GUERNSEY, Channel Islands--(BUSINESS WIRE)--KKR Private Equity Investors, L.P. (Euronext Amsterdam: KPE), a Guernsey limited partnership that is invested predominantly in private equity investments identified by Kohlberg Kravis Roberts & Co. (together with KKR & Co. L.P. and its affiliates, “KKR”), today reported its financial results for the quarter ended June 30, 2009. As of June 30, 2009, KPE’s net asset value (“NAV”) was $3,004.1 million, or $14.66 per unit.

Results of Operations

Operating results of KPE for the quarter ended June 30, 2009 are highlighted as follows:

• Net unrealized appreciation on investments and foreign currency transactions was $379.3 million. The most significant changes in the unrealized fair value of investments from March 31, 2009 to June 30, 2009 were:
  • An increase of $116.2 million in the value of the investment in Dollar General Corporation (“Dollar General”), which was marked from 1.3 times cost as of March 31, 2009 to 1.7 times cost as of June 30, 2009;
  • An increase of $59.4 million in the value of the convertible senior notes investment in Sun Microsystems, Inc. (“Sun”);
  • A net increase of $53.7 million in the value of the convertible preferred stock investment in Orient Corporation (“Orico”) and the related forward foreign currency contract;
  • An increase of $49.7 million in the value of the investment in HCA Inc. (“HCA”), which was marked from 1.0 times cost as of March 31, 2009 to 1.2 times cost as of June 30, 2009;
  • An increase of $34.8 million in the value of the investment in Alliance Boots GmbH (“Alliance Boots”), which related entirely to the impact of the change in the exchange rate from British pounds sterling to U.S. dollars from March 31, 2009 to June 30, 2009;
  • An unrealized gain of $23.3 million related to investments in KKR Strategic Capital Institutional Fund, Ltd. (“SCF”); and
  • An increase of $12.7 million in the value of the investment in Legrand Holdings S.A., based on a market quotation on a U.S. dollar basis.
• Net realized gain on investments and foreign currency was $10.2 million. The net realized gain was primarily comprised of $11.7 million related to foreign currency translation and $2.3 million from the sale of investments by SCF, offset by realized losses of $3.8 million related to the settlement of shorts and futures contracts.
• Net investment loss was $11.5 million, which principally represented management fees, interest expense and general and administrative expenses, offset by interest and dividend income.
• The net increase in net assets resulting from operations was $378.0 million and KPE’s total return was 14.4 percent during the quarter.

Results of Operations

Operating results of KPE for the six months ended June 30, 2009 are highlighted as follows:

• Net unrealized appreciation on investments and foreign currency transactions was $496.2 million. Of the total net unrealized appreciation during the six months ended June 30, 2009, $84.0 million represented the reversal of previously recorded net unrealized depreciation, primarily from the sale of certain interests in co-investments and opportunistic investments in public equities, related derivative instruments and a fixed income investment. The most significant changes in the unrealized fair value of investments excluding these reversals from December 31, 2008 to June 30, 2009 were:
  • An increase of $174.3 million in the value of the investment in Dollar General, which was marked from 1.1 times cost as of December 31, 2008 to 1.7 times cost as of June 30, 2009;
  • An increase of $101.8 million in the value of the investment in HCA, which was marked from 0.8 times cost as of December 31, 2008 to 1.2 times cost as of June 30, 2009;
  • An increase of $83.8 million in the value of the convertible senior notes investment in Sun;
  • An increase of $57.4 million in the value of the convertible preferred stock investment in Orico and the related forward foreign currency contract;
  • An unrealized gain of $46.3 million related to investments in SCF;
  • A net increase of $30.1 million in the value of the investment in Alliance Boots, which related entirely to the impact of the change in the exchange rate from British pounds sterling to U.S. dollars from December 31, 2008 to June 30, 2009;
  • A decrease of $73.0 million in the value of the investment in Energy Future Holdings Corp., which was marked from 0.7 times cost as of December 31, 2008 to 0.5 times cost as of June 30, 2009;
  • A decrease of $15.2 million in the value of the investment in Capmark Financial Group Inc., which was marked from 0.1 times cost as of December 31, 2008 to nil as of June 30, 2009;
  • A net decrease of $15.0 million in the value of the overall investment in ProSiebenSat.1 Media AG, which was marked on both a Euro and U.S. dollar basis from 0.1 times cost as of December 31, 2008 to less than 0.1 times cost as of June 30, 2009; and
  • A net decrease of $13.7 million in the value of the investment in KION Group GmbH , which was marked on both a Euro and U.S. dollar basis from 0.2 times cost as of December 31, 2008 to 0.1 times cost as of June 30, 2009.
• Net realized loss on investments and foreign currency was $83.7 million. The net realized loss was primarily comprised of $40.9 million from the sale of opportunistic investments in public equities and related derivative instruments, a fixed income investment and the settlement of shorts and futures contracts, $39.8 million related to the sale of certain interests in co-investments and $25.7 million from the sale of investments by SCF, offset by realized gains of $22.7 million related to foreign currency transactions and translation.
• Net investment loss was $27.1 million, which principally represented management fees, interest expense and general and administrative expenses, offset by interest and dividend income.
• The net increase in net assets resulting from operations was $385.4 million and KPE’s return was 14.7 percent during the six months ended June 30, 2009.

Investments

KPE invests its capital as the sole limited partner of KKR PEI Investments, L.P. (the “Investment Partnership”). As of June 30, 2009, the fair value of the Investment Partnership’s portfolio, which consisted primarily of private equity investments, net of related financing, was $3,188.5 million, as follows:

• Investments of $1,295.9 million in the following KKR private equity funds:
  • KKR 2006 Fund L.P.
  • KKR Asian Fund, L.P.
  • KKR European Fund, Limited Partnership
  • KKR European Fund II, Limited Partnership
  • KKR European Fund III, Limited Partnership
  • KKR Millennium Fund L.P.
• Co-investments of $1,373.0 million in the following portfolio companies of KKR’s private equity funds:
  • Alliance Boots GmbH
  • Biomet, Inc.
  • Capmark Financial Group Inc.
  • Dollar General Corporation
  • Energy Future Holdings Corp.
  • First Data Corporation
  • HCA Inc.
  • KION Group GmbH
  • The Nielsen Company B.V.
  • NXP B.V.
  • PagesJaunes Groupe S.A.
  • ProSiebenSat.1 Media AG
  • U.S. Foodservice, Inc.
• Negotiated equity investments of $433.6 million, net of related financing, in the following companies:
  • Aero Technical Support & Services S.à r.l.
  • Orient Corporation
  • Sun Microsystems, Inc.
• Non-private equity fund investment of $86.0 million in SCF.

Please refer to the schedule of investments as of June 30, 2009, included elsewhere in this release, for detailed amounts of the investments listed above.

Commitments

As of June 30, 2009, the Investment Partnership’s remaining capital commitments related to limited partner interests in KKR’s private equity funds were as follows, with amounts in millions:

We expect that the unfunded capital commitments presented above will be called over a period of several years.

On August 7, 2009, KKR E2 Investors L.P. (the “KKR Annex Fund”) accepted the Investment Partnership’s subscription agreement for $17.6 million, which represents the obligation of the Investment Partnership to fund capital calls to the KKR Annex Fund. Pursuant to the terms of the subscription, the Investment Partnership’s capital commitment to the KKR European Fund III was reduced by an equal amount.

Liquidity and Capital Resources

As of June 30, 2009, the Investment Partnership had a cash balance of $808.3 million and had $937.8 million outstanding on its five-year senior secured credit facility established on June 11, 2007. As of June 30, 2009, the Investment Partnership’s availability for further borrowings under the credit facility was $17.9 million.

Financial Report and Other Information

KPE’s interim financial report, which includes its unaudited financial statements and the unaudited consolidated financial statements of the Investment Partnership, is available on its website (www.kkrprivateequityinvestors.com). KPE encourages investors to carefully read these documents accompanying this news release.

Transaction Update

The consent solicitation of the KPE unitholders in connection with the transaction to combine the businesses of KPE and KKR pursuant to the Purchase and Sale Agreement, dated as of July 19, 2009, expired on August 14, 2009. As of the expiration date, KPE had received consents in favor of the combination from the holders of approximately 98% of all KPE units for which a consent form was properly submitted. As previously announced, the unitholder consent requirement and all other conditions precedent to completion of the combination included in the Purchase and Sale Agreement were satisfied on August 4, 2009. As a result, the combination is expected to become effective on October 1, 2009, subject to the completion of the restructuring of KKR’s businesses and similar requirements under the Purchase and Sale Agreement that must be performed prior to the effectiveness of the combination. Assuming such requirements are satisfied, on October 1, 2009, KPE and KKR’s existing owners will begin to share ratably in the assets, liabilities, profits, losses or distributions of the combined business.

Selected KKR Financial Information

Attached to this press release in Annex A is selected financial and other data for KKR. The KKR results for the quarter ended June 30, 2009 were at the higher end of the ranges provided in KPE’s press release dated July 20, 2009. As of June 30, 2009, KKR’s assets under management were $50.8 billion compared to $47.3 billion as of March 31, 2009 and $60.8 billion as of June 30, 2008. For the three months ended June 30, 2009, fee-related earnings were $54.3 million compared to $43.7 million for the three months ended March 31, 2009 and $58.9 million for the three months ended June 30, 2008. Economic net income for the three months ended June 30, 2009 was $366.9 million compared to an economic net loss of $52.1 million for the three months ended March 31, 2009 and economic net income of $119.9 million for the three months ended June 30, 2008.

Information for Investors – Teleconference and Webcast

KPE will discuss its financial results on a teleconference to be broadcast live on the Internet on Tuesday, August 18, 2009 at 7:00 p.m. CEST (Amsterdam) / 6:00 p.m. BST (Guernsey) / 1:00 p.m. EDT (New York City). A webcast (listen only) of the teleconference can be accessed via the Investor Relations section of KPE’s website at www.kkrprivateequityinvestors.com.

About KPE

KKR Private Equity Investors, L.P. (Euronext Amsterdam: KPE) is a Guernsey limited partnership that seeks to create long-term value by participating predominantly in private equity investments identified by Kohlberg Kravis Roberts & Co. (“KKR”). As of June 30, 2009, KPE’s investment portfolio was substantially comprised of limited partner interests in six KKR private equity funds, co-investments in 13 companies alongside the private equity funds and three negotiated equity investments. KPE is governed by its general partner’s board of directors, which is required to have a majority of independent directors, and makes its investments as the sole limited partner of another Guernsey limited partnership, KKR PEI Investments, L.P.

The common units and related restricted depositary units of KPE are subject to a number of ownership and transfer restrictions. Information concerning these ownership and transfer restrictions is included in the Investor Relations section of KPE’s website at www.kkrprivateequityinvestors.com.

No Offering Statement

This release does not constitute an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from KPE and that will contain detailed information about KPE and management, as well as financial statements.

Forward-Looking Statements

This release may contain certain forward-looking statements with respect to the financial condition, results of operations, liquidity, investments, business, net asset value and prospects of KPE and the transaction with KKR. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future, and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. KPE does not undertake to update any of these forward-looking statements.