Is it possible that the ‘faces’ behind the private equity funds, which made such huge investments in the semiconductor business two years ago, are beginning to regret their moves?
New York fund Kohlberg Kravis Roberts (KKR) last week wrote down the value of its holding in NXP Semiconductors by 25%. “NXP has underperformed versus our expectations due to overall softness in the semiconductor business,” said KKR partner Paul Raether.
The comments are significant because KKR is renowned as one of Wall Street’s most aggressive ‘leveraged buy out’ pioneers. Founder and partner Henry Kravis – centre in picture – is also reported to be ‘extremely displeased’ with the NXP situation. KKR – along with such funds as Alpinvest, Apax, Bain Capital, and Silver Lake – purchased 80% of NXP from Philips two years ago.
KKR took the write down as NXP released soft results for Q4 2007, with sales down 4% on the preceding period at €1.16billion and a forecast of ‘a 9% to 13% sequential sales decline in the first quarter of 2008’.
