KKR Confirms DOJ Letter

NEW YORK (AP) — Private equity firm Kohlberg Kravis Roberts & Co. on Monday said it received a request for documents and information from the antitrust division of the U.S. Department of Justice.

In an amendment to its filing for an initial public offering, the firm said the request is in connection to the Justice Department's ongoing investigation of private equity firms. The government is trying to determine whether they have engaged in conduct prohibited by U.S. antitrust laws.

KKR, whose offering could total up to $1.25 billion, said it is cooperating with the department's investigation.

The firm also said that lenders are demanding higher interest rates for financing private equity buyouts.

Private equity firms borrow money, often by selling lower-grade bonds, to buy public companies and revamp them. The cost to finance a buyout “has recently increased significantly,” KKR said.

This disclosure echoes statements from borrowers worldwide that lenders have reassessed how much risk they are willing to stomach. If KKR cannot raise enough money by selling bonds, the firm said it may need to borrow from investment banks or other lenders.

These loans often cost more and carry more restrictive conditions, the firm said, which could eat into the returns on private equity deals.