KKR expects Q4 profit to be hit by Asia private equity fund underperformance

KKR (KKR [https://seekingalpha.com/symbol/KKR]) expects its Q4 adjusted net income per share to be about $0.18 lower due to a one-time charge incurred by the underperformance of its second Asia private equity fund.

Shares were -0.05% Friday post-market to $121.26.

Today, the company reported a Q3 adjusted EPS of $1.41, topping the average analyst estimate of $1.30, which rose from $1.18 in Q2 and $1.32 in last year's Q3.

"Asia II was raised 12, 13 years ago and stopped investing roughly 8 years ago. And as we have disclosed to our Asia II investors, we expect that fund will roughly return its cost," said CFO Robert Lewin during the company's third-quarter earnings call [https://seekingalpha.com/article/4840363-kkr-and-co-inc-kkr-q3-2025-earnings-call-transcript].

"We collected roughly $350 million of gross carry from Asia II many years ago that we now have to pay back. We will be taking a charge in the fourth quarter to do just that, and reversing the compensation that was paid out when that carry was collected," said Lewin.

"To be clear, while we are recognizing this event in Q4, our accrued unrealized performance income on the balance sheet has been net of this impact for some time," the CFO noted, adding that they expect the fourth-quarter net realized performance income to be lower than it otherwise would have been.

The alternative asset manager's Q3 earnings [https://seekingalpha.com/news/4518495-kkr-q3-earnings-beat-helped-by-strong-fundraising-increased-investment-activity] beat consensus with a rebound in fundraising and investment. Alternative credit turned in the best performance among its strategies in the quarter, while its infrastructure investments had the strongest returns in the past 12 months.

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