KKR - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 was strong on recurring metrics: FRE $823 million ($0.92/adj. share, +23% YoY), TOE $1.1 billion ($1.24/adj. share, +16% YoY), and ANI $1.0 billion ($1.15/adj. share, +20% YoY), while GAAP diluted EPS was -$0.22 due to insurance GAAP volatility.
• Street EPS was modestly beaten: Primary EPS consensus $1.13* vs. actual $1.15; Asset Management Segment Revenues beat consensus ($1.71B* est. vs. $1.77B actual). Management highlighted recurring earnings now ~80% of total segment earnings LTM, supporting durability.
• Fundraising momentum and deployment remained robust: $31B raised in Q1; Americas XIV reached $14B initial close in April; capital invested was $19B with line-of-sight to >$800M monetization-related revenue (≥$250M in Q2).
• Strategic catalysts: activation of Americas XIV in Q2 (turning on fees), launch of Capital Group public‑private credit solutions (interval funds), and continued scale in Strategic Holdings; regular dividend raised to $0.185 (annualized $0.74).

What Went Well and What Went Wrong

What Went Well

• Recurring earnings growth and margin resilience: FRE $823M ($0.92/adj. share, +23% YoY) with a 69% FRE margin; TOE $1.1B ($1.24/adj. share, +16% YoY), ANI $1.0B ($1.15/adj. share, +20% YoY).
• Scaled fundraising and dry powder: $31B new capital raised in Q1, $114B LTM; uncalled commitments (dry powder) $116B, supporting deployment into volatility.
• Capital markets and monetization visibility: Transaction fees $229M; line‑of‑sight to >$800M monetization‑related revenue, with ≥$250M expected in Q2; “Volatility brings opportunity,” positioning KKR to play offense globally.
• Management quote: “We have direct line of sight to north of $800 million of monetization-related revenue… we expect at least $250 million to be generated in Q2” — CFO Robert Lewin.
• Tariff exposure assessed as limited: “90% of our AUM has limited to no first order impact… core private equity and Strategic Holdings are not expected to have any material impact” — CFO Robert Lewin.
• Private wealth acceleration with Capital Group: two public‑private credit solutions launched; equity strategies expected in 2026, plus work on models and target-date funds.

What Went Wrong

• GAAP results were pressured: GAAP diluted EPS -$0.22 and GAAP revenues fell to $3.11B (YoY down from $9.66B), reflecting insurance GAAP volatility and lower insurance GAAP revenues.
• Insurance Operating Earnings declined YoY: $259M vs. $273M (Q1’24), with net cost of insurance rising alongside higher funding costs and liability run‑off; management expects ~“$250M plus or minus” run‑rate over next few quarters.
• Sequential ANI per share down: $1.15 in Q1 vs. $1.32 in Q4; FRE per share also down sequentially ($0.92 vs. $0.94), as timing effects offset solid YoY growth.
• Analyst concerns centered on fundraising elongation and macro uncertainty; management flagged “barbelled” close patterns and reiterated confidence but acknowledged timing variability (Infra V final close timing not yet announced).

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. Welcome to KKR's First Quarter 2025 earnings conference call. During today's presentation, all parties will be in the listen-only mode. Following management's prepared remarks for the conference, we'll be open for questions. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. I will now hand the call over to Craig Larson, Partner and Head of Investor Relations for KKR. Craig, please go ahead.

Craig Larson (Partner and Head of Investor Relations)

Thank you, Operator. Good morning, everyone. Welcome to our First Quarter 2025 earnings call. This morning, as usual, I'm joined by Rob Lewin, our Chief Financial Officer, and Scott Nuttall, our Co-Chief Executive Officer. We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the Investor Center section at kkr.com. As a reminder, we report our segment numbers on an adjusted share basis. This call will contain forward-looking statements which do not guarantee future events or performance. Please refer to our earnings release and our SEC filings for cautionary factors about these statements. I'm going to begin this morning by reviewing our results for the quarter before Rob walks through the current environment, its impact on our key business drivers, as well as our strategic positioning longer term.

Scott will then finish with some closing thoughts. Beginning with our headline financial results for the quarter, fee-related earnings per share came in at $0.92, up 22% year over year. Total operating earnings of $1.24 per share are up 16% year over year, and adjusted net income of $1.15 per share is up 19% compared to a year ago. All of these figures are among the highest we reported as a public company and are reflective of the diversified and global business model built over the last decade plus. Going into our quarterly results in a little more detail, management fees in Q1 were $917 million, up 13% year over year, driven by fundraising and deployment activities. If anything, management fee growth in the quarter feels understated relative to the breadth of the $31 billion of new capital that we raised in Q1.

The largest component of this $31 billion was capital raised for North America XIV, the latest vintage of our flagship North America private equity strategy, which had not turned on as of March 31 and therefore did not contribute to management fees in the quarter. Rob's going to give a little bit of a more fulsome update on North America XIV in a few minutes. Total transaction and monitoring fees were $262 million in the quarter. Capital markets transaction fees were $229 million, driven primarily by activity in new and existing portfolio companies within both private equity and infrastructure. Fee-related performance revenues were $21 million in the quarter. Altogether, fee-related revenues came in at $1.2 billion. That's up 22% year over year. Turning to expenses, fee-related compensation was right at the midpoint of our guided range at 17.5% of fee-related revenues. Other operating expenses were $168 million for the quarter.

In total, fee-related earnings were $823 million, worth $0.92 per share that I mentioned a moment ago, with an FRE margin of 69%. Insurance solutions operating earnings were $259 million, and strategic holdings operating earnings were $31 million, both of which were in line to modestly ahead of our recent guidance. In terms of our strategic holdings segment, we have closed on our purchase of additional stakes in three existing core private equity businesses as we introduced on our call last quarter. We continue to feel that our strategic holdings business is a real differentiator for us, and these transactions are a further accelerant for the segment. Today, our share of annual revenue and EBITDA across the 18-company portfolio is approximately $308 billion and $920 million, respectively. Again, that is our share.

Since quarter end, we've announced the acquisition of a new core private equity investment, Karo Healthcare, which will bring our strategic holdings portfolio to 19 companies. Altogether, total operating earnings were $1.24 per share. As a reminder, total operating earnings is comprised of our fee-related earnings together with our insurance and strategic holdings operating earnings, which represent the more recurring components of our earnings streams. Over the last 12 months, total operating earnings comprised nearly 80% of total segment earnings. Said differently, nearly 80% of our pre-tax earnings over the last 12 months were driven by our more recurring earnings streams, highlighting the durability of our business, especially during periods of volatility. Turning now to investing earnings within our asset management segment, realized performance income was $348 million, and realized investment income was $218 million for total monetization activity of $566 million.

That's up almost 40% year over year. This quarter activity was largely driven by the annual crystallization of carry from core PE, as well as other monetization events across traditional PE, as well as growth equity. Turning to investment performance and looking at page 10 of our earnings release, the private equity portfolio was up 4% in the quarter and up 11% over the last 12 months. This was a quarter where investment performance was undoubtedly helped by the geographic diversification of our firm, as European and Asian equity indices were both up in the quarter. In real assets, the opportunistic real estate portfolio was up 2% in the quarter and up 5% over the LTM. Infrastructure was up 4% in the quarter and appreciated 13% over the LTM. In credit, the leveraged credit composite was flat in the quarter and up 7% over the last 12 months.

The alternative credit composite was up 3% in the quarter and up 11% over the last 12 months. Finally, consistent with historical practice, we increased our dividend to $0.74 per share on an annualized basis, or $0.185 per share per quarter, beginning with this quarter. This is now the sixth consecutive year we've increased our dividend since we changed our corporate structure, increasing our annualized dividend from $0.50 per share to $0.74 over this period of time. With that, I'm pleased to turn the call over to Rob.

Rob Lewin (CFO)

Thanks a lot, Craig. Thanks, everyone, for joining our call this morning. We've all experienced some real volatility, particularly since early April. It is in this type of environment that our business model and collaborative culture uniquely positions us, and we are using that to lean in and source attractive investment opportunities around the globe for our clients. As we navigate this volatility, there are a number of themes and questions that we have consistently been hearing from our shareholders and clients. I thought I would spend my time this morning walking through a number of common areas of focus. The first is the impact of tariffs on our existing portfolio. As a starting point, it is important to remember that tariffs and supply chain diversification and resilience have been front-of-mind topics for our investment, public affairs, and macro teams dating back to the global pandemic.

As a result, for five-plus years now, this has been a standard topic of conversation. Taking a look at our global private equity portfolio today, this includes traditional, core, and growth. Based on our initial findings, we estimate that 90% of our AUM has limited to no first-order impact from the announced tariffs. Importantly, this figure does not include identified mitigating measures that we are actively implementing. Specifically, our core private equity portfolio and our strategic holdings segment are not expected to have any material impact from tariffs. Across our infrastructure platform, the vast majority of our companies have either contractual protections that insulate KKR returns or minimal estimated exposure. Looking at our infrastructure deployment over the last five years, approximately 70% has been in Europe and in Asia.

As we look at our credit portfolio, there will be pockets of exposure, but we believe the opportunities, and we really do think this is a credit pickers' market, will outweigh the downsides. While we expect there will be individual instances of direct tariff impact in parts of the portfolio, based on how we understand tariffs today, we feel well-equipped to manage these challenges and, on the whole, feel very good with how our portfolio is positioned. The second theme that I wanted to cover this morning is the effect on both the deployment and the monetization environment. We find ourselves in the fortunate position of being ready as a firm to play offense on behalf of our clients. Volatility brings opportunity, and we benefit from the global and connected nature of our firm.

We've closed or committed to over $30 billion worth of new investments since the start of the year. Within private markets, these investments are diversified across geographies, with more than half coming outside the U.S. Notably, multiple of these investments are in Japan, where we continue to be at the forefront of activity, including the purchases of Fujisoft and Topcon in our private equity strategy. Looking only at investments that we announced over the last month, when the tariff-related volatility began, we committed over $10 billion of equity. This includes $7 billion in private markets across global opportunities in traditional PE, core PE, infrastructure, and tech growth, to name a few, and another $3 billion in private credit across direct lending, high-grade ABF, and junior debt. Moving next to monetizations, we think we remain really well-positioned here.

Our discipline around investment pacing and linear deployment has definitely contributed to the overall strength and maturity of our portfolio. At quarter end, our gross unrealized performance income stands at $8.7 billion. It's a high point for us and up over 25% year on year. I think this number in particular stands out given our healthy level of monetizations over the past 12 months. As a result of our mature and global portfolio and strong investment performance, we are better positioned than some might expect in terms of realization activity, even in the face of the market volatility. To give you a sense, looking at our pending monetizations, so this is based on transactions that are signed but not yet closed, we have direct line of sight to north of $800 million of monetization-related revenue, most of which will be performance income.

This includes exits of Seiyu in Japan, Kito Crosby in the U.S., and four infrastructure investments, to name a few of the key drivers. Of that $800 million+, we expect at least $250 million to be generated in Q2, so a very healthy figure for us as we stand here in just early May. The third theme that I wanted to hit on is the impact on our capital raising efforts. We are actively engaged with our clients. Part of this is making sure they know what is happening with their portfolios, but a lot of it is discussing how to invest into these markets and ways that we can work together. We've heard a range of responses, and they are evolving with the market.

While it may be early as we see how this all plays out, today there are no changes to our targets, and we have continued conviction in our fundraising outlook. Total new capital raised in the quarter was $31 billion, and it's worth spending a minute on our North America private equity strategy. In April, we completed the initial close period to North America XIV at $14 billion. It's a great first step for us and reflects, in our view, the strong investment returns we've delivered on behalf of our clients alongside a differentiated return of capital profile. Remember, our approach here stands in contrast relative to many in our industry as we raise traditional PE funds focused across North America, Europe, and Asia, compared to the global funds you often see from our competitors. This approach, we think, has allowed us to raise more capital.

As of 3/31, we had over $40 billion of committed capital across our active traditional private equity flagship funds and has also allowed for more diversified carried interest profile at the same time. This does not include committed capital across core private equity, mid-market, and our growth strategies. Looking at another important piece of capital raising, private wealth, our K-series suite of vehicles continue to maintain traction. Across the four investing verticals, AUM was at $22 billion, including activity that closed April 1st, 2025. This compares to $9 billion a year ago. Our North Star for the K-series suite continues to be focused on building vehicles that we can be proud of 10+ years from now. As a result, recognizing that we do not read too much into the month-to-month sales, we continue to be encouraged by our performance, deployment, and the capital raising activity.

Earlier this week, the two public-private credit solutions created in exclusive partnership with Capital Group have launched. We are similarly focused on building these products for long-term success. As we look ahead to the second half of the year, we would expect to give you an update on the private equity and real asset product launches. In addition, work is underway to extend access for individuals interested in private markets through model portfolios and target date funds. Turning next to insurance, we are now a year-plus into owning 100% of Global Atlantic, and we are progressing well on our path to modestly evolving how we source both liabilities and assets, including raising more third-party capital, elongating our liability profile, and sourcing additional alternatives.

This addition of longer-dated alternatives to the portfolio, where we think that we have a differentiated sourcing advantage, will drive up overall returns while at the same time naturally reducing leverage over time. Financial performance here begins with insurance segment operating earnings. In Q1, as you would have heard from Craig, we reported $259 million, which was in line with our expectations. Consistent with our comments last quarter, I would expect insurance operating earnings to stay in that $250 million plus or minus level during the next few quarters. This line item alone does not capture, though, how our model works and the overall impact of our insurance-related economics. A lot of it appropriately shows up in our asset management segment. Firstly, management fees from our IV Sidecar vehicles, as well as strategic partnerships.

This capital allows us to grow GA in a very capital-efficient way, and there is more to come here. As an example, Japan Post Insurance announced in Q1 their intention to expand our existing strategic partnership and make a new $1 billion-$2 billion investment here. Number two, capital markets fees, where we've just begun to scratch the surface. We see the potential to generate several hundred million of additional annual revenues over time. In 2024, that number was closer to $50 million. Finally, the management fees charged for our investment management agreement with Global Atlantic. Critically, even while we are in the process of shifting our strategy to emphasize longer duration and more private market assets, our all-in pre-tax ROE of our insurance business is approaching 20%, with a clear path to 20%+ returns as we get all the elements of the business working well together.

The last theme that I want to go through before handing it off to Scott is around the durability of our model, which provides us with a significant amount of both stability and visibility. Over 90% of our capital is perpetual or committed for an average of eight years or more. Today, we have $116 billion of committed but uncalled capital. If you look at our management fees, they are largely calculated on committed or invested capital and therefore not influenced by marks and corresponding NAVs. Finally, we have a record amount of capital on which we're not yet earning fees, with $64 billion committed, with a weighted average management fee rate of about 100 basis points that turns on when the capital is either invested or enters its investment period.

Just to put that $64 billion figure into perspective, it is up almost 50% compared to one year ago. We benefit from real stability of management fees and increased visibility on how they will grow. Finally, our business is global and diversified. Almost half of our investment professionals sit outside of the U.S. Looking specifically at our management fees, they are well-diversified across asset classes. Over the last 12 months, management fees across private equity, real assets, and credit and liquid strategies were each over $1 billion, and in aggregate, have grown at a high teens CAGR over the past three years. We do not think that there are any asset management firms that combine our scale, growth profile, and diversification. Now I will end where I started. This is an environment where our people and our model really should excel.

With that, let me hand it off to Scott.

Scott Nuttall (Co-CEO)

Thanks, Rob. Thanks, everybody, for joining our call today. Given the recent volatility and uncertainty, I want to spend a few minutes on how we're navigating this environment and address what else may be on your minds. Before I do that, some context. Today is KKR's 49th birthday. We were founded on this day in 1976. You and I have been here nearly 29 of those 49 years. Over this period, the firm has seen a number of cycles and dislocations. In our experience, times like this yield some very attractive investment opportunities. The key is to use our global and diversified business model with significant locked-up capital and $116 billion of dry powder to keep investing when others are scared.

These periods always end, and we typically look back and wish we had invested more when the world is most uncertain. We are running the firm with those lessons in mind. We did a good job leaning into the COVID dislocation, and we're approaching this environment with the same mindset. As Rob mentioned, we've announced over $10 billion of investments in the last four weeks since the tariff announcement, and we have significant pipelines across our businesses. You should expect to continue to see us investing into this environment. No doubt, some sale processes may be delayed if this continues, but it is times like this where we see the benefit of being very global as Asia and Europe are less impacted so far and multi-asset class and connected as companies still need capital but may prefer debt over equity if valuations are down.

We are optimistic about deployment and the returns we will see from this vintage. We are also sure you have questions about what this means for monetizations. As Rob mentioned, we have a mature portfolio and benefit from linear and disciplined deployment. As such, we have record embedded gains in our portfolio, and those gains are global and across asset classes. Here again, we have good line of sight and several assets in sale processes. We remain of the view that we can monetize gains in this environment. If we do decide to delay some processes, that just means we will likely monetize more next year. We are sure you also have some questions about fundraising. We want you to have our views and some facts. As an example, China-based LPs make up a low single-digit % of our AUM.

Some may delay decisions in this environment, but we do not expect a material impact. We are also watching private wealth flows, which have not been affected to date. These markets are in adoption phase, and we have a long history of outperforming in down markets. This period could actually accelerate adoption over time, and we think our partnership with Capital Group will accelerate that adoption as well. Remember, a good portion of our fundraising comes through Global Atlantic. We expect annuity demand to be largely unaffected in this environment, and it could be positively impacted as investors focus on safety and quality. In short, given our momentum and the diversity of our global fundraising channels, we remain confident we will continue to raise scaled capital. Stepping back, you are also likely wondering if we have changed our view of what we are capable of achieving as a firm.

We have not. Joe and I shared 2026 guidance last year. We still feel good about those numbers across both our fundraising and financial metrics. When you cut through it, we believe that while this dislocation may be different for a variety of reasons, the key is to stay focused on what we control and to not waste the opportunities it affords. We will continue investing, speaking with our clients, finding new themes, and looking for strategic opportunities, some of which are only available in times of distress. Times like this reveal experience, culture, and business model durability, and they give us the opportunity to differentiate ourselves with performance, client engagement, and strategic action so that we emerge stronger as a firm and as investors. That's our focus and intent. With that, we're happy to take your questions.

Operator (participant)

Thank you.

Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star and one on the telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. Request participants, please limit to one question and one follow-up and rejoin the queue. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Craig Siegenthaler with Bank of America. Please go ahead.

Craig Siegenthaler (Managing Director)

Good morning, Scott, Rob. Happy 49th birthday and hope everyone's doing well. Our question is on your Asia business.

We all know that you have the largest private markets business across Asia. We are curious in your perspective on what the emerging trade war means for your strategy, your ability to fundraise, and also investing effort across the region.

Scott Nuttall (Co-CEO)

Thanks for the question, Craig. No change to our strategy. I mean, one of the things we talked about in the prepared remarks is that we learned a lot kind of going through Trump 1.0 and thinking about tariff implications. Learned a lot during COVID about supply chains as an example. We have been looking at investments across asset classes with those lessons and the benefit of that timeframe in mind. No change to our strategy. Our effort, as you know, is cross asset class and Pan-Asian.

We have efforts across private equity, real estate, infra, credit, the beginnings of an insurance effort, nine offices across the region approaching 600 people. We think it is a big opportunity for us as a firm, and we see a lot of growth ahead. On the margin, one of our themes for a while has been intra-Asia trade. That is just an example. We think that is going to be an even bigger opportunity now on the back of this. Perhaps as investors, stay focused on being even more global with their portfolios. I would say January, February, there was a little bit of a bent toward maybe I should have more in the U.S. On the margin, I think it is going to be beneficial to Asia flows if people decide to stay more global.

It is something that I think will benefit us given our scale in the region.

Craig Larson (Partner and Head of Investor Relations)

Craig, it is Craig. I was just going to add some numbers to this. I think you are probably aware of this. I know you spent a healthy amount of time in the region yourself. At the end of 2019, we had $21 billion of AUM. Almost 90% was in private equity. Looking at Q1 2025, we had about $70 billion of AUM with traditional PE comprising just below 50% of that. As Scott noted, meaningful growth with meaningful diversification at the same time.

Craig Siegenthaler (Managing Director)

Thank you, Craig. Just for my follow-up, I heard your commentary towards the end of the call on the resilience of private wealth flows and actually the potential for an acceleration coming out of this correction.

Do you see the strong relative performance to date or the very low adoptions as the key drivers? Was that comment really brought across asset class? Because I know you're doing very well in particular in private equity just given [KPEC's] strong recent performance.

Scott Nuttall (Co-CEO)

Yeah, I think it all really is a comment on our ability to perform through a cycle, Craig. The comment was more if the public markets pull back, that's when we tend to outperform by even more. If the private wealth channel, which is newer to the alternative space, has that experience, we think over time that could actually accelerate adoption. It was more of a forward-looking comment. You're right. We haven't really seen it impact flows as of yet. Craig will walk through some numbers in a minute.

For us, as I mentioned in the prepared remarks, we've been around a long time. We've seen a lot of cycles, and we're a learning organization. We learned a lot of lessons during the financial crisis. One of those was the importance of linear deployment and portfolio construction. As you know, we've been talking about it for a long time. We've been implementing it for a long time. It's now coming through the results. The bigger performance point, I think, is going to start to shine through and show how differentiated we are. Just to take one example, America's private equity over the last eight years, we've returned two times the amount of capital that we've called. That's in a business that's been growing.

We think this is going to allow us to outperform over time in terms of capital access. We do see it as a go-forward advantage across channels. Private wealth is part of that, but we also see the benefit across institutional and everything else we do. Craig, you want to give an update on private wealth?

Craig Larson (Partner and Head of Investor Relations)

Yeah, we were looking at the stats through April. If you look at Q3 and Q4, we were below that $3 billion of new capital raised in Q3, right at about that in Q4. In Q1, we had raised $4 billion across the K-series for the quarter. When we look at activity at this point through April, so one month period, we are right at about that $1 billion level. It feels like a healthy month for us.

It's interesting when you look at overall flows in particular for private equity and infrastructure. In Q1, roughly half of those were inside the U.S., roughly half outside the U.S. Based, again, on this preliminary data for the month of April, we're again very diversified with a pretty equal split both inside and outside the U.S. Overall, tough to read too much into any four weeks of data, particularly April of 2025, but at this point, things feel okay.

Operator (participant)

Thank you. The next question comes from Alex Blostein with Goldman Sachs. Please go ahead.

Alex Blostein (Managing Director)

Hi, good morning. Thank you for the question. Zooming out a little bit, the comments over the course of your prepared remarks suggested a much more resilient business, perhaps what's perceived in the market today. You talked about monetization not quite falling over the cliff. Deployment, dry powder really healthy.

It sounds like you're not really changing the outlook for fundraising either. The question obviously is, with the stock doing what it's done over the last few months, why not step up the buyback here? I know it's a dynamic approach you guys have talked about in the past, and you're looking to generate the best return and invest the capital. If not now, when? Maybe you guys can also hit on expectations for putting the $2 billion+ of convert to work and kind of how you're thinking about use of those proceeds.

Rob Lewin (CFO)

Great. Alex, it's Rob. Why don't I start? We've been very consistent as it relates to capital allocation for some time, and I really do think the most important thing for any capital allocation process is consistency. We've got two goals.

One of which is to make sure that every marginal dollar of free cash flow is going to generate the most amount of long-term earnings per share. The second goal, closely related, is to make sure that we are increasing the quality of those earnings. More durability, more resilience, more recurring nature of those earnings. Every marginal dollar of free cash flow we look at through that lens. We have talked about four areas of using our capital base to accomplish those goals. One of which is share buybacks. The other three are core private equity, strategic M&A, and insurance. Share buybacks, as you know, over the past several years have been a really important part of our capital allocation framework and use of capital.

I have every confidence that as we look forward and as we think about using our capital, share buybacks will continue to be a core part of how we think about capital allocation. We also do not have a framework that puts a specific amount in any one bucket. To us, it is all about how we take that marginal dollar of cash flow and derive the most amount of earnings per share across our business over a long period of time with the most amount of durability and resilience to that cash flow. We are going to take that same lens. As I said, I would expect that share buybacks as we look forward will continue to be a very important part of that allocation framework. Maybe the last point, because I think anytime you are talking about capital allocation, it is important to point this out.

KKR Senior Management owned roughly 30% of KKR. Any decision that we take around capital structure, around capital allocation, you briefly mentioned the convert we did a couple of months ago, it was really through that lens in a way that is highly aligned with our shareholder base. That is really the approach that we've taken. If you look at share buybacks historically, we've used our capital base to retire roughly 10% of our shares outstanding, 15% of our free float. We've done so at an average price of roughly $28 per share. We like our historical body of work and would expect that going forward, we're going to continue to be able to find a creative way to put that capital work for all of our shareholders.

Operator (participant)

Thank you. The next question comes from Bill Katz with TD Cowen. Please go ahead. Hi, good morning.

This is Manu on for Bill. Happy birthday, you guys. Just wanted to say that. Thanks. Maybe a question on asset-backed finance. Maybe update us on the platform as we go into the balance of 2025. Some color on expanding the sourcing funnel and bank partnerships.

Craig Larson (Partner and Head of Investor Relations)

Hey, my name is Craig. Why don't I start? Glad you asked about. Look, first on page 13 of our release. This is the page that details our credit and liquid strategies business. We break out the composition of the AUM in that piece. If you look overall, total credit AUM is up 10% year over year, $280 billion+ of AUM. The private credit component is growing at even a faster rate. We have $117 billion of AUM, up 26%. Within that private credit piece, $74 billion of that is in asset-based finance.

ABF year over year has grown at a number between 35% and 40%. The asset-based finance business is a big business for us. Our scale here is probably larger than someone might expect. Back to your question on how we are positioned at this market. Look, it is a lot of the same themes you would have heard from us historically. Massive end market, $6 trillion on its way to $9 trillion. In our view, you have got really high barriers to entry. There is a lack of scale capital with, as you noted, a number of traditional providers in our view leaving this market and are creating a void. We are continuing to find attractive risk-reward. I think our clients like the diversification away from the corporate credit cycle. In terms of the current environment, we think this is a very good environment for asset-based finance.

We think companies are still going to look to be efficient with volatile markets as companies look to finance themselves. We think companies will continue to look for creative ways to finance themselves off balance sheet. Again, as we think about banks, we think our opportunity set will continue to increase. If you look at overall asset-based finance deployment for us, it was a little over $4 billion in Q1. Over the trailing 12 months, we're at about $21 billion. It is a healthy part of deployment for us. Just to give you a frame of reference, 2023, that number was at about $8 billion. You are seeing really significant growth for us in a number of different asset classes. It just feels like there is a lot more for us to do.

Operator (participant)

Thank you. Our next question comes from Ben Budish with Barclays. Please go ahead.

Ben Budish (Equity Research Analyst)

Hi, good morning, and thanks for taking the question. I wanted to ask maybe a two-in-one on capital markets fees. I know sometimes you'll kind of give a look into how Q2 is shaking up. I was wondering if you could do that. I'm also curious, in the slide deck, you noted that about two-thirds of transaction fees were debt-focused in the quarter. Can you talk about what is that historically? Is this sort of a function of a changing environment or part of a more explicit strategy to kind of broaden the type of business you're doing there? Thank you.

Rob Lewin (CFO)

Great. Ben, thanks a lot for the question. Maybe I'll answer the second part of the question first because it's the shorter part of the answer. Roughly, we've been at that two-thirds level over time, so no real big change in the quarter.

As it relates to our capital markets business fees, listen, Q1 was a really solid quarter for us, particularly given the backdrop, $230 million of revenue. Q1 tends to be historically a lighter quarter. Frankly, as we came into the quarter looking at pipelines, I think we thought we'd be a little bit shy of that number. As we look at Q2, especially with the backdrop that we have, lower deal flow out there, we've got a very solid pipeline. Does that shape up to be similar revenue numbers Q1? Not sure. We might be a little bit shy of that, but given the environment, feel really good about that pipeline. Back half of the year, we're going to need to see. Let's see how the environment plays out, how the capital markets shape up.

As we sit here, May 1st of 2025, when we look at Q1, look at our forward pipeline, feel better about it than we felt May 1st of 2024. We had a big back half of the year in 2024. We'll see how the rest of 2025 shakes out. We feel really good with how our business continues to be able to perform in different market environments. You look at 2022 and 2023, we generated roughly $600 million of revenue in both of those years. Really protected downside in that business, created more of a floor from a revenue perspective in very choppy capital markets environments. You saw a spike to roughly $1 billion of revenue when the markets opened up in 2024.

Team's done an awesome job building that business over the last almost two decades, and we think there's a lot of upside from here.

Operator (participant)

Thank you. The next question comes from Glenn Schorr with Evercore. Please go ahead.

Glenn Schorr (Senior Managing Director and Senior Research Analyst)

Hi there. I want to circle back to the conversation on private equity. You clearly helped us see how the linear deployment and investment pacing helps your particular situation, especially look at even Americas XII and the capital you've returned. The question is broader. Do you expect in 2006, 2007, and 2008 vintages, that was kind of subpar performance for the industry? People thought private equity was dead. We go out and we raise a lot of money at doubles and triples. The question is, is this time any different for the industry? There's more funds, there's more assets raised, there's subpar performance.

Are we going to see a bigger shakeout? Because we did not see enough of one in past downturns. The real question at the end of all that is, will we see lower allocations to private equity or just a dispersion and consolidation to the better performance?

Scott Nuttall (Co-CEO)

Hey, Glenn, it is Scott. It is a great question. Our expectation is that it will probably be more about where you ended up. It will be more about dispersion. I think you are going to have meaningful dispersion of results across private equity managers. That will start to come through maybe in a way that it has not, to your point, for a very long time. We have already seen a trend for a while of institutional investors, in particular, globally, wanting to do more with fewer.

They've been consolidating their relationships with people that they think can perform through a cycle and that in a lot of cases are global and multi-asset class. Obviously, we've benefited from that. I think it's going to be—I wouldn't use the term shakeout. I think there'll be more of a concentration of capital with fewer players. I think we'll now see the benefit of what I mentioned before, that we learned a lot during GFC, during COVID, during Trump 1.0. We've been applying those learnings. Volatility creates opportunity. You need to have the capital to invest and the courage to invest it. We as a firm, and we talk about culture all the time here, we're incredibly well connected. If nothing else, we learn. Hopefully that will benefit us as it comes through results.

I think it's going to be dispersion as opposed to shakeout.

Operator (participant)

Thank you. The next question comes from Steven Chubak with Wolfe Research. Please go ahead.

Steven Chubak (Managing Director)

Hi, good morning.

Rob Lewin (CFO)

Morning.

Steven Chubak (Managing Director)

Recognize that you're planning to give a more fulsome update on the capital partnership in the second half, but was hoping you could just provide some early color on distribution strategy and specifically areas of differentiation versus other competing products and just how these vehicles might evolve over time.

Craig Larson (Partner and Head of Investor Relations)

Hey, Steve, it's Craig. Why don't I start? Look, we're obviously at the earliest of days, are really excited with being in position to launch the two vehicles. You would have seen in the press release from a couple of days ago that there's more to come with a private equity-focused product in addition to real assets yield-oriented products.

Alongside of that, there are initiatives focused on things like model portfolios as well as target date funds. We are just at the, again, at the earliest of days. We were preparing for the question of what do we think good looks like. That is, Steve, a super tough question to answer because in many ways, it feels like together we both are forging a new path, a very exciting path. We will keep everybody abreast in terms of progress as we go forward. Our mindset, as you have heard from us over time, is not on new capital raised in a three, six, or twelve-month period.

We together are trying to design products that we think five, 10, 15 years from now, collectively, we're both going to look back at and feel really proud about the net investment performance that we've delivered on behalf of our clients. If we are successful in that part of the equation, we're going to be able to raise just a fine amount of money. There is a lot of excitement within our firm, I think within Capital Group as well, about the opportunity. It just feels great at this point to be launched and underway.

Scott Nuttall (Co-CEO)

Hey, Steve, it's Scott. I think Craig said it well. We've talked about the private wealth opportunity for a while. We do think that it is significant. As you know, a lot of institutions globally are 30%-50%.

In alternatives, individual investors are low single digits, depending on what you look at, 1% or 2%. The opportunity for kind of expanding our market is meaningful. Even more importantly for that, it just does not make sense that if you are a teacher in Texas and you are retired, you have 30%-40% of your retirement funds invested in alternatives. If you are a retired dentist, you have zero. You have not had access to what we do. With K-Series, we have been focused on hitting the accredited investor and up. Let's talk U.S. market for a minute. That is $1 million of net worth and up. That is about 5%. Anyway, you look at 5%-7% of U.S. households. As you know, we have launched there and we are underway. Those were some of the numbers Craig walked through before.

With Capital Group, we're focused on the other 95%. We have just launched these first two products in the credit space. What's coming? Private equity, real estate, infrastructure, models, and figuring out how to access more efficiently the broader investor universe and target date. What can we do in 401(k)? There are a lot more coming attractions than there is work done to date. We think the opportunity is immense. Our focus, to be super clear, is investment performance that we generate for the client. Just like we have been for pension funds, sovereign wealth funds, insurance companies, family offices for nearly 50 years, that remains our focus and figuring out how to deliver that performance to that new audience with a fantastic partner.

Operator (participant)

Thank you. The next question comes from Mike Brown with Wells Fargo. Please go ahead.

Mike Brown (Managing Director)

Hi, good morning, Scott, Rob, and Craig.

Rob Lewin (CFO)

Morning.

I wanted to ask on the flagship fundraising in 2025. You had the first close on North America buyout. It seems like the industry-wide fundraising is elongated. I wanted to ask what's the right time frame to consider for a final close? Beyond North America buyout, where else are you expecting the inflows from the big flagships in 2025? I believe Asia starting. Can we see some inflows in 2025? What's the expected timing on the final close for Infra Fund 5? Thank you.

Craig Larson (Partner and Head of Investor Relations)

Hi, Mike. It's Craig. Why don't I start? First on Infra and flagship Infra fundraising at 3/31, we're at a little over $11 billion, $11.3 billion, as you can see in the back of the release. I think we feel really good about progress to date.

I think to your point, if anything, we may be seeing a little bit more of a barbelled approach to fundraising in this environment. The biggest components of capital coming in either at the initial close to take advantage of first close discounts or the final close. I think that's probably always been the case, but perhaps feels maybe even a little more so in the current environment. Again, as it relates to America's private equity, wrapped up the first close at 14, as Rob alluded to in the prepared remarks, just feel really great about progress to date and think it's a real credit to the team as we look at absolute returns and capital return and all the things that we've already talked about.

Would expect we'll have a couple of closes in America and we'll launch fundraising for the flagship Asia strategy on the heels of that. We haven't announced publicly any specific timing as it relates to when we would launch that fundraising. I think that is a topic that is certainly becoming front of mind for us here. Similarly, we haven't announced a final close date on Infra 5. Our first close period ended or was in July of 2024. We are well inside of 12 months at this point. We'll keep you abreast as we move forward there. Again, we just haven't announced any specific closing date on Infra 5.

I think the broader point just relates to the breadth of activity that you see for us because on the one hand, there's always, and we understand it given the size of these vehicles, there's always a big focus on the flagship activity. If you look at that activity for us, and if that's been $20 billion or so in the trailing 12 months, probably a little north of that, that still means you've got $80 billion-$90 billion outside of that activity that you're seeing across the breadth of our platform. Lots of activity across the credit business. I think similarly, broadly across infrastructure, even we've launched fundraising for Asia infrastructure, the various wealth platforms, climate, etc. There is just an underlying breadth of activity that gives us comfort.

Scott Nuttall (Co-CEO)

Yeah, I think the only thing I'd add, Mike, is just to underscore Craig's last point.

We talked about the durability and diversity of the model. We've been very focused on this the last 10, 15 years. Flagships obviously remain very important. LTM, just over 20% of the capital we've raised. In the last two years, we've raised over $200 billion of capital just over, and it's been about 12% of that $200 billion. Just to give you a sense of the diversity of the fundraising channels that we have and all the different ways we can access capital, meaningfully different than how we looked and felt a decade ago.

Operator (participant)

Thank you. The next question comes from Dan Fannon with Jefferies. Please go ahead.

Dan Fannon (Managing Director and Research Analyst)

Thanks. I wanted to follow up on just fundraising and was hoping, obviously, momentum is quite strong.

I was hoping you could just talk about your conversations you're having with LPs and generally the health of that client base on the institutional side as you think in the heels of this kind of volatile market we've been in.

Scott Nuttall (Co-CEO)

Great. Thanks, Dan. Scott, let me take a shot at it. We have had, as you'd expect, significant engagement with our clients the last several weeks. We tend to lean in even more when the world's uncertain and have even more connectivity. It's hard to paint everybody with one brush, but people are in healthy shape overall. The characteristics of the dialogue, one, it's super early. Everybody's just processing all of this. What's it mean? How do I think about it? What are we seeing around the world? We're sharing that with everybody that we work for.

There is confusion on what this means, what it means in different places and where we end up. A lot of the discussions are on macro policy implications, geopolitics. The clients overall are liquid, and they're asking us, where should I lean in to take advantage of this for the most part? I think a number of them probably wish they'd invested more aggressively post-COVID and post the GFC. They do not want to make the same mistake. We're getting questions about traded and opportunistic credit as an example. I'd characterize it on balance. Of course, some people are more concerned than others, but I'd characterize it as cautious greed and not wanting to look back with regret again. I say all this, and I mentioned it's changing very quickly. The S&P is now down 1% since April 1.

I have not looked at where we are trading since our call started and down 5%. This is as of last night since the beginning of the year. Credit spreads, which were very tight, had moved back maybe to the averages. We had not seen them blow out materially. People are liquid, and I think overall are trying to figure out how to take advantage of this. The other question we get is, how do I think about where to invest my money? A number of folks, as I mentioned before, had been thinking about if they were 60%-70% U.S., should I be even more on the forward? That was January, February. Now it is more kind of retrenching. Maybe I have got it about right. Do I need to rethink it? People are just trying to figure out what all this means.

In the final analysis, the U.S. is 25% of global GDP and 65% of global market cap. Said another way, the U.S. equity market is two times the size of Europe, Japan, and India combined. As we talk to CIOs, CEOs around the world that are allocating capital, there is a recognition of that fact and the depth and liquidity of this market. We have not seen anybody make any abrupt changes, but it is super early. I would say highly constructive discussions and business as usual, plus a lot more engagement.

Operator (participant)

Thank you. The next question comes from Patrick Davitt with Autonomous Research. Please go ahead.

Patrick Davitt (Partner)

Hey, good morning, everyone. My question is on the insurance discussion. I think you said you expect it to stay in the $250 million range for the next few quarters.

With the ongoing portfolio repositioning and now I would think potential for wider new investment spreads, why is there not room for that to tick up through the year? Thanks.

Rob Lewin (CFO)

Yeah, thanks a lot for the question, Patrick. There are a few different things going on. Let me just start with how we look at things, and then I'll work towards your specific question. We really do focus on that all-in-ROE concept today. We are approaching that 20% level. Pretty attractive in its own right. We have got a clear path to sustainably beating that level to generate 20%+ all-in-ROEs, especially if we get all elements of the business model working together.

I point out that we're achieving that return level while we're going through this evolution of our business model at GA, which we know is going to put some near-term pressure on insurance segment operating earnings for a bit of time, all with the benefit of the longer-term economic profile that we think we can achieve. We know for us that that's unquestionably the right path to take. I think you've followed us for some time. Others on the call have, I'm sure as well. You know that we're always going to make the decision to side for long-term economics, even at the expense of short-term P&L. Now, going into a little bit more of the detail that will answer your question more specifically, we are working on a few different initiatives simultaneously, all with good momentum. Let me give you a few different data points.

This all starts, how we evolve the business model modestly here, all starts with elongating our liabilities. If you look at Q1 of this year, in the retail channel, 90% of the annuities that we went out and sold and the liabilities that we raised had a duration of five-plus years attached to them. If you go look at this time last year, that number was 65%. Really good progress on that important front. Number two, we've talked about taking our exposure to alternatives up. Industry average tends to be 5%-8% exposure to alternatives. Global Atlantic, we mentioned at the end of last quarter, was 1%. In the quarter, we added roughly $1 billion of alternatives exposure. Making progress there too. Importantly, third-party capital is a very significant part of our strategy going forward.

I referenced in the prepared remarks some of the momentum that we have there, the Japan Post Strategic Partnership. We're out raising IV3 right now. There is a lot going on as it relates to third-party capital as well. Good progress across these three very important initiatives. To answer your question specifically, this is all going to take a little bit of time to impact the P&L, especially the part around the alternatives book and the growing alternatives book. Remember, much of that does not come through in yield. In addition to that, as we grow our third-party capital base, big part of our go-forward strategy, those fees only turn on when the capital is invested. Again, it will take a bit of time.

We think where this all lands is a very attractive run rate return inside the insurance business, I think importantly with lower leverage over time. Then with significant asset management economics alongside that takes that all-in-ROE to that sustainable 20%+ level that I referenced earlier. I hope that's helpful color.

Arnaud Giblat (Senior Equity Analyst)

Thank you. The next question comes from Arnaud Giblat with BNP Paribas. Please go ahead.

Yeah, good morning. We have seen a large number or a certain number of large deals that would have been financed through the broad syndicated loan market for private debt in April. I think Karo is an example here. I was wondering how the availability of bank debt is currently evolving as we're seeing spreads tighten once again. I'm asking the question from two angles, really.

Number one is, what is the availability to do deals, the availability of debt, and how that is evolving in April given the spreads tightening once again? Second, also looking through the lens of KKR as a provider of private debt, is there an opportunity to take back market share from the banks here? Thanks.

Rob Lewin (CFO)

Great. Thanks, Arnaud. It's Rob. Why don't I start? Listen, I think when you saw very early April, you saw a brief dislocation where it was, for a small period of time, hard to go secure bank financing. I think we talk a lot about our capital markets business as a fee generator for KKR and a profitability generator, and of course, it has been. The whole reason that business started was to really be able to support our portfolio companies in a differentiated way.

We saw that in Karo where we went out and arranged our own financing. As it relates to where we sit today, we see bank availability of capital. The leveraged finance market is open, albeit I think in order to access it, spreads are a little bit higher for sure today than where they were, but it is open and available for new deals sitting here in early May. Private credit opportunity remains a robust one as well. Given the backup in spreads and the leveraged finance market, a little bit slower activity, of course, in the CLO formation market, we think that the spread opportunity in our private credit and direct lending business is one that is attractive as we head into Q2 here as well.

Scott Nuttall (Co-CEO)

Yeah, I know it is Scott. I think the capital is available to do deals.

Depending on the transaction, I'd say the more straightforward stories that high line of sight to syndicate ability, those are going the leveraged credit bank route. Those with maybe more of a story attached can go the private credit route. That capital is available. The key for us is those markets exist and function side by side. It presents an option for us as we think about the best way to go depending on the transaction. As you know, in the private credit space, that capital tends to be locked up and it's readily available. It is more about the cost, as Rob said, and what's the best path based on the story and the underlying.

I do think you're going to continue to see as banks periodically pull back, if volatility increases, then you'll see private credit take more share from leveraged credit or the syndicated market, and then it'll cut back the other way. This is an environment where we've got a little bit of both going on.

Operator (participant)

Thank you. The next question comes from the line of Brian Bedell with Deutsche Bank. Please go ahead.

Brian Bedell (Director)

Great. Thanks. Thanks. Good morning. Thanks for taking my question. Most have been asked and answered, but maybe one on FRE margin continues to be impressive growth in the FRE margin. Just a question for Rob. I've asked this before in prior calls, but just to ask it again, do you see any kind of ceiling in that with basically the view of investing more, I guess, if the fee revenue growth improves?

Should we be thinking about higher expenses around distribution costs for your capital partnership as that evolves as maybe being a potential headwind on margin?

Rob Lewin (CFO)

Great. Thanks a lot, Brian. A few different things as I try and address your question. Maybe just start on the expense side. We have talked about continuing to want to invest back into our business for growth. As an example, we've talked about placement fees and distribution costs. From my seat, that is the best cost we have because it's got the clearest ROI attached to it. Now, even with that said, what I've also talked about in the past as it relates to margin. I think we can operate in a sustainable way at that mid-60% FRE margin. The past number of quarters, as you know, we've been close to the high 60% level.

I do not think either is a cap for us. I know it is not a cap for us. Because if you go back to our business strategy, from our perspective, this is all about scaling things that we have already started. If we are successful at executing on that business strategy, and as a leadership team, we have got a lot of confidence that we are going to be, we are going to grow our revenue at a pace that meaningfully exceeds our headcount growth and the operating complexity across the firm. While FRE margin expansion or overall margin expansion is not an input to our business strategy, it is a really nice output to our strategy if we get it right, and we think we will.

Operator (participant)

Thank you. The next question comes from Michael Cyprys with Morgan Stanley. Please go ahead.

Michael Cyprys (Managing Director)

Good morning. Thanks for squeezing me in here.

Just a question on tariffs. I think you had referenced about 10% of your AUM that has some sort of first-order impact. Sounds like that's mostly in credit. Is that fair? Can you just elaborate a bit on how you see restrictive trade policy impacting the portfolio? I think you also mentioned you're taking some mitigation steps. Maybe you can elaborate on the mitigation action steps you guys are taking. Could you also speak to any sort of second or third-order impacts that you're thinking about? How are you going about assessing that? Thank you.

Rob Lewin (CFO)

Yeah. Thanks, Mike. Let me start. When I referenced the 90% number, that was a private equity number across our portfolio where we're looking across our global PE business and feel like in 90% of the outcomes on an AUM basis, that there's no material exposure.

As you think about that other 10%, that does not include any mitigation strategies that are, of course, already well underway. We feel really well positioned. Infrastructure, we feel equally well positioned. When we look at that portfolio, much of what we do has contractual protections that insulate KKR returns or just no exposure at all. On the credit side of our business, actually, as we understand the tariffs today, we think there might be even less exposure than what we are seeing in our private equity portfolio today. We feel, as we look across our $600 billion+ of AUM, really well situated. It is not to say we are not going to have our issues.

As you think about potential second or third-order impacts and potential impacts across the economy, whether that's GDP or inflation or interest rates, of course, we're very attuned to that. We believe we're in a very fortunate position to have invested meaningfully behind a macro function, a geopolitics function, public policy, all of those teams deeply embedded across our investment teams globally, and really synced up in a way that we're trying to anticipate what could happen next and be in a position where we can really react to things either proactively or very quickly if things change from our base case. There is a lot going on on the macro side. Again, we feel very well competitively well positioned given our resources and the connectivity across our firm.

Scott Nuttall (Co-CEO)

Yeah, Mike, it's Scott. I'd say this is obviously not an accident.

I mentioned before we learned a lot during COVID and 1.0 Trump. We have been focused on acquiring assets and companies that have more durable demand drivers. One of the things that we have been looking at is do we think companies can hold margins in a high cost or higher inflation environment? We have frankly been leaning into those parts of the global economy and away from those that the answer is not as good. As Rob said, I am sure we are going to get surprised by some things. As we look at it today, really where we are today and what Rob just walked through is a result of the last five-plus years of investing through that prism.

Look, if we have a broader consumer-led recession in the United States or there's some other larger dislocation, I'm sure you're going to have other work to be done. We also think we have management teams that are well equipped. Again, having gone through COVID with a large part of this portfolio, we've already had good practice as to how to get ready for a more dislocated environment. We think we're well tested. Time will tell.

Operator (participant)

Thank you. The next question is from Kyle Voigt with KBW. Please go ahead.

Kyle Voigt (Managing Director)

Hi, good morning, everyone. Maybe just a blended follow-up question on insurance and capital markets.

Rob, just to clarify your earlier comments, should investors move away from thinking about insurance earnings being at the 14%-15% pre-tax ROE range over the long run and instead simply think about an all-in type 20%+ target instead? Secondly, in the prepared remarks, you reiterated the opportunity to substantially grow the capital markets fees that are tied to insurance versus the $50 million level in 2024. Can you just give us an update on the roadmap to get to the several hundred million level you noted and how you're thinking about a timeframe to achieve that?

Rob Lewin (CFO)

Great. Thanks a lot, Kyle. Short answer is no as it relates to the insurance operating earnings and moving away from that.

Of course, how we go maximize profitability inside our insurance business and how we go operate on behalf of our annuity holders is a very important consideration. I think as we're trying to frame the insurance business at KKR, I think it's important to look holistically, which is really how we as a management team think about it. That is insurance operating earnings. It is importantly the third-party capital fees from IV, our capital markets business, in addition to, of course, our investment management agreement that exists between our asset management and our insurance business. I think both are very important.

Holistically, as a management team, we do look at that all-in ROE, and we thought it was important to share on this call because to be generating a high teens approaching 20% all-in ROE at the same time we are evolving our business model and really intentionally under-earning in the near term inside of the four walls of insurance, I think speaks to the opportunity that we have once we've got all elements of our business model working really well together.

As it relates to your second part of your question on the opportunity for capital markets fees, we've got a peer firm that's done a really awesome job building that part of the business into something that contributes a significant amount of revenue. As we look at how our capital markets business is situated, the investments that we've made in structured products in private investment grade, the resources that we have on the ground in distribution, we feel really great about continuing to build out that business and to achieve very substantial revenue outcomes for our shareholders. If you look across all of 2024, we were roughly $50 million fees in that part of our business. In Q1 of this year, that number was about $20 million. Like most things here, Kyle, we're not in a rush.

We're very conscious of doing it in the right way and in a way that maximizes the long-term opportunity. We continue to believe that generating hundreds of millions of revenue on the back of this type of opportunity is certainly well within achievability from our perspective.

Operator (participant)

Thank you. Our next question is a follow-up from Ben Budish from Barclays. Please go ahead.

Ben Budish (Equity Research Analyst)

Hi, thank you for taking my follow-up. I wanted to ask about one more kind of forward-looking commentary item provided last quarter in terms of management fee growth. Rob, last quarter, you suggested that we should see some, excuse me, some acceleration from the 14% growth in 2024. Just curious if that's still the case. Maybe as part of that, I know perhaps you can't say when the Americas Fund might activate, but could you remind us what are the sort of constraints?

Is it just dependent on making the first investment or the pace of deployment at the predecessor? What should we be looking for there? Thank you.

Rob Lewin (CFO)

Yep. Thanks for the question, Ben. We continue to believe that management fees will accelerate from here off of this level. Keep in mind that much of the $31 billion of capital that we raised isn't showing up in management fees. We've got $64 billion of AUM where the fees have not yet turned on with a weighted average management fee of roughly 100 basis points. A lot of visibility around where our future growth is going to come from. I can tell you that NAX 4 will be activated in Q2 of 2025. In this current quarter we're in right now, it will be a partial benefit to the Q2 quarter.

We have a lot of other, I think, momentum across our capital raising channels that we have touched on through this discussion. We continue to believe management fees will accelerate from here.

Operator (participant)

Thank you. As there are no further questions, I would now like to hand the conference over to Craig Larson for closing comments.

Craig Larson (Partner and Head of Investor Relations)

Ezekiel, thank you for your help this morning. Thank you, everybody, for your attention. I know this has been a longer call during a very volatile environment. We appreciate your interest, and we look forward to giving everybody another broad update in 90 days. Thank you so much.

Operator (participant)

Thank you. This concludes today's study conference. You may disconnect your lines at this time. Thank you for your participation.