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KKR Swings to First-Quarter Loss as First Data Position Slumps

  • Stake in payments processor fell 19% during volatile quarter

KKR & Co. reported a loss for the first quarter after its biggest investment, in payments processor First Data Corp., lost a fifth of its value, highlighting the heightened exposure a private equity firm takes on when it bets its own money on a company.

The buyout firm had a loss in economic net income, which reflects both realized and unrealized investment gains, of $553 million, or 65 cents a share, according to a statement Monday. That result, which is after-tax, compares with a $526 million profit in the same period last year and falls short of the average 33-cent loss expected by 15 analysts in a Bloomberg survey.

KKR’s exposure to First Data accounted for $300 million of the firm’s loss before taxes. The investment is unusual among private equity managers because in addition to investing client capital from its funds, KKR bet about $1 billion of its own money on the company from 2007 to 2014. The move, which the buyout firm was able to do because it has the largest balance sheet among its peers, allows it to keep more of the investment’s gains while also being more exposed to its losses.

“A single large holding drove an outsized...