KKR & Co. (KKR) 6 May 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the KKR Q1 2020 Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today to Mr. Craig Larson, Head of Investor Relations for KKR. Thank you. sir. ahead, go Please

Welcome first Operator. call. XXXX to you, quarter our earnings Thank

usual, by by Co-COO; CFO. morning joined Rob Nuttall, our As this and Scott I'm our Co-President Lewin, and

for measures refer that guarantee also related GAAP will cautionary the to in contain The future do on Investor our is call. filings which refer everyone Center are which figures remind or not we'll release, forward-looking our events over like posted we've referring on of that to call be presentation factors which statements, please like these quarters, to to We'd And so call supplementary statements. our non-GAAP available to website the on press course section the to SEC performance, previous reconciled a kkr.com. we'll the at

healthy. Before on the front into the hope challenging by times start line. we and those on most call we're to the COVID-XX, that course, are our extremely affected particularly the want we we get those experiencing, and thoughts, all of And that are everyone with by recognizing results, safe

time, a to services. our As pandemic safety same of best-in-class during has provide our firm, employees, the the at health the investment while been priority and continuing

across we been working global fund, looked, all incredibly dialogue are firm Like those of the to support connectivity need our volatility. last in the that It's has also doing of our helping teams. And similarly, portfolio remotely as KKR's tremendous proud COVID-XX. in increased given relief companies actually across we've And pandemic, the our we've technology terms also we've anything, many if the largely of several we're of LP you, overcommunicate to like been has felt in efforts and during the increased. over of weeks. Thanks having and base operations established

to to came We're $XXX X at $XXX begin to on the compared quarter of billion X turning of $XXX year XX/XX in AUM and supplement. going for our billion Page billion results. as Now our ago.

billion, $X private by are strategies real And XX%. as as and New the estate capital as fees within months driven Asia by in trailing management our the driven as well fundraising XX equity. quarter totaled up in raised infrastructure asset growth, for QX well

reported earnings $XXX quarter, or came is Book on value for which quarter, tax We looking the a share mark-to-market million trailing every after $X.X per approximately distributable generated DE LTM basis. $XX.XX. we tax of share, adjusted basis, first on $X.XX at a of And after per in billion.

been investment XX talk over in will performance both indices. past Rob a months about fixed the of minutes, equity few As has nicely and income ahead

our value over down book the months. modestly trailing is only So XX

in We've touching the engaged inclusion requirements. And over something decision we meet on meaningfully we ours, like on index a benchmark believe couple last priority indices be been a finally, to introduced Russell is continues for Russells' not Russell's Russell's and topic we us. obviously months FTSE FTSE with of quarter, last any inclusion and

And over turn things that, Rob. with to pleased to I'm

with all the results, time. solid speaking you mid-February that are especially Craig, families and performance. environment everyone. of you quarter's consider be Beginning the healthy. your Really how We've when lot, and from and glad and a Thanks today you hello, reported with to was monetization challenged financial and hope safe operating

revenue. up of which versus at those supplement are fees, are came the quarter. our P&L starting fees for the our in fees, at earnings Looking X approximately Total management year. XX% $XXX operating last and distributable with Of XX% million on Page

our dislocation. to our funds, benefit industry periods during NAVs Our market invested real that of the assets as a management driven commitments is are our the fees funds, largely of our which by financial affords of and opposed to cost

totaled for by in sale the total, of million Our realized generating the Group in over Korea, basis, revenues of exits income year by compared blended PURE sale performance In In were quarter investment a income aggregate, million. quarter, carry And came ago. Technologies. X.Xx QX and done on quarter the $XXX grew just at driven KCF finally, XX% our this $XXX in investment South our to the for costs. a at realized

to Moving thing here. totaled noncompensation totaled benefits Compensation million. expenses. while and $XXX One $XX note expenses million, to

ratio, quarter. equity for XX% Our came comp, total including the in at compensation based

total remain after-tax think range for distributable and you models, the share XX% continue quarter, variable an at earnings per the you compensation our remainder about of As operating our to in margin the of increase should low to your in XX% came XX%. And for with finally, go-forward expect ratio our XXXX. in

we on total close. sight forward, good and and have have income actually closed carried X/XX signed realized line and to from are of future transactions or interest have since Looking expected been that investment reasonably

that in today, $XXX is of number As excess of million.

to approvals a some While there to of of additional of figure, of small is is base transactions couple a XXX% rely solid achieving around into close, on it definitely still helpful revenue. number with uncertainty quarters go various that next so regulatory the those

a ago a As that same was on point of little this number over $XXX year reference, call, million. a

all So forms with quarter volatility, in of our a revenue tremendous X increased.

were margins Our maintained.

our XX% meaningfully share ago. year into has per relative increased our Our a earnings improved distributable by near-term and to earnings visibility

adverse its However, this profile impacts did share of well. quarter financial our as to bring clearly

every see all $XX.XX XX. can that came clearly our our at March value mark-to-market are book in of where share, most at that quarter You investments as in per

balance trailing was down for S&P for balance for our XXX. down XX for to quarter the compared XX% investment months, to XXX. And Specific compared down sheet, X% performance X% the S&P investment down to was performance sheet XX% the the

it this decreased is per since the end close flat share still year. December, book of our XX% While last value from relatively to time

the to of X presentation. Please specifically performance supplemental broad more Turning to quarter. go our for the investment Page

remains positive that been over performance see our can affected the classes months. asset where by invest last this you the downturn XX we market of quarter, While the many have

in the directly both compared down modest pandemic. Outperformance to flagship recent XX% PE portfolio exposure most by Our and entire the our impacted index. down our funds MSCI the for down is areas by XX% private quarter, equity to was were X% World driven

an direct less to private well. investments is of number technology quite exposure a online portfolio. the that As of performed X% example, oriented than greater Alongside and energy equity

assets. Turning to real

flagship by real over carrying depreciated X% that at well funds Our the estate appreciated of valuation our excess the significant a while which fund its in value. driven in quarter, was exit XX% by flagship was infrastructure quarter, a

topic returns this energy front now. a because our the page, we in are AUM appears this right mind have on it's an shown quarter While what we threshold know for not supplement of

were reminder, a the quarter. But X% AUM. in is as of only in total funds energy down direct aggregate XX% this Our our

respectively. On market depreciated the quarter. This the credit by and the that compares XX% credit to and bond leveraged LSTA the were both XX% indices alternative side, XX%, high-yield public down in and around

believe especially good our hold investment cycles clients. well relative performance, continued XX-year with stead operating our a the through as that do of us market funds, strong flagship combination in as in our will We history of

dislocation. investing undoubtedly ways others have new While looking down finding commitments, there into clients invest also some slowed for we the that their to of are are pace

on March As or an of across May X through our closed X-month the platform. example, have new billion we from $XX window on commitments fund in over in legal documentation X,

that years XX%. do management a In too little we've terms that approximately fees the We've quarters felt outlook, all last we to for that XXXX. shared our X the early what we this market grown last to could the over have we by in of means fundraising again coming it's XXXX couple And through say. given of our funds from the

judgment here can but are We our today us now sitting additional year still to best the quarters confident in X a achieve. that is our trajectory, few take path

a longer obviously very just a we'll to get take much to It the environment, keep us extent destination you the dynamic little is there. same. So views is our updated so may the This change.

off it hand Scott. I to before points final Two

The first liquidity. relates to

$XXX in in an of we this but of in April, senior that what quarter, the senior certainly to the environment. additional quite thought X.XXX%. We take advantage mature X.XX% feels it million for raise, markets $XXX to investment-grade priced XX-year During notes notes first XXXX. sense And at made in of an the time knew it million valuable opening capital we raised at differentiated was opportunistically

have cash undrawn of flexibility. our short-term revolver portfolio today debt and providing over financial in investments maturity to liquidity Taken our significant addition together, is billion years. and capacity, $X.X XX The of we weighted average

per second share. to an relates our Since $XX we last shares of The million call, earnings point share the XX have buyback over just price average activity. at retired

our buyback average weighted a of to share. total inception, review just $XX per retire shares $X.X is under at in program billion since over at cost Looking

capital very as shares We repurchased we are be use next several the confident years. forward in the good look over we of a QX that will

$XXX release, press our back in seen our have repurchase to have would authorization up share you As we increased million.

would I to to like Scott. it And turn over that, with

I your can expected call Rob. Thank Hello, well you, today. you're and during safe hope as our everybody. you for Thanks strange families as this and and be doing healthy, that time. are joining

much I are. with process It's has changed how The first like to acknowledge last just to it the all sure you. do I'm our world is remarkable. we call thing since want pretty you're working

telling today, some think firm a it spend I as are for us. how what would time the So and you crisis I means we we thought approaching

smaller, time young formative let financial Before the was to it a alongside go back At was U.S.-centric firms. me business. firm. franchise a of that, GFC, a had narrowly credit more focused We private the global I KKR the because do crisis our for equity

did sheet. business nascent, was capital Our markets and balance a have not we

a on As profiles. focused job we companies we capital sellers. we were had maturity We and on went we first were did crisis, our repositioned in portfolio that that balance, good structures through not period. forced teams And our on laser-focused defense debt during to, where We companies. very and

some our capital and good largely investments, we made also new in raised in first PE, credit. We third-party

KKR took and advantage time, it dislocation management market permanent capital of our as of public this one our also asset business creating we of think During private today. vehicles, into then you merged

our the feel the However, next we frustrated course we interesting. ability immediately a invest wanted We to have meaningful businesses frustration relevant were we the that that, about to as our our many make good risk footprint the found and on helped in did set not a us offense to time by any of investment short, that found after opportunity, became or to and the opportunities as flexibly In was that interesting we were would defense. about there during we and reward seeing. we GFC, sure very investment more crisis

businesses balance spent So we've capital formative expanded hundred we that million to increased from investing markets few Over the like XX, all to meaningfully XX X years since a in and diversified we've invest crisis, in XX $XXX assets of Because ability our our to we've that of billion. and gone last Since to dramatically have business. on from the experience. also anywhere that billion now the we capabilities. we world. opportunities building $XX the crisis, gone AUM KKR and $XX offices based to sheet last of this, XX time, billion, We've

looking us. meaningfully for some large the crisis post We and years moves to developmentally we inflection back, for investments, in crisis. that the it critical business made an strategically, was made was important us So expand and our the last point great drove firm

to are providing similar a and of but capabilities We with. this off capital, work crisis as viewing larger opportunities, AUM base

greater, So are from here too. possibilities the

for And the being lot offense. not we've only weeks. of over last as on model remind But a color play the in several me why a share volatility. ourselves both find before defense, both what positions do of a our but also we time we're doing fronts. firm thought to you of position periods I doing business been on let well of play that, I bit us this more would I ready So fortunate

is investments. Our and dry average years of called we visibility. away it that an more. prices be and get or when to powder, capital our XX% And significant About provides new be waiting of you have sheet, a have $XX of good liquid amount X model for our in stability billion committed balance When capital news cannot taken cheaper. for is contractually committed asset

are or committed and on Also, calculated by influenced largely capital fees not marks. management our invested

management are our steady. So very fees

XXXX. rate investment earning capital $XX committed its and capital As XXX basis example, a XXXX that lot fee of a yet which or we committed on our the grew both not with have weighted about an invested when fees actually billion in average management turns fees. points period. of year-over-year on we're is Plus, enters

how nice fees visibility we So have of stability grow. management and they on will

also We're global.

Asia is U.S. first, near-term we've As from reopen where, and some ahead portfolio, some part you high. visibility Europe due in of pipeline the to That remains of virus and our hit the heard of economies Rob, seen where our the exit course,

large discussed, and have we a balance sheet. also we've As liquid

During new balance than our times strategic critical balance view for own We a more like for acquisitions use for our so as aggressive we investments, this, buying to sheet can stock. strategic never now. our be and tool, sheet

Having this over our protecting doubt said the good focused largely last been playing crisis no have. weeks, all that, is there business. on is what impacting We've amount of defense a we several

Those and a people the to and of of functioning construction our at also as standpoint fortunate We're from our been well as around actually for a very portfolio finding only connected level. hospitality. quite X% well. Hats investments, Most teams We're X%, a are were retail our high our We and underweight focused that home. firm, our on from we've global world working are X% quite it's respectively. portfolio technology off energy, account We're team. direct going companies.

definitely a smaller different it's approach relatively Now to manage, number it small with portfolio could and of a been than situations now, be have to clear, total we have right much to construction. of tough a the but percentage

have is through So this. firm And is it manageable. a well lot to manage, while we the operating

model some of invest spending And is offense. our on We've at using while as taking in time into least time, business defense markets. our to these been powder dry we're much

our committed been the be prior private ago, teams this that has preparation buy to a dollars lists occurred. type shopping invested distressed preparing More and Since a equity the traded $X high equity environment debt XX, we've began, be of yield February leveraged Of mark repositioned in over markets. some by for created of billion recently, has target teams our we've closer explained, is $X approximately starting as has and billion together an the includes I billion This volatile equity. As years and on market which for we've or and approximately we been in like credit a the if dislocation mentioned we couple would billion, lists $X firm. loan started in capital we or of want and crisis $X been as on when to and to calls, for more when helped This credit invested amount us. decade.

know we've list into find investing are few we over risk using We and reward building And at like the target attractive. levels last the been years. companies we

and also finding at like for buy to or back companies to from our And stock. invest We're looking did delever opportunities portfolio sales pursue U.S. noncore recently we M&A. to are looking companies, Foods, behind subsidiary former with we companies portfolio

So do there's investments. to new on plenty

the to conversations, year. ways by have and markets us clients of portfolios. those making usual first discussing is capital clients. these lot We're with more time happening since time even also a committing which But sure our of encouraged together. know lead they into we than spending of beginning this with We're their helped Part to invest XX to it work what's how the can is

color. Hopefully, the no We've defense are uncertain, that where incredibly and firm have the path and both several near-term clarity. we areas busy this. some gives on connected but critical been is well doubt ahead you There's is there through offense,

to successful be deploying continue expect capital. raising to We and

And we as to what's this to for able business next last our to expect our markets. in firm. public through inflection coming create able this the to We to we be be evolve expect the generate and of above the returns crisis available to aggressively and use well continue and out grow one to did point

happy joining your our to take questions. call. Thank We're you for

Instructions]. [Operator

Blostein Our Alex first from comes Goldman Sachs. question from

bit outlook bit you a continue where of start could on the I composition uncertainty. to to little you longer? with the expectations. that little can larger, to of bit longer products taking original fundraising pipeline obviously, sense, take So path could could active which the that change if makes smaller, your The actually be relative versus products fundraising. little pretty areas given, a may near first, how be be talk guys term lots wanted But wonder about a Which could

Craig. it's on the I Alex, I'll that, don't Scott with let and at end. begin Why add

because breadth you see the Just where to sense in -- I currently is this. of it think give something a you'll we're that fundraising

estate, see continuous private our and strategy, we're So new a Europe, In fundraising outside as strategies, equity more real and fund core estate and our had assets. few direct includes same in private a opportunistic as business. and estate areas We real ago CLO that's like Asia, for plus you're at our real BDCs credit and for fundraising hedge to the including equity well fundraising to Americas also our continue of that Also time, weeks issued lending. that real opportunistic dislocation, across estate partnerships. basis, going areas a CLO on actually going the real

it's where very a think top of I a So to add on be we're that? of Scott, anything -- it you'd fundraising. active continues list areas

Thanks the One, very fundraising. Yes. it I'd A couple to say the things. comes Alex. optimistic overall when just we question, of remain for go-forward on

the offense in. through and in on the their of that. But questions our we every pivots environment, what lot especially started lean about basically, for So to and on of Maybe portfolios. terms Asia, composition seeing then a little no ourselves of There's change of see see usual. question bit of talking rest the everything where where terms We're just X from composition, the about you. to in our notes large of engagement recovery just clients, of portfolio, material to where accessing lot our your ahead given easily explaining conversation them dialogue a portfolio, And with been the we're we to color in it's Asia to to capital. Xx A comparing world.

LPs clients couple the the that have of in around GFC play to we remarks, are these high institutional and And $XX XX new I a lot year-end, last invested world capital. lean recovery worth think a we in X offense. prepared since addition months. in, and for post retail looking the we're about to of the into net seeing billion And in raised hit particular, ways in

no path we it's as time, around our just recover, to best The additional expectation But but composition. it quarters our is outcomes. in no may guess. change few there's highly commentary over in that continue the shorten markets dependent, So may take for but change

Great.

makes billion and Scott, the question follow-up just both Rob Of you $XX number course. sense. just That that around My mentioned.

billion So X give the months. you us again, that when fees? going management give of then what in on in come us strategies $XX sort over last kind is of And Can And of course the May? what fundraising drove sense actually that maybe a into was to May? timing the over

Thanks, Great. Alex.

best documentation were is, with paying to in So we be trying it markets. that's or legal that what could to terms QX example of we a that whether the the have instead And to $XX the or opposed fundraising we the trying fee investor community AUM going raising but in to or where $XX of not we'll capital commitments close, in do volatility to AUM. is quarter-to-quarter commitments the QX to our billion we're despite QX the or that good parse we sense it, give closed expect as to give billion, guide still

question Citigroup. Our Katz Bill from next from comes

your both prepared couple of thinking against how as crisis, everyone quarter. maybe in performance be this doing any management all, commentary. composition of from hot you could then of we given through base topics the wondering clawback earning fees? through or during at well as about fees subordinated come metrics that carry? thought if was of revenues risk, the A just how much the risk season I potential the hope is we button I maybe space on some well this Okay. versus CLOs, And seem address really performance the should if for to CLOs clawback thanks out and going is alt okay the

CLO But the million I'll handle questions. do we $XX CLOs, put of Rob. today are $XX at our QX. where in A tests. it's as as through at of million are well impact on little everybody we change context, could the the are compliance Across Bill, just OC and of some we I'll on that's Based with that, about than update Right sure management million, management complex. what fees coming $XX our de that minimis in today, where think of downgrades $XX fees see our -- with make or subordinated all we'll a more that quarter, call. in impact QX, course our X/XX both into across quarter portfolio impact. material don't to see the our On it more we QX now, million over end things of market, risk. as see the we a as we QX

And what numbers. irregular accrued got then clawbacks of carry, million any Bill the an It's present part that's funds of And question, second our a of $XX clawback roughly of north our way, on not and business. part few in around that's a globally. we material liabilities of clawbacks. was And be a really number clawback that certainly KKR. for we we've through Today, how is our small that's in exposure to different have shoot something

that clawback and our have of billion million $X.XX across in to spread a of But that's on liability we of the $XX some as sheet And of ways. for claw that smaller backed balance of bunch our of have have firm in liabilities again, relatively carry now, the us contained. So accrued form course different business. it's the pretty net is we normal

in Great. could I parter. the get And X a follow-up, was my even first if though one

level? might both an assets potential be potentially opportunity investments wonder, to the that up sort I a generic just you of well was for here M&A. Or there me, strategic comment? had distressed where some your excuse Just as using Scott, you mentioned thinking? capital at pick as if And is so,

for the Bill. question, Thanks

high look in some do. this interesting. provide looking just find always going to opportunities continue like As bar always that opportunities, strategic a have environment and we we to you we're really We're may we know, for

for that we of opportunity. In whether We're the would now, one been building to also opportunities point is in you areas our real place I an specific distribution you world on as younger we the which especially would terms where you thinking way looking, around point nothing be I that a us, businesses areas of may assets, to it's some potential we've right that just periods opportunities about sometimes that the observation front. come this, But when find get interesting. like

And operator, if work to back limit have really it. we if appreciate actually then way be that and just as everyone look circle we of And through get could free, We just follow-up, themselves course, feel would back can queue. helpful in to ask we question, our please you X around. a to to the

question from from Kotowski Oppenheimer. comes next Our Chris

you Yes. that making, it gave the Scott, on the I was color thought you're investments interesting. really

would And they Foods. And And did company investment publicly a you why guess, a in was was invest I debt? in were it's traded in was at that your that a or where billion by was couple since publicly equity And you the One curious, themselves mentioned that, then discount? distressed companies or investments, I credit I'm traded investments of company, secondly, does is window U.S. activity an a equity said you when retire a $X of there debt Just things lot that kind of you the made is of include around a portfolio portfolio? private to too that. curious, short?

question, the for Chris. Thanks

of include of $X activity by their in own that our portfolio buying not not the some a on does no companies at that was terms activity debt discount. There billion, but First, extensive activity. themselves

$X mentioned the billion So just for specifically. account was I firm's that

investment, Foods of was the In terms convert. that U.S. a

convert a in So it know we company was well. a

from comes question Crédit Craig next from Siegenthaler Our Suisse.

And I from wanted some just fees NAV think based funds, if XXXX actually component also include including BDC any low. you X. fees, and given comments, sources stability markets performance of question for on fees, your like subordinated FRE risk, other your guys, are in and already from to CLO Bill's you mark-to-market is on I Franklin quite a on business FRE updated transaction forgetting your previous including thoughts which which capital Square, I'm small current levels, FRA

sources and I just of unpack shadow could develop other of that So too. unpack by deployment fundraising, risk offset of wanted would those throughout be to that risk the year. maybe course, there. AUM And But maybe sources just

way FRE the Great. to our to component take parts. in Rob. this Thanks, Craig. It's do is And best maybe

The important our as you fees potential impact quarter. total first with business. Even based part the XX% are minor. the subordinate fees, and as said, our management And of fairly which is pretty most it's are minor know, you our this overall CLO our roughly a fees, of of NAV funds also

quarter. And look of component, fee our significant front we has management this stable best both at so as and we in example it. year-over-year is The it's growth think of that being XX% up

management over and our also greater On years. that XX% fees the next by expect we X grow than top change of guided we've to that,

markets based today well biased transaction take it to and growth environment as business, The made fees business some we for normalized a KKR share probably time, grows have. engine are we size be other the people and over up fees to model monitoring I overall that a of we additional up a XX% able how think, the is And on our are long-term us. should of capital our of think of combination go set with that as the up which and really

to fee trajectory would component that expansion able we the do in expect the see margin management it. flow if the we're past next over indicated think some growth last that margin through the the achieve we've that And piece business. is to can What maybe we we our of is few years,

a think out amount all a to real specific while of two, component that suggest guided some from would stability; haven't here. meaningful and X we And that so when break number, do things: one, you the parts FRE of upside we

question from comes from Devin Our JMP Securities. next Ryan

away team. guess to shied about interesting, to we're I be would you've but you a heard pretty just the looking distressed at that weren't focusing kind getting the maybe areas comments the have maybe think potentially guess, of of moving from closer little you more going are that to but so trying bit little from distress, about could about just on PE of more just love and in valuation. severe that some getting maybe kind to attractive kind areas the opportunities guys because And whether I playbook investing team I now here. be the valuations focused same, in dig Or bit maybe on attractive? been a more is it more to

stress what think kind kind trying you guys the investment the about look of like playbook that. defined Just to to just of in and might

It's thanks Scott. first were very big Devin, of wave as we're we see we there's standpoint. question. say few in how we was that and created equities, the helpful opportunity we unfolds And would investing say, couple different in had this the I themes and an out this X of that that busy that months. particularly lists were dislocated target regard. traded the last on front from probably rolling in and over credit around the commentary gave kind seeing of investment a the waves, kind I'd for

we up. prices the we were but we We've target both when where, and frankly, work on the showed that work, there to number done were first companies price. tracking that high, had were able credit the a dislocation So a equity, the and of of buy were back too

move to was so wave were of And short some of very quickly able we one. by those virtue That that. were kind opportunities of lived,

capital are into there. set. still see we continue We opportunity deploy to and that wide, continue opportunities Spreads to

take all like when have hands working other U.S. can that, have deck. And estate sure So second companies appropriate, we like, firm move companies on we're form got credit, both very now. basically structured liquidity that, right are need. well seen either to is providing that know but example And the on we've to opportunities are is credit, we are they real or those firm liquidity, for across infrastructure that we quickly. of to wave And working of and looking we one where together equity the we've several the that tend and PE in the Foods making that

around for now And be several years, a going acquisitions. those to on powerful earnings. that get see can consolidators are of the is our are relative of be with time. synergies base making of are but valuation becomes to and of companies grow in this would and portfolio theme what through to times opportunity a been conversations was on done minds and starting or lot companies like economic even big have around more probably looking there portfolio of everybody We're opportunities third more again, there, the of the little that working merge months this meeting type a The perhaps

And busy there. so we're

delever mention And both to to is fourth non-core around that to cases, companies, sell wave they're And bit theme buy starting subs. private little then a stock the would some in are or I And is both. public doing that of show to looking or and back up. that

it we've and seen the started markets more private is markets. moved in generally the traded what So of into has now

And we're today. capital. return here as so fronts about those of all sit enthusiastic the on busy ahead we're we reason and of opportunity deployed that's the of the on opportunity part the us deployment so And

they of to to high, in because are And away some that were areas those past in we from come way. have started back our question, valuations yes, too shied and your may the

Our Davitt next Autonomous Research. from comes Patrick question from

there. been to what exposure particularly of the for have color giving Thanks the recession. A stressed this firms as around more us the also percentage they view industry lot breakout portfolio of or detail exposed other

press into in that doesn't the high you been the have standpoint, buckets I your portfolio of the So you view if exposed frame from you gave. fit believe okay X conversely, X Could that's the that maybe that profile, categoried then you has that or as maybe been benefiting this bucketed category? from perhaps a percent have the percent And environment? more meaningful even maybe companies into stress of X

Thanks, Sure. question. It's Patrick. and I'll take that Rob,

going energy, we not break to different feel good our we're of little you to on how our So through portfolio. it's out mentioned exposure buckets. relative hospitality into portfolio could really combination expand But a tell we I'll about and our is leisure and call, limited be Scott and on companies going retail, construction, it's we bit what more, what in travel, a disclose and of the

a firm. U.S. fair on our the up today Europe. over for and portfolio private relative portfolio as last last well we've which online or construction market, upside, years around better become I directly equity of the held Asia basis, the number to and a has a point then the Asia than in towards obviously over overweight bit XX% On of the up couple which weighting of us North is of quite of is think have businesses, have exposed exposed e-commerce held the to last we And Asian months.

the our equity of look certainly last overall, we so pretty mentioned if our companies and the that why companies last businesses to about But going we construction additional think the through are is health performance portfolio some you we over part this call, especially, need investment the good and time. on our our would overall quarter, hold of private period have portfolio. reason And of seen good over up our you XX the months. in support our the have Scott of feel

Glenn Our next question Evercore. comes from from Schorr

That's a are. I you use term, question. holding term, better, us little the thought it's you because of can Asia about up? because nationalism what can implications longer the a about right on little opening I long -- your and that there's tougher opportunities in just bit and related ahead the would what across where franchise. part and want then who that of being is short-term friction if talk of short ask world. And now, Asia I little the process term, the the those such to has franchise, China you besides meaning, everywhere a the more franchise from up in And more a important to good any don't I terms markets both learn an are? lead-in know And the

Glenn. Thanks Scott. the It's for question,

first, and those lot to countries those Europe those see markets to and see started in some portfolio of such be Asia. several markets able term, and -- and impacted we've of and So start we by hugely were such to a been in a improvement. of short Asia see having obviously, U.S., now it's ahead say, platform the a Because big broad on I'd the helpful the bottom crisis

a give team and crisis around daily we to early. moved just you in little sharing from with started, portfolio world, the of what a people top with bit insights the of so seeing very on all our the from color, ground, And to the And they're is the call Asia the Asia. when firm its kind including in

adjust able that of approach been those of kind Europe and we've from so the on And we our as learn and in back to the U.S. learnings.

manufacturing seeing to U.S., capacity. bottoming. And in of some see starting started it XX% the improvement to a of of slow our operating actually at kind bit now We that see in we're number across Asia. we parts to in also occur are facilities of of to We're a are Most portfolio even starting companies. see markets, in Europe. XXX% And

But world. like in see the escalator to we're in few Now of -- weeks, of happen it's be Asia the showing up the we now the rest not started up clear, type the charts portfolio. to of that and seeing it's set last an it's more that elevator over down across

So all as helpful us to navigated very this. we've it's been

opportunity feel front In have longer franchise we great the term, terms the us. of about in and Asia our we of

X As are there, have big our business. China, offices XX opportunity outside. We a to grow of of reminder, our those in a two X we see

and across businesses started to Asia. from been examples, in technology, Asia know name KKR's bringing have some estate in to we're now we Asia also just bringing the infrastructure you credit, growth real rest As to prior private really discussions, equity of

feel big And good firm. the ahead that opportunity so China our in part the the the expand we of opportunity of to world. to about with a regardless happens what still continue quite see platform for And dialogue, we

that additional it's talking that's there. a of talked how strategy actually we're one worth Xx lot announced exit Asia and about of QX the financials. I'll over But was been X us nice for just our alpha number and -- you'll of point, and that We've carve-outs that's multiple in for strategy around the our mentioning beta, real in our carve-outs about Japan. that our had last April, that money Japan for sale win of franchise, us first We in March, when quarters for closed Glenn, through that a see relevant. of a we flow us,

Our Carrier next Mike from of from question America. Bank comes

a on fees question performance I just and have investment income.

to seemed eligible of So some in your carry level less dip AUM firms.

I April million post XX%, mentioned of you paying I rally. the ratio Your mean carries above likely mean, hire $XXX pipeline.

hand, bit backdrop, it fees, bit some But and seems it tough these challenging of but fairly stats on a on to depending performance like realize better curious of the type one further on the a outlook period. maybe look still So coverage out predict. than make a of

income So color and of any including the you sheet? additional can from balance stability provide, dividends the interest

that we certainly mode at have that there's Listen, liquidation some that's accrued But that on of Sure. to you and top I'll cover stands of basis. Today think, the paying carried our AUM. there's would now both And still value in lot be statistics $X said, encouraging of north those. at of about as environment carry carry for list, a XX% our total I carry eligible billion. us. be carry interest, difficult the -- all a of would realized predict right

actually most $XXX critical carried plus is give visibility the quarter is what and try mentioned do and the think number our that our we know I sheet every terms thing you interest the balance on in realized which of do we prepared million earnings, remarks. and I in to million what

As three largely over interest elevated it relates for those quarters dividends, the reason. same the have last to and of been our much

to fairly Pfizer against and take QX, loan LTV shares QX margin used low QX. and we've in loan a margin loan our -- that a dividend margin have We

with probably balance we'll relatively reasonably on line albeit a our dividends the cash going this represented line X/X quarter. about little should interest of that item. take overall is now I that interest so our of our on bit And the hit and forward. be of And stable, X, stable X/X near other think But interest a rates

Our Robert next from KBW. question from Lee comes

Great, business. on have question hope well in doing capital markets is a and I everyone crazy the I this environment.

business kind the in near-term or slow, at same activity more remain would pick to that about or near that it actually by least resilient. sense for guess, extent opportunity maybe term, healthy. business maybe token it, that be up the the investment thinking some of but opportunities So to make would There's I

we how should the quarters? coming of So the think business capital over about kind markets

our of some have potential last are question. able in business, I'll a sort meaningful, call. averaged quarter last transactions of QX to of of lot Rob, was part few have feel that take in $XX About and didn't generate the especially $XX that for our half in across in It's that that pretty environments should it's is million quarter was why have as of business. in business organization. of quarter $XX from years. business occurrence million from the suggested we've to the $XX $XX then deployment that revenue, third-party KKR stable, a that exactly we had in we ordinary Listen, our to baseline be markets capital to continue course an a that regular we million upside with QX million which over line us, revenue So, a large been and interesting in where million that

near not yet relates in to type environment. it term, I'm normalized capital the sure market As we're

when say, and QX, end for be there's of our on lower business the the it's where come think that to go. business market million is certainly so through $XX to scarce of of can do that left a that really shine $XX to that some we continue is in capital the range, early quarter But And might pipeline. lot we too transactions around opportunities larger million to

Bedell Brian comes Bank. next Our from Deutsche question from

certainly how both a delayed and characterize maybe deployment to terms that that get wave? deals anything second the the out -- environment, do can't lot see a balance in this firms used capital how contagion we question. with for it other might get if and sort to being just year, you're the the project right you more Actually, your -- sheet, to getting -- then of help of done the business rest in how that the Rob, crisis COVID-XX your thinking your extent? good of of In capabilities you that might you follow-on And can if got Rob's markets

question, I'll take Scott. Brian. the for Thanks that. It's

people I'd deployment see as on, started of there's In happening. that process trying the during first the crisis what to weeks pick was a bit opportunities a to terms especially of actually world. were being went delayed, the pause But pipelines probably of we've our around say several up

in But was liquidity, the begin we that terms the in need larger markets companies mentioned to of providing areas opportunities. I of of Some scale opportunities the rescue also it some type in capital to reemerge. seeing of private are some

in Asia active pipeline our now. is example, an As very right

It's pick So up path I to back starting dependent, in of don't big maybe think long-term. but on are the it's impact going to terms obviously, all have we over the see pipelines visibility in improvement a of timing. the some

long-term on posted you no change. but that, big keep we'll So

been might may Just things the a into bumped have half that back the get first in half. few

terms In this. us view our question. times model providing advantage with in real in sheet, We balance it's great like is of really a a the KCM

capital of some business have And because use couldn't. able been access when our and the we've that both during deals able markets periods to debt financing, of the dislocation and been sheet balance been we done to have get equity to others

only So capital have we've we had and certainty. where several we're bidder were situations bidder, the the the over not that but could time, recently, necessarily including highest actually financing access

that strategic and sheet be the to are this real like able tool periods providing with prior do is balance in as we, so again. And viewing to a us KCM

question balance is teams and in with a like time we that well markets on can capital sure we team make the deal are making liquidity the to do connected really And this. on sheet so our we've got good sure and that well focused that

Brian, And Craig. it's

like tangential in greater this is value relates this. one to value-add Just strategic as certainly a and capital periods point it markets in

Sometimes portfolio people ask our own that of question framework companies. in the

position to just and volatility. strength entering of is to helpful us be markets understand So is one in I been us position how a the thing has capital active that allow think team it this to

we have maturities. across portfolio when really the equity whole, look in So private we very near-term few

the XXXX maturities companies look the and of of long-term So what XXXX, our only debt at we X% of have. we that about represents and portfolio in see that quantum that when we

help we've been -- given of very is this it's well entered the volatility, periods it markets, be front as positioning us there I strength allow when period. think does footed us helpful capital in of we I So us also think to

next question Our Wells comes from from Harris Chris Fargo.

investors? potential and anticipate give to where us your with Can long-only the what by do And things do might related of to that, index an stock ownership number? you to update you that respect on the Russell stand index

Chris, it's Craig.

to seen really indices it that do index our really a only our So but at in investment it they to nice I been as ownership, who as Russell. index mutual it's buying as it those also look increase influenced we've think relates relates not benchmark that experience there decisions. And decision relates has to as their make funds

ETFs as and and and I Again, I relates formulaic as amount, owned And linked those it directly XXXX think relates So that strategies it million the you math. in more A indices pretty it to done XXXX the been that those math at think lot terms XX in the of would that have are have straightforward. that those teens, strategies. Russell to suggest XX the Russell, is that we and teens ETFs of to providers. like that's those to million -- in are look by passive between when been first, shares in index million mid-XXs, there

are those that And as those to our and we looked share. that institutions should that mutual And piece most are -- mind indices ability funds be and first. has more we really to even powerful benchmarked market the think interested through industries our the ourselves it, those second really against piece us at increase than second

looking so a whole a of construction they of cap, a time, detailed public amount equity, at you'd as that, items. fair spent And float document. methodology considerations of pretty a Russell, that they review publish whole structure, within and for recognizing series market we've expect, And series domicile,

couple we've over course, FTSE engaged that, document of last we mentioned pretty of closely So meaningfully and the Russell with reviewed of as earlier, directly that months. have alongside

earlier, we Russell's any stated we index meet ours, decision decision obviously and inclusion not while we is believe as requirement. their on So

Our last question Morgan from Michael comes from Cyprys Stanley.

a effect bit wanted you for have lower around evolving have means in for in you you commitments talk the fund Just elsewhere drives one I allocations of that On certainly the but the LP asset rates. around from backdrop. hand, a see just allocations the portfolio, low the so these on could hope in to billion distributions $XX the ask door. LP new higher demand. denominator that more how could I commitments to little which coming the private LP and class demand have challenge, the you But markets be you then heard all their from in this

have you'd there's like And more and activity? and to that maybe a see these just curious in? demand. that through is so asset impact more on the I it navigating pieces class? presence these more we of of dynamics the sort you marketplace have LPs And how secondary could part the see Do

Thanks, Scott. be a definitive Michael. It's It's great early, to I'll a answer a those. question. give it. to bit take honestly, it able is And on you

to takes, be be allocations There's you're effect happens the questions and investors of going to alternatives. some to going with started be think rebound. some the institutional right. their to see a the portfolio There's But and there's what frankly, right? rest public to going their the -- we've puts markets for around little of denominator and I

that, denominator be bit initial little uncertainty think or now about there's And a as to effect were questions not. will the a what of so I consideration whether big

see actually going settles was an just allocation saw to that have investing alternatives a class. The could we're big reduction what time in so actually give but we increase happened, that the of that alternatives, that think to allocation how to I the not to keep in investors last time a out. in bit institutional asset

what see happens but dependent. it's here, path we'll pretty So

on the of think flip that, I entirely you're right. side

environment no with around went I looking weeks virtually to returns. the even a for is keep real generate to the and a rate they in environment, the rate there ways that recognition low last world, need think of conversation to a CIOs handful

alternatives which to quickly pivot those from And think, is defense so conversations, around the dialogue pretty continues, why offense. I

traditional to think of And take investors going are as expecting and so continue the equities for us. their that private as around We for markets look to returns to the public less that's We and out we income they're encouraging. world portfolios. fixed think great less

space, we're and with approach, incremental companies And there insurance so which conservative continues the from a period period we've And just finding from from interest dialogue retail be its be an an of color, this that them of lot during this in tends also as as quite lean into markets, quite this piece insurance liquid the to time, of time. and been high offense active well. we're our of net over in worth seeing standpoint to

business. the you think lots going And in bodes even that. of all power if an think the total it the the greater need our But illiquidity overall fros a of of about well there's for premium overall, normal provides, So tos be to and return return. we return. the as greater alternative premium for There's percentage is is, lower illiquidity of that space the market the that

do, we more think, interest of we And so what out this. there's coming in even

of on we the we a space to to of on front. as will and periodically from that have spend time that terms on but time opportunities report to I that's think there the be strategically, secondary space areas think continue nothing opportunities that your grow In the one looked to it's to question to us we about for time, today secondary other for look at continue and market,

for time, our over Mr. Larson go like Craig Please I'd Q&A closing remarks. this the At to concludes to ahead. session. back turn This call

for thank operator, everybody, And course, follow-up you, out update help. And of for to forward next Thank your items, quarter. joining me [indiscernible] to We you or again. free feel any directly. look giving call. an for reach once Thank you, to you please our

concludes participating. this Thank conference for call. Ladies today's and you gentlemen,

You may now disconnect.