Buyout giant KKR reports rising management fees, lower transaction fees

By Isla Binnie and Pritam Biswas

Feb 5 (Reuters) - Investment firm KKR KKR.N reported a rise in fourth-quarter income from fees it earns on managing new capital on Thursday, but booked lower fees earned from transactions, while a one-off charge weighed on a key profit metric.

The New York-based group said it raised $129 billion in new capital in 2025, more than in any other prior year, driven by inflows into its credit and insurance business, bringing its total assets under management to $744 billion.

Private capital firms have been operating in a challenging fundraising environment since the Federal Reserve started raising interest rates in 2022. The lion's share of new money is now flowing to larger groups like KKR rather than smaller or newer funds.

The fee KKR earns on managing money for clients, regardless of investment performance, jumped 24% in the quarter, to $1.12 billion.

Its capital markets unit posted a 16.6% drop in transaction fees compared with the same quarter of 2024, to $225.5 million. The unit charges fees to companies within its portfolio or owned by others for helping them with transactions like initial public offerings and debt financing.

Separately, KKR said on Thursday it will acquire Arctos, an institutional investor and asset management solutions provider, in a transaction valued initially at $1.4 billion.

KKR's adjusted net income of $1 billion for the quarter translated to $1.12 per share.

KKR said in November it would take a charge in the fourth quarter for an underperforming fund in Asia. It had collected $350 million of compensation linked to that fund which it said it would pay back.

Excluding the charge, KKR said its ANI per share would have been $1.3. Total investing earnings, which includes gains from asset sales and performance income, dropped 78.8% to $84.8 million in the quarter.

Late 2025 saw a resurgence in dealmaking, which boosted earnings for fellow alternative asset manager Blackstone BX.N.

During the quarter, KKR's traditional private equity portfolio delivered returns at 4%. Its infrastructure funds appreciated 2% in valuation.