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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.

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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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AUTHORZeno Toulon

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