Higher fee revenues, brighter outlook boost mood of private equity's Big 4

Record revenues from management fees and a brighter outlook for M&A in the year ahead helped private equity's Big Four close 2024 on a high note.

The average net positivity score for the four largest listed alternative asset managers — Apollo Global Management Inc., Blackstone Inc., The Carlyle Group Inc. and KKR & Co. Inc. — rose to its highest level in several years, according to an S&P Global Market Intelligence analysis of the language used by executives and analysts on fourth-quarter 2024 earnings calls.

Strong fee-related earnings (FRE), a key measure of asset manager performance and profitability, gave executives something to crow about. Carlyle and KKR set annual records for FRE in 2024, while both Apollo and Blackstone reported their best-ever quarterly FRE marks in the fourth quarter.

The executives' 2025 outlook also leaned positive, with many predicting higher M&A levels as cheaper financing and pent-up demand drive transaction activity. Blackstone CFO Michael Chae said this should include a healthy dose of private equity exits, whose scarcity in recent years has hindered fund managers' ability to raise money from investors.

"We see a much more constructive environment for realizations in 2025," Chae said.

AUM update

The Big Four firms all reported higher FRE in 2024 compared to 2023. KKR's FRE grew the most year over year, increasing 37% to $3.27 billion, or $3.66 per share, in 2024.

KKR also ran just behind Apollo on two key growth metrics. The firm increased total assets under management 15.3% year over year to $637.53 billion by the end of the fourth quarter and raised the portion of AUM that generates management fees 14.7% to $512 billion over the same period. Apollo's year-end 2024 totals of $751.04 billion in AUM and $568.7 billion in fee-earning AUM were both up 15.4% from the fourth quarter of 2023.

Meanwhile, Carlyle lagged its peers on both metrics. The firm grew AUM just 3.5% year over year in 2024 while the portion of AUM that generates fees shrank nearly 1% over the same period.

Carlyle CFO John Redett put a positive spin on the decline in the firm's fee-earning AUM, noting that exits from private equity investments factored into the drop.

"Realizations are good in our business in the sense we're giving capital back to our [limited partners (LPs)]. Our LPs like to see capital return," Redett said.

Credit drives fundraising

Private credit strategies continue to be a top priority for the Big Four's LPs and are the main driver of their fundraising.

Blackstone, the largest of the four by AUM, also led its peer group in fundraising, reporting a $171.5 billion haul in 2024. Of that total, 53%, or $91.2 billion, flowed to the firm's private credit strategies, while Blackstone's various private equity strategies attracted $41.3 billion, or about 24% of all capital committed to the firm in 2024.

– Review call capsules from recent private equity firm earnings calls. – Catch up on January's drop in global private equity and venture capital entry value. – Read a ranking of the 20 largest private credit managers.

Fundraising was even more lopsided at Apollo. The firm's private credit strategies drew $142.6 billion in new commitments in 2024, accounting for nearly 94% of the $152.4 billion raised by the firm in 2023.

"Credit is simply more attractive in absolute terms in the environment we're in," Apollo CEO Marc Rowan said.

Total return performance

Apollo's stock turned in the best performance between the start of 2024 and the end of the fourth-quarter 2024 earnings season in mid-February 2025, delivering a 71.5% total return to investors over that period, according to S&P Global Market Intelligence data. KKR followed with a total return of 69.5%.

Total returns of 27.1% for Blackstone and 26.7% for Carlyle slightly lagged the S&P 500, which produced total returns of 28.8% over that period.

Dividend forecast

Blackstone's dividend of $1.44 per share was the highest among the four firms in the fourth quarter. That dividend is expected to fall in 2025, according to Eclipse, an S&P Global dividend forecasting service.

Recently updated forecasts for Apollo and KKR predict both will continue with annual dividend increases, citing the firms' reported growth in fee revenue.