June 1 (Bloomberg) -- KKR & Co., Henry Kravis’s and George Roberts’s private equity firm, swung to a loss in 2008 as leveraged buyouts dried up amid the credit crisis.

The New York-based firm posted a $1.2 billion loss for 2008, compared with pretax economic net income of $815 million the previous year, KKR said in a presentation to investors late yesterday. The loss is the firm’s first in at least five years.

KKR, Blackstone Group LP and other rival leveraged buyout firms have struggled to finance acquisitions in the past 18 months after the credit crisis shut off the debt financing they rely on for takeover finance. A lack of credit for acquisitions and scant appetite for initial public offerings are preventing LBO firms from selling holdings. Stephen Schwarzman’s Blackstone had a $1.3 billion loss for 2008.

KKR’s assets under management shrank by 11 percent to $47.3 billion at the end of March, the company said. The firm, which acquired Seoul-based Oriental Brewery for $1.8 billion last month, said it has $15.3 billion of cash available to invest.

Fellow buyout firms such as Apollo Management LP and London-based Candover Investment Plc have also marked down the value of the companies they own to match a global decline in prices for almost all types of assets. KKR values five of its 10 biggest investments -- including Texan power producer Energy Future Holdings Inc. and British drugstore chain Alliance Boots Ltd. -- at less than what it originally paid for them, according to the filing.

Merger Prepared

After gorging on a record $1.4 trillion of takeovers in 2006 and 2007, buyout firms spent just $212 billion in 2008 on takeovers as investors demand for the bonds and leveraged loans the firms use to finance their acquisitions dried up.

KKR is preparing to merge with its publicly traded European fund, KKR Private Equity Investors LP, and list the combined company on the New York Stock Exchange. Blackstone sold shares to the public in June 2007 at the end of a record leveraged buyout boom; its stock has dropped more than 63 percent since.

KKR highlights economic net income, a non-standard measure of profit that excludes income tax and non-cash employee compensation charges.

For Related News and Information: Top Stories: TOP<GO> Link to Company News: KKR US <Equity> CN <GO> Link to Company News: KPE NA <Equity> CN <GO>

Last Updated: June 1, 2009 06:04 EDT