KKR's Euronext fund seeks consent for deal

NEW YORK/PHILADELPHIA (Reuters) - Private equity firm Kohlberg Kravis Roberts & Co KKR.UL (KKR) moved another step closer to becoming publicly traded on Friday as the Amsterdam fund it proposes buying launched a consent solicitation to seek approval for the deal.

The New York-based buyout firm also gave a detailed update of the performance of its funds and valuations of its portfolio companies, in a document provided to the fund's unit holders, which ran to over 400 pages.

Combining with its Amsterdam-listed fund, KKR Private Equity Investors LP KKR.AS (KPE), is a roundabout way for KKR to gain a European listing, and is a step toward it following rival private equity firm Blackstone Group (BX.N) in becoming a U.S. listed company.

Under the consent solicitation, if the majority of the unitholders provide valid consent prior to the August 14 expiry date, KPE may then move ahead with the proposed plan. Those owning 44 percent of KPE's outstanding shares have agreed to the deal.

KKR has had a long, complicated road toward a public listing. Initially, it launched plans to list on the New York Stock Exchange via a traditional initial public offering in July 2007, a month after Blackstone went public and just before the markets started to tumble.

It later proposed a more complex method of going public, by combining with KPE, delisting the fund from Amsterdam and listing in New York. In June, it formally withdrew the proposed New York IPO plan, but kept the door open for such a move, saying it had the ability to seek a listing in the future.

On Monday, KKR and KPE moved a step closer to merging after receiving approval from the board of the fund to combine businesses.

Following the deal, KPE and KKR will have the right to cause the combined company to list in the United States. If that happened, KPE would make a distribution to KPE unitholders, and KPE would be delisted from Euronext Amsterdam, the documents said.

KKR has all along stated its aim to list on the New York Stock Exchange (NYX.N), although Friday's documents did also note that Nasdaq (NDAQ.O) is an option. KKR's rival Blackstone is listed on the NYSE.

FUND DATA

The documents also gave details of the value of some of KKR's biggest investments in various portfolio companies as of March 31.

The biggest is discount retailer Dollar General, valued at $1.6 billion. KKR wrote up the value of its investment in Dollar General in March, compared with December, and there has been speculation about whether it will seek an initial public offering for the discount store.

Other investment valuations it listed for March 31 included First Data, at $1.5 billion; Alliance Boots at $1.4 billion; HCA Inc at $1.1 billion; Biomet at $1 billion and Energy Future Holdings -- formerly known as TXU -- at $1 billion.

The data revealed the difficulty private equity firms have had investing their dollars in the absence of leverage. Private equity dollars invested dropped to $3.2 billion for the year ended December 31, according to the document, a decrease of $11.7 billion, or 78.5 percent, from the previous year.

KKR has plenty of available funds left to invest -- traditional private equity funds had $14.9 billion of remaining unused capital commitments at the end of the year, it said.

It disclosed that its latest buyout fund -- a $17.6 billion fund it finished raising in 2006 -- has $5.5 billion left to spend. KKR is likely to start raising its next buyout fund in 2010, sources previously told Reuters and Thomson Reuters' private equity website peHUB.

It also detailed that KKR principals will remain responsible for any "clawback" obligations relating to distributions they received prior to the KPE deal, up to a repayment obligation as of June 30 of $224 million.

Clawbacks refer to distributions private equity firms are required to repay to investors, if, upon liquidation of a fund, the amount distributed during the term of that fund exceeds what they were entitled to receive, due to poor performance of later investments.

(Reporting by Megan Davies, Jessica Hall and Jonathan Spicer; Editing by Richard Chang)