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So it's a beat for KKR in the first quarter against the estimates. The asset manager changed how it relays its results. Shnelli Basik has the CFO in conversation, Sonali.
Thank you so much, Manis and Rob Lewin KKR CFO is joining us. Now you're at Bloomberg and you have your profit topping estimates, you also have assets under management. Topping estimates puts you on the.
Way to reach the goal you've laid out at KKR to reach a trillion worth of assets in the next five years. Rob, is there anything that changes here in this hire for longer environment in terms of how you meet these goals?
Sure? Well, Snelli, thank you for having me on this morning. Maybe we'll start with the headline of the day. Our quarters are really strong our quarter for us at KKR, across our core fine metrics even more encouraging as our
forward looking indicators. And so if you look across our three core profitability measures, that's fee related earnings, that's total operating earnings, adjustin ed income, all of which on a per share basis, we're up between twenty and twenty eight percent year on year, so really strong quarter in that respect, but even more encouraging is what we're seeing going forward. We raised thirty one billion dollars of capital in the quarter.
It's the second consecutive quarter where we've raised over thirty billion of capital, which is actually the first time in ky Care's forty eight year history where we've done that in back to back quarter, so really bodes well for the future. We've written a little bit most importantly, sorry go ahead, Shell.
Yeah, we've written a little here about your fundraising plans here. I know you can't talk about fundraising plans publicly, but privately we know that you're on track to raise more than a billion dollars here or roughly a billion dollars for an infrastructure fund. Rob Can you give us some picture here about where investors are putting money to work? Where is most of this fundraising coming from across assets?
Sure?
And so the interesting thing is if you look at KKR since the beginning of twenty twenty two, we've raised about one hundred and eighty billion dollars of capital, which is a really healthy number for us. But we've been able to do that without a lot of our large flagship strategies in the market. So as we've talked about the go forward, we've talked about fundraising being able to accelerate from here. If you look at where a lot of that capital raising has been over the course of
the past number of quarters. You know, in Q one we had a final close of six point four billion dollars in our Asia Infrastructure strategy. That's the largest fund by a good margin in Asia Pacific focused on infrastructure. Lots of real good tailwinds there in terms of longer term growth, a lot of capital raising across our credit franchise that's the asset based finance that's direct lending leverage credit north to twenty billion dollars in just this quarter alone.
So there's a lot of momentum for US across capital raising and we would expect that to accelerate. What we've articulated to our investors is we believe that we could raise three hundred plus billion dollars of capital over the course of the next three years.
How do you feel about the money not only brought in, but the money that you're spitting back out to investors? Big open question across Wall Street in terms of how quickly firms like yours can be monetizing your assets, selling them, putting them into public markets. With this kind of volatility around.
Sure, the important thing to think about when you're thinking about KKR is that we have four main investing verticals, So that's private equity, that's infrastructure, real estate, and credit. We are also very much a global firm, and we've got if you look at our investment professionals, nor than fifty percent of our investment professionals today are based outside
the United States. So we are always in the market, always able to pursue different investment themes that we have in front of us really exciting in that respect.
Do you think in terms of do you think that this year that that investment window can stay this open? Do you think that that might be pushed out into twenty twenty five in terms of monetization oportus unities with the volatility that we're.
Seeing, Sure, let's maybe start on the deployment side and then we'll move to monization. It's not what we're seeing. Our pipelines on deployment are building across the firm. We are really active in areas like infrastructure, all things digital infrastructure, so towers, fiber, data centers. If you look, we're really leaning in on the renewables energy transition side of investing. We just complete our first climate investment in the US and Q one a business called Avantis in the energy,
a solar energy storage business. Really exciting opportunities for US across all areas of infrastructure. Asset based finance is another area where we're really leaning in as a firm. I think there's a lot of really good tailwinds for the alternative asset manager in asset based finance, and KKR is a real market leader there with nor than fifty billion of assets under management today. Focused on that area. In terms of.
Please go ahead monetization, yeah, sure.
In terms of your question as it relates to monetization, again, we're starting to see pipelines building. In just Q one, we exited a really successful investment for our firm at these partially exited a business called app Love and at north of eighteen times multiple money for our investors. So we are seeing real opportunities across the firm to be
able to monetize. And likewise, just like we're seeing growing pipelines on deployment, we're seeing growing pipelines on the monetization side as well.
It sounds like you're trying to find opportunities or are finding opportunities regardless of this kind of higher for longer environment. It's fed day, Rob, How do you think about what the investment opportunity looks like with rates potentially staying at this level or not much soler Yeah.
So one of the unique things about our model right is we have over two hundred companies that we're invested in across the globe, so it gives us a pretty good lens into what's going on from an economy standpoint. And we're seeing goods inflation come down, we're seeing shelter inflation come down, we are seeing core services inflation remain stickier. And we've been feeling this way for quite some time and we've been able to position our portfolio to be
able to address this. And so we you see interest rates coming down over time, but we don't see any CONTs in twenty twenty four. We would expect the tenure to probably come down to somewhere around four percent plus or minus. But all been very front of mind for us as we pursued investment themes. We've been focused on businesses now for some time that we feel can sustain margin in a higher cost environment. You're starting or you're really seeing that play out in our portfolio really healthy.
Back to we've driven real investment performance on behalf of our clients again this quarter and over a longer period of time, so we're quite proud of that. And back to areas where we've been leaning in asset based finance infrastructure both have a component of inflation protection baked into those asset classes.
Speak to us more about inflation here and how inflation might be impacting your portfolio companies, and you've we've kind of talked about this kind of potentially higher for longer inflationary environment as well. How are you thinking about investing through that? Sure?
You know, back to we've got a big, global, diverse platform, so we're able to move capital around where we think we see the highest opportunities across the globe. As it relates to our portfolio specifically, we feel really good with the health of the overall portfolio. You know, there's aspects of KKR's business that are going to perform better in a higher rate environment and aspects of our business that are going to perform better in a lower rate environment.
The key for us. Have we set up a firm where we think that we could go out compete our competitors regardless of the environment. And we feel like we've got the tool kit inside KKR to really be able to do that.
But do you think at KKR you have to prepare here for potentially higher prices across those portfolio companies and pr fuertionality.
Yeah, and we have and absolutely I think from a portfolio construction perspective, we feel really well prepared for that boat. At KKR, we really have to prepare across different outcomes Dynamically. You might be in an environment where our interest rates are higher, or you might be in an environment where you know, we're surprised on the inflation side and it could be lower. And so back to how we focus
our teams, it's very much real time. The information we have back from our two hundred plus companies inform our investment process and I think allow us to stay really ahead of the curve, which ultimately benefits our clients with greater investment performance relative to the competitors that we're competing against in the market.
Rob thank you so very much for your time here, and I know you have an earnings call ahead of you as well. That is Rob Lewin, the CFO of KKR,