(Bloomberg) -- KKR & Co. reported its best fundraising quarter in more than four years, driven by record demand for its credit products, as earnings topped Wall Street expectations.
KKR shares rose 3.93% in premarket trading to $124 at 7:42 a.m. in New York.
The buyout firm gathered $43 billion during the three months through September, including $27 billion for its credit business, according to a statement Friday. KKR's Global Atlantic insurance unit, collateralized loan obligation issuance and its high grade and asset-based finance groups fueled the credit results.
Assets under management rose 16% to $723 billion.
KKR and other alternative asset managers have been grappling with a difficult fundraising climate since the Federal Reserve began raising interest rates in 2022, with credit standing out as a bright spot. The unit also led a record quarter for investing, with credit accounting for $11 billion of the $26 billion deployed during the period.
Adjusted net income rose 7.8% from a year earlier to $1.27 billion, or $1.41 a share, New York-based KKR said in the statement. That beat the $1.30 average estimate of analysts surveyed by Bloomberg.
"New capital raised reached $43 billion – the highest quarterly figure for KKR in over four years – reflecting the trust we've built with our investors and continued momentum across our businesses," KKR Co-Chief Executive Officers Joe Bae and Scott Nuttall said in the statement.
Third-quarter fee-related earnings increased 3% from a year earlier to $1 billion. Total operating earnings, which include management fees, insurance and KKR's Strategic Holdings unit, rose 12% to $1.4 billion.
Earnings at Strategic Holdings, KKR's business for holding long-term bets, surged 35% after it exited some stakes that the company didn't disclose. While the unit contributed modestly to the firm's bottom line, it's expected to generate more than $1 billion of annual profit by 2030. Its previously announced acquisition of Karo Healthcare for €2.5 billion ($2.9 billion) was completed during the third quarter, according to the statement.
Global Atlantic generated $304.6 million of profit in the third quarter, helped by an accounting adjustment, exceeding previous forecasts.
Earnings from asset sales declined 3.8% to $306.3 million. KKR netted $275.8 million in capital markets fees for the quarter, a decline from a year earlier, with 80% of fees focused on debt products.
--With assistance from Erin Fuchs.
(Updates with share price in second paragraph and AUM in fourth paragraph)
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