KKR posts higher profit, aims to deploy $116 billion cash to tap choppy market

(Reuters) -KKR’s first-quarter profit rose nearly 20% on higher fees and the investment firm said it was ready to put its $116 billion of capital to use as market volatility creates fresh opportunities.

The results reflect the structural advantage held by large alternative asset managers, which can generate hundreds of millions in management fees even when asset sales are muted.

While a slowdown in dealmaking may limit exit opportunities, investment firms are often able to secure valuable assets at a discounted price during these times.

"Volatility can yield attractive investment opportunities, and we’re encouraged by our positioning given our global footprint," co-CEOs Joseph Bae and Scott Nuttall said.

The company’s adjusted net income was $1.03 billion for the three months ended March 31. On a per-share basis, it earned $1.15, in line with analysts’ expectation, according to estimates compiled by LSEG.

Shares rose 1.6% to $116.09 before the bell. They have fallen 23% this year, compared with a 5% drop in the S&P 500 index.

Rivals Blackstone (NYSE:BX), Apollo Global and Carlyle have dropped 23.6%, 17.4% and 23.5%, respectively.

The results come at an anxious time for markets, with several executives warning that rapidly changing tariffs could squeeze mergers and acquisitions.

Data released on Wednesday showed the U.S. economy contracted for the first time in three years in the first quarter, potentially adding to the strain.

RETAIL OUTREACH

KKR is sharpening its focus on retail investors. Earlier this week, the company, along with Capital Group, launched two funds with low fees and minimum investment thresholds, to allow retail investors to get exposure from a blend of public and private credit.

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The companies are also working on similar products focused on a mix of public and private equities.

KKR’s fee-related earnings, a key source of stability during times of heightened market turbulence, grew 23% to $822.6 million. Assets under management rose 15% to $664 billion, helped by $31 billion of new capital raised.

The results come weeks after KKR’s peer Blackstone reported higher-than-expected profit for the first quarter, driven by strength in its private equity and credit businesses.

Apollo is scheduled to report on Friday.

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