(Adds market reaction, comment from earnings call, private equity performance, paragraphs 4-12)
By Joshua Franklin
NEW YORK, Feb 1 (Reuters) - Private equity firm KKR & Co Inc reported a 23.5 percent year-on-year rise in distributable earnings on Friday, as it sold down stakes in industrial machinery maker Gardner Denver Holdings Inc and optical retailer National Vision.
After-tax distributable earnings (DE) - the cash available for paying dividends - totaled $460.1 million for the last three months of 2018, up from $372.6 million a year earlier, KKR said.
This bucked the trend set on Thursday by private equity rivals Apollo Global Management LLC and Blackstone Group LP, which reported year-on-year drops of 20.4 percent and 42 percent, respectively, in DE.
KKR said DE per share came in at 55 cents for the quarter, up from 45 cents a year earlier. Jefferies analysts, who rate KKR's stock "buy", said the earnings were ahead of market consensus for 49 cents per share, supported by transaction fees and performance income.
KKR's stock was up almost 4.7 percent around midday in New York, ahead of the broader market.
The transaction fees came largely from KKR's capital markets unit, a business it has focused on expanding in recent years and which had record revenue of $232 million in the quarter. It booked fees from transactions involving two KKR deals, BMC Software and Envision Healthcare.
Under generally accepted accounting principles (GAAP), KKR reported a net loss attributable to the firm of $393 million for the quarter. Apollo and Blackstone lost $196.4 million and $10.9 million, respectively.
The benchmark S&P 500 index had its biggest quarterly loss in more than seven years at the end of 2018, hitting private equity firms which use public peers to value their private investments.
KKR said its overall private equity portfolio declined 8.3 percent in the quarter, compared to declines of 2.9 percent for Blackstone and 10.9 percent for Apollo.
Assets under management around $195 billion, flat from three months earlier. Fundraising activity in the quarter was partly offset by decreases in the value of private equity and credit investments, the firm said.
Wall Street's slump at the end of last year may help private equity firms find bargains when they look for companies to purchase, acording to KKR's Scott Nuttall.
"We've been seeing valuations drop in Asia and parts of Europe over the past couple of years back, and we may be seeing the beginning of a similar dynamic in the U.S.," President and Co-Chief Operating Officer Nuttall said in an earnings call. (Reporting by Joshua Franklin in New York Editing by Matthew Lewis and David Gregorio)