Private equity firm KKR & Co reported lower-than-expected second-quarter earnings on Wednesday as investment income declined and the value of its investments rose less than the previous year, sending its shares lower.

However, KKR, which has investments in companies including retailer Dollar General , hospital operator HCA and media ratings company Nielsen , said its private equity funds rose 4 percent in the quarter and 10 percent for the year to date.

KKR said while the value of its investments increased in value, it was less of a rise than a year earlier. KKR said the company's fee earnings can be significantly influenced by when deals close, meaning that the numbers they report on a quarterly basis can be lumpy.

In private equity, we continue to be very active on a global basis, said Scott Nuttall, a partner and director at KKR who leads the company's earnings calls. Valuations are relatively attractive and the financing markets are open for our companies.

Economic net income (ENI), a measure used by private equity firms to report earnings, was $315 million, down 27 percent from $433 million a year earlier.

ENI after tax per adjusted unit was 36 cents, down from 48 cents a year earlier. Analysts' average forecast was 40 cents.

Second-quarter investment income was $239.8 million, down from $370.6 million a year earlier.

KKR shares were down 90 cents, or 6.4 percent, to $13.24 in early afternoon trading on the New York Stock Exchange.

By other metrics, KKR's figures improved. Fee-related earnings were $76 million compared with $63 million the previous year. Earnings using general accepted accounting principles showed that net income was $39.6 million compared with $29.9 million a year earlier.

Assets under management totaled $61.9 billion, up from $54.4 billion a year earlier.

We are in a very fortunate position, said Nuttall. We have long dated capital... In times like this, companies need capital. Many of the traditional providers are gone.

KKR said that it would pay a distribution to shareholders of 11 cents per unit. It said that its recent investment in energy company Hilcorp is expected to add approximately 6 cents a unit to its fourth quarter distribution.

Marathon Oil Corp in June struck a deal to buy oil and gas properties in Texas' Eagle Ford shale field for $3.5 billion from KKR and Hilcorp Resources Holdings. KKR nearly tripled the investment it made just a year ago with the sale.

Last year it had returns on deals such as its investment in oil and gas exploration firm East Resources.

Rival private equity and real estate giant Blackstone recently reported that its second-quarter economic net income was $703 million, up from $205 million a year earlier. The value of its private equity funds rose 9 percent in the second quarter while its real estate funds rose 6.7 percent.

(Reporting by Megan Davies; Editing by John Wallace and Tim Dobbyn)

Investment Fall