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KPE Sees Slight NAV Mark-Up

(Reuters) – KPE (KKR.AS), Kohlberg Kravis Roberts & Co’s [KKR.UL] Amsterdam-listed fund reported a small increase in net asset value over the prior quarter, as it marked up the value of some of its investments.

The fund, whose full name is KKR Private Equity Investors and which has investments in a number of KKR’s funds, said on Friday that net asset value in the first quarter was almost $2.63 billion, 0.3 percent higher than the previous quarter.

Net asset value per unit rose slightly to $12.82. That compared with $12.78 at the end of the fourth quarter of 2008, and $23.02 per unit in the year-ago first quarter.

“We believe that our performance during the first quarter is attributable in large part to our focus on operational improvement, cost reduction and efficiency initiatives,” said George Roberts, co-founder of KKR and co-chairman of KPE’s managing partner’s board of directors.

KPE invests its capital as the sole limited partner of KKR PEI Investments LP. As of March 31, the fair value of the investment partnership’s portfolio was $2.76 billion.

Private equity firms are obliged for the first time this year to value their investment stakes as if they were to sell them today, rather than years in the future when they may be sold, although KPE has been doing this from the fund’s inception.

KPE marked up the value of its investments in U.S. retail chain Dollar General Corp [DG.UL] and U.S. hospital operator HCA Inc [HCA.UL], which offset markdowns in companies such as power company Energy Future Holdings Corp [TXEFHE.UL].

KPE said that although certain segments of the global capital market had improved since the end of 2008, “worldwide economies and other segments of the global capital market remain weak and, in general, credit remains scarce and confidence in global financial systems and economic performance has not been fully restored.”

Roberts said the firm has not yet seen signs of growth, but has seen some leveling in the economic downturn.

In April, KKR extended the deadline to buy KPE, which is a key step in the parent firm’s plans for a U.S. stock listing. The two firms continue to evaluate the transaction, Roberts said, but he declined further comment.

KKR had announced the complicated transaction last July, but since then, deterioration of financial markets and global economies has made it far less attractive for a company to go public.

The private equity industry has been hit by the meltdown, which shut off the supply of leverage for new deals and made nearly impossible the sale of companies they already owned.

Rival Blackstone LP (BX.N), the only other major U.S. private equity firm to go public, is trading substantially lower than its June 2007 IPO value of $31 a share. Blackstone’s shares traded at $11.51, down 8 cents, on the New York York Stock Exchange on Friday. (Reporting by Ben Berkowitz in Amsterdam and Megan Davies in New York and Jessica Hall in Philadelphia; editing by Simon Jessop and Lisa Von Ahn)