co-President and release, usual, CFO As Center on figures and measures Nuttall, we’ll are our We’d to section Janetschek, the the reconciled

of a contain a SEC will do going that on to guarantee cautionary call I’m previous which This be forward-looking please Pages not the like related to supplementary future begin website statements, by so quarters, course and our deck. performance, refer call. factors presentation the supplementary X we’ve of these and events referencing filings or And referring statements, – we’ll X to posted our the to over for

key of charts Perhaps most seen the So trends hand nicely continues page. grow see the Page earnings in X on of four the left that be evident summary shows as to you our importantly by underlying metrics. are strength can on the of fundamentals the firm the power our side. the The

up favorably this per the broad like with returns compounding now across AUM X% This of Our market attractive book this power XX% is the asset share Spending value compares we’ve is increase classes per value, is combined really timeframe. World, book and has driven $XX.XX. to over performance seen book the at $XXX which billion MSCI share. our on year-over-year XX% figure a in value in indices minute

the up the as income last fixed X% over As like LSTA months. XX well that’s indices about

of components of and last the since Highlighting performance, our one increased is up carried since it’s beginning the we’ve seen of year. quarter XX% book key the XX% interest, strong unrealized the

have fees this XX%. on distributable the grown side have earnings page right-hand management the alongside an of at LTM steadily Looking increased of basis and

We Turning report reported earnings or to Page taking share do details. $XXX of earnings look $X.XX additional we for distributable as basis. into quarter per account And reminder, distributable million after-tax figures, these a our at adjusted on after equity based X, you’ll see as a you some the charges.

for and fees the up comparing year-over-year at came the compared QX, quarter quarter XX% an related the on Management figure XXXX month Fee is earnings billion, XX in related periods. our XX% XX% LTM year $XXX $XXX a million for the LTM ago. fee LTM are figure of as to record trailing and basis this compared a of $X.X basis, us to on earnings for a million,

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

return private Page the our mentioned minute equity, compare terms favorably In performance, the flagship investment performance shows on a appreciated I of the look a World, appreciated the deck, three figures blended In a of XX%, to funds whole basis as of our funds. private our both these across at take and ago. XX% please flagship total of equity portfolio MSCI which a trailing XX-month the X X%

indices, compared the LSTA is XX% months. last which our Index. real performance as well are respectively compares performing special in to X% sits while minus are XX favorably plus XX Select our credit, the the flat flagship in S&P’s E&P to And decline estate and our a flagship last Oil strategies and relative over XX%, and composite with asset months real HFRX X.X% more X% up infrastructure fund funds Our mature, and energy Gas the and over

the billion terms fundraising, Asia held quarter. estate alternative We our In new in had Europe as raised in and credit new in strategy. the new in credit as an inflows capital U.S. of initial close we real $X.X CLOs We SMAs of price and leverage various products. the well

raising in capital. progressed long we Additionally, our goal duration of

in long strategic end, quarter years more of XX-plus permanent $XX is points. powder there quarter and In basis commitments average or and capital now at a contributed a of over the that of billion at As on to either inflows end become total just capital in basis fee-paying as-invested inception. or have weighted at this very billion rate recycling $XX expected dry $XX has XXX of of in included quarter billion an we life

that, And turn it Bill. with I’ll over to

geographies well, Craig. do to with across primarily Thanks, and start third investment billion, I’ll is we strategies. in opportunities. $X.X deployment markets quarter. second and the private billion the which need Public businesses We was from coming credit our new lending invested $X.X thing direct find

billion. of a private Middle equity market contributors Midstream investment. investment – Eastern private newest and invested core for our from Europe handful a European of Asia our equity The notable private investments fund. were investment in $X the we On investments infrastructure side, largest and Other coming out

higher. a completed of to exit final secondaries our from Shifting activity, number monetization including we

our We and four positively impacted strategic at times our balance down basis, exits fund sales PE a also were both completed that cost. sheet. blended multiple the the On

has stand realized was has quarter, total signed income. here million it which realized carried of total closed $XXX the or and in only gross investment For This interest or as expect close to of it’s $XXX at close million of and compares been to today million July. $XXX XXXX that the XXXX in we to point, end QX, in is this and expected we

all use from of last firm greater need balance the our capital economics of investors we activities. and to model And sheet do to and is thing AUM our markets finally, well our the capture for

breadth transaction environment in a North the on America. with in capital million KCM of first QX this outpace capital and business as of geographic revenues The improved in market certainly is the year. this in Europe, of had to Focusing Asia revenues QX markets added quarter, $XXX compared both fees. strong quarter markets highlighted Performance

balance And spend minute turn X on a ago investment a and We sheet the and strategy book handful Page strategy, you we’ve of to on to two plus commit core We focused our that on investments XX own focus this on have begin $XX.X call currently compounding. to going a own the our billion to strategy years investing of as capital profile target with in equity, introduced of we committed our return years. our lower sheet have but alongside impact $X.X want billion balance partners. we’ve solid if chose I’m for to of businesses capital. supplement, this significant core core a a private to seen including AUM performance, We value

two is together gain. transactions through at L.P. sheet, quarter unrealized billion and Europe the the years of investment and value Now IRR Core Asia total with not in, in U.S., IRR with looking $X mind, that our gross capital a billion run distributor Keep total line of a yet, end. segment sheet fair balance as all XX% the earnings through on of Capital a in as we’ve of has $X.X across the balance of invested terms XX%

in $XXX began since point to in to we’ll approximately good the of However, relation Core feel strategy are we’re value this posted make investing start keep other million a the like way. we to contributed balance I’d and There you sheet. we is off balance sheet along two

investment biopharma The point BridgeBio, first largest now out sheet third thing want I you’ll a balance is to see our is holdings.

IPO our million its cost. QX strong June and five times – its value post of IPO, Following as was XX market trading $XXX and fair

significance to provide color. its wanted Given we additional that

I’d bond offering obligations. at increase any of recently balance have thing approximately the out second to associated to $XXX no rates. refinancing The out added with taking and Putting a liquidity to both notes, effectively denominated attractive call dollar denominated our of in million related will offerings, the interest U.S. aside sheet, maturity two a premium like the priced expense. we XXXX We debt XXXX with euro

with And over it I’ll Scott. that, to turn

to joining strategies last our been from despite that think I’m on call launched we’ve in thanks our and business our decade firm. XX everybody to how going last scale. on today XX were XX-year the business decade, our and Bill in our start and achieve the about of for history, mentioned about we we’re I young a to takes Thanks, it trajectory for how here. focus scaling our call.

So we majority one across activities. fund or we growth of us five to four of as have a three, the investing go ahead and two from fund firm’s of the lot

ago, we’ve is been investments new been We building for a but We’ve team us nearly about way efforts. dozen on we that fundraising on to have relate the think We Remember, X,XXX businesses. is had our fact distribution. the years people We and but while this a compounded making investors. opportunity by upside long go. distribution that investing out also people investors, team still XXX growth in and large XX to now have we XX our dramatic, launching

an been has still improving, count stats numbers. those cross-sell meaningfully see expand investors been and we opportunity Our of our but both have growing to

investor As combination a from our base. compound records of forward, growing powerful to see significantly going mature a track result, the more we expect AUM and

the our we of at last are larger what’s a and given been every capital Page market. years. basis. That We timing seven our for a when X sense of closings give release, report of raised To over happening the the acquired chart Especially, funds better the on quarter. press new be you experiencing a trailing the deck, three-year to front what sense can in this number the and new capital raised this give gross lumpy, come on good funds. looks

and trailing number grown that billion And You number with of the despite use from in year acquisitions, is see our the can relationship billion. $XX billion the many today. three from chart strategies the over $XXX $XX XXXX and of has

about PE fund, billion have to dramatic to however billion. to which has as As you gone more see from basis $X on three-year $XX this trailing funds scaled. regional have can capital our $XX from our $XX billion chart, What’s billion raised the billion PE of non-PE is from grown $X three

of of As fund these lot has this keep about with mind, think and a happened you chart a please what said. I new ones at This lot in relationships. and all numbers look

progress while us the records made, really to position So the with in we here. from of building years we’re scale last track like feel we’ve relationships pleased XX

funds. on with relationships to in see in the scaling from we’ll platforms investors. new platforms that And creating recognize important world. upside more We existing with the from And more six new the and of doing around existing even three and those across be we growth our top market see next creating for relationships to investment our months points, it’s channels largest these XX existing

Asia PE, and PE Americas infrastructure.

long-term So is the near-term opportunity is high. the and visibility large

Thank joining you for our call.

to happy We’re questions. your take

Instructions] [Operator

everyone one Michelle they allow the we’d to if mind you. us then queue. and And way just question one necessary wouldn’t please our to Thank to ask follow-up ask work if through to like

of from America. comes question first our Michael And Carrier Bank of

line Your is open.

and the there, I the just opportunities flagships there. thinking about out questions. in be meaningful first like but the XXXX, fundraising on benchmarks. Scott, we thinking of thanks mentioned both the relative think the it’s should of the the then the it the morning with how over view about a Maybe timeline. pace half and in distribution, whether outlook terms it, peers distribution the maybe the that can – XXXX focus I good you’re of to, guess, or if we question. the for second of over Good sort what’s have given on deployment taking How and performance you some pretty be

see in the some Craig, you over off give years why we couple market what of then talk don’t and next coming about I’ll to kick and color.

sure. Yes,

of terms we’re we would number in do of Mike a currently. for European fundraising start include Why there, where So strategies. that fundraising

business, our impact, generation within, for outside estate, equity and next the also our and at And platforms private technology In strategy. that’s CLO we fund special we’re as including partnerships. and strategies the we of where credit real private well Asia, have opportunistic real continuous real equity U.S. our raise leverage that and capital on Europe fundraising estate estate So situations growth credit, we’re fundraising as and infrastructure a lending. the look and hedge across same time areas direct BDC in more to basis includes

Yes.

to bit XX the on a as just do say market from think funds deck. be it’s the just coming X months the it an more that of to can, but I’d to mentioned than those chart So It’s much because in episodic the Michael, the up larger little dramatic. funds you I’d scale when is we say, in here, from Page numbers. three come, six as overlay, We sizable more coming the tend opportunity next you large tell market, they do showing to the to

have lot way and fund And one, we’ve so to XX fund in, the about think through the be have it kind the two is talked the as places the in different they for we businesses funds prior. happen of across are way we these that that past And of XX we work their of look at can – starting just dynamic that other the multiples in a we successor firm. to of were

insurance retail, begin net we’re of relationships from a just structured about lot opportunity mentioned relationship, can out we the and products the relationships we And can the as good a lot distribution the – something see quite we worth, we building been incremental opportunity the and so there everywhere, build believe a of reason we we to more we start. we and that is optimistic surface have institutional time, – same that at scale it’s high is scratching are create

So, this where time way a upside saying of of lot just see of and we’re lot a we creating a has during a created been long of things. period chart

the you a that benefits in can the do call flowing just ROE All being about, you about on mark-to-market the the sheet, you quick right, then the ROE area. the say relative meaning that versus how in the balance you like just but think metric. a in When on for as especially metric, EBITDA growth immediately through to play that’s given And guys that that sheet, helpful. talk years impacts more think mentioned this that Like, realizations to balance take Core a follow-up, about how and out.

mentioned asking a for this precisely is the Mike. about reason Yes, actually and a it’s Thanks – of great example for you it question good very Core dynamic.

do critical. So creation, we We as our that think on to at to ROE look and really we in total on aspect at performance. focus basis, value marks ROE and is us look our I order evaluate a

in to the been we’ll in total mark-to-market book book for the know So we or look look really to numerator, you the sheet – whether dividend look and the book. XX And we’ll change add created, over at the balance we our out period. at value as and value that retain invest the dividend has that months, that last the that’s at the paid on versus average over that in

XX.X% do So really as leverage and I very XX.X% if you after-tax as think ROE attractive broad last that versus months, think and you’d about, firm get XX over with net a in we financials. is low the

is mark-to-market focus we So a denominator numerator that’s how most in importantly again, critical I of ROE the and that. on and reflecting think piece the

Okay, lot. thanks a

you. Thank

Suisse. Craig next question Credit Siegenthaler from of comes Our

is open. line Your

morning. good Thanks,

morning. Good

that see slide fresh shareholder this a C-Corp you wondering us that share the us if at had base conversion the data terms investor didn’t base following in but the and had you KKR provided on evolved months? your I’m you I three points quarter with has last of over any Last quarter, how an update can

thanks about. is The a actually Craig, answer one. for good asking

then and quarter. what to three had last – represent. you back what have it jot let thinking numbers down So through walk If I we could me

$XXX million, million $XXX million. So the three numbers are $XXX then and

what components. fund, since the an had highlighted it showed the So in slide the base within fund most index and evolution conversion supplement our significantly the – last was as that the other increase mutual you out pointed quarter in we institutional it and shareholder a

to year-end and were you as back XXXX. of look that if slide at So go

and group $XXX that that to units pre-conversion year-end own first So million combined number of as XXXX.

saw conversion own XXX group $XXX we increase million combined so post that to million So XXXX of over an shares.

at that, base. shareholder of that part our Looking

XXX So to numbers as million update, help some shares. put group March owned that XX, that around of

increase with an saw we all across period, about $XX three-month or categories. million three that in So increases of XX%

that And we a is [ph] at a number other statistics that of of sense file breadth. the gives look XX-F institutions

that in increase time a percentage over institutions double-digit a the just XX-F, saw file at period. And that you XX% was increase. we again look when So

probably seen final closely a pretty sense, two you I – statistics these we’ve as update and So we thoughts. all to continued other get them the progress across pretty improvement think follow a

One, outside. we like, we It when look of a large the lot as as at best against and financials have are still stats both S&P XXX we and other C-Corp’s can the that room inside to grow. looks those

a feels is So, but continued progress, do. great, to there there which I like like think is still lot we’ve – is importantly, seen

Craig. Thanks,

Research. question next Autonomous comes from Our of Patrick Davitt

Your line is open.

Hey guys, morning. good

morning. Good

On the revenue. Markets’ Capital

came given the the visible kind of increase lot better key it the there? a any of maybe in drivers surgeon capital of Could large lack deal. syndicated you expecting think in through was than I the anyone and walk revenue of

the Bill, number We the is This "shut" saw we rebounding Markets of was mentioned thing we the Patrick. this always activity I was million. for quarter, second said a Sure, the quarter. Capital $X and in major nice quarter. in in quarter were probably and the breadth first for actually is why that, The about remember, which U.S. only the and Markets is, generation from prepared interesting we’ve the when in fees about and that’s remarks Capital half the and Europe talked excess from generated of highlighted geographic quarter this fee

equity during revenue we we but as portfolio third quarter, the that our more the about, party And geographic plus that from KKR came their so of we means importantly activity expansion about look so business. companies, And we’re when a the have view, we of point at as also issuing in have is positive that this debt generated talked far the about you and of actually in that KKR clients over XX% from mandates, use fees XX%, the issuances. business. Markets XX% And revenue the and separate and from distinct from XX% Capital excess

when in were excess the broad lastly, mandates only $XX so And those again you Markets breadth verified is again, were and activity million, there think in of of Capital this two quarter. mandates about that the in this

[ph] give was third-party? And you the would percent that

roughly quarter, not, did about was this but it I XX%.

XX%.

you. thank Okay,

Yes.

Thank you.

comes O’Hara question next from Our of Jefferies. Gerald

is open. line Your

Q O’Hara Gerald -

of about of maybe and this Bill thanks. just in sort for Great, a Is increase to to rate run minute, years. begin how kind I kind – linear reasonable given the the to next with given in start income out or thinking that going as the that still Any it might previously how think a at staying of low forward. kind taxes the know a of somewhat progression you quarter, looking over model you guidance kind several we of of XXXX. state XXXXs some increase nature. and and to should of change about linear a in kind play that sort

out as did guidance Gerald since dig about pretty but to we towards we every and was to and we of goodwill be XX so did be how trying as model what that’s years, say you this, could single linear step-up the C-Corp, amortized when better we convert and know, this about half that quarter give C-Corp was that model. over to we’d talk you and actually to

that we we’ve actually tax. or and of XX% will benefit other the saw and specific as tied shelter those of investments specific we funds to The assets get carry

far a if C-Corp. in time appreciation occurred didn’t we as XX, and were talking against investments we of and go that when lower there of which to we a that June shelter weren’t about were a so than C-Corp of after when happened as quarter did when as couple of few that heavily those investments, said, amount investments That we decent lot still much had any still went provide XXXX have XXXX, income. the this shelter monetize, cost being A have What’s second written up value. quarter we’re

to investments. allocate were we to so those And able

keep we’ll those a through ago, simple, things – that try every pretty rate, year up and mentioned get to ��� roughly few percentage said hard from it points you predict, to go model. roughly it’s of the as are hard rate XX% is so walk on single But a the to of XX% this to telling is benefit investments which that, hard very up year sold, wire going tax that As a was it it the quarter. I reduction. we a long-winded the X%, I’ve written to way

it could be depending of the the the quarter, all be Next or C-Corp, the all sold went that in are third written to well on up when be we XX%. it were of that quarter, XX% assets at that assets on rate very tax mix be will could

thanks the Okay, thanks Appreciate color. for for it. the –

Bill from comes of Katz question Citi. next Our

line open. is Your

of supplement much picture certainly thank for you policy morning. remain? does talk scale the diversify. the you maybe how big this very, Can business as bit book a It’s to a you very the value very questions page I important question Okay, dividend taking helpful. strategy continue and my your is And appreciate X and little

and I’d focus a critical priority compounding say remains Bill. the us, book for value

shorter can deck As talked look past, we of policy into see good so, started and compounding in of we we’re and at to you distribution in or particular, the about instead policy period in you compounding better of a – power our page back when was relatively several in time. from to the $XX to last in ago, side, book if the of over changed, got believers XXXX changed X big see the of the long-term years flip detail bottom our distribution the left-hand in few meaningful we’ve years, part we

continues to of big be value story part compounding and book our does compounding. as a related So, AUM fee earnings compounding

and is and Dividend own our above. our invest basis, in growth, up to bet show ourselves, to per on continue the but book revisit something we’ll bet on will on policy So, annual our we’re going focused we’re share. – an that that all value of in

time. up or the expect to the else dividend should over you policy, think I dividend move equal So, have

be book it grow largely but compound metrics. on of rest compounding to we we the expect as So, will our focused do we

of FRE the just strong a FRE? a very question, bit And Okay. incremental that activity think it sequentially, more tactical on Is the just coming about back to impact the line. to drivers given transaction a the way activity of on

transaction – KCM and when proper. between focus you break on Well, fees, Bill, you KKR you have down when their to it

you in and know the also us. fees but our credits, markets, quite transaction a we the market private fee side, on they speaking, were was see increase you As arrangement L.P.’s robust, in sharing there remember roughly big to and because and L.P.’s with private a have to that’s XX% XX%

to see transaction fee go the us if but you side, good fee up to market private news, adjusted the be on is of believe be Again, reported to economics go Capital So, or the we the XXX%. you roughly transaction that sort is that’s fee a be there credit about XX%. going to Markets, the back any in to point, going if with

the million. fee expect in would you that to and fee And capital higher that, the the first, you actually take fees you monitoring this so compared saw to went investment pretty $XX increase roughly quarter the investing from netted at you activity are of we against $X if mind, almost you $X.X about be though, and in should keep billion line, billion Interestingly transaction second transaction look robust credit, and still quarter. if an

toward I’m trying Okay. we FRE incremental contribution, offline. can but to follow just the up get

Scott. question, you taking thank the Okay, much for very

Bill. Thanks,

comes of from Blostein Alex Goldman Sachs. question next Our

open. is line Your

that here. bring How your that years? related down should being you the the Hey, up some as you of fact couple Scott, have and around good the horizon to to business look for catching initiatives, been think especially, flexibility follow that much the guys funds to of last at flagship look How couple over out, scaling it thanks. and maybe, sort range company discussion you the on distribution the guys the we in of to we next but the about as have are years XX%-ish morning are now? been of everyone, up over maybe,

it’s you we’ve that low-XXs. guidance to given is use. the the think be assumption we I what we think still right expect in So, ratio Alex, to that’s the suggest, comp I the

see As and fund our not a doing to yet from the scale of AUM track We would work in particular, number time all we any fees we in from the and low-XXs. been scale good potentially as that as very twos that have than and records. teams but been down, terms our flexibility and generated next we have businesses these bring in realized over carried the wouldn’t years. that interest differently of creating continue a invested, to couple guide of more but have you attractive I ones

just transaction there stand the follow-up, any other so Data Okay, quarters, of $XXX realize state fair million where related want a first or just enough. sort of disposition FIS on And or your of your quick does kind of then couple to update of that Bill next number. I the incentive public of sure, investment to the kind make holdings. that Union of contemplate of kind income any for

any question. not does secondaries. it Good clear, contemplate To be

that and of And $XXX the couple to that in million, early it transactions $XXX had a those of there have number was headline XXXX. place. close. the strategic to close we are yet in have because sales are and it’s these reference the expect third million, We a quarter signed signed sales the So, we have strategic that’s part taken documentation closed expect and the was our which been

so thanks much. Great,

Thank you.

Schorr Our next from question comes Evercore. of Glenn

Your is open. line

We and much. is See it very distribution scaling growth get working one. I hear all what the it’s this and the at we’ll get can great. Thanks

other look we – than is at we you the suggest If believe proposal all out would of recently, Warren it all taking place. Elizabeth something

give to I’m in how are response A, talk about love adapt some you if I’d put of and/or – either guess shot business B, I those proposals So a would the place. to

appreciate question. you take on up being Always an today. it you, given for to going not Thank the Glenn opportunity,

Okay, no problem.

not not going – we’re We’re to comment.

would have we’ll obviously let as watch a tell and sure I that we I thoughtful medias on plus the for of business. – things you to all things in the a that that number we’re last the it have and about impacts developed, being focused stakeholders as know all you things season think, we’re at we the how be of effort sure of, that how making if it around and will robust will ESG been will whom decade our beginning we’ll responsible. a making we’re you different probably

so And and adjusts. focus the as that endeavor on then we’ll to adjust continue environment

trends. am, a This rising Okay. seasonal degree the think related same private a as differential of thing. one. I to be it if And and I to of to it’s Curious function business a just a maybe, public if valuations seems seeing that in you’re

seeing it us. too. opportunities it And is I We’re providing think to

I lower capital There’s get think lot if a as They have/have behind. sectors and lot that is there direction, explaining real in done. not complexity a become Glenn; market, think a it’s market. multiple high there if companies company that tend goes and left story. more the if is to it’s has there certain simple growth, really of a a I be growth; of is if, a of some is And needs a to bit get

to the think more this we part is that develop bifurcated going leading of to so teams are consider interest private do seeing management transactions. I And on and market

this benefiting carveouts it’s a to trend, corporate particularly say that’s think creating the subsidiaries. the trend also simplified of are the clearly of a companies thing far, us. lot around that’s more are. been – we’ve simple And all is same public a from, private around and number a non-core we’re world. on I’d the as creating opportunities of And derivative focus I seeing you we’re but for that selling So market’s so stories opportunities active

much. very Thanks Okay.

from Kotowski Chris of Company. Our Oppenheimer next comes question &

open. line Your is

Yes. linked quarter noticed carried a receivable interest is The good ho-hum that story the XX% seems big thanks. market. and – particular behind like up and morning I that? any number and of there just kind Is a

example, a story or equity This of during capital equity Chris. robust Bill. portfolio the other lot private than was the is Hey, is No we for quite particularly X.X%. up and private appreciation manage quarter,

carry in and accrued lot of a is you you’ll come demand through that see So, appreciation, capital that the see number.

line Chris, are we dollars add accrued of in and the also The younger now getting non-PE are in carry that is coming tick ground non-PE to are it’s well. I’d for shared thing continues there is we the investments out exited. And those And is interest over the mentioned to from and the to only number think carried our that significant as we’ve play growing invested. funds these up and upside time starting

equal, see grow. to hope that, carry we else from non-PE to all that accrued continue So,

that Right. – we and actually carry $XX last of slide to actually manage – a eligible billion supplemental carry we eligible in that of point, was we funds billion. And number quarter had $XXX that the we that deck the

mandates our we returns again, So they and then preferred to only different continue but to to PE, going that their go work you’re add not see carry in Scott’s point, eligible, up. and as continue way number the business, grow their to through

also Okay. sheet the And fund is growth healthcare follow-up, then BridgeBio or it a investment? a as is just balance in

it their sheet, that were is and again, answer. capital of specifically first a beauty we not straightforward answer the four we to to some we the attached. sheet capital tranches, of question. Good raise ability then over sheet go The on balance balance it’s our with BridgeBio just balance was third-party made have on is the sheet. prove separate contact use the our mandate originally two balance a invested And

fund raised participate eligible fund as that that And and then the a to was we – with fund participated. investment in

healthcare importantly, a balance that half But $XX of and we cost only So years. $XXX plus sheet million a million you’ve made it’s but a that the value, and the the last growth of of two flavor in more $XXX million is investment over [ph] interest capital on. GP got

also have what wondering was it Well, – is about five nice guess biotech. it’s in the would to nice in be obviously, time your a I first I banger –

– did performance So, your I is help – to on fund I boost a mean as – does see of balance it the that by we amount the sheet. similar mean that it’s what

so Healthcare a is an very right a account, – now. point. because fund the write-up, is early you talking when in – accrued sheet. has, million, on IRR because now. carry, that’s growth XXX%. think over that very also is, fund big And about some and had Remember, good, it growth of IRR it our Embedded some is balance we healthcare there gross right the has of good our the just it’s take $XXX funding, we’re into which is investment And I the certainly

bang going you’re that so see big to And about. that you talk

Okay, all you. right. thank

Chris. Thanks,

Our comes from next question Devin Ryan JMP of Securities.

Your line is open.

then of and into Scott, longer-term helpful the you it business lot which next but some have on think got just maybe, the for Good and guidance I of near-term, but related the market. Most at great. specific from you of visibility here mentioned had years a your fee perspective morning, FRE Day. trajectory for had the this peers been given some earnings everyone. asked, been just questions one to Okay, has the pretty transparency, given some few since we’ve Investor my

years level where if fee us it to parts and from over granular business two of give or fund-raising that the moving maybe growth on possible, rates related like possible is you visibility based here And more or to some on into of see earnings, the three anything deployment? so the just you next have range of

Great question, also but up this appreciate I it. on not as well, you to Devin. take opportunity And going

per guidance we’re giving not comfortable think se. I FRE

Capital we I give think business. in XX% that And is continue or can to businesses. sharing had we fees, seeing plus you management the see scale just take our from you trends we’ve we’re what doing Markets to the opportunities growth significant as tell with and narrative comfortable the the in the are

but in share in can opportunity well. leverage terms page of specific create mode to I’d around decade. with is scale of point tell from sentiment as if guidance. what do we’re as we this see We’ll the last we’ve ones six relationships, the the upside optimistic to with what we ourselves new here can there’s we’re but operating Getting very you create no relationships hard new we put and overall fund and a lot a of records meaningful with kind work track creating but we being of seeing, you and in in this do and that, point forward.

no So for specifics upbeat, but you.

points you’re XXX able fees of the to income be attached number bit as year-over-year, – it’s up of capital that. shadow when fee-paying just short-term, talked of is that increased, over remember color, at management and that basis AUM fee-paying AUM to of look give years, X% billion the you very roughly take going about $XX that next certainly that to little and because you a we And was to a have see couple invested over to

Bill, thanks okay. shot, that a give for it appreciate Yes, it and but I guys.

just I’ll try.

Appreciate it.

question from next Fargo. Our comes Wells Chris of Harris

Your open. line is

if this So, know. lot you of guys investing there in is business approach to Europe your a How all? negative debt region or impacting as is your in at yielding that

And markets question. opportunity is significant. the great a that capturing in and the it’s Chris, premium opportunity illiquidity to finding what Oh, Europe the we’re – the generate return it’s in it’s private from

components And so investors approach Europe finding talk those portfolio. we it’s in especially of world, big we are their around impacting European but investment per are the not when our se, that to with

illiquidity figuring more them. with to capture us, they are focused how do So, for out are that premium to looking on they because

are but what So, yielding on se, us has investing their how really to portfolio it is discussions to allowed negative with trying series figure position changed per done it environment. a to that of a create hasn’t it how investors we’re out

from and a seeing flows illiquidity yield infrastructure, we’re the into So, credit anything that more has estate real things private coming markets. like private

lot a finding interest. of We’re

it. you. Got Thank

you. Thank

comes next of from Michael question Our Stanley. Cyprys Morgan

open. is line Your

the morning. Thanks good question. for Hey, taking

pays you fixed newer invest your of hoping recently companies the a about number return a particular, enhanced structured initiatives that you’re some could little talk targeted product a distribution. had in note introducing I that and bit a you toward I saw of Just insurance across think strategies, but

innovative opportunities high you your are for pays guess see market the I that? you able of on you evolving out sort Thank equity on us you return of funds how structured coupon Are and if structure payouts match solutions sort these understand such help the that sort just of private what streams and could to you. So, a do note? to

few is we longer focused One that is kind this brings of Thank you, continue we’ve question how can covered that think we’re I different capital – past. to Michael. on in the duration. Yes, this a themes together raise

you long-term of capital type As focused year capital. of generating on know, we’re more XX-plus block and kind recycling permanent

we’ve And that’s so thing very been on. focused one

AUM different opportunity those our for billion for raise capital on course respects from or to as over have for we’ve invest them years, And companies is thing, very for insurance of last in out go been found we both the and do that north our of $XX compound is create our relationships across to of the an the objectives, focused to in been products seen attractive from format to to $X we’ve insurers themes, number and building invest Another space. time a spending that so in. four longer-term innovate it in in partners achieve and two insurance a billion we’ve us easier

we higher yield question you The have the many is actually been a answer have been your level that one so And that them talking about generate to relatively portfolio example around a of Private product how on completed. just working is can straightforward. of you’re on number and Markets

traditionally does credit equity return generate do, not growth true about If current equity, about real you infrastructure, just basically credit, we’re do if it, private and equity, real some energy private but everything what you think whereas we it’s examples. think doing estate much estate are else

create that a of an private run asset yield also on of finding it’s of that create hybrid we’re a alternatives yield. and so opportunity and upside. And long-term and you to have then does recurring think I of both more that portfolio think combination that in upside are recurring diversified And can the plus other terms products that we growth equity it’s attractive, classes

to get follow-up. Great. the ask thanks. back in queue I’ll

you. Thank

Lee from Robert comes question next Our KBW. of

Your line is open.

taking kind questions. – little got reset because a for the I going dividends. Great. call And apologize and bit one of dividend, on my if year a late, Good went the capital converted, back I this, I thanks this anniversary but since over morning the mean, not to just management and maybe you

of kind and point you that Since is view guess we’re the think – and guys a in to growth second your relates here? pay dividend about think ratio you everyone at it year I we of from question and you should more somewhat about I really pool, how kind there, more unique carry pretty are this comp pool, as as funds. becomes as many to those more kind to pressure on change point to out that have model get or it, strategy much firm I the is diverse? is becomes of execute bigger the big of opposed a is you you specific easier but on, one carry other believe, that So,

that punch it’s We Hey, points it the to but relates cover probably It’s quarter earlier the so fourth call. annually did discussed these Bill. the is we on, dividend in nothing will address and change something policy. is, we’ll Rob, this both line – is what be on

that down that comp relates is one how to it remember we it’s talking we over is continue more and P&L, not our margin balance income but that to holistically. specifically, the but one in or over low-XXs see break we’re that every se. business generated going improvement, and that at that believe to to of – earnings, and you’ve full per As got grow we you the we sheet how don’t should to comparable time, carry scale then look that everything that’s we what business, be on not one-off whether earlier, fee next happen to as mentioned quarter pay income

went we that only make And the would about operating conversion number, and margins going one reported so to the sure low-XXs in the C-Corp target when to that said we comp roughly XX%. number were be we we that to

be to going change not is there anytime so And any soon.

is allows we we across dots the connect participated to case. carry make of a KKR be the to critical see change pool. to that. everybody has in of on culture us any and Rob, is a think together sure that firm part it. works from inception part always the question the pressure everybody been and so of global expect the your to the It’s how we This that continue I and don’t the last our operated And to no, change pressure part

taking my Okay, great. Thanks question. for

Thank you.

with Our Morgan from Michael next follow-up Cyprys Stanley. a question is

open. is line Your

capital to extent on the KKR industry delaying using of just terms and leverage and One deployments, of in order lending, today lending how that? you’re size, that capital and then call costs what making does down on you’re when across used seeing use drawing magnitude

mind halfway in you just your silent you repeating we part. cut it question. you for Would catch, and were through Mike, the first didn’t just actually

Sure. I line call was just asking lending. capital about

the asset future. in repaying you’re a fund line and to using buy buying it off drawing when initially in then to, an leverage So, and the on then down

in curious, sort what usage to Just you’re in across seeing of the of of of leverage. do size industry part form this What leverage? that the magnitude of form using you extent and of industry terms is see this KKR what for this

We’ve one years. Hey take for doing in Michael, having this by few funds. that past When the is the Bill. a I’ll subscription that facility the administrative of about eased one. each think you been

built opposed as not much is for all. to at as line that so ease It’s anything. administrative more in And again,

you know a we report use report to our if would maybe, return question that facility, be report IRR, let the line. we because you return that asking to having didn’t as as that a I might as far draw, us because use on subscription L.P.’s, you profile to relates, increase to to ability want the do also the just we that but it line, you that the of but use the we particular a subscription the fund, delay as of extent actually As

again, have numbers. report for So, where transparency these reports, of we both we actually those

Great. And duration of that? what draw would typical on a be the

this it down every have and gets six usually this average, facility on drawn paid facility, we months. we’ve Typically,

okay. Got it,

so months. six So, much. thanks

you. Thank

You’re welcome.

further the There turn Craig for closing I’d remarks. Larson are like call any to over questions. no back to

look your Michelle, thanks anything quarter. with else for please thank our and for next we directly you follow course, up chatting forward everybody of call. help joining and to

does This the and may all program thank have you Everyone, for a gentlemen, and Ladies in great day. disconnect. conference. participating you today’s conclude