Nov. 3 (Bloomberg) -- KKR & Co. LP, the leveraged-buyout firm run by Henry Kravis and George Roberts, delayed plans to go public for a second time in a year as mounting losses in credit and equity markets eroded the value of its investments.

The firm plans to convert to a public company by taking over KKR Private Equity Investors LP, the Amsterdam-listed buyout fund it created in 2006. The transaction, initially set to be completed by year-end, won't close until sometime in 2009, KKR Private Equity said today in a statement.

The publicly traded fund's holdings, which include stakes in KKR's buyout pools and in companies acquired by the New York- based firm, tumbled 15 percent to $3.87 billion in the third quarter. The losses provide a glimpse at the impact the global slide in financial markets has had on KKR and the private-equity business.

``Investors are shunning all risk right now,'' said Ben Hauzenberger, who helps oversee about $51 billion at Swisscanto Asset Management AG in Zurich, including shares of the KKR fund. Private-equity firms can't assess how they will fund takeovers and realize investments as the credit crisis deepens, he added.

KKR Private Equity dropped 14 percent to $4.25 as of 4:35 p.m. in Amsterdam, giving the fund a market price of $870 million, or about one-quarter of its net asset value. The shares have dropped 77 percent this year.

`Extraordinary Turbulence'

KKR Private Equity wrote down by 29 percent the value of its stake in Energy Future Holdings Corp., the Dallas-based energy producer formerly known as TXU Corp. The value of its investment in NXP BV, Europe's third-biggest semiconductor maker, was marked down by 44 percent.

``Some of our investments faced reduced valuations during the third quarter as a result of the extraordinary turbulence in the global capital markets,'' Roberts, 65, said in the statement.

KKR announced the takeover of the Amsterdam fund in July when it abandoned a plan for an initial public offering on the New York Stock Exchange. KKR General Counsel David Sorkin said on a conference call with investors today that the delay was largely due to the complicated process of combining the two firms.

No IPOs

Mergers and IPOs have ground to a halt as banks, pinched by the credit squeeze, clamped down on lending, and investors shunned new stock.

Only one company has held an IPO in the U.S. this quarter, compared with 40 in the same period last year, data compiled by Bloomberg show. AMC Entertainment Holdings Inc., the movie theater operator controlled by J.P. Morgan Partners LLC and Apollo Management LP, on Oct. 31 withdrew its plans for an IPO.

``The parties remain committed to completing the transaction, but do not at this point expect the transaction to close until 2009,'' KKR Private Equity said in the statement.

Investors have lost money on Stephen Schwarzman's Blackstone Group LP, the world's largest private-equity firm, which shed more than two-thirds of its value since its June 2007 IPO, or twice as much as the benchmark Standard & Poor's 500 Index.

In a leveraged buyout, the purchaser borrows money against the target company to fund the transaction. A two-year boom, fueled by low interest rates that allowed firms to seek ever- larger acquisitions, ended a year ago when rising losses on subprime mortgages scared investors away from all but the safest government debt, making financing scarce.

Other Investment Opportunities

``When all is said and done, you can't raise any debt to do a buyout,'' Roberts said on the conference call.

Kravis and Roberts, cousins, started KKR with their Bear Stearns Cos. colleague Jerome Kohlberg and helped pioneer the LBO business with deals such as the buyout of RJR Nabisco Inc. in 1989. Kohlberg left in 1987 to start Kohlberg & Co. KKR's investments today range from Alliance Boots Plc, the British chain of drugstores, to HCA Inc., the U.S. hospital operator.

KKR said earlier this year that it plans to expand beyond the leveraged buyouts pioneered by founders Kravis and Roberts. Kravis, 64, has cited ``opportunities'' in real estate, mezzanine loans, infrastructure assets and publicly traded shares.

Roberts said today that funds devoted to those areas are still winning new commitments as some institutions back away from more traditional private-equity funds.

In all, Kohlberg Kravis Roberts & Co., as the firm was previously known, owns stakes in about 46 companies with $205 billion in sales and 855,000 employees, the company said on its Web site in July.

KKR posted $1.12 billion in investment losses in the first half of the year on Sept. 22, wiping out net income for the period. The net loss for the first six months was $1.1 million, compared with net income of $667.4 million a year earlier, the New York-based company said at the time.

To contact the reporter on this story: Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net; Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net;

Last Updated: November 3, 2008 13:09 EST