KKR posts $1.2 billion loss on LBO market fall

Posted Jun 1st 2009 7:00AM by Tom Johansmeyer
Filed under: Earnings Reports, Private Equity, KKR Financial (KFN), Initial Public Offerings

Private equity giant KKR & Co. (NYSE: KFN) posted a $1.2 billion loss last year -- compared to pretax net income of $815 million the year before. This is KKR's first loss in at least five years.

Bloomberg pins the blame on a drop-off in leveraged buyout transactions. A $1.4 trillion market in 2006 and 2007, only $212 billion was spent on takeovers last year, which was bound to put a dent in KKR's top and bottom lines.

The company's assets under management fell by 11% to $47.3 billion by the end of the first quarter of 2009, but the company claims to have $15.3 billion in investable cash on hand. Currently, KKR values half of its top 10 investments -- including Energy Future Holdings Inc. and Alliance Boots Ltd. -- at less than what it paid for them.

It's been a tough reporting season for other leveraged buyout companies, as well. Blackstone Group LP (NYSE: BX)has been constrained by a lack of credit for acquisitions and the slim initial public offering (IPO) market -- both market entry and exit are limited, as a result. This led to a $1.3 billion loss last year.

Tags: blackstone, blackstone group, inthenews, ipo, kkr, kkr financial, kohlberg, kohlberg kravis roberts, kravis, lbo, lbo debt, lbos, leveraged buyouts, roberts