RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

11. RELATED PARTY TRANSACTIONS

Due from and to Affiliates consists of:

	March 31, 2013		December 31, 2012
Due from Related Entities	$	88,155	$	73,357
Due from Portfolio Companies	61,459		48,828
Due from Affiliates	$	149,614	$	122,185
Due to KKR Holdings in Connection with the Tax Receivable Agreement (a)	$	77,214	$	70,375
Due to Related Entities	2,460		2,455
Due to Affiliates	$	79,674	$	72,830

(a) Represents amounts owed to KKR Holdings and/or its principals under the Tax Receivable Agreement. See Note 2, “Summary of Significant Accounting Policies—Tax Receivable Agreement.”

KFN

KFN is a publicly traded specialty finance company whose limited liability company interests are listed on the NYSE under the symbol “KFN.” KFN is managed by KKR but is not consolidated by KKR. KFN was organized in August 2004 and completed its initial public offering on June 24, 2005. As of March 31, 2013 and December 31, 2012, KFN had consolidated assets of $8.6 billion and $8.4 billion, respectively, and shareholders’ equity of $2.4 billion and $1.8 billion, respectively. There were no shares of KFN held by KKR as of March 31, 2013.  Shares of KFN held by KKR represented 0.1% of KFN’s outstanding shares as of December 31, 2012. If KKR were to exercise all of its outstanding vested options, KKR’s ownership interest in KFN would be 0.30% and 0.35% of KFN’s outstanding shares as of March 31, 2013 and December 31, 2012, respectively.

Discretionary Investments

Certain of KKR’s investment professionals, including its principals and other qualifying employees, are permitted to invest, and have invested, their own capital in side-by-side investments with KKR’s investment vehicles. Side-by-side investments are made on the same terms and conditions as those acquired by the applicable investment vehicle, except that the side-by-side investments are not subject to management fees, incentive fees or a carried interest. The cash invested by these individuals aggregated $61.7 million and $35.9 million for the three months ended March 31, 2013 and 2012, respectively.

Aircraft and Other Services

Certain of the Senior Principals own aircraft that KKR uses for business purposes in the ordinary course of its operations. These Senior Principals paid for the purchase of these aircraft with personal funds and bear all operating, personnel and maintenance costs associated with their operation. The hourly rates that KKR pays for the use of these aircraft are based on current market rates for chartering private aircraft of the same type. KKR incurred $0.9 million and $1.4 million for the use of these aircraft for the three months ended March 31, 2013 and 2012, respectively.

Facilities

Certain trusts, whose beneficiaries include children of Mr. Kravis and Mr. Roberts, and certain other Senior Principals who are not executive officers of KKR, are partners in a real-estate based partnership that maintains an ownership interest in KKR’s Menlo Park location. Payments made to this partnership were $1.8 million and $1.7 million for the three months ended March 31, 2013 and 2012, respectively.