KKR & Co Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Craig Siegenthaler - Bank of America - Analyst : Scott, Rob, happy 49th birthday and hope everyone's doing well. Our question is on your Asia business. So we all know that you have the largest private markets business across Asia. So we're curious in your perspective on what the emerging trade war means for your strategy, your ability to fundraise, and also investing effort across the region. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 1:00PM, KKR.N - Q1 2025 KKR & Co Inc Earnings Call

Question: Craig Siegenthaler - Bank of America - Analyst : Just for my follow-up, I heard your commentary towards the end of the call on the resilience of private wealth flows, and actually, the potential for an acceleration coming out of this correction. Do you see the strong relative performance to date or the very low adoptions as the key drivers? And was that comment really broad across asset class? Because I know you're doing very well, in particular in private equity, just given CapEx strong recent performance.

Question: Alex Blostein - Goldman Sachs - Analyst : So zooming out a little bit, the comments over the course of your prepared remarks suggested a much more resilient business perhaps what's perceived in the market today. You talked about monetization not quite falling off the cliff. Deployment in dry powder, really healthy, it sounds like you're not really changing the outlook for fundraising either. So the question obviously is what doing what it's done over the last few months, why not step up the buyback here? I know it's a dynamic approach. You guys have talked about in the past, and you're looking to generate the best return on invested capital. But if not now, when? And maybe you guys can also hit on expectations for putting the $2 billion-plus of convert to work and kind of how you're thinking about use of those proceeds.

Question: Ben Budish - Barclays - Analyst : I wanted to ask maybe a two-in-one on Capital Markets fees. I know sometimes you kind of gave a look into what -- how Q2 is shaping up. So I was wondering if you could do that. But I'm also curious, in your -- in the slide deck, you noted that about two-thirds of transaction fees were debt-focused in the quarter. Can you talk about what is that historically? Is this sort of a function of a changing environment or part of a more explicit strategy to kind of broaden the type of business you're doing there?

Question: Glenn Schorr - Evercore ISI - Analyst : So want to circle back to the conversation on private equity. You clearly helped us see how the linear deployment and investment pacing helps your particular situation, especially if you look at even Americas XII and the capital you've returned. So the question is broader. Do you expect -- in 2006, '07, and '08 vintages that was kind of subpar performance for the industry, people thought private equity is dead. We go out and we've raised a lot of money at doubles and triples. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 1:00PM, KKR.N - Q1 2025 KKR & Co Inc Earnings Call So the question is, is this time any different for the industry? There's more funds, there's more assets raised, there's subpar performance. Are we going to see a bigger shakeout? Because we didn't see enough of one in past downturns. So the real question at the end of all that is, will we see lower allocations to private equity or just a dispersion and consolidation to the better performance?

Question: Steve Chubak - Wolfe Research - Analyst : So recognize that you're planning for a more fulsome update on partnership in the second half, but was hoping you could just provide some early color on distribution strategy and specifically areas of differentiation versus other competing products and just how these vehicles might evolve over time.

Question: Mike Brown - Wells Fargo - Analyst : I wanted to ask on the flagship fundraising in 2025. So you had the first close on North America buyout. It seems like the industry-wide fundraising is elongated. So I wanted to ask then, what's the right time frame to consider for a final close? And then beyond North America buyout, where else are you expecting the inflows from the big flagships in 2025? I believe Asia is starting. So can we see some inflows in '25? And then what's the expected timing on the final close for Infra Fund V?

Question: Dan Fannon - Jefferies - Analyst : Wanted to follow-up on just fundraising. And was hoping -- obviously, momentum is quite strong. Was hoping you could just talk about your conversations you're having with LPs, and generally, the health of that client base on the institutional side as you think -- in the heels of this kind of volatile market we've been in.

Question: Patrick Davitt - Autonomous Research - Analyst : My question is on the insurance discussion. I think you said you expect it to stay in the $250 million range for the next few quarters. But with the ongoing portfolio repositioning and now I would think potential for wider new investment spreads, why is there not room for that to tick up through the year?

Question: Arnaud Giblat - BNP Paribas Exane - Analyst : So we've seen a large number or a certain number of large deals that would have been financed to the both syndicated loan markets for private debt in April. I think Karo is an example here. So I was wondering how the availability of bank debt is currently evolving as we're seeing spreads tighten once again. I'm asking the question from two angles really. So number one is what is the availability to do deals, the availability of debt and how that is evolving in April given the spread is tightening once again? And second, also looking through the lens of KKR as a provider of private debt, is there an opportunity to take back market share from the banks here?

Question: Brian Bedell - Deutsche Bank - Analyst : Most have been asked and answered, but one -- maybe one on FRE margin, continues to be impressive growth in the FRE margin. So just a question for Rob. I asked this before in prior calls, but just to ask it again, do you see any kind of ceiling in that was basically the view of investing more, I guess if the fee revenue growth improves? And then should we be thinking about higher expenses around distribution costs for your capital partnership as that evolves as maybe being a potential headwind on margin?

Question: Michael Cyprys - Morgan Stanley - Analyst : Just a question on tariffs. I think you had referenced about 10% of your AUM that has some sort of first order impact. It sounds like that's mostly at credit. Is that fair? Can you just elaborate it on how you see restrictive trade policy impacting the portfolio? I think you also mentioned you're taking some mitigation steps. Maybe you can elaborate on the mitigation action steps you guys are taking. And then could you also speak to any sort of second or third order impacts that you're thinking about? How are you going about assessing that?

Question: Kyle Voigt - Keefe, Bruyette & Woods, Inc. - Analyst : Maybe just a blended follow-up question on insurance and capital markets. Rob, just to clarify your earlier comments, should investors move away from thinking about insurance earnings being at the 14% to 15% pretax ROE range over the long run and instead, simply think about an all-in-type 20%-plus target instead? And secondly, in the prepared remarks, you reiterated the opportunity to substantially grow the Capital Markets fees that are tied to insurance versus the $50 million level in 2024. Can you just give us an update on the road map to get to the several hundred million level you noted and how you're thinking about a time frame to achieve that?

Question: Ben Budish - Barclays - Analyst : I wanted to ask about one more kind of forward-looking commentary item provided last quarter in terms of management fee growth. Rob, last quarter, you suggested that we should see some acceleration from the 14% growth in 2024. So just curious if that's still the case. And maybe as part of that, I know perhaps you can't say when the Americas fund might activate. But could you remind us what are the sort of constraints? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 1:00PM, KKR.N - Q1 2025 KKR & Co Inc Earnings Call Is it just dependent on making the first investment or the pace of deployment at the predecessor? What should we be looking for there?