KKR in $1.2bn loss as investments dive
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.
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.
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.
KKR is currently approaching investors to raise $569m (£345m) for an emergency annex fund to support European Fund II.
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.
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.
KKR pointed out yesterday its averaged adjusted pre-tax economic net annual income in 2004 to 2007 was $926m (£561.6m).
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.
KKR has also been affected by its announcement that it would go public, made in July 2008 – just before markets plunged.