KKR profit rises 22% on investment gains

KKR reported a 22 per cent rise in economic net income in the fourth quarter as the pioneering private equity firm registered its most profitable year since going public, raised more money than in any other single year and gave more money back to investors than ever before.

Economic net income rose to $347.7m from $285.5m in the year-ago period on a strong performance across the board.

Assets under management totalled $75.5bn at year end, up from $59bn at the end of 2011. That reflected $11bn in fundraising, a $10bn increase in the value of the investments in KKR's portfolios and $8bn of acquisitions, largely accounted for by its purchase of Prisma Capital Partners.

KKR took advantage of strong capital markets in the fourth quarter to cash in on investments, returning $10.6bn to its investors as it took profits from some of its largest deals from before the financial crisis including HCA and Dollar General.

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It was also able to mark up its portfolio 24 per cent, with gains particularly strong in its European private equity portfolio in 2012, factors which should bode well for fundraising this year.

KKR announced an increase in its dividend, raising its payout to $0.70 for the final quarter and more than double the $0.32 it paid holders a year ago.

KKR focuses on economic net income rather than GAAP earnings because the measure excludes costs associated with the group's initial public offering, including compensation costs. It also takes into account operating performance including the current market valuation of its portfolio.

KKR had an even better year in terms of distributable earnings, a measure comparable to cash flows from operations, earning $546.3m for the quarter, up from $146.5m a year ago.