KKR re-evaluates acquisition of publicly listed KPE

As the mega-firm reportedly shelves plans to go public, its directors and founders are reviewing a previously agreed deal to buy out unit-holders in KKR Private Equity Investors, the Euronext-listed vehicle that co-invests alongside KKR.

Kohlberg Kravis Roberts is reevaluating its plan to buy out its publicly listed affiliate KKR Private Equity Investors (KPE).

“We believe that the valuations of KPE’s underlying private equity investments are more reflective of broader global macroeconomic conditions and mark-to-market considerations than they are of the fundamentals of KPE,” Henry Kravis, co-founder of KKR and co-chairman of KPE’s board of directors, said in a statement. 

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

“The financial world and markets have changed dramatically since July 2008,” according to the statement. KKR and KPE’s independent directors are “in the process of reevaluating the impact of these changes on the continued advisability of the transaction and hope to complete their analysis over the next several weeks”, the firm said. 

KKR announced in 2008 that it was delaying its IPO until 2009. The IPO process would involve KKR de-listing the firm from the Euronext and buying KPE, and subsequently re-listing the combined entities on the New York Stock Exchange. However, a report in today’s Wall Street Journal cited people close to KKR as saying that the firm had decided to abandon plans for the NYSE listing

The firm wrote down several investments, including a decrease of $164 million in First Data; a decrease of $128.2 million in Alliance Boots and a decrease of $121.2 million in HCA. Other write-downs included NXP, Energy Future Holdings and Capmark Financial Group.

.KKR took KPE public in 2006 for $5 billion, with about $2 billion earmarked for the mega-firm’s 2006 buyout fund, which closed on $17.6 billion.

The firm’s other publicly listed affiliate, KKR Financial, also reported a steep loss of $1.1 billion Monday for the full-year 2008. The company, which invests in debt, said it would suspend its dividend through 2009.