July 20 (Bloomberg) -- KKR & Co.’s plan to purchase the assets of its Amsterdam-listed buyout fund was approved by the affiliate’s board, bringing the private-equity firm a step closer to being publicly traded as it returns to profitability.

The agreement was supported by the three directors of KKR Private Equity Investors LP who are independent of the fund and of New York-based KKR, the companies said today in a statement. The transaction is scheduled to be completed on Oct. 1 if a majority of KPE unitholders consent during voting in the third quarter. KPE rose 11 percent in Amsterdam trading.

The combined company may seek a listing on the New York Stock Exchange, though the shares will initially continue to trade in the Netherlands. KKR, run by co-founders Henry Kravis and George Roberts, tried unsuccessfully for almost two years to list shares in New York, filing for an initial public offering in July 2007 after rival Blackstone Group LP’s $4.75 billion share sale.

The collapse of credit markets, which halted most leveraged buyouts, forced KKR to instead propose the tie-up with its publicly traded fund a year later. Blackstone, run by Chairman Stephen Schwarzman, has lost 66 percent since its IPO.

KKR had second-quarter economic net income, a measure of profit that excludes some costs, of $345 million to $375 million, the firm said in the statement. It didn’t disclose a figure for the year-earlier period.

KPE Assets Gain

The company said in June it posted a $1.2 billion loss in 2008, the first in at least five years. Assets under management rose 7.4 percent to $50.8 billion in June from March. No reasons were given for the gains.

KPE investors will own 30 percent of KKR, which is closely held by executives of the firm. No cash will change hands, no new securities will be issued, and KKR owners won’t sell any of their holdings as part of the acquisition, according to the statement.

KPE rose 57 cents to $5.95. That gives the Guernsey, Channel Islands-based fund a market value of $1.22 billion. Shares were first sold to the public at $25 apiece in 2006.

KPE’s net asset value was $3 billion, or $14.55 to $14.75 a unit, as of June 30, according to the statement. That’s an increase of 14 percent from March 31. KPE plans to release full results by Aug. 30.

Investors holding about 44 percent of KPE’s stock, including Black River Asset Management LLC, Putnam Investments and Templeton Global Advisors Ltd., previously pledged to approve the proposal, the statement said.

Citigroup Inc. is KPE’s financial adviser, while Lazard Ltd. is advising the fund’s independent directors. Bredin Prat and Cravath Swaine & Moore LLP are lead legal counsels to KPE and the directors.

Goldman Sachs Group Inc. and Morgan Stanley are KKR’s financial advisers, while Simpson Thacher & Bartlett LLP is the firm’s lead legal counsel.

To contact the reporter on this story: Larry Edelman in Boston at ledelman3@bloomberg.net

Last Updated: July 20, 2009 12:36 EDT