There’s more exits to do in the public markets. And as our deployment goes up in our experience and our dry powder goes up, so do our capital markets opportunities. Because we can speak for larger transactions, we need to bring partners alongside, there’s just more for us to do. So all of that speaks to the growth opportunity, which is why I think you’re seeing this baseline, even in a pretty anemic capital market overall, continue to increase. And I think you’ll continue to see that into the future as we execute on all of those.
Operator: Next question is from the line of Benjamin Budish with Barclays. Please proceed with your question.
Benjamin Budish: I just wanted to check, I think you didn’t mention in the prepared remarks, but can you share any color on your line of sight towards realization and related revenues into Q1? It sounds like on the capital market side, things are looking pretty strong. But just wondering on the realization side, anything you can share to date.
Rob Lewin: We have a pretty healthy pipeline as we’re coming into 2024 from a monetization factor. But what I’d say is timing is a little bit less certain given some regulatory approvals that are required around some of these monetizations. But taken together, we have somewhere around $500 million of very high visibility, monetization-related revenue. But we currently don’t expect all that to hit in Q1. Obviously, still a couple of months to go in the quarter as well. And as usual, at the end of Q1. We’ll provide our standard press release that gives you more detail around the monetization related revenue for the quarter. Maybe while we’re on the topic of monetization, one other thing that I think is worth calling out given the growth across a number of our businesses and also the strategic announcements that we made in November, including moving our comp down on fees and up on carry, this is just a much smaller part of our business than it used to be at KKR.
It’s part of the reason why you’ll see us introduce this new metric in Q1, total operating earnings. Our expectation going forward is north of 70% of our earnings is going to come from total operating earnings. So of course, monetization-related revenue is going to be a big part of where we’re going as a firm, it’s just a lot smaller on a relative basis than it used to be.
Operator: Next question is from the line of Mike Brown with KBW. Please proceed with your question.
Michael Brown: Great. I just wanted to ask on infrastructure. So strong performance there in the quarter. Can you maybe just expand on some of the key drivers behind that 5% performance in the quarter? And then if we look forward, how do you expect investor demand for this asset class to evolve and as allocations grow, where are the dollars kind of shifting from? And then, specifically, on the Asia side, what’s kind of making the strategy there so attractive to LPs? If you could maybe just touch on some of the deployment opportunities.
Craig Larson: Why don’t I begin — Mike thanks for the question. Why don’t I begin first, just as it relates to the overall framework of the infrastructure platform because, you’re right, we’ve seen wonderful growth. So if we look back 3 years ago, AUM was $17 billion. And at 12/31, we were at about $60 billion. So we’ve gone from $17 billion to $60 billion, all organic. And that, as we’re — again, our infrastructure strategy is a front-burner topic for us as it relates to fundraising. We’re also fundraising for a climate strategy. And we also have the wealth products that we’ve also launched midway through last year that we expect to continue to build in scale. So I think the growth has been really attractive and a lot of momentum.
But a lot more for us to do, which is exciting. I think as it relates to Asia, and why don’t I touch on that for a moment, it’s again interesting to see the statistics there because I think what you’re seeing there reflects the growth as well as the diversification you’re seeing across the platform. So at the end of 2019, we are looking at these stats over the weekend, we had about $21 billion of AUM in Asia. At the end of ’21, we were up to $42 billion and at the end of ’23, we’re at $65 billion. And so again, if you kind of step back at the end of 2019, we had $21 billion of AUM, almost 90% of that was in private equity. At the end of ’23, we’re at $65 billion and 51% of that is in private equity. So you’ve seen meaningful growth for us in the region as well as meaningful diversification across the footprint.
And I think just as it relates to broad investment performance, I think it’s something that the team is really proud of and we all love to see, obviously, because you’ve seen strong, consistent results. Across the flagships in particular, we’re seeking mid-teens gross low-teens net returns with a 4% to 6% target annualized yield. Infra I and II, our mature funds with performance that exceeds those targets. In Infra III and IV, both earlier in their value creation but are tracking very nicely. I think our most recent fund is actually ahead of I, II and III when you look at the returns in that fund relative to when we made that first investment. So I think the team has been wonderfully disciplined as it relates to the investments we’ve made. We talk a lot about thematic approaches renewables, digital infrastructure, data centers, fiber networks, all great examples of large critical growing markets where we think we can bring differentiated resources to bear.
So again, a lot of progress but a lot of opportunity ahead for us at the same time.
Scott Nuttall: Hey, Mike. It’s Scott. Just I think in terms of your question about performance in the quarter, it was broad-based. There’s nothing that we use to specifically. The portfolio has been assembled incredibly thoughtfully, as Craig mentioned, and is performing very nicely. And as expected, ahead of expectations. In terms of your question about investor demand where it’s shifting from, I mean, for the most part, we’ve seen people creating allocation to infrastructure over the last several years. It hasn’t really been a shift out of other parts of alternatives to some extent, where we’ve seen alternative allocations to increase, it’s to be able to accommodate an infrastructure allocation. And I think a lot of that is investors have focused on the fact you’ve got a real asset that is mission critical, has an attractive yield.
And the way we do it is to have to have that contractual yield and it is inflation protected, so it’s also viewed as an inflation hedge. And I think as people have done the work on the space, you’ve started to see more and more dollars flow into it. So largely speaking, and none of these comments are universal, but largely speaking, it’s been an and as opposed to an or. And I think on Asia, Craig hit it. I mean our Asia Infra business has gone from a standing start to $10 billion of AUM in 4 years. We have a great team on the ground. They’re leveraging our Pan-Asia presence across our 9 offices. And as you know, we run the firm as one firm, so everybody helps each other. I think that’s really allowed us to scale very rapidly in that market.
There’s a significant amount of capital required to develop infrastructure all across Asia in those themes that Craig just walked you through. And candidly, on the margin, there’s less competition in Asia, because fewer firms have built the platform that we’ve built. So I think large opportunity, fewer competitors, firm well integrated.
Operator: Our next question is from the line of Michael Cyprys with Morgan Stanley. Please proceed with your question.
Michael Cyprys: Just wanted to ask about insurance. I was hoping you might be able to talk about the opportunity to expand the organic insurance origination, how much you expect to do annually there. Maybe talk about some of the opportunities around getting on more platforms, how meaningful could that be at this point. And if interest rates were to come down, what sort of impact might that have for customer demand and origination volumes. Maybe you could also speak to some of the pipelines from new blocks, which you guys have been quite active with.
Rob Lewin: Thanks for the question, Mike. Why don’t I start? So over the last few years, our individual business is done, on average, around $10 billion of production. And you’re right, you’ve seen a step-up across the industry, given, I think, higher rates, but I don’t think that tells the full story. I think what we’re seeing is a real trend towards retirement products. It’s probably somewhat agnostic to where interest rates are. And as we think about Global Atlantic and how we’re situated specifically in the individual markets, I think there’s a lot of share that we continue to take there, getting ramped up on some new platforms, as you suggested. Also historically, Global Atlantic hasn’t been as active in the more longer duration fixed annuity market, the 7- to 10-year product.
We think there’s some market share gains that we can have there. And we do have an expectation that we could take the individual business over time from $10 billion of production to $15 billion to $20 billion of production. Then on the institutional side of our business, there’s two components of it. It’s not just the block business where we’ve had a lot of success over the last couple of quarters. Clearly, with MetLife closing in Q4, the Manulife block closing in the first half of the year and a really strong pipeline of opportunity, both domestically and especially internationally. But there’s a couple of other aspects of our institutional business that we’re really excited about. We’ve become a real leader in flow reinsurance in the marketplace.
