KKR absorbs assets from listed fund

KKR has acquired five co-investments worth $211m, including hospital group HCA, from its listed Euronext affiliate, which it is winding down and will de-list. The absorption of KPE’s assets was last year described as a key element preceding the firm’s NYSE flotation, though KKR has said it is rethinking its IPO plans.

Kohlberg Kravis Roberts will pay $200 million to buy further stakes from its Amsterdam-listed affiliate, KKR Private Equity Investors (KPE), in some of the biggest deals it agreed during the past private equity boom.

KKR will invest a further $42 million into the five co-investments: orthopaedic medical supplies company Biomet; US retailer Dollar General; data services firm First Data; healthcare firm HCA; and financial advisory firm The Nielsen Company. The assets have been written down significantly over the past year, and were given an aggregate fair value price of $211 million as of 31 December 2008.

HCA: in line for further investment

KPE will retain co-investment stakes of $118 million in Biomet; $232 million in Dollar General; $77 million in First Data; $158 million in HCA; and a $137 million investment in Nielson.

Last summer KKR decided to acquire and de-list KPE, whose steep discount to net asset value and trading volume had disappointed its parent, prior to listing its management company on the New York Stock Exchange. Before it opted to de-list KPE, KKR registered in 2007 for a $1.25 billion IPO. Earlier this month, the firm said it is re-evaluating its flotation plans given the dramatic changes in the world financial markets that have taken place since July 2008.

In 2008, KPE reported a 32 percent decline in its asset values and a drop in net asset value to $12.78 per share, down from $24.36 per share in 2007. The total value of KPE’s portfolio of private equity investments is about $3 billion, down about 50 percent from 2007.

KKR raised $5 billion when it floated KPE in 2006. The listed fund had about $2 billion earmarked for investment with the mega-firm’s 2006 buyout fund, which closed on $17.6 billion last year. As of 31 December 2008 more than 95 percent of KPE’s $3.4 billion portfolio was made up of interests in six KKR private equity funds, co-investments in 13 companies alongside the private equity funds and negotiated equity investment.