* Q3 after-tax ENI per adjusted share of 84 cents vs Street view of 59 cents
* Assets under management reach $90.2 billion
* Third-quarter dividend of 23 cents per share
NEW YORK, Oct 24 (Reuters) - Private equity firm KKR & Co LP reported a higher-than-expected 20 percent rise in profit on Thursday as investments funded with its balance sheet as well as its clients' money outperformed those of its peers.
KKR's private equity portfolio appreciated 5.9 percent in the third quarter, beating a 4.2 percent rise in the value of rival Blackstone Group LP's private equity assets and a 5 percent rise in Carlyle Group LP's buyout funds.
Economic net income (ENI), KKR's headline earnings metric that takes into account the mark-to-market valuation of its assets, was $613.7 million in the third quarter, up from $509.9 million in the third quarter of 2012, KKR said.
This translated into after-tax ENI of 84 cents per adjusted share versus the average 59 cents forecast by analysts in a Thomson Reuters poll. KKR's principal investments that originate from its balance sheet were a major contributor to this result.
Huge by industry standards, the size of KKR's balance sheet is the legacy of the firm's merger in 2009 with KKR Private Equity Investors, a fund vehicle whose listing KKR transferred to New York from Amsterdam in 2010.
ENI in KKR's credit investments unit dropped 19 percent year-on-year to $28.4 million, mainly due to lower fee revenue, lower appreciation of some of its funds and higher fundraising costs.
Blackstone last week reported a 3 percent rise in total ENI. Carlyle will unveil its third-quarter earnings on Nov. 6.
Red-hot capital markets have made the valuations of many companies frothy, prompting many private equity firms to sell assets in order to fetch a good price but making them reluctant to buy new ones for fear of overpaying. KKR, however, has been not just an active seller of companies but also a buyer.
KKR invested $1.8 billion in private equity in the third quarter of 2013, equal to what it invested in all of the first nine months of 2012, making it the most active capital deployment quarter in almost two years. This was partly driven by completing its $3.9 billion acquisition of industrial pumps and compressors maker Gardner Denver Inc.
Assets under management totaled $90.2 billion as of the end of September, up from $83.5 billion as of the end of June. KKR disclosed it had raised $1.4 billion so far for its new Energy Income and Growth Fund, and that 17.9 percent of that came from partners at the firm rather than outside investors.
KKR announced a third-quarter dividend of 23 cents per share. In April, KKR declared a new payout policy and promised to distribute 40 percent of its balance sheet income as a dividend every quarter.