KKR & Co. Inc.

growth in revenue in EBITDA year-over-year respectively. So altogether, total operating earnings were $1.17 per share. As a reminder, total operating earnings equals our fee-related earnings together with insurance and strategic holdings operating earnings. This quarter, total operating earnings represents over 80% of pre-tax adjusted net income So said differently, over 80% of our pre-tax earnings this quarter were driven by our more recurring revenue streams. Turning to investing earnings, realized performance income was $482 million and realized investment income was $139 million. This was driven by secondary and strategic sale activity across a number of asset classes, including private equity infrastructure. as well as across multiple geographies, pointing to the maturity and the diversity of our business. So in aggregate, adjusted net income was $972 million, or the $1.09 per share figure I mentioned a moment ago. Moving to investment performance in page 10 of our earnings release, the traditional private equity portfolio appreciated 4% in the quarter and 18% in the last 12 months. Opportunistic real estate was up one in the quarter and up three in the LDM. Infrastructure continues to perform well, up 3% in Q2 and up 17% LDM. And in credit, the leveraged credit composite was up two and the alternative credit composite was up three in Q2. And over the past 12 months, performance here was 12% for most strategies. And given this investment performance, our gross unrealized carried interest balance increased to 7.1 billion, and that is up over 40% from Q2 of 2023. And finally, before turning over to Rob, we wanted to reflect for a moment on an exciting milestone as KKR entered the S&P 500 index in June. We believe this is a strong reflection and endorsement of the firm's performance, our people and our culture, And we want to thank and recognize everyone at KKR for the creativity, innovation, and focus that got us to where we are today and will continue to propel us going forward. And with that, I'll hand the call over to Rob.

Thanks a lot, Craig. Given the recent S&P 500 inclusion, we expect that there are many on the call listening for the first time. Welcome. We would encourage you to also take a look at our April Investor Day replay and presentation that is found on our website. We feel as good as ever to hit our 2026 guidance figures that we introduced in April. As a reminder, those include 300 billion plus of new capital raised over the course of 2024 through 2026. And in terms of our financial metrics by 2026, $4.50 plus cents per share of FRE, $7 plus per share of total operating earnings, and between $7 and $8 of adjusted net income per share, which is after tax. So looking at the LTM figures that we reported this morning, our 2026 guidance implies a 20% annual growth rate, plus or minus, across all three of these key financial metrics. Overall, our activity levels and the momentum across the firm feel very strong. We are continuing to see our management fees scale meaningfully. with 13% year-over-year growth, and this is before our in-market flagship funds have turned on. We are also seeing continued real signs of the monetization backdrop improving, as evidenced by our Q2 realized performance fees and investment income. Last quarter, I mentioned that we had very healthy pipelines on the back of the improved environment, as well as our diversified and performing portfolio. I will echo those same comments again this quarter. So far in Q3, we have already completed a secondary sale of our shares in Cocosci, took our portfolio company OneStream public, and advised Lineage Logistics, a third-party capital markets client, on their IPO as well. As a result of the current activity levels, our capital markets business saw its second highest revenue quarter in the past couple of years in Q2. Looking forward, unless something changes in the market or our deal pipeline gets pushed, Q3 capital markets fees are shaping up to be one of the highest in our history. Turning to strategic holdings, we've only reported this segment on a standalone basis for two quarters, but we remain confident in our ability to take the business to over a billion of operating earnings by 2030. Stepping back, I don't think there are a lot of corporates giving seven-year guidance, so I think this really does speak to our confidence in both the durability and growth orientation of these cash flows. Now turning to insurance. There are a lot of really positive developments this quarter, so I wanted to spend a bit of extra time taking you through a number of business building initiatives. In Q2, we saw record volume of inflows from Global Atlantic across annuity sales and flow reinsurance, totaling over $8 billion in the quarter, compared to less than $3 billion just a year ago. And looking at the last four quarters in aggregate, Total inflows, including block activity, have been over $50 billion. That's the highest point in any 12-month period in GA's history. On the earnings front, we continue to feel good about our ability to generate 14% to 15% pre-tax ROEs as the right long-term target. The ROE for Q2 came in below this range as a result of a couple of factors, but mostly a function of us leaning into the long-term opportunity at GA. The drivers for the quarter include elevated levels of liquidity from our big block reinsurance transactions, as well as the significant ramp up in quarterly volumes. And some of the investments we are choosing to make that favor longer-term ROEs really at the expense of near-term ROEs. Overall, we continue to feel great about the long-term trajectory at GA and the opportunity for us to create significant value together. In particular, given that we are now six plus months into owning 100%, We thought we'd bring you through some tangible examples of how our closer collaboration across investments as well as capital markets are driving real business performance. First in real estate, we recently closed on a 2 billion unlevered acquisition of a 5,000 plus unit multifamily portfolio. Given the dearth of core real estate capital globally, we are seeing excellent risk return for the few very well-capitalized buyers in the market, of which we are one. We have conservatively priced this deal to an 8% unlevered return with significant upside potential, which we think is a really compelling risk-adjusted return, but it's the type of deal that is going to put some pressure on our near-term ROEs for the benefit of longer-term profitability. As an example, we expect the year one yield on this portfolio to be in the low 4% range. Obviously, less than where we are originating our liabilities today. But the combination of yields increasing over time and the expected appreciation of the asset make this a really interesting deal and one we're excited to pursue for the long term. Now, there will naturally be a limit to how much of this type of investment that we want to make, but I think it's a really great example of our increased coordination between our real estate equity team and GA. We also have had a very positive development this quarter on the infrastructure side of our business. We announced an investment in Labrador Island Link, which is a transmission line that brings renewable energy to Eastern Canada. This is the first collaboration between Global Atlantic and Cake Air's infrastructure teams who work together to structure the equity interest with significant downside protection. And finally, we wanted to take you through a brief case study from early Q3 that combines Global Atlantic, our credit teams, as well as our capital markets franchise. Cyrus One, a data center portfolio company of ours, has been growing rapidly with demand for hyperscale facilities continuing to increase driven by cloud and AI deployment. To support this growth, our capital markets team helped arrange an $8 billion facility of which we sole led the $3 billion institutional tranche that was anchored by Global Atlantic. Strategically, This represents a really exciting evolution in our playbook, where we generated a great outcome for a portfolio company, made a compelling credit investment, and were able to simultaneously drive capital markets fees. All of these examples would not have been possible without the interconnectivity across the firm and our model. We expect many more examples like this to come. Now, before handing it off to Scott, I wanted to briefly touch on some of our operating metrics across the firm. where there continues to be very significant momentum. In the quarter, we raised $32 billion of capital. This is the second most active fundraising quarter in our history. Of particular note, we're very pleased with the initial reception of our Global Infrastructure Five Fund. Through July, approximately $10 billion of capital has been raised. And in June, we launched our America's Private Equity Flagship Fundraise. So our fundraising super cycle is now well underway. Also within private equity, our middle market strategy called Ascendant has already achieved its fundraising goal of $4 billion, and we have not yet held its final close. It's a great outcome for a first-time fund, obviously something that is adjacent and benefiting from our existing private equity team. I think it really speaks to the receptivity of our investors to the quality of our team and our track record as we look to fundraise for our next flagship. Focusing for a moment specifically on private wealth. Our K-Series vehicles in the quarter raised $2.8 billion of capital, 60% of which was driven by our private equity strategy. The K-Series suite has gained real momentum, but we are still in the earliest of days of what we view to be a really long-term strategic focus. As a reminder, we now have vehicles across our four key investing verticals. That's private equity, infrastructure, real estate, as well as credit representing over 11 billion of AUM. And that's up from approximately 3 billion just a year ago. And looking beyond case series, we recently announced our exclusive strategic partnership with Capital Group, one of the largest global active asset managers. With 2.6 trillion of AUM and serving 67 million individual investors, Capital Group has built a leading client franchise with world-class wealth distribution capabilities. By combining Capital Group's public market investing as well as distribution expertise with KKR's nearly 50-year track record in alternatives investing, we plan to introduce a series of hybrid public-private investment solutions that make the KKR platform available to a broader universe of investors. Importantly, the hybrid products are a step beyond what we are already doing with the K-Series and the accredited investor universe. as they expand our reach to include the mass market. We're excited about the future of this collaboration, and we will share much more as we approach the product's expected launch in 2025. Turning to capital invested, we deployed $23 billion of capital in Q2. For the first half of 2024, we have now deployed $37 billion, which is almost double the first half of 2023. Real estate in particular had a strong deployment quarter across equity and credit. On the credit and liquid strategy side, direct lending continued to put capital to work as well as opportunities in high-grade ABF. Importantly, there remains a very healthy pipeline for deployment in the second half of 2024 as well. Overall, we remain very excited around the business momentum that we are seeing across the firm and how that can really translate into further P&L outcomes of the second half of the year. And with that, let me turn it over to Scott.

Thank you, Rob. And thank you, everybody, for joining our call today. Last month, we held our annual meeting for our fund investors, followed by KKR's partners meeting. I thought while we were together today, I would share some of the messages we shared in those sessions and some reflections from Joe and me on the first half of the year and our expectations for the second half. The main message we shared with our investors is that we are seeing significantly greater market activity since the beginning of the year. The macro inflation and rates backdrop has improved. Markets are open and the deal market is back. To give you a sense globally year to date, leveraged credit issuance is up over 100%. IPOs are up nearly 50%. and announced M&A is up approximately 25%. And given it typically takes a couple quarters for the market to turn back on, these numbers understate the run rate activity we are feeling today. If this momentum continues, we believe you will see even more activity and announced deals and exits in the second half of the year. We are seeing this dynamic across our businesses. Deployment is up. Monetizations are up. Capital markets revenues are up. Deal pipelines are up. And visibility is high. Unless something happens to disrupt this momentum, we expect to see increased activity in the second half of this year relative to the first. What's also encouraging is that we believe this is a very attractive investment environment. Volatility and uncertainty are still with us. So far, 2024 feels like it could be a sweet spot year where values are attractive and activity levels are high. This is in contrast to last year when values were attractive, but transaction volumes were more muted as owners of mature assets didn't want to sell or finance them. in a closed market. This year, we not only have an open market, we have pent up supply of deals that didn't get done the last couple of years coming to market. So we are optimistic. A couple other things we shared in our June sessions. In private equity, while many in our industry over deployed in and around 2021, we did not. We have been applying the lessons we learned before and during the financial crisis and have been deploying in a linear fashion the last many years. As a result, we have strong returns, dry powder, and a healthy portfolio. In credit, we're seeing the benefits of a scaled $230-plus billion platform with significant opportunity across now a $40 trillion global credit space. Our private credit business is now over $100 billion, and we continue to see attractive investing opportunities in asset-based finance, Asia credit, opportunistic investing, and junior debt, amongst other areas. In infrastructure, the global opportunity is immense across our efforts in core, value-add, and climate. The capital need massively outstrips supply, and we feel very well positioned. In real estate, the credit opportunity remains compelling with banks on the sidelines, and the equity investment opportunity is very attractive. As a reminder, we started our real estate business in 2011. We don't have office and retail exposure of any consequence, so we have the ability to play offense in this environment, and we believe we will take share over the next several years and will benefit from the current and coming dislocations. The real estate investment opportunity is highly compelling. We have closed or are under exclusive contract on over $10 billion of real estate equity deals since April 1st and have a full pipeline as some owners of real estate seek liquidity and sell their best assets. And in this environment, scale is trading at a discount. And we also introduced a fifth asset class to our investors in June, insurance. This is the IV sidecar franchise that invests alongside the Global Atlantic balance sheet in block and flow deals. This area has amongst the most compelling capital supply, demand, and balances we see across the firm. And speaking of GA, we're now roughly seven months since we became 100% owners. We've been focused on mining the untapped opportunities we shared with you last November when we announced the deal. As you heard, GA is growing rapidly. And as we transition the business to 100% ownership, we're seeing the combined impact of simultaneous fast growth and investing in the business for the long term. As we sit here today, we feel very optimistic about the opportunities to create value with GA at 100%. Investing across more KKR asset classes, scaling KKR capital markets and structured assets, going global in particular in Japan, and finding more ways to work together more broadly. Overall, the opportunity with GA is greater in our minds today than it was at the beginning of the year. So to keep it simple, the market is open. The firm is very active. Our investment performance is particularly strong. We've never felt better about our team. and we are well positioned to execute the plan we shared with you at our April industry day. With that, we're happy to take your questions.