What’s private equity without equity? hmmm…

When money was cheap and freely available, private equity firms were among  the (unregulated) darlings of wall Street.  My, how times have changed.

KKR – one of the biggies – was (is) planning an IPO. business overview.  So, they provided a public overview last weekend. 

CNBC reports:

KKR had an adjusted pre-tax loss of $1.19 billion in 2008 while its assets under management dropped by 11 percent.

The firm still has $15 billion in capital it has yet to invest in deals, but …  “Given that private equity can’t get financing for deals of more than $2 billion if they’re lucky, it could be a while until KKR works off all that capital. PE firms exists to raise money for new funds, reap the fees from those funds and quickly deploy and return the capital raised. … It’s fair to say that right now the model isn’t working that well.”

And KKR has mucho unrealized losses from the investments it made during the LBO crazed days of 2005-2007.  For example,

“Its deal to acquire First Data in September of 2007 which cost $2.325 billion is now worth almost a billion less at $1.395 billion

The world’s biggest private equity deal, the acquisition of TXU has seen the value of KKR’s equity stake decline by exactly 50 percent from $1.817 billion to $908 million.”

And it all seemed so easy …

Full article: 
http://www.cnbc.com/id/31049647

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