KKR posts first-quarter loss but assets grow

PHILADELPHIA, July 27 (Reuters) - Kohlberg Kravis Roberts & Co [KKR.UL], which set plans to become public traded company by buying an affiliated fund, said it suffered a loss in the first quarter due, in part, to a drop in the market value some investments.

KKR said its adjusted economic net loss for the first quarter of 2008 totaled $97 million, compared with a $361 million profit in the first quarter the previous year.

The loss was partly due to the value of a number of holdings that KKR has in publicly traded companies falling along with the turbulent markets, a source familiar with the matter said.

In May, KKR's rival Blackstone Group (BX.N) reported a first-quarter loss for the same reason -- it has to adjust the value of is investments every quarter for accounting purposes as if the assets were being sold that day.

Blackstone's first-quarter loss of $93.6 million -- excluding income taxes, noncash charges for vesting equity-based compensation and amortization of intangible assets -- compared with a year-earlier profit of $957.8 million.

KKR said its total assets under management were $57.7 billion for the first quarter, up from $53.4 billion for the year-ago quarter. The current first quarter assets included $46.7 billion in private equity assets under management, and $11.0 billion in fixed-income assets under management.

As of June 30, its assets under management swelled to $60.8, the company said.

KKR said it had total fee income of $136 million in the first quarter, up from $114 million a year ago.

The company said its fees had grown at a 90-percent compound annual growth rate over the past three years. For the full year 2007, its total fee income was $872 million, according to an investor presentation on the company's website.

KKR said it deployed $1.8 billion in capital in the first quarter of 2008, compared with $1.4 billion in the year-ago first quarter. For the full year of 2007, the company deployed $15.0 billion in capital, up from $6.7 billion in 2006.

KKR and other private equity firms have been hit by tight credit markets, which cut off access to the cheap financing that had fueled the buyout bubble of multibillion dollar deals.

KKR's investments range from Toys R Us to Sealy mattress maker and asset manager Legg Mason (LM.N). Its largest holdings include First Data, Alliance Boots and Legrand, the company said.

Founded in 1976, KKR has more than 500 employees in 9 offices globally, focusing on three core businesses: private equity, fixed income, capital markets. (Reporting by Jessica Hall in Philadelphia and Megan Davies in New York; Editing by Lincoln Feast) (For more M&A news and our DealZone blog, go to here)