KOHLBERG Kravis Roberts (KKR), the US private equity giant founded by “buyout king” Henry Kravis, yesterday reported a $1.2bn (£729m) loss for last year, blaming the effects of the economic downturn on its investments.<br /><br />In its annual update to investors, the New York-based group said total annual fee income fell 27 per cent to $640m (£388m) in 2008. This was accompanied by a dip in total assets under management to $48.5bn (£29.4bn) from $53.2bn at the end of 2007.<br /><br />The group reported further pain on its second European fund, which has made investments in UK pharmacy chain Alliance Boots among others. It revealed write-downs on the $5.8bn European Fund II’s assets worth almost half their original values. A staggering $2.8bn (£1.7bn) was written off. <br /><br />KKR is currently approaching investors to raise $569m (£345m) for an emergency annex fund to support European Fund II. <br /><br />The group said overall it now holds $15.4bn (£9.34bn) of uninvested capital across its three geographic fund areas – Europe the US and Asia. <br /><br />The loss for last year compares to a pre-tax economic net income – a measure which excludes certain taxes and charges – of $815m (£495m) reported 2007.<br /><br />KKR pointed out yesterday its averaged adjusted pre-tax economic net annual income in 2004 to 2007 was $926m (£561.6m). <br /><br />The private equity industry has been struggling with numerous problems, including the absence of leverage for new deals, troubled portfolio companies and investors hurt by equity market falls.<br /><br />KKR has also been affected by its announcement that it would go public, made in July 2008 – just before markets plunged.