KKR, the US private equity giant, posted a drop in its third-quarter profits compared to the same period a year earlier, coming up short of analysts’ expectations.

Earnings for the quarter ending September 30 fell to $153.6m from $352.2m a year earlier.

Economic net income, a closely watched metric that reflects unrealised and realised moves in investments, was $308.4m, down from $598.2m a year earlier.

KKR shares fell 1.11 per cent to $20.52 in early trading.

But the firm also reported a boost in its private equity portfolio and an increase in assets under management bolstered by investors’ appetite.

The New York-based firm said it has assets under management amounting to $153bn, which represents a 17 per cent increase compared to the same period a year earlier.

The US buyout titan also said it has fee-paying assets under management of $114bn, representing a 22 per cent increase from a year earlier.

The company’s private equity portfolio rose 3.9 per cent in the quarter compared to a 5.8 per cent gain a year earlier.

KKR founders Henry Kravis and George Roberts highlighted “continued strong operating fundamentals” across the firm.

KKR’s earnings follow Blackstone’s better-than-expected third-quarter results posted earlier this month. Carlyle, whose founders announced on Wednesday they are stepping back from the daily running of the business, is due to report earnings on Tuesday.

Private equity groups are enjoying strong trading with funds raising records sums of capital, but they are also having to pay higher valuations for businesses than a decade ago.

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