Private equity firm KKR & Co. L.P. does not expect its initial public offering to close until 2009 as turbulent market conditions reduced the value of its investments, a statement released by its Amsterdam-listed investment fund KKR Private Equity Investors L.P. or KPE said Monday.
As announced on July 27, 2008, KPE and KKR & Co. L.P. had entered into an agreement providing for the acquisition of all of the assets and assumption of all of the liabilities of KPE by KKR & Co. L.P.
This is the second time that the company is postponing its IPO. KKR was forced to postpone a $1.25 billion public offering in 2007 after investors showed little interest.
With the subprime collapse and the credit crisis, there is a crisis of confidence in the market and investors are not willing to take risks.
The statement from the company said, "U.S. Securities and Exchange Commission review of the registration statement related to the transaction is continuing. 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."
It was in July that the offer plan was made public. KKR said it would list on the New York Stock Exchange or NYSE later this year in a complex transaction that would involve the takeover of KPE. At that time it was estimated that KKR could be valued at as much as $15 billion after its shares are listed on the NYSE.
Releasing the third-quarter results, KPE said net investment loss widened to $27.2 million from $6.37 million in the year-ago period. Net realized loss on investments and foreign currency was $19.7 million, compared to a gain of $104.81 million last year.
Net unrealized depreciation on investments and foreign currency transactions was $649.0 million, compared to $119.67 million last year. The company's total return was a negative 15.3% during the quarter. The fund's net asset value was $3.86 billion or $18.85 per unit, as of September 30.
George Roberts, Co-Founder of KKR and Co-Chairman of KPE's Managing Partner's Board of Directors, commented, "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. We are redoubling our already extensive efforts to improve the operations of our companies in anticipation of a weaker economic environment."
KPE added that global financial markets have experienced considerable declines in the valuations of equity and debt securities, an acute contraction in the availability of credit and the failure of a number of leading financial institutions during the second half of fiscal 2007 and through 2008 to date.
"Uncertainty regarding the value of assets and the ability of counterparties to meet their obligations, and a lack of transparency regarding the magnitude of risk inherent in certain investments, spread from the residential real estate market to financial markets generally. As a result, sources of liquidity may be not only more difficult, but also impossible to obtain in the current market environment," it said.
The company also warned that the state of the financial markets may also adversely impact other aspects of the business, operations, investments or prospects of KPE and the Investment Partnership in ways that are not currently foreseeable.
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