AMSTERDAM (Reuters) – Kohlberg Kravis Roberts & Co’s KKR.UL Amsterdam-listed fund reported a 22.6 percent decline in its net asset value since the start of the year and said a planned merger and new listing with its parent will not happen until 2009.
KKR Private Equity Investors (KPE) (KKR.AS: Quote, Profile, Research, Stock Buzz), an affiliate of Kohlberg Kravis Roberts & Co that listed in 2006, had been planning to merge with its parent and list on the New York Stock exchange by the end of 2008.
“As the decline in KPE’s quarterly NAV evidences, some of our investments faced reduced valuations during the third quarter as a result of the extraordinary turbulence in the global capital markets,” George Roberts, Co-Founder of KKR, said in a statement.
Roberts said the group was redoubling efforts to improve performance amid a weaker economic environment.
KPE’s net asset value, which tracks the worth of its investment portfolio, fell to $18.85 per share at the end of September from $24.36 at end-2007, the fund said in a statement.
In that period, KPE said that its investments, including currency effect, depreciated $999.5 million. Two thirds of that occurred in the third quarter, when the global financial crisis deepened and led to several financial institution failures or buyouts.
The investment losses in KPE’s portfolio reflected a wide range of assets, including Energy Future Holdings Corp., NXP, convertible notes from Sun Microsystems (JAVA.O: Quote, Profile, Research, Stock Buzz), Capmark Financial Group, Alliance Boots AB.UL and the Nielsen Company.
At the end of September, KPE said it had investments of $3.87 billion, cash of $3.63 million and debt of $7.77 million.
In late July, KPE and parent KKR announced that they planned to merge their businesses, delist from Amsterdam’s exchange and relist on the New York Stock exchange by end-2008.
“Subject to the satisfaction or waiver of the conditions to closing, the parties remain committed to completing the transaction, but do not at this point expect the transaction to close until 2009,” KPE said in a statement.
KPE went public in Amsterdam in May 2006 in a $5 billion, or $25 per share, offering. Its shares now at a fifth of the IPO price but were up 5 percent at $5.18 at 0840 GMT in early Monday trade in Europe.
KPE was among several affiliates of larger private equity funds to list in Amsterdam within the past few years. Lehman Brothers Private Equity Partners Ltd (LBPE.AS: Quote, Profile, Research, Stock Buzz), an affiliate of U.S. bank Lehman Brothers that listed in July 2007, has fund and buyout investments.
Buyout firms have listed such vehicles to open up their portfolio to retail investors and boost liquidity. But despite the industry’s reputation for high returns on its investments, not all such listed units have been success stories.
Carlyle Capital Corp, which was an affiliate of U.S.-based buyout firm Carlyle Group CYL.UL also listed in Amsterdam but went bankrupt in March and liquidated its assets as it could not meet margin calls from its lenders. Carlyle Capital Corp had mainly invested in mortgage-backed assets.
By Reed Stevenson
(Editing by David Cowell)