KKR Writes Up HCA, Dollar General

NEW YORK (Reuters) – Private equity firm Kohlberg Kravis Roberts & Co’s Amsterdam-listed fund said on Monday that it marked up the value of its investments in portfolio companies Dollar General and hospital firm HCA for the three months to June 30.

Private equity firms are ramping up plans to take portfolio companies public, as a long freeze in being able to exit investments appears to be thawing. Both those companies are possible IPO subjects.

KKR Private Equity Investors (KKR.AS) (KPE) marked the value of its investment in discount retailer Dollar General $116.2 million higher for the three months to June 30. It was marked from 1.3 times the cost of the investment at the end of March 2009, to 1.7 times cost at June 30.

It marked its investment in HCA $49.7 million higher, to 1.2 times cost at the end of June.

A listing of discount retailer Dollar General is possible before the year-end, and HCA is also being considered, a source familiar with the situation previously told Reuters.

Plans for HCA, however, are unlikely to get off the ground until there was more clarity around the Obama administration’s reform of healthcare, that source said at the time.

KKR is itself planning to become a publicly-listed company through a complex deal that will see it combine with Euronext-listed KPE. That transaction is expected on Oct. 1.

KPE also said on Monday its net asset value for June 30 was $3 billion, or $14.66 per unit. That is down from the $22.25 per unit reported at the same time a year ago, but higher than the $12.82 reported at the end of March.

It is also towards the higher end of guidance KPE gave in July — that its net asset value was expected to be between $14.55 and $14.75 per unit for the quarter.

EQUITY MARKET REBOUND

Valuations of KKR’s portfolio companies have been helped by a rebound in the equity markets over the last few months. Private equity firms have to value their portfolio companies as if they were selling them today; rather than years in the future.

The company also released select financial data for KKR itself.

Assets under management grew to $50.8 billion compared with $47.3 billion at the end of March, but lower than the $60.8 billion recorded a year ago, the company said.

Economic net income was $366.9 million, compared with income of $119.9 million a year ago.

KKR launched plans to list on the NYSE via a traditional initial public offering in July 2007, a month after rival Blackstone Group (BX.N) went public and just before the markets started to tumble.

It later proposed a more complex method of going public, by combining with KPE, delisting the fund from Amsterdam and listing in New York.

In June, it formally withdrew the proposed New York IPO plan, but kept the door open for such a move, saying it had the ability to seek a listing in the future.

KPE said the deal had received consent from unit holders, with about 98 percent of KPE units in favor.

By Megan Davies
(Editing by Valerie Lee)

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