Deals Help Juice KKR Profit; Private-Equity Firm Has Its Busiest Quarter for Buyouts in About Two Years
KKR & Co.'s third-quarter profit surged more than 60%, buoyed by the increasing value of companies it owns and fees the buyout firm reaped from new deals it struck.</br></br>KKR's third-quarter net income rose to $204.74 million, the buyout firm reported Thursday. So-called economic net income rose more than 20% to $613.75 million. Private-equity firms contend economic net income better reflects their performance because it gauges both realized and unrealized gains and losses from investments and factors in accounting quirks related to partnerships becoming public companies.</br></br>The private-equity firm's economic net income after taxes amounted to 84 cents a adjusted unit, soundly beating Wall Street expectations. Analysts polled by Thomson Reuters expected 59 cents. In 4 p.m. trading on the New York Stock Exchange, the buyout firm's shares rose 45 cents, or 2%, to $23.36.</br></br>KKR's profits were largely the result of increases in the value of companies the firm bought and then partially sold in initial public offerings, including hospital operator HCA Holdings Inc. and NXP Semiconductors NV. The value of KKR's private-equity funds, which gather money from investors to buy companies, increased 5.9%.</br></br>New York-based KKR's most-high-profile deal of the quarter, the takeover of industrial-pumps manufacturer Gardner Denver Inc., was a key contributor to its results in the quarter, as the buyout firm benefited by selling chunks of its equity in the $3.7 billion deal to other investors. That, along with similar work on other deals, resulted in transaction fees rising more than 70% compared with the same period a year ago, to $129.13 million.