KKR writes down value of European fund by half

US buyout house KKR has written down the value of its $5.8bn second European fund, which includes Alliance Boots in its portfolio, by almost half taking $2.8bn off the total.

It has been reported that the buyout house is expected to complete a $569m fundraising for an annex fund this month to support additional equity investments for portfolio companies of the vehicle. Investors in the annex fund will take the first 20% IRR on each deal.

However, some investors have already expressed concern over the proposal, as it will inevitably make it less likely that LPs in the original fund will receive any returns from the sale of companies into which the annex vehicle has invested.

KKR recorded a $1.2bn loss in 2008, compared with a profit of $815m last year.

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