May 2 (Bloomberg) -- Kohlberg Kravis Roberts & Co., the world's biggest buyout firm, more than tripled its initial public offering of a private-equity fund to $5 billion to meet demand, bankers with direct knowledge of the sale said.

New York-based KKR will sell 200 million shares for $25 apiece today, the two bankers said, asking not to be identified before an official announcement. Shares of KKR Private Equity Investors LP, which had initially planned to raise $1.5 billion, will start trading in Amsterdam tomorrow, they said.

Founders Henry Kravis and George Roberts, both 62, are granting individuals with less than $25 million access to the firm's takeovers for the first time in its 30-year history. Part of the IPO proceeds will be invested in a separate $10 billion buyout fund KKR is seeking. KKR's Millennium fund, raised in 2000, gave its backers an internal rate of return of 55 percent after fees.

``KKR is a strong brand name, so people are looking to participate,'' said Kelvin Chan, a senior vice president at Partners Group in Singapore. Still, as private equity funds raise a record amount of money, there is ``some concern whether they can find good investments to deploy the capital,'' he said.

Executives in the industry warn that buyout firms are at risk of paying too much for their takeovers. In February, Steve Schwarzman, chief executive officer of Blackstone Group LP, a New York-based private equity firm that's seeking about $13.5 billion for the world's biggest leveraged-buyout fund, said prices being paid for assets had reached ``nosebleed territory''.

The buyout industry gathered $134 billion last year, more than twice 2004's amount, according to London-based Private Equity Intelligence Ltd. KKR last year took in 4.5 billion euros ($5.5 billion) for its second European fund and opened its first offices in Asia.

Investor Demand

Three quarters of the money raised for KKR's fund will be invested in private equity, with the rest to be used for equity and debt securities, according to sale documents. The cash earmarked for private equity will be used to buy stakes in KKR's buyout funds and in companies owned by its funds, so-called co-investments.

KKR is following London-based buyout firm Permira Advisers Ltd. in using a publicly traded investment fund to help raise money for its buyouts. SVG Capital Plc, a London-based investment trust, is contributing 2.8 billion euros ($3.5 billion) to Permira's planned 10 billion-euro fund.

KKR's New York-based rivals Apollo Management LP and Ripplewood Holdings LLC sold shares in publicly traded funds during the past two years.

With the IPO, KKR can tap a new range of investors: mutual funds and wealthy individuals. Until now, its typical backers have been pension funds such as Washington's State Investment Board, which oversees $65 billion.

The KKR sale is attracting demand from individual and institutional investors as well as hedge funds, the bankers said. Mark Semer, a KKR spokesman with Kekst & Co. in New York, declined to comment when reached on his mobile phone today.

KKR Founders

Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley are leading a group of banks managing the IPO. The shares will trade in Amsterdam under the symbol ``KPE.''

Kravis and Roberts are cousins who started KKR in 1976 with their former Bear Stearns Cos. mentor, Jerome Kohlberg. The firm is the leader in buying companies using borrowed money to finance acquisitions. KKR's 1989 purchase of RJR Nabisco Inc. for $31 billion remains the largest leveraged buyout.

To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net.

Last Updated: May 2, 2006 07:20 EDT