March 2 (Bloomberg) -- KKR & Co., the buyout firm run by Henry Kravis and George Roberts, has left shareholders of its two publicly traded vehicles with losses of more than 90 percent after writedowns on takeovers, mortgages and corporate loans.

KKR Private Equity Investors LP, a fund that invests in LBOs arranged by the firm, fell 8.9 percent in Amsterdam trading today after reporting that the value of its holdings tumbled 32 percent in the fourth quarter. The buyout firm’s credit affiliate, New York-listed KKR Financial Holdings LLC, fell 30 percent after posting a fourth-quarter loss of $1.2 billion.

Kravis and Roberts started both vehicles to supplement their private funds with public capital, which isn’t subject to investor withdrawals. The plunge in global markets and a deepening recession have forced KKR to mark down the value of most investments and probably drop a plan to list publicly by acquiring KPE.

“The financial world and markets have changed dramatically since July 2008,” New York-based KKR said today in a statement. “KKR and independent directors of KPE’s general partner are in the process of evaluating the impact of these changes.”

KKR said in July it was abandoning an initial public offering announced a year earlier in favor of a merger with KPE and subsequent listing on the New York Stock Exchange.

“No doubt, we’re in a very sobering time,” Kravis said today on a conference call with investors. “The system has not yet normalized.”

KPE stock has lost 91 percent since Kravis and Roberts, cousins who started KKR in 1976, raised $5 billion for the fund in May 2006. KKR Financial has lost 95 percent since the San Francisco-based company went public in June 2005.

First Data

KPE, the Guernsey, Channel Islands-based fund that invests as a limited partner in KKR funds as well as a co-investor in some deals, marked down its stakes in companies including Energy Future Holdings Corp., the power producer formerly known as TXU Corp., and credit-card processor First Data Corp.

“We believe the valuations of KPE’s underlying private- equity investments are more reflective of broader global macroeconomic conditions and mark-to-market considerations than they are of the fundamentals of KPE,” Kravis said in the statement.

Kravis said on the conference call that KKR was working with the companies its owns to analyze whether they should buy back their down debt and take advantage of a provision in President Barack Obama’s economic stimulus plan that allows companies to delay paying taxes related to buying back debt.

No Dividend

KKR Financial, which began investing in mortgages and later switched its focus to corporate debt, said today it won’t pay a fourth-quarter dividend and doesn’t expect such payouts this year, according to a statement.

“Almost all leveraged financial companies are facing real challenges and must adjust and rethink their business models,” KKR Financial Chief Executive Officer William Sonneborn said on a conference call today.

Sonneborn took over as CEO from Saturnino Fanlo in December when KKR created a new asset-management division to consolidate all of its non-private equity businesses.

KKR Financial had a fourth-quarter net loss of $7.85 a share, compared with net income of $59.9 million, or 52 cents, a year earlier. The firm had losses of $137.5 million on the sale of assets in Wayzata Funding LLC, a collateralized loan obligation fund created in 2007. The firm increased its provision for loan losses by $471.5 million to $480.8 million.

Losses From Boom

KPE’s woes are tied to a drop in values, mostly in companies acquired in 2006 and 2007 during the leveraged buyout boom that collapsed about 18 months ago.

About 95 percent of KPE’s assets are in leveraged-buyout funds run by KKR or companies in which the New York-based firm has invested.

KPE marked down its holding in First Data, a Greenwood, Colorado-based credit-card payments processor, by 40 percent from Sept. 30, according to the statement. The value of its stake in Energy Future Holdings, the Dallas-based power producer formerly known as TXU Corp., dropped by 30 percent.

KPE valued its original $220 million investment in ProSiebenSat.1 Media AG, Germany’s largest private broadcaster, at zero, down from 0.1 percent of cost at Sept. 30, while investing another $30.2 million in the company.

The fund marked up by 10 percent its investment in discount retailer Dollar General Corp., based in Goodlettsville, Tennessee, the statement said.

The fund’s net asset value has dropped 46 percent since inception.

To contact the reporter on this story: Jason Kelly in New York at jkelly14@bloomberg.net

Last Updated: March 2, 2009 17:34 EST