Aug. 15 (Bloomberg) -- Kohlberg Kravis Roberts & Co. co- founder George Roberts said buyout firms may struggle to offer attractive premiums on publicly traded takeover targets because stock prices don't account for a slowdown in lending.

``It's very hard for people to get financing,'' Roberts said on a conference call with analysts today. ``Stock markets haven't fully reflected what's taken place in the credit markets.''

Leveraged buyout firms including New York-based KKR will be hard-pressed to offer ``satisfactory'' premiums on transactions, the 63-year-old Roberts said. Because LBO firms use borrowed money to fund about two-thirds of the cost of the deals, takeovers depend on banks finding investors to buy those loans.

Stung by losses from U.S. subprime mortgages, investors have cut back on riskier assets such as the loans and bonds that fund LBOs, jeopardizing future KKR buyout transactions. An increase in borrowing costs for leveraged buyouts may hurt KKR funds' performance, the firm said earlier this week.

The Standard & Poor's 500 Index of the biggest U.S. stocks has fallen 8.5 percent from a 2007 high reached last month as some hedge funds, mortgage companies and other financial- services companies have been gutted by defaults on subprime loans, which are given to people with poor or inadequate credit.

``Life will go on, markets will adjust themselves,'' Roberts said. ``We've just come off a period of a major bull market for corporate credit. That's subsiding.''

Roberts said banks arranging financing for KKR to provide that money. ``We expect those transactions to close,'' he said.

Shares of KKR Private Equity Investors LP, KKR's publicly traded private-equity fund, have dropped an annualized 16 percent in the past three months. The fund fell 30 cents, or 1.5 percent, to $20.10 in Amsterdam trading today.

The net asset value of KKR Private Equity was $26.12 a unit, or $5.34 billion, as of June 30, the Amsterdam-based fund said today in a statement.

To contact the reporter on this story: Edward Evans in London at at eevans3@bloomberg.net

Last Updated: August 15, 2007 15:10 EDT