KKR & Co. Financial Model
Asset Management Company Financials Example (Free Excel Download)
KKR & Co. Inc. is a leading global alternative asset manager offering private equity, credit, real assets, and capital markets solutions, alongside a massive insurance business.
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About this model
This model provides a Sum-of-the-Parts (SOTP) equity valuation and Distributable Earnings forecast for KKR & Co., enabling an equity research analyst to value the firm's distinct business lines (Asset Management, Insurance, and Strategic Holdings) using segment-specific multiples.
KKR & Co. Inc. is a leading global alternative asset manager offering private equity, credit, real assets, and capital markets solutions, alongside a massive insurance business. The firm generates revenue through management fees on committed capital, performance fees (carried interest) on investment returns, and investment income from its insurance operations and balance sheet.
Business segments include:
- Asset Management (approx. 45% of Total Operating Earnings): Includes Private Equity, Real Assets, Credit, and Liquid Strategies. Generates Fee-Related Earnings (FRE) and realized performance revenues.
- Insurance (approx. 40% of Total Operating Earnings): Operated through Global Atlantic (100% owned as of Q1 2024), providing retirement and life insurance products. Generates spread-based earnings.
- Strategic Holdings (approx. 15% of Total Operating Earnings): A newly created segment in 2024 comprising KKR's Core Private Equity balance sheet holdings, generating recurring cash dividends and operating earnings.
The business model is a hybrid of an asset-light fee generator (Asset Management) and an asset-heavy balance sheet compounder (Insurance and Strategic Holdings). KKR ranks among the top three alternative asset managers globally, competing directly with Blackstone, Apollo Global Management, and Carlyle. A major recent event was KKR's acquisition of the remaining 37% minority stake in Global Atlantic for $2.7 billion in Q1 2024, bringing its ownership to 100%.
The downloadable KKR & Co. financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsKKR & Co. financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $16.23B | $5.70B | $14.50B | $21.88B | $19.46B |
| Net Income (Loss | $12.30B | -$1.02B | $5.36B | $4.91B | $6.15B |
| Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders | $4.56B | -$910.1M | $3.68B | $3.08B | $2.25B |
| Net income | $4.73B | -$521.7M | $3.73B | $3.08B | $2.37B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for KKR & Co.
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Asset Management
- Segment Name: Asset Management
- Revenue Driver Formula: Average Fee-Paying Assets Under Management (FPAUM) x Effective Management Fee Rate + Capital Markets Transaction Fees + Realized Performance Revenues.
- Historical Growth Rate: 15% to 20% CAGR in AUM and FPAUM over the last 3 years.
- Key Growth Levers: Scaling perpetual capital vehicles (which reached $268 billion in 2024), expanding private wealth distribution, and growing real assets (infrastructure and real estate).
- Pricing Dynamics: Management fees are highly contractual, typically locked in for 7 to 10 years on private market funds, averaging 0.85% to 1.00% across the blended platform.
- Revenue Recognition: Management fees are recognized over time as services are provided. Performance revenues are recognized when the investment return exceeds a specified hurdle rate, but only "realized" performance revenues are included in Distributable Earnings.
- Seasonality: Capital markets transaction fees and performance realizations are highly transactional and tend to skew heavier in Q4 due to year-end deal closings.
Insurance (Global Atlantic)
- Segment Name: Insurance
- Revenue Driver Formula: Average Invested Assets x Net Investment Yield - Cost of Insurance / Crediting Rate.
- Historical Growth Rate: 20%+ CAGR in assets since KKR's initial majority acquisition in 2021.
- Key Growth Levers: Block reinsurance transactions and retail annuity origination.
- Pricing Dynamics: Spread-based business. Profitability depends on earning a higher yield on investments (often originated by KKR's credit and real estate teams) than the rate credited to policyholders.
Strategic Holdings
- Segment Name: Strategic Holdings
- Revenue Driver Formula: Invested Capital x Return on Equity / Dividend Payout Yield.
- Historical Growth Rate: Newly broken out in 2024; targets $1.1 billion in operating earnings by 2030.
- Key Growth Levers: Increasing ownership stakes in core holdings (e.g., USI Insurance Services, 1-800 Contacts, Heartland Dental).
Cost Structure
Variable Costs / COGS
- Unlike traditional corporates, KKR does not have traditional COGS. The closest equivalent is Fee-Related Compensation, which scales directly with management fees.
- Compensation Ratio: Cash compensation and benefits typically run at 35% to 40% of Fee-Related Revenues.
- Insurance Expenses: Policyholder benefits and interest credited to policyholder account balances act as the "COGS" for the Global Atlantic segment.
Operating Expenses
- Non-Compensation Expenses: Occupancy, technology, professional fees, and travel. These provide operating leverage, typically growing slower than AUM.
- Stock-Based Compensation: Material for KKR. It is excluded from Fee-Related Earnings (FRE) and Distributable Earnings (DE) but must be tracked for GAAP reconciliation and share dilution modelling.
- Placement Fees: Costs paid to third parties for capital raising, amortised over the life of the fund.
Margin Profile
- FRE Margin: A critical industry metric. KKR's FRE margin typically ranges from 60% to 65%, expanding recently due to operating leverage in the Asset Management segment.
- Total Operating Earnings (TOE) Margin: Blends the high-margin FRE with the spread-based Insurance earnings.
Balance Sheet Structure
- Total Assets: Massive scale (hundreds of billions), heavily skewed by the consolidation of Global Atlantic's insurance assets and KKR's own investment funds.
- Key Asset Categories:
- Investments (KKR's balance sheet capital committed to its own funds).
- Insurance Investments (Fixed maturity securities, commercial mortgage loans held by Global Atlantic).
- Cash and Short-Term Investments.
- Goodwill & Intangibles: Material due to the Global Atlantic acquisition and historical bolt-on asset management acquisitions.
- Working Capital: Not a meaningful metric for alternative asset managers. Liquidity is measured by Uncalled Commitments (Dry Powder) and corporate cash.
- Liabilities: Dominated by Future Policy Benefits and Policyholder Account Balances (Insurance segment), followed by corporate debt.
Capital Expenditure & Investment
- Capex as % of Revenue: Traditional PP&E capex is negligible (under 1% of revenue).
- Balance Sheet Investments: The true "capex" for KKR is its GP commitments and co-investments alongside its funds. KKR is unique among peers for having a very large balance sheet, deploying billions annually into its own strategies.
- M&A Pattern: Transformational acquisitions (Global Atlantic in 2021 and 2024) mixed with organic growth.
Debt & Capital Structure
- Total Debt: Split between KKR corporate debt and Global Atlantic operational debt.
- Credit Rating: A- / A (Investment Grade), which is critical for the Insurance segment's counterparty risk.
- Key Debt Instruments: Senior notes, revolving credit facilities, and subordinated debt.
- Interest Rate Profile: Primarily fixed-rate long-term bonds for corporate debt.
- Share Repurchase Programme: Active, primarily used to offset dilution from stock-based compensation.
- Dividend Policy: Regular annualized dividend of $0.74 per share (as of early 2025), representing a steady, growing payout funded by Fee-Related Earnings.
Cash Flow Characteristics
- Distributable Earnings (DE): The primary cash flow proxy used by management and analysts. It removes unrealized mark-to-market gains/losses and equity-based compensation.
- FRE Cash Conversion: Extremely high (near 100%), as management fees are paid in cash quarterly.
- Performance Fee Cash Flow: Highly lumpy. Cash is only received when investments are sold (realized).
- Insurance Cash Flow: Driven by statutory capital generation at Global Atlantic, which is then upstreamed as dividends to the KKR holding company.
Sheet Structure
- Assumptions: Hardcoded drivers for AUM growth, fee rates, margins, and SOTP multiples.
- AUM & FPAUM Roll-Forward: Beginning balance, inflows (capital raised), outflows (distributions), and market appreciation by asset class (Private Equity, Real Assets, Credit).
- Asset Management Segment: Calculates Management Fees, Transaction Fees, Fee-Related Compensation, and outputs Fee-Related Earnings (FRE).
- Insurance Segment (Global Atlantic): Models average invested assets, net investment yield, cost of insurance, and outputs Insurance Operating Earnings.
- Strategic Holdings Segment: Models invested capital base and dividend/operating earnings yield.
- Consolidated Earnings (Non-GAAP): Aggregates segment earnings into Total Operating Earnings (TOE) and Adjusted Net Income (ANI).
- GAAP Income Statement: Reconciles Adjusted Net Income to GAAP Net Income (adding back stock-based comp and unrealized marks).
- Consolidated Balance Sheet: Tracks corporate cash, balance sheet investments, insurance assets, and debt.
- SOTP Valuation: Applies distinct multiples to FRE, Insurance Earnings, Strategic Holdings, and adds net balance sheet value to derive a target price.
Key Financial Relationships
- `FPAUM (End of Period) = FPAUM (Beginning) + New Capital Raised - Distributions/Realizations +/- Market Impact`
- `Management Fees = Average FPAUM x Blended Management Fee Rate`
- `Fee-Related Revenues = Management Fees + Capital Markets Transaction Fees + Other Fee Income`
- `Fee-Related Compensation = Fee-Related Revenues x Compensation Ratio (approx. 35-40%)`
- `Fee-Related Earnings (FRE) = Fee-Related Revenues - Fee-Related Compensation - Non-Compensation Expenses`
- `Insurance Operating Earnings = (Average Insurance Invested Assets x Net Investment Yield) - Policyholder Benefits - Insurance Operating Expenses`
- `Strategic Holdings Earnings = Core PE Balance Sheet Assets x Target Operating Yield`
- `Total Operating Earnings (TOE) = FRE + Insurance Operating Earnings + Strategic Holdings Earnings`
- `Distributable Earnings (DE) = TOE + Realized Performance Revenues - Realized Performance Compensation - Cash Taxes`
- `SOTP Value = (FRE x FRE Multiple) + (Insurance Earnings x Insurance Multiple) + (Strategic Holdings Earnings x Strategic Multiple) + Net Cash/Investments`
Cross-Sheet Dependencies
- The AUM & FPAUM Roll-Forward sheet is the engine of the model. It feeds Average FPAUM to the Asset Management Segment sheet to calculate Management Fees.
- The Asset Management Segment sheet feeds FRE to the Consolidated Earnings and SOTP Valuation sheets.
- The Insurance Segment sheet relies on the Consolidated Balance Sheet for the Insurance Invested Assets balance to calculate yield.
- The SOTP Valuation sheet aggregates outputs from all three operating segment sheets and pulls the share count from the Assumptions sheet to calculate the per-share target price.
Sign Convention
- Revenues and AUM Inflows: Positive.
- Expenses, AUM Outflows, and Distributions: Negative.
- Margins and Ratios: Positive percentages.
- Formulas combining revenues and expenses should use addition (e.g., `Revenue + Expense = Profit` where Expense is a negative number).
Things Most Likely to Go Wrong
- Double Counting Global Atlantic: KKR acquired the remaining 37% of Global Atlantic in Q1 2024. Historical data prior to 2024 includes a minority interest deduction. The model must reflect 100% ownership from 2024 onwards.
- Confusing GAAP vs. Non-GAAP: KKR's GAAP net income is highly volatile due to mark-to-market accounting on its massive balance sheet. Analysts value the company on Distributable Earnings (DE) and Total Operating Earnings (TOE). Do not use GAAP net income for valuation.
- Unrealized vs. Realized Carry: Performance fees are accrued on the balance sheet as investments appreciate, but only *realized* carry (when assets are actually sold) flows into Distributable Earnings.
- Capital Markets Volatility: Capital Markets Transaction Fees are highly cyclical. Straight-lining this revenue line will cause massive forecasting errors; it must be modelled based on expected deal activity.
- Stock-Based Compensation: SBC is excluded from FRE and DE, which flatters the margins. However, the model must capture the resulting share dilution in the fully diluted share count used for per-share valuation.
- Strategic Holdings Segment Change: KKR created the Strategic Holdings segment in 2024. Historical financials before 2024 will not map cleanly to this new three-segment structure without pro-forma adjustments.
- Perpetual Capital: Perpetual capital vehicles (like K-Series) do not have traditional distribution outflows. The AUM roll-forward must apply a lower outflow rate to this specific capital base.
- Insurance Yield Spread: A 10 basis point error in the assumed net investment spread for Global Atlantic translates to massive earnings misses due to the $150B+ asset base.
Validation Checks
- "Total AUM should be greater than Fee-Paying AUM (FPAUM); FPAUM typically runs at 80% of Total AUM."
- "FRE Margin should remain within the 60% to 65% band; flag if it expands beyond 65% without a clear drop in compensation ratio."
- "Total Operating Earnings (TOE) should roughly equal FRE + Insurance Earnings + Strategic Holdings Earnings."
- "The SOTP implied share price should be benchmarked against the current market price; flag if the variance exceeds 20%."
- "Dividend payout should be fully covered by Fee-Related Earnings (FRE payout ratio typically under 50%)."
- "Perpetual capital should represent at least 40% of Total AUM based on 2024 actuals."
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Total AUM (Starting 2024) | 638,000 | $ Millions | Actual Q4 2024 reported figure. |
| Fee-Paying AUM (Starting 2024) | 512,000 | $ Millions | Actual Q4 2024 reported figure. |
| Annual Gross Capital Raised | 110,000 | $ Millions | Aligns with $114B raised in FY2024. |
| Blended Management Fee Rate | 0.95 | % | Typical blended rate across KKR's private markets and liquid strategies. |
| FRE Compensation Ratio | 37.5 | % | Midpoint of historical 35-40% target range. |
| FRE Margin | 62.5 | % | Reflects recent operating leverage and scale. |
| Global Atlantic Invested Assets | 160,000 | $ Millions | Approximate scale of GA assets post-2024. |
| Insurance Net Investment Spread | 1.50 | % | Estimated spread between investment yield and crediting rate. |
| Strategic Holdings Target Earnings | 350 | $ Millions | Management guidance for 2026 operating earnings from this segment. |
| Annualized Dividend per Share | 0.74 | $ | Actual declared dividend run-rate for 2025. |
| FRE Valuation Multiple | 22.0 | x | Typical peer multiple for high-quality, recurring fee streams. |
| Insurance Earnings Multiple | 10.0 | x | Typical multiple for spread-based life/annuity insurance earnings. |
| Strategic Holdings Multiple | 12.0 | x | Blended multiple for core private equity balance sheet holdings. |
Data Sources & Benchmarks
- Filings: KKR Investor Relations website, SEC EDGAR (10-K, 8-K earnings releases, Financial Supplements).
- Key Peers: Blackstone (BX), Apollo Global Management (APO), The Carlyle Group (CG), Ares Management (ARES).
- Industry Data: Preqin or PitchBook for private capital fundraising benchmarks and dry powder statistics.
- Consensus Estimates: Bloomberg or FactSet for consensus FRE, DE, and AUM estimates.
Sources
Do more with the KKR & Co. model
Frequently asked
How does KKR & Co. generate its revenue?+
KKR & Co. generates revenue primarily through management fees on committed capital and performance fees (carried interest) from its investment returns in its Asset Management segment. Additionally, it earns investment income from its massive insurance operations and from its balance sheet holdings within the Strategic Holdings segment.
What are the primary sources of KKR's earnings across its business segments?+
KKR's earnings come from three main segments: Asset Management, which generates Fee-Related Earnings and realized performance revenues; Insurance, operated through Global Atlantic, which provides spread-based earnings; and Strategic Holdings, providing recurring cash dividends and operating earnings from KKR's core private equity balance sheet. These segments contribute approximately 45%, 40%, and 15% respectively to total operating earnings.
How should capital expenditure be understood for KKR & Co. in a financial model?+
Traditional property, plant, and equipment capital expenditure for KKR is negligible, typically under 1% of revenue. The true "capex" for KKR involves its significant GP commitments and co-investments alongside its funds, as the firm deploys billions annually into its own strategies from its large balance sheet.
What are the key revenue growth and margin assumptions used in the KKR financial model?+
The KKR financial model assumes a revenue growth rate of 20% (0.2). For profitability, Cost of Goods Sold is modeled at 55% of revenue, and Selling, General & Administrative expenses are assumed to be 15% of revenue.
What is the purpose of the KKR financial model and how does it approach valuation?+
The KKR financial model's primary purpose is to provide a Sum-of-the-Parts (SOTP) equity valuation and a Distributable Earnings forecast for the firm. It enables an equity research analyst to value KKR's distinct business lines - Asset Management, Insurance, and Strategic Holdings - using segment-specific multiples.
Can I download an Excel financial model for KKR & Co.?+
Yes, an Excel financial model for KKR & Co. is available for download. This model provides a forecast horizon from FY2026 to FY2030 and is designed for financial services companies.
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