KKR & Co., the private-equity firm run by Henry Kravis and George Roberts, is facing a loss on its first investment in Turkey, three people with knowledge of the matter said.
U.N. Ro-Ro Isletmeleri AS, an operator of roll-on roll-off transportation ferries, is expected to be sold for as much as $1 billion this year, the people said, who asked not to be identified because the matter is confidential.
KKR, based in New York, paid 910 million euros ($1.26 billion) for U.N. Ro-Ro in 2007, which represented a multiple of about 12 times the company’s earnings that year, said two of the people. The deal was then the largest investment by a private-equity firm in Turkey, according to KKR’s website.
U.N. Ro-Ro was given about a further 25 million euros by the private-equity firm in 2010, said one person. The company has about $800 million of debt, meaning that should the target sale price be met KKR will receive less than a third of the 385 million euros of equity it has invested during its ownership, the people said.
Money for the U.N. Ro-Ro deal came from three pools. They were its $17.6 billion 2006 fund, KKR 2006 Fund LP; a 4.5 billion-euro pool it raised in 2005 for European investment, KKR European Fund II LP and a 400 million-euro pool it raised in 2009 to support companies hurt amid the financial crisis.
Unlike most European roll-on roll-off operators, which specialize in short-distance crossings, U.N. Ro-Ro has developed long-distance Mediterranean routes linking Turkey with Trieste on the Adriatic in northern Italy and the southern French port city of Toulon.
Officials for KKR and U.N. Ro-Ro declined to comment.
U.N. Ro-Ro, created by a group of Turkish transporters in 1994, increased sales to 221.8 million euros in 2012, from 218 million euros in 2011, according to its website. Sales were 164.5 million euros when KKR bought the company.