KKR reported better-than-expected earnings as an increase in management fees helped offset a sharp drop in performance fees.

For the fourth quarter, the private equity firm’s after-tax distributable earnings — the cash available for paying dividends to shareholders — fell to $375.1 million compared with $460 million a year earlier. But the earnings per share of 44 cents exceeded the average analyst forecast of 41 cents.

Total revenue was $1.06 billion for the fourth quarter, compared to negative revenue of $178.1 million a year earlier, as management fees rose 14% to $317 million. Assets under management was $218.4 billion as of Dec. 31, 2019, up from $208.4 billion as of Sept. 30, 2019.

“Assets under management, management fees and book value per share all grew at double-digit rates in 2019,” said Henry R. Kravis and George R. Roberts, co-CEOs of KKR. “Given our investment performance, integrated business model and growing fundraising pipeline, we feel well positioned to continue to deliver strong results for our shareholders.”

As The Wall Street Journal reports, KKR has been steadily growing its assets under management, aided by growing demand worldwide for private investments. Executives expect to begin fundraising for the firm’s three largest flagship funds in the next several months and to raise an additional 20 funds over the next three years.

“Assuming the fundraising environment continues to cooperate and with continued investment performance, we believe we can grow our management fees by at least 50% over the next three years,” co-President Scott Nuttall said.

But in the fourth quarter, KKR generated only $245 million in “carried interest” and other “realized performance income” from asset sales, well below the $345.6 million in the last three months of 2018.

“Stock market investors place far less value on erratic performance fee income than on annuity-like management fees, leading some buyout executives to complain that their share prices do not adequately reflect the bounty they expect to receive from future asset sales,” The Financial Times said.

In trading Friday on news of the earnings, KKR shares rose nearly 5% to $31.90.

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