KKR halved carried interest for its private equity people last year
The private equity industry – and the people who work in it – haven’t exactly been having the best of times recently. KKR's Q4 and full year results explain why.
Between 2022 and 2023, the amount of carried interest KKR paid people in its private equity business fell 48%, to $939m. In the past four years, it's only been lower once: at the start of the pandemic in 2020.
The decline matters. In an effort to align employees with investors, KKR, like Apollo, is paying its senior staff a greater proportion of carried interest in their compensation. The fund provided a helpful explainer of how carried interest works last week.
KKR's private equity professionals aren't alone in finding that their golden eggs haven't hatched: carried interest at Blackstone declined by a similar amount.
While carried interest payments are falling, KKR's private equity professionals have more assets to oversee and potentially more work to do. Assets Under Management (AUM) increased by 7% to $176bn in the firm’s private equity segment.
In the firm as a whole, which also includes real estate and credit (among others), AUM increased by 10% to $553bn. Revenue for the year increased to $14.5bn from $5.7bn.
High interest rates are making life hard for private equity professionals and encouraging the pivot towards private credit and insurance.
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