KKR beats expectations on adjusted basis as record capital deployment underscores dealmaking strength
Private equity giant raised $129 billion in 2025, posted strongest investment quarter despite headline EPS miss from one-time charge
KKR & Co reported stronger-than-expected underlying fourth quarter performance on Thursday, with record capital raising and investment activity overshadowing a headline earnings miss caused by a previously disclosed one-time charge.
The private equity giant reported earnings per share of $1.12, missing analyst estimates of $1.30, due to a $207 million repayment of carried interest that had been disclosed in November. Excluding the one-time item, adjusted earnings would have matched expectations at $1.30 per share, according to the company's earnings release.
Shares of KKR rose 1.4% in morning trading to $104.77, as investors focused on the company's robust capital raising and deployment rather than the headline earnings shortfall. The stock remains well below its 52-week high of $154.73 but above its year-low of $85.77, reflecting broader volatility in the alternative asset management sector.
The New York-based firm raised a record $129 billion in capital during 2025, a 14% increase from the prior year, demonstrating continued investor appetite for private market investments despite macroeconomic uncertainty. In the fourth quarter alone, KKR deployed $32 billion across its various investment strategies, marking its most active quarter ever for new investments.
"We are pleased to report another quarter of strong capital raising and deployment, which positions us well for continued growth," the company said in its earnings statement.
Assets under management reached $744 billion, up 17% year-over-year, driven by robust inflows and strong investment performance across credit, private equity, and real estate platforms. The company's fee-related earnings, a key metric tracked by analysts as a measure of predictable, recurring income, rose 15% to $1.08 per share. Total distributable earnings, which include performance fees from investment gains, increased 17% to $1.42 per share.
Demonstrating confidence in its cash generation capabilities, KKR increased its annualized dividend to $0.78 from $0.74 per share. The move comes as private equity firms face pressure to show consistent returns to investors in an environment of higher interest rates and increased competition for deals.
The carried interest repayment stemmed from underperformance in KKR's second Asia private equity fund, a challenge that has affected several global firms as Asia's markets have struggled to rebound from pandemic disruptions. The company had previously flagged the charge in November, limiting surprise among analysts who follow the firm.
Analysts remain broadly positive on KKR's outlook, with 18 of the 20 analysts covering the stock rating it as a buy or strong buy, according to market data. The consensus target price of $159.21 suggests significant upside from current levels, reflecting expectations that strong capital raising and fee income will continue to drive earnings growth.
The record capital raising in 2025 underscores a broader trend in private markets, where investors have continued to allocate capital to alternative investment vehicles seeking higher returns than those available in traditional public markets. KKR's ability to raise $129 billion despite market volatility points to institutional investors' confidence in the firm's investment platform and track record.
KKR's credit platform has been a particular growth driver, as institutional investors seek yield in a higher interest rate environment. The firm has expanded its credit offerings across liquid credit, private credit, and specialty finance, diversifying its revenue streams beyond traditional private equity buyouts.
Looking ahead, KKR faces both opportunities and challenges. The record $32 billion deployed in the fourth quarter provides a substantial pipeline of potential realized gains as investments mature and are exited over the coming years. However, the company must navigate a more complex exit environment, with initial public offering markets recovering slowly and strategic buyers showing increased price discipline.
The private equity industry is also facing increased regulatory scrutiny and potential tax changes that could affect carried interest treatment, though any such changes would likely take time to implement and face political opposition.
For KKR specifically, the integration of recent acquisitions and expansion into new strategies will be key to maintaining its capital raising momentum. The firm has made significant investments in data and analytics to improve investment selection and portfolio monitoring, aiming to demonstrate superior returns that justify continued fee premiums.
As the earnings period for alternative asset managers continues, KKR's results set a strong benchmark for peers including Blackstone, Apollo Global Management, and Carlyle Group, all of which report in the coming weeks. The sector's performance will be closely watched for signs of whether the private equity boom can sustain momentum amid economic uncertainty.