The New York private equity firm released its 1Q earnings Tuesday, and stockholders will be pleased. The firm posted after-tax distributable earnings of $314.1 million, or 38 cents per share, above analyst estimates that pegged the figure as low as 34 cents apiece. Both figures, which measure the amount available to pay out investors, fell short of 4Q totals, when KKR posted distributable earnings of $460.1 million, or 55 cents per share. But it could in theory be offset somewhat by the firm's board of directors increasing its share buyback program from roughly $247 million to $500 million.
Overall, KKR posted a profit of $709.3 million, up 298% during the same period YoY, after it generated a net loss of $384.6 million in 4Q 2018. The recent gains can be attributed, in part, to KKR's decision in February to unload part of its stake in web hosting company GoDaddy, offering 3.4 million shares at $75.35 apiece to raise an estimated $256.2 million. The firm's separate private equity portfolio also jumped up 15%, outpacing the S&P 500's 13% gain.
In another sign of its financial health, KKR's AUM increased to roughly $200 billion, a 13% YoY gain, and management fees increased 16% to $292.3 million. And its book value per share, which measures the net assets including the unrealized value of its investments, was $16.99, up from $15.57 from the end of 2018.
The news comes after KKR last year became one of the first private equity firms to flip its tax structure from a partnership to a C-Corporation in hopes of attracting more interest from index funds. The firm also wanted to make it less burdensome for individual investors to buy its shares and take tax advantage of corporate tax laws that dropped to roughly 21% under the 2017 tax reform bill. Blackstone has since followed, announcing earlier this month that it would make the switch to a C-Corporation on July 1.
For KKR, the move appears to have worked, at least when it comes to bringing in different investors. Index funds owned 66 million shares at the end of 2018, a 13x increase YoY, per the Financial Times. On the flip side, hedge funds and other broker dealers began to exit, dropping their combined ownership stake in the company's stock by more than 40%, per The Wall Street Journal. The stock's performance, however, has yet to show much change, actually dropping 1% Tuesday.
The firm hasn't slowed down activity this week. On Tuesday, KKR-backed Internet Brands agreed to sell automotive software company Autodata Solutions to Thoma Bravo in a deal said to be worth about $1 billion. In addition, portfolio company Gardner Denver agreed to merge with Ingersoll-Rand in what will be a $15 billion deal. And to top it off, KKR has teamed with sovereign wealth fund GIC to purchase a 57% stake in power company IndiGrid for roughly $400 million, per Reuters.
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