22JUL200905111057July 24, 2009

Dear Unitholder:

On July 19, 2009, KKR Private Equity Investors, L.P. (‘‘KPE’’) entered into an amended andrestated purchase and sale agreement with KKR & Co. L.P. and certain of its affiliates providing forthe combination of the asset management business of KKR with the assets and liabilities of KPE asdescribed more fully in this consent solicitation statement (the ‘‘Combination Transaction’’). Uponcompletion of the Combination Transaction, KPE would hold a 30% interest in the combined business(the ‘‘Combined Business’’) and the existing owners of KKR (as defined herein) would hold a 70%interest in the Combined Business. The Combination Transaction would be consummated subsequent tothe completion of the Reorganization Transactions described in this consent solicitation statement. TheReorganization Transactions and the Combination Transaction are referred collectively to as the‘‘Transactions’’.

There is no applicable legal, regulatory or other requirement that requires the consent of theholders of KPE units to consummate the Transactions. Nevertheless, based on the extraordinary natureof the Transactions, KKR and KPE have agreed that the consummation of the CombinationTransaction is conditioned upon, among other things, the consent of KPE unitholders representing atleast a majority of the KPE units for which a properly submitted consent form is submitted (excludingKPE units whose consent rights are controlled by KKR or its affiliates). The record date fordetermining holders of KPE units entitled to receive notice of, and consent to, the consummation ofthe Combination Transaction is the close of business on July 23, 2009.

If the consent of a majority of the unitholders as described above is obtained and the otherconditions precedent to the Combination Transaction are satisfied or waived, the closing conditions willbe considered irrevocably satisfied and the effective date of the Combination Transaction will be thefirst day following the end of the quarter during which the conditions are satisfied or waived. If theconditions to closing the Combination Transaction are satisfied or waived on or prior to September 30,2009, then October 1, 2009 would be the date that KPE and KKR’s existing owners would begin toshare ratably in the assets, liabilities, profits, losses and distributions, if any, of the Combined Businessand that reporting as a combined company would begin.

The independent directors of the board of directors of KPE’s general partner have unanimouslyrecommended to the board of directors that the board of directors approve the CombinationTransaction. Taking into account this recommendation, the board of directors unanimouslyrecommends that the holders of KPE units consent to the consummation of the CombinationTransaction. Certain KPE unitholders have agreed to deliver consents to consummate the CombinationTransaction. See ‘‘The Combination Transaction’’ and ‘‘The Consent Solicitation’’.

KPE units are currently admitted to listing and trading on Euronext Amsterdam by NYSEEuronext, the regulated market of Euronext Amsterdam N.V., or Euronext Amsterdam, under thesymbol ‘‘KPE’’. KPE units will continue to be listed and trade on Euronext Amsterdam immediatelyfollowing the Combination Transaction and will continue to be subject to applicable restrictions onownership and transfer.

Following the consummation of the Combination Transaction, KPE and KKR will have the right torequire that the other use its reasonable best efforts to cause interests in the Combined Business to belisted and traded on the New York Stock Exchange or The NASDAQ Stock Market at a future date. Ifsuch listing occurs, KPE would make an in-kind distribution of such interests to KPE unitholders,subject to applicable laws, rules and regulations, KPE units would cease to trade on EuronextAmsterdam and KPE would subsequently be dissolved and delisted from Euronext Amsterdam.

Through the attached consent solicitation statement, the general partner of KPE is soliciting yourconsent to consummate the Combination Transaction. In considering the Combination Transaction, youshould carefully consider the matters described in the attached consent solicitation statement, includingthe matters described under the section of the consent solicitation statement entitled ‘‘Risk Factors’’beginning on page 21.

The consent solicitation period will expire at 5:30 p.m. (Amsterdam time), on August 14, 2009,unless extended. Please complete and submit your consent as promptly as possible. Since thedetermination of whether the required KPE unitholder consent is obtained is based only on the KPEunits for which a properly submitted consent form is submitted, your failure to submit a consent formwill not affect the outcome of this consent solicitation.

If you hold restricted depositary units of KPE, please complete, date, sign and return, as promptlyas possible, the consent form in the reply envelope or submit your consent by telephone or Internet.

Very truly yours,

Henry R. Kravis and George R. RobertsCo-Chairmen of the Board of DirectorsKKR Guernsey GP LimitedThe General Partner of KKR Private EquityInvestors, L.P.

This consent solicitation statement is dated July 24, 2009, and is being distributed to holders ofKPE units on or about July 24, 2009.

Table of Contents

Page

Questions and Answers About the Combination Transaction and the Consent Solicitation . . . . . . 1Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Distribution Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57The Combination Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59The Consent Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Proposal—Approval of the Combination Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94KKR Private Equity Investors, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100Preliminary Unaudited Pro Forma Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103KKR’s Selected Historical Financial and Other Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations . . 121KKR’S Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198Conflicts of Interest and Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211Description of KKR Group Holdings L.P. Limited Partnership Agreement . . . . . . . . . . . . . . . . . 213U.S. Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219Material U.S. Federal Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245

Index to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1Appendix A—Amended and Restated Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1Appendix B—Form of Investment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1Appendix C—Opinion of Citigroup Global Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1Appendix D—Opinion of Lazard Freres & Co. LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

You should rely only on the information contained in the consent solicitation materials. NeitherKKR nor KPE has authorized anyone to provide you with additional or different information. Theinformation in the consent solicitation materials is accurate only as of the date of this consentsolicitation statement, regardless of the time of delivery of this consent solicitation statement.

This consent solicitation statement has been prepared using a number of conventions, which youshould consider when reading the information contained herein. Prior to the completion of theCombination Transaction, KKR will complete a series of transactions, which are referred to as theReorganization Transactions, pursuant to which KKR’s business will be reorganized into a holdingcompany structure. The Reorganization Transactions will be completed only after unitholdersrepresenting at least a majority of the KPE units for which a properly submitted consent form issubmitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates) consent tothe Combination Transaction. The Combination Transaction and the Reorganization Transactions arereferred collectively to as the ‘‘Transactions’’.

Unless the context suggests otherwise, references in this consent solicitation statement to ‘‘KKR’’refer: (1) prior to the Reorganization Transactions, to the KKR Group, which comprises certainconsolidated and combined entities under the common control of KKR’s senior principals, and underthe common ownership of KKR’s principals and certain other individuals who have been involved inKKR’s business, who are referred to collectively as KKR’s ‘‘existing owners’’; and (2) after theReorganization Transactions, to Group Holdings and its subsidiaries, which will continue to be underthe common control of KKR’s senior principals and exclude certain interests that will be retained by

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KKR principals as described under ‘‘Organizational Structure.’’ References in this consent solicitationstatement to KKR’s (i) ‘‘principals’’ are to KKR’s senior investment and other professionals who holdinterests in KKR and (ii) ‘‘senior principals’’ are to those principals identified as senior principals in‘‘KKR’s Business—Employees.’’ References in this consent solicitation statement to KKR’s ‘‘traditionalprivate equity funds’’ are to KKR’s private equity funds other than KPE.

The KKR Group is expected to become KKR’s predecessor for accounting purposes and itscombined financial statements are expected to become KKR’s historical financial statements only uponcompletion of the Transactions. In connection with the Reorganization Transactions, KKR’s businesswill be reorganized under two new partnerships, or the KKR Group Partnerships, which will serve asholding companies for the Combined Business. The KKR Group Partnerships will not acquire all of theinterests in the KKR Group in connection with the Transactions and, accordingly, the combinedfinancial statements of the KKR Group may not be indicative of the results of operations and financialcondition that the KKR Group Partnerships will have following the completion of the Transactions. See‘‘Organizational Structure,’’ ‘‘Preliminary Unaudited Pro Forma Segment Information’’ and ‘‘KKRManagement’s Discussion and Analysis of Financial Condition and Results of Operations.’’

Unless otherwise indicated, references in this consent solicitation statement to the equity interestsin the Combined Business, or to percentage interests in the Combined Business, reflect the aggregateequity in the KKR Group Partnerships, which will serve as holding companies for the CombinedBusiness. References to percentage interests in the Combined Business are net of amounts that aredirectly allocated to KKR principals in respect of the carried interest from the Combined Business andreferred to as ‘‘carry pool’’ allocations and exclude the interests in KKR’s business that will be retainedby certain minority investors and not acquired by the KKR Group Partnerships, as set forth in greaterdetail under ‘‘Organizational Structure’’ and ‘‘The Combination Transaction’’. Such minority interestswill, however, be included as noncontrolling interests in KKR’s financial statements following thecompletion of the Transactions. See ‘‘KKR Management’s Discussion and Analysis of FinancialCondition and Results of Operations—Impact of the Transactions.’’

References in this consent solicitation statement to ‘‘KPE’’ are to KKR Private EquityInvestors, L.P., a Guernsey limited partnership. Unless otherwise specifically stated, references herein tounits of KPE include any such units that may be represented by restricted depositary units. Referencesin this consent solicitation statement to the ‘‘KPE Investment Partnership’’ are to KKR PEIInvestments, L.P., a Guernsey limited partnership whose limited partner interests are held by KPE.

References in this consent solicitation statement to the ‘‘Controlling Partnership’’ are toKKR & Co. L.P., a Delaware limited partnership.

In this consent solicitation statement, the terms ‘‘assets under management’’ or ‘‘AUM’’ representthe assets as to which KKR is entitled to receive a fee or carried interest. KKR calculates the amountof AUM as of any date as the sum of: (i) the fair value of the investments of its traditional privateequity funds and its carry-yielding co-investment vehicles plus the capital that it is entitled to call frominvestors in such funds and vehicles with respect to their unfunded capital commitments; (ii) the netasset value of certain of its fixed income funds, managed accounts and other private equity products;(iii) the NAV of the KPE Investment Partnership; (iv) the equity of KFN; and (v) the par value ofoutstanding tranches of structured finance vehicles that it manages. You should bear in mind thatKKR’s calculation of AUM may differ from the calculations of other asset managers and, as a result,KKR’s measurements of its AUM may not be comparable to similar measures presented by other assetmanagers. KKR’s definition of AUM is not based on any definition of AUM that is set forth in theagreements governing the investment funds that KKR manages.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This consent solicitation statement contains forward-looking statements, which reflect KKR’s andKPE’s current views with respect to, among other things, KKR’s operations and financial performance.You can identify these forward-looking statements by the use of words such as ‘‘outlook,’’ ‘‘believe,’’‘‘expect,’’ ‘‘potential,’’ ‘‘continue,’’ ‘‘may,’’ ‘‘should,’’ ‘‘seek,’’ ‘‘approximately,’’ ‘‘predict,’’ ‘‘intend,’’‘‘will,’’ ‘‘plan,’’ ‘‘estimate,’’ ‘‘anticipate’’ or the negative version of these words or other comparablewords. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there areor will be important factors that could cause actual outcomes or results to differ materially from thoseindicated in these statements. These factors include, but are not limited to, those described under‘‘Risk Factors’’ and ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Resultsof Operations’’. These factors should not be construed as exhaustive and should be read in conjunctionwith the other cautionary statements that are included in this consent solicitation statement. NeitherKPE nor KKR undertakes any obligation to publicly update or review any forward-looking statement,whether as a result of new information, future developments or otherwise.

MARKET AND INDUSTRY DATA

This consent solicitation statement includes market and industry data and forecasts that KKR andKPE have derived from independent reports, publicly available information, various industrypublications, other published industry sources and internal data and estimates. Independent reports,industry publications and other published industry sources generally indicate that the informationcontained therein was obtained from sources believed to be reliable. Internal data and estimates arebased upon information obtained from investors in KKR’s funds, trade and business organizations andother contacts in the markets in which KKR operates and its understanding of industry conditions.Although KKR and KPE believe that such information is reliable, they have not had this informationverified by any independent sources.

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QUESTIONS AND ANSWERS ABOUT THE COMBINATION TRANSACTIONAND THE CONSENT SOLICITATION

The questions and answers below highlight only selected information with respect to the CombinationTransaction and the consent solicitation. They may not contain all of the information that may beimportant to you. You should read carefully this entire consent solicitation statement and any additionaldocuments incorporated by reference or referred to in this consent solicitation statement to fully understandthe consent solicitation and the matters for which consents are being solicited.

Q: What is the transaction to which I am being asked to consent?

A: On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR & Co. L.P. and certain of its affiliates providing for the combination of the assetmanagement business of KKR with the assets and liabilities of KPE. Upon completion of theCombination Transaction, KPE would beneficially hold a 30% interest in the Combined Businessand KKR’s existing owners would beneficially hold a 70% interest in the Combined Business. KPEwould hold its interest through KKR Group Holdings L.P., which is referred to as ‘‘GroupHoldings,’’ and KKR would hold its interest through KKR Holdings L.P., which is referred to as‘‘KKR Holdings.’’ You are being asked to consent to the consummation of the CombinationTransaction.

Additional information concerning the Combination Transaction, including a summary of theamended and restated purchase and sale agreement, a discussion of the background to theCombination Transaction and a discussion of KKR’s and KPE’s reasons for engaging in theCombination Transaction is included in this consent solicitation statement. See in particular‘‘Summary—The Transactions’’ and ‘‘The Combination Transaction.’’

Q: What will I receive if the Combination Transaction is consummated?

A: Upon completion of the Combination Transaction, you will continue to hold the KPE units youhold prior to the Combination Transaction without any change and each KPE unit will indirectlyrepresent an interest in the Combined Business. KPE, through its interests in Group Holdings, willown equity interests representing 30% of the Combined Business. Interests in the CombinedBusiness are net of amounts that may be allocated to participants in KKR’s carry pool. KKRexpects to allocate approximately 40% of the carry it receives from its funds and co-investmentvehicles to its carry pool, although this percentage may fluctuate over time. Prior to a U.S. listing,allocations to the carry pool may not exceed 40% and, following such a listing, allocations to thecarry pool may exceed 40% only with the approval of a majority of the independent directors ofKKR’s ultimate general partner. Upon completion of the Combination Transaction, KPE, throughGroup Holdings, and KKR’s existing owners, through KKR Holdings, will share ratably in theassets, liabilities, profits, losses and distributions, if any, of the Combined Business. KPE units willcontinue to be listed and trade on Euronext Amsterdam following the Combination Transaction.

Additional information concerning Group Holdings units and the KKR Group Partnership Units,including a discussion of the risks of owning such units, is included in this consent solicitationstatement. See in particular the sections of this consent solicitation statement entitled ‘‘RiskFactors—Risks Related to KKR’s Organizational Structure and the Transactions,’’ ‘‘TheCombination Transaction,’’ ‘‘Distribution Policy’’ and ‘‘Organizational Structure—KKR GroupPartnerships’’.

Q: What happens if I do not provide a consent in response to the consent solicitation?

A: The consummation of the Combination Transaction is conditioned upon the consent of the holdersof at least a majority of KPE units for which a properly submitted consent form is submitted,excluding any KPE units whose consent rights are controlled by KKR or its affiliates. As of therecord date for the consent solicitation, KKR or its affiliates controlled the consent rights withrespect to approximately 3.8% of the KPE units. Since the determination of whether the required

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KPE unitholder consent is obtained is based only on those KPE units for which a properlysubmitted consent form is submitted, your failure to submit a consent form will not affect theoutcome of this consent solicitation.

Regardless of whether or not you consent to the Combination Transaction, if the requisite consentis obtained and the Combination Transaction is subsequently consummated, KPE will receive KKRGroup Partnership Units representing 30% of the Combined Business.

KKR has discussed the proposed Combination Transaction with certain KPE unitholders and, inconnection with such discussions, certain KPE unitholders holding in the aggregate approximately44% of the KPE units have entered into agreements to deliver consents to consummate theCombination Transaction or advised KKR that they intend to support the Combination Transactionsubject to the terms of the Combination Transaction conforming to the terms previously describedto such unitholders.

Q: What is KKR?

A: Led by Henry Kravis and George Roberts, KKR is a global alternative asset manager with$50.8 billion in AUM as of June 30, 2009 and a 33-year history of leadership, innovation andinvestment excellence. KKR’s franchise offers a broad range of asset management services topublic and private market investors and provides capital markets solutions for the firm, itsportfolio companies and clients. With offices in 13 major cities on four continents, KKR hascreated an integrated global platform for sourcing and making investments in multiple asset classesand throughout the capital structure. See ‘‘Summary,’’ ‘‘Risk Factors,’’ ‘‘Organizational Structure,’’‘‘Unaudited Pro Forma Financial Information,’’ ‘‘KKR’s Selected Historical Financial and OtherData,’’ ‘‘KKR’s Management Discussion and Analysis of Financial Condition and Results ofOperations,’’ ‘‘KKR’s Business,’’ ‘‘Governance’’ and the KKR financial statements and relatednotes thereto included in this consent solicitation statement.

Q: What is the recommendation of the board of directors of KPE’s general partner to the holders ofKPE units?

A: The board of directors of KPE’s general partner, acting upon the unanimous recommendation ofthe directors of KPE’s general partner who are independent of each of KPE and KKR and theiraffiliates under the standards of the New York Stock Exchange, who are referred to as the KPEIndependent Directors, unanimously approved the entry into the amended and restated purchaseand sale agreement and the transactions contemplated thereby. The board of directors of KPE’sgeneral partner unanimously recommends that the holders of KPE units consent to theconsummation of the Combination Transaction.

Additional information concerning the recommendation of the board of directors of KPE’s generalpartner, including the reasons therefor, is included in this consent solicitation statement. See inparticular the sections of this consent solicitation statement entitled ‘‘The CombinationTransaction—KPE Reasons for the Combination Transaction’’ and ‘‘The CombinationTransaction—Recommendation of the KPE Independent Directors; KPE Board Approval.’’

Q: What was the role of the KPE Independent Directors in evaluating the Combination Transaction?

A: Due to the fact that Messrs. Kravis and Roberts, two of the directors of KPE’s general partner,have interests in the Combination Transaction, the organizational documents of KPE’s generalpartner require that the Combination Transaction be approved by the affirmative vote of amajority of the KPE Independent Directors. The board of directors of KPE’s general partnerauthorized the KPE Independent Directors to set up their own process for evaluating theCombination Transaction and granted to the KPE Independent Directors the sole authority tonegotiate for and on behalf of KPE the terms and conditions of the amended and restatedpurchase and sale agreement.

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Following an independent process undertaken by the KPE Independent Directors to review theCombination Transaction and the negotiation by the KPE Independent Directors of the terms andconditions of the amended and restated purchase and sale agreement, the KPE IndependentDirectors unanimously recommended to the board of directors of KPE’s general partner that theyapprove the execution of the amended and restated purchase and sale agreement and theconsummation of the transactions contemplated thereby.

Additional information concerning potential conflicts of interest and the role of the KPEIndependent Directors is included in this consent solicitation statement. See in particular thesections of this consent solicitation statement entitled ‘‘The Combination Transaction—Backgroundof the Combination Transaction,’’ ‘‘The Combination Transaction—Interests of Directors andExecutive Officers in the Combination Transaction,’’ ‘‘Certain Relationships and Related PartyTransactions,’’ and ‘‘Conflicts of Interest and Fiduciary Responsibilities.’’

Q: Will KPE units continue to trade on Euronext Amsterdam by NYSE Euronext following theCombination Transaction?

A: Yes. KPE units are currently admitted to listing and trading on Euronext Amsterdam by NYSEEuronext, the regulated market of Euronext Amsterdam N.V., or Euronext Amsterdam, under thesymbol ‘‘KPE’’ and will continue to be listed and trade on Euronext Amsterdam immediatelyfollowing the Combination Transaction.

Q: Will the interests in the Combined Business trade on a U.S. securities exchange?

A: Following the consummation of the Combination Transaction, KPE and KKR will have the right torequire that the other use its reasonable best efforts to cause interests in the Combined Businessto be listed and traded on the New York Stock Exchange or The NASDAQ Stock Market in thefuture. If such listing occurs, KPE would make an in-kind distribution of its interests in theCombined Business to KPE unitholders, subject to applicable laws, rules and regulations, KPEunits would cease to trade on Euronext Amsterdam and KPE would subsequently be dissolved anddelisted from Euronext Amsterdam. See ‘‘U.S. Listing.’’

Q: Will KPE continue to be managed by its general partner? Who will manage Group Holdings?

A: Upon completion of the Combination Transaction, KPE unitholders will continue to hold interestsin KPE and KPE will continue to be managed by its general partner, which has a majority-independent board of directors. KPE’s only asset will be its 30% interest in the CombinedBusiness, which it will hold through Group Holdings. The KKR Managing Partner, which is theultimate general partner of Group Holdings, will manage the business and affairs of the CombinedBusiness, and will be governed by a board of directors that is co-chaired by KKR’s founders, whoalso serve as KKR’s Co-Chief Executive Officers. However, prior to a U.S. Listing, the auditcommittee of the general partner of KPE will have an oversight function for the financialstatements of the Combined Business and the KPE Independent Directors will also have certainconsent and information rights with respect to the Combined Business, including related partytransactions. See ‘‘Governance.’’

Q: Is KPE unitholder consent required to consummate the Combination Transaction?

A: Neither the KPE limited partnership agreement nor any applicable legal, regulatory or otherrequirement requires the consent of the holders of KPE units to consummate the CombinationTransaction. Nevertheless, based on the extraordinary nature of the transaction, KKR and KPEagreed in the amended and restated purchase and sale agreement that the consummation of theCombination Transaction would require the consent of the holders of at least a majority of theKPE units for which a properly submitted consent form is submitted, excluding any KPE unitswhose consent rights are controlled by KKR or its affiliates.

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Q: When will the Combination Transaction be completed?

A: The effective date of the Combination Transaction will be the first day following the end of thequarter during which all of the conditions to closing the Combination Transaction are first satisfiedor waived. If the conditions to closing the Combination Transaction are satisfied or waived on orprior to September 30, 2009, then October 1, 2009 would be the date that KPE and KKR’s existingowners would begin to share ratably in the assets, liabilities, profits, losses and distributions, if any,of the Combined Business and that reporting as a combined company would begin.

For a description of the conditions included in the amended and restated purchase and saleagreement, see the section of this consent solicitation statement entitled ‘‘The CombinationTransaction—The Amended and Restated Purchase and Sale Agreement—Conditions toCompletion of the Combination Transaction.’’

Q: What happens if the Combination Transaction is not consummated?

A: If the requisite unitholder consent is not obtained, or if any other condition to the CombinationTransaction is not satisfied or waived, or if the amended and restated purchase and sale agreementis terminated for any reason, the Combination Transaction will not be consummated, the KPEunits will not represent an interest in the Combined Business and KPE’s assets will not bepurchased by KKR.

Q: What are the tax consequences to me if the Combination Transaction is consummated?

A: For a discussion of the U.S. federal income tax considerations related to the CombinationTransaction (and related transactions), see ‘‘Material U.S. Federal Tax Considerations.’’ Holders ofKPE units should consult their own tax advisors concerning the U.S. federal, state and localincome tax and estate tax consequences of the Transactions in their particular situations, as wellas consequences under the laws of any other taxing jurisdiction.

Q: Am I entitled to seek appraisal rights?

A. No. Neither the organizational documents of KPE nor applicable law entitle holders of KPE unitsto any dissenters’ rights of appraisal in connection with the Combination Transaction. Accordingly,even if you return a consent form and indicate that you do not consent, you will not be entitled toseek dissenters’ rights of appraisal.

Q: Will a meeting be held to vote on the Combination Transaction?

A: No. This consent solicitation statement and the accompanying consent form are being furnished tothe holders of KPE units so that such holders can take action without the need to hold a meetingof unitholders.

Q: When is the record date?

A: The record date for determining holders of KPE units entitled to receive notice of, and consent to,the consummation of the Combination Transaction is the close of business on July 23, 2009. See‘‘The Consent Solicitation.’’

Q: I sold my KPE units on or prior to the record date. Am I entitled to consent to the consummationof the Combination Transaction?

A: For purposes of determining holders as of the record date, only transactions in KPE units whichhave been settled on or prior to the record date will be taken into account. Accordingly, if youhave sold KPE units on or prior to the record date but the transaction has not been settled on orprior to the record date, you will be entitled to consent to the foregoing matters. If, however, yousold KPE units on or prior to the record date and the transaction has settled as of the record date,the purchaser of the KPE units will be entitled to consent to the foregoing matters.

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Q: May I revoke my consent?

A: Yes, but only for a limited period of time. You may revoke your consent at any time prior to theearlier of (i) the expiration of the consent solicitation period and (ii) the time that the consent ofthe holders of more than 50% of the KPE units (excluding KPE units whose consent rights arecontrolled by KKR or its affiliates and by any person who has informed KPE in writing that it willnot submit a consent) have been obtained to approve the consummation of the CombinationTransaction. The earlier of the (i) expiration of the consent solicitation period and (ii) the timethat the consent of the holders of more than 50% of the KPE units (excluding KPE units whoseconsent rights are controlled by KKR or its affiliates and by any person who has informed KPE inwriting that it will not submit a consent) have been obtained to approve the consummation of theCombination Transaction is referred to as the ‘‘Revocation Deadline’’.

The condition to the Combination Transaction relating to the obtaining of unitholder consent willbe deemed to be satisfied on the applicable Revocation Deadline, assuming the requisiteunitholder consent has been received as of such date. Your consent may not be revoked after theRevocation Deadline. KPE will announce that the Revocation Deadline has occurred on the firstbusiness day following the date of the Revocation Deadline. If you have submitted your consentand desire to revoke it prior to the Revocation Deadline, you should contact your broker or bankand follow the instructions provided by your broker or bank. Your broker or bank may require thatyou inform them of your desire to revoke your consent sufficiently in advance of the RevocationDeadline in order for your revocation to be effective.

KKR has discussed the proposed Combination Transaction with certain KPE unitholders and, inconnection with such discussions, certain KPE unitholders holding in aggregate approximately 44%of the KPE units have entered into agreements to deliver consents to consummate theCombination Transaction or advised KKR that they intend to support the Combination Transactionsubject to the terms of the Combination Transaction conforming to the terms previously describedto such unitholders.

If you are a holder of restricted depositary units of KPE, please see the section of this consentsolicitation statement entitled ‘‘The Consent Solicitation—Holders of Restricted Depositary Unitsof KPE’’ for the procedures that should be followed in order to revoke your consent.

Q: How long is the consent solicitation period?

A: The period during which consents will be solicited pursuant to this consent solicitation statementwill begin on the date hereof and will continue until 5:30 p.m. (Amsterdam time) on August 14,2009, unless extended. If the requisite unitholder consent has not been obtained by the scheduledexpiration of the consent solicitation, the consent solicitation may be extended from time to timeupon the request of either KKR or KPE. However, you may not revoke your consent following thedate of the Revocation Deadline as described above.

Q: What do I need to do now?

A: You should carefully read and consider the information contained in this consent solicitationstatement and the other documents incorporated by reference or referred to therein. Since yourKPE units are held in ‘‘street name’’, in order to submit your consent you should contact yourbroker or bank and follow the instructions provided by your broker and bank. Please note thatyour broker or bank may require that you submit your consent instructions prior to the expirationof the consent solicitation period so that the broker or bank has sufficient time to execute yourinstructions on your behalf in advance of the expiration time.

If you are a holder of restricted depositary units of KPE, please see the section of this consentsolicitation statement entitled ‘‘The Consent Solicitation—Holders of Restricted Depositary Unitsof KPE’’ for the procedures that should be followed in order to consent to the CombinationTransaction.

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Q: Will my broker or bank automatically consent for me?

A: No. Generally, your broker or bank may not be able to provide consent with respect to the KPEunits that you own without instructions from you. You should instruct your broker or bank whetheror not you would like to provide your consent. Since the determination of whether the requiredKPE unitholder consent is obtained is based only on the KPE units for which a properly submittedconsent form is submitted, the failure to submit a consent form will not affect the outcome of thisconsent solicitation.

Q: I hold restricted depositary units of KPE. Are there special procedures that I need to follow inorder to provide my consent?

A: Yes. If you own restricted depositary units of KPE, you will receive in the mail a consent formwhich should be used to instruct The Bank of New York Mellon, as Depositary, whether or not toconsent to the Combination Transaction with respect to the KPE units underlying the restricteddepositary units that you own as of the record date. This consent form must be returned to theDepositary no later than 5:00 p.m. (New York City time) on August 11, 2009, so that theDepositary has sufficient time to tabulate instructions in advance of the expiration time.Alternatively, you may submit your consent over the telephone or the Internet by following theinstructions set forth on the enclosed consent form.

For additional information concerning the procedures that should be followed by holders ofrestricted depositary units of KPE in order to consent to the Combination Transaction, please seethe section of this consent solicitation statement entitled ‘‘The Consent Solicitation—Holders ofRestricted Depositary Units of KPE.’’

Q: Will I be able to transfer my KPE units or RDUs following the completion of the CombinationTransactions?

A: KPE units and RDUs will continue to be listed and traded on Euronext Amsterdam and will alsocontinue to be subject to a number of ownership and transfer restrictions following the completionof the Combination Transaction. For example, a U.S. resident, U.S. entity or other U.S. personmay not invest in KPE units or RDUs, unless the investor is at all times a ‘‘qualified purchaser’’ asdefined in applicable U.S. securities laws.

Q: How can I obtain a hard copy of this consent solicitation statement?

A: If you would like to obtain a hard copy of this consent solicitation statement, you can contactKPE’s Dutch paying agent, ING Bank N.V. at +(31) (0) 20-7979-397, and if you are a holder ofrestricted depository units, you may contact The Bank of New York Mellon at +1 (267) 468-0786or (toll free in the U.S.) 1-800-555-2470.

Q: What should I do if I have further questions?

A: If you have any questions about the Combination Transaction or how to provide your consent, youshould contact:

Innisfree M&A Incorporated501 Madison AvenueNew York, NY 10022

Toll-free from the U.S. or Canada:(888) 750-5834

Free-phone from within the EU:00 800 7710 9970

Collect from all other locations:+1 (212) 750-5833

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SUMMARY

This summary highlights information contained elsewhere in this consent solicitation statement anddoes not contain all the information you should consider in connection with the Combination Transaction.You should read this entire consent solicitation statement carefully, including the section entitled ‘‘RiskFactors’’ and the historical financial statements and related notes included elsewhere herein.

Overview

KKR

Led by Henry Kravis and George Roberts, KKR is a global alternative asset manager with$50.8 billion in AUM as of June 30, 2009 and a 33-year history of leadership, innovation andinvestment excellence. When KKR’s founders started the firm in 1976, they established the principlesthat guide KKR’s business approach today, including a patient and disciplined investment process; thealignment of KKR’s interests with those of its investors, portfolio companies and other stakeholders;and a focus on attracting world-class talent.

KKR’s franchise offers a broad range of asset management services to public and private marketinvestors and provides capital markets solutions for the firm, its portfolio companies and clients.Throughout its history, KKR has consistently been a leader in the private equity industry, havingcompleted more than 165 private equity investments with a total transaction value in excess of$425 billion. In recent years, KKR has grown its business by expanding its geographical presence,building businesses in new areas, such as credit and infrastructure, that complement its private equityexpertise and strengthening its client interaction and capital markets activities. Today, with over 575employees across the globe, KKR believes it has a preeminent global platform for sourcing and makinginvestments in multiple asset classes and throughout a company’s capital structure.

KKR conducts its business through offices in New York, Menlo Park, San Francisco, Houston,Washington, D.C., London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney, whichprovide a global platform for sourcing transactions, raising capital and carrying out capital marketsactivities. KKR has grown its AUM significantly, from $15.1 billion as of December 31, 2004 to$50.8 billion as of June 30, 2009, representing a compounded annual growth rate of 30.9%. KKR’sgrowth has been driven by value that it has created through its operationally focused investmentapproach, expansion into new lines of business, innovation in the products that it offers investors, anincreased focus on providing tailored solutions to its clients, and the integration of capital marketsdistribution activities. KKR’s relationships with investors have provided the firm with a stable source ofcapital for investments, and KKR anticipates that they will continue to do so.

KPE

KKR Private Equity Investors, L.P., or KPE, is a Guernsey limited partnership that is admitted tolisting and trading on Euronext Amsterdam by NYSE Euronext under the symbol ‘‘KPE.’’ All of KPE’sinvestments are made through a lower-tier partnership, or the KPE Investment Partnership, of whichKPE is the sole limited partner. KPE’s only material assets are the interests that it holds in the KPEInvestment Partnership. KPE expects that its net asset value as of June 30, 2009 on a preliminary basiswill be approximately $3.0 billion. See ‘‘—Recent Developments.’’

The Transactions

On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR & Co. L.P. and certain of its affiliates providing for the combination of the asset managementbusiness of KKR with the assets and liabilities of KPE. Upon completion of the CombinationTransaction, KPE would beneficially hold a 30% interest in the Combined Business and KKR’s existing

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owners would beneficially hold a 70% interest in the Combined Business. KKR’s existing owners arenot selling any equity interests in the Transactions.

The amended and restated purchase and sale agreement was unanimously approved by the boardof directors of KPE’s general partner, acting upon the unanimous recommendation of directors ofKPE’s general partner who are independent of each of KPE and KKR. Although there is no applicablelegal, regulatory or other requirement to do so, given the extraordinary nature of the CombinationTransactions KKR and KPE have agreed to condition the consummation of the CombinationTransactions on KPE receiving the consent of its unitholders as set forth in this consent solicitationdocument. If the requisite unitholder consent is obtained, KKR will undertake ReorganizationTransactions pursuant to which its asset management business will be reorganized under the KKRGroup Partnerships as described under ‘‘Organizational Structure.’’

Business Segments

Following the completion of the Combination Transaction, KKR expects to conduct its businessthrough three separate business segments: private markets; public markets; and capital markets andprincipal activities.

Private Markets

KKR’s private markets segment is comprised of its global private equity and infrastructurebusinesses, which manage and sponsor a group of investment funds and co-investment vehicles thatinvest capital for long-term appreciation, either through controlling ownership of a company orstrategic minority positions, in global private equity and infrastructure assets. These funds build onKKR’s sourcing advantage and the strong industry knowledge, operating expertise and regulatory andstakeholder management skills of KKR’s professionals, operating consultants and senior advisors toidentify attractive investment opportunities and create and realize value for investors.

Since KKR’s inception through March 31, 2009, KKR has raised 14 investment funds withapproximately $59.3 billion of capital commitments to invest in private equity and infrastructureopportunities, often in connection with leveraged buyouts, build-ups and growth equity investments, andhas sponsored a number of fee and carry paying co-investment structures that allow it to commitadditional capital to transactions. As of June 30, 2009, the segment had $37.5 billion of AUM and itsactively investing funds included geographically differentiated investment funds and co-investmentvehicles with over $15.1 billion of unused capital commitments, providing a significant source of capitalthat may be deployed globally.

Public Markets

KKR’s public markets segment is comprised of its fixed income business, including credit andmezzanine finance businesses, as well as other businesses that invest primarily in publicly tradedsecurities or private debt. Through these businesses, KKR manages a number of investment funds,structured finance vehicles and separately managed accounts that invest primarily in bank loans, highyield securities, distressed and rescue financings, private debt investments and mezzanine instruments.These funds, vehicles and accounts leverage KKR’s global investment platform, experienced investmentprofessionals and ability to adapt its investment strategies to different market conditions to capitalizeon investment opportunities that may arise at every level of the capital structure. As of June 30, 2009,the segment had $13.3 billion of AUM, including $1.4 billion of AUM in fixed income funds,$2.9 billion of AUM in separately managed accounts and $9.0 billion of AUM in structured financevehicles.

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Capital Markets and Principal Activities

KKR’s capital markets and principal activities segment will combine the assets acquired from KPEwith the capital markets business of KKR. KKR’s capital markets business supports the firm, itsportfolio companies and clients by providing tailored capital markets advice and developing andimplementing both traditional and non-traditional capital solutions for investments and companiesseeking financing. Its activities consist primarily of capital markets advisory services, arranging debt andequity financing for transactions, placing and underwriting securities offerings and structuring newinvestment products. To allow it to carry out these activities, the firm has obtained broker-dealerlicenses in the United States, Canada, the United Kingdom, Dubai, Australia and Japan and hasreceived passporting authority to act as a broker-dealer broadly in the European Economic Area.

The assets that KKR will acquire from KPE are expected to provide the Combined Business with asignificant source of capital to further grow and expand KKR’s business, increase its participation in itsexisting portfolio of businesses and further align KKR’s interests with those of its investors and otherstakeholders. KKR believes that the resources of its capital markets business combined with theinvestment expertise of its investment professionals will provide an attractive means for growing anddeveloping this asset base over time.

Why KKR is Undertaking the Combination Transaction

KKR’s decision to undertake the Combination Transaction is based on its conclusion that thetransaction will benefit KPE unitholders over the long term. KKR views the Combination Transactionas part of its continued commitment to KPE and its unitholders, who supported KKR in KPE’s initialoffering and have remained committed to KKR. KKR believes that the Combination Transaction offersa superior opportunity to KPE unitholders. In particular:

Global Alternative Asset Manager with Significant Growth Potential and Diversity

The Combination Transaction provides KPE unitholders with a new opportunity to participate inall the economic benefits of KKR’s business, as compared to only participating in the capitalappreciation of certain investments, and will allow KKR’s owners and KPE unitholders to share inattractive growth opportunities. By combining KKR’s business with the assets of KPE, the CombinationTransaction is expected to bolster the firm’s position as one of the world’s leading alternative assetmanagers and further enhance its business diversity, scale and capital.

Alignment of Economic and Strategic Interests

The Combination Transaction will more fully align the interests of KKR’s owners and KPEunitholders as they all will own equity in the same business and share in the same income streams.KPE unitholders will gain broad exposure to all of KKR’s activities and will no longer bear the expenseof fees and carry on their investments, which are currently paid out of KPE’s assets.

Ability to Build New Businesses

KKR believes there are significant opportunities for it to build new businesses by leveraging theintellectual capital of KKR and increasing the utilization of its people. Historically, when KKR hasbeen unable to complete a transaction, much of the work that it had completed remained unused. WithKKR’s integrated efforts in private and public market investments, it has in recent years been able toleverage, where appropriate, the work and contacts of its industry teams and deploy more capitalbehind its ideas. KKR believes that gaining access to additional capital will better enable it to investmore heavily behind its activities and the ideas that it develops in the normal course of its business.

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Attract and Incentivize World-Class People

KKR places a strong emphasis on its culture and values, and it intends to continue to operate thefirm in the same manner it has throughout its 33-year history. KKR has attracted and incentivizedworld-class people by allowing them to participate in its investments and by sharing economicsthroughout the firm. KKR believes that combining its business with the assets of KPE, while retaining astock exchange listing and allocating meaningful equity to its people, will allow it to continue to attract,retain and incentivize quality professionals that will benefit its businesses, portfolio companies andother stakeholders.

For a discussion of the KPE Independent Directors’ reasons for recommending the CombinationTransaction, see ‘‘The Combination Transaction—KPE Reasons for the Combination Transaction.’’

Recent Developments

Based on preliminary unaudited information, KPE expects that its net asset value as of June 30,2009 will be approximately $3.0 billion, or between approximately $14.55 and $14.75 per unit and thatas of June 30, 2009, based on preliminary unaudited information, the KPE Investment Partnership hada cash balance of approximately $810 million, approximately $940 million outstanding on its $1.0 billionfive-year senior secured credit facility, and remaining capital commitments related to limited partnerinterests in KKR’s private equity funds of approximately $930 million.

Based on preliminary unaudited information, KKR expects its assets under management as ofJune 30, 2009 to be approximately $50.8 billion and that its economic net income (ENI) and fee relatedearnings for the three months ended June 30, 2009 to be between approximately $345 million and$370 million, and between approximately $45 million and $55 million, respectively.

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23JUL200900115586

Organizational Structure

The following diagram illustrates the ownership and organizational structure that KKR will haveupon the completion of the Transactions.

Management CompaniesCapital Markets Companies

KPEInvestment Partnership(3)

General PartnersFunds and Co-Investments

KKRManagement Holdings L.P.

KKRFund Holdings L.P.

KKRManagement Holdings

Corp.(1)

KKR Group Holdings L.P.

KPE(Euronext Amsterdam) KKR & Co. L.P.

KKR Management LLC

KKR Holdings L.P.

GP 30%

GP 30%

LP 100%GP (No Economics)

GP (No Economics)

KKR Group Partnerships

KKR Group (2)

LP 70%LP 70%

KKR Principals

KKR Senior Principals

KPE Investors

Notes:

(1) Except for KKR Management Holdings Corp., certain of KKR’s foreign subsidiaries and certainsubsidiaries of the KPE Investment Partnership, which will be taxable as corporations for U.S.federal income tax purposes, all entities are treated as partnerships or disregarded entities for U.S.federal income tax purposes.

(2) For information concerning the interests in the KKR Group that will be owned by the KKR GroupPartnerships or retained by minority investors upon completion of the Transactions, see‘‘—Components of KKR’s Business Owned by the KKR Group Partnerships.’’

(3) For information concerning the contribution of the KPE Investment Partnership and the otherassets of KPE to the KKR Group Partnerships, see ‘‘—Combination Transaction’’ and‘‘Organizational Structure.’’

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The Reorganization Transactions

Following the date that the conditions to closing the Combination Transaction are satisfied orwaived and prior to the effective date of the Combination Transaction, KKR will complete a series oftransactions, which are referred to as the Reorganization Transactions, pursuant to which KKR’sbusiness will be reorganized under two new partnerships, which are referred to as the ‘‘KKR GroupPartnerships.’’ The reorganization will involve a contribution of equity interests in KKR’s business thatare held by KKR’s principals to the KKR Group Partnerships in exchange for newly issued partnerinterests in the KKR Group Partnerships. No cash will be received in connection with such exchanges.See ‘‘—Components of KKR’s Business Owned by the KKR Group Partnerships.’’ If the conditions toclosing the Combination Transaction are satisfied or waived on or prior to September 30, 2009, theReorganization Transactions would occur on September 30, 2009 and October 1, 2009 would be thedate that KPE and KKR’s existing owners would begin to share ratably in the assets, liabilities, profits,losses and distributions, if any, of the Combined Business and that reporting as a combined companywould begin.

Group Holdings

Group Holdings, which will be wholly-owned by KPE, is the entity through which KPE will hold itsinterests in the KKR Group Partnerships, and Group Holdings will serve as the general partner of theKKR Group Partnerships. As is commonly the case with limited partnerships, the limited partnershipagreement of Group Holdings provides for the management of KKR’s business and affairs by a generalpartner rather than a board of directors. KKR Management LLC, which is referred to as the ‘‘KKRManaging Partner’’ serves as the ultimate general partner of Group Holdings and the KKR GroupPartnerships. The KKR Managing Partner has a board of directors that is co-chaired by KKR’sfounders Henry Kravis and George Roberts, who also serve as KKR’s Co-Chief Executive Officers and,in such positions, are authorized to appoint other officers of the partnership. However, prior to a U.S.listing the audit committee of the general partner of KPE will have an oversight function for thefinancial statements of the Combined Business and the independent directors of the general partner ofKPE will also have certain consent and information rights with respect to the Combined Business,including related party transactions.

KKR Group Partnership Units

Each KKR Group Partnership will have an identical number of partner interests and, when heldtogether, one partner interest in each of the KKR Group Partnerships will represent a KKR GroupPartnership Unit. Upon the completion of the Transactions, KPE, through its interest in GroupHoldings, will initially hold 30% of the outstanding KKR Group Partnership Units and KKR’sprincipals, through their interests in KKR Holdings, will initially hold 70% of the outstanding KKRGroup Partnership Units. These interests will allow Group Holdings and KKR Holdings to shareratably in the assets, liabilities, profits, losses and distributions, if any, of the KKR Group Partnershipsbased on their respective percentage interests in the KKR Group Partnerships.

Components of KKR’s Business Owned by the KKR Group Partnerships

Upon completion of the Transactions, KKR’s business will be conducted through the KKR GroupPartnerships and Group Holdings will serve as the general partner and parent company of thoseentities. Except for noncontrolling interests in KKR’s funds that are held by fund investors, interests inthe general partners of the 1996 Fund and the Retained Interests described below, the KKR GroupPartnerships will own:

• all of the controlling and economic interests in KKR’s fee-generating management companiesand capital markets companies, which will allow KPE to share ratably in the management,

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advisory and incentive fees earned from all of KKR’s funds, managed accounts, portfoliocompanies, capital markets transactions and other investment products;

• controlling and economic interests in the general partners of KKR’s funds and the entities thatare entitled to receive carry from KKR’s co-investment vehicles, which will allow KPE to shareratably in the carried interest received by them as well as any returns on investments made by oron behalf of the general partners after the completion of the Transactions; and

• all of the controlling and economic interests in the KPE Investment Partnership and the otherassets of KPE, which will allow KPE to share ratably in the returns that the KPE InvestmentPartnership and such other assets generate.

With respect to KKR’s active and future funds and co-investment vehicles that provide for carriedinterest, KKR intends to continue to allocate to its principals, other professionals and selected otherindividuals who work in these operations a portion of the carried interest earned in relation to thesefunds as part of its carry pool. KKR expects to allocate approximately 40% of the carry it receives fromthese funds and vehicles to its carry pool, although this percentage may fluctuate over time. Prior to aU.S. listing, allocations to the carry pool may not exceed 40% and, following such a listing, allocationsto the carry pool may exceed 40% only with the approval of a majority of the independent directors ofthe KKR Managing Partner.

In connection with the Transactions, certain minority investors will retain the following additionalinterests in KKR’s business and such interests will not be acquired by the KKR Group Partnerships:

• controlling and economic interests in the general partners of the 1996 Fund, which interests willnot be contributed to the KKR Group Partnerships due to the fact that the general partners arenot expected to receive meaningful proceeds from further realizations;

• noncontrolling economic interests that will allocate to a former principal and such person’sdesignees an aggregate of 1% of the carried interest received by general partners of KKR’sfunds and 1% of KKR’s other profits until a future date;

• noncontrolling economic interests that will allocate to certain of KKR’s former principals andtheir designees a portion of the carried interest received by the general partners of KKR’sprivate equity funds that was allocated to them with respect to private equity investments madeduring such former principals’ previous tenure with KKR;

• noncontrolling economic interests that will allocate to certain of KKR’s current and formerprincipals all of the capital invested by or on behalf of the general partners of KKR’s privateequity funds before the completion of the Transactions and any returns thereon as well as anyrealized carried interest distributions that are actually received but not distributed by the generalpartners prior to the Transactions; and

• a noncontrolling economic interest that will allocate to a third party an aggregate of 2% of theequity in the KKR’s capital markets business.

The interests described in the immediately preceding bullets (other than interests in the generalpartners of the 1996 Fund) are referred to as the Retained Interests. As of March 31, 2009, theRetained Interests, the general partners in the 1996 Fund and the carry pool allocations referred toabove collectively accounted for approximately $150 million of partners’ capital. Following thecompletion of the Transactions, the Retained Interests will be reflected in KKR’s financial statementsas noncontrolling interests even though these interests will not be part of the Combined Business.Except for the Retained Interest in KKR’s capital markets business, these interests generally areexpected to run-off over time, thereby increasing the interests of the KKR Group Partnerships in theentities that comprise KKR’s business.

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You should note that the interests that the KKR Group Partnerships will own as described abovedo not represent all of the interests in the KKR Group that are reflected in its combined financialstatements included elsewhere in this consent solicitation statement or interests in all of the entitiesthat KKR has sponsored over time. KKR is also required to consolidate in KKR’s financial statementsthe funds over which it exercises substantive controlling rights and operational discretion, despite thefact that the substantial majority of the economic interests in those entities are held by third party fundinvestors. These interests have been allocated to such third party fund investors as noncontrollinginterests in KKR’s financial statements. Except for interests in the KPE Investment Partnership thatwill be acquired from KPE in the Combination Transaction, KKR will not acquire any of the economicinterests in KKR’s funds that are held by fund investors. For financial and other information thatpresents the KKR Group’s results without giving effect to the consolidation of KKR’s funds, see‘‘Preliminary Unaudited Pro Forma Segment Information’’ and ‘‘KKR Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Business Segments.’’

As used in this consent solicitation, references to interests in the Combined Business exclude theinterests in the general partners of the 1996 Fund, the Retained Interests, the carry pool allocationsand the interests of third party fund investors described above.

U.S. Listing

Following the consummation of the Combination Transaction, KPE and KKR will have the right torequire that the other use its reasonable best efforts to cause interests in the Combined Business to belisted and traded on the New York Stock Exchange or The NASDAQ Stock Market at a future date.To effect such a listing, following the Combination Transaction KPE would contribute its GroupHoldings units to KKR & Co. L.P., which is referred to as the ‘‘Controlling Partnership’’, in exchangefor Controlling Partnership units. KKR or KPE, as the case may be, would seek a listing of theControlling Partnership units on the New York Stock Exchange or The NASDAQ Stock Market, whichwould represent equity interests in the Combined Business. See ‘‘U.S. Listing’’.

KKR Holdings

Upon completion of the Transactions, KKR’s principals will hold interests in KKR’s businessthrough KKR Holdings, which will own all of the outstanding KKR Group Partnership Units that KPEdoes not own through Group Holdings. These individuals will receive financial benefits from KKR’sbusiness in the form of distributions and payments received from KKR Holdings and through theirdirect and indirect participation in the value of KKR Group Partnership Units held by KKR Holdings.As a result, certain profit-based cash amounts that were previously paid by KKR will no longer be paidby the firm and will be borne by KKR Holdings.

The interests that these individuals hold in KKR Holdings will be subject to transfer restrictionsand, except for certain interests that will vest upon completion of the transactions, will be subject totime and/or performance based vesting requirements. While employed by the firm, these individuals willalso be subject to minimum retained ownership requirements that will require that they continuouslyhold at least 25% of their cumulatively vested interests. KKR believes that these structures will furtheralign the interests of its executives with those of its public unitholders. See ‘‘Organizational Structure—KKR Holdings.’’

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The Transactions

Combination Transaction . . . . . . . . . . KKR will acquire all of the assets of KPE, including interestsin the KPE Investment Partnership held by KPE, and KKRwill assume all of the liabilities of KPE, in exchange for whichKPE will receive a 30% interest in the Combined Business.KKR’s principals are not selling any equity interests in theTransactions. The amended and restated purchase and saleagreement was unanimously approved by the board ofdirectors of KPE’s general partner, acting upon the unanimousrecommendation of directors of KPE’s general partner whoare independent of each of KPE and KKR under NYSERules.

Consideration . . . . . . . . . . . . . . . . . . Upon completion of the Combination Transaction, theholdings of KPE units by KPE unitholders will not change andKPE units will continue to be listed and traded on EuronextAmsterdam. The Combination Transaction does not involvethe payment of any consideration to KPE unitholders orinvolve an offering of any securities to KPE unitholders.Through its interests in Group Holdings, KPE will own anumber of KKR Group Partnership Units equal to the totalnumber of KPE units outstanding, which in the aggregate willrepresent a 30% equity interest in the Combined Businessupon completion of the Combination Transaction. KKRHoldings will own the balance of the outstanding KKR GroupPartnership Units, which in the aggregate will represent a 70%interest in the Combined Business upon completion of theCombination Transaction.KKR expects to allocate approximately 40% of the carry itreceives from its funds and co-investment vehicles to its carrypool, although this percentage may fluctuate over time. Priorto a U.S. listing, allocations to the carry pool may not exceed40% and, following such a listing, allocations to the carry poolmay exceed 40% only with the approval of a majority of theindependent directors of the KKR Managing Partner.

KKR Group Partnership Units . . . . . Following the date that the conditions to closing theCombination Transaction are satisfied or waived and prior tothe effective date of the Combination Transaction, KKR willcomplete a series of transactions, which are referred to as theReorganization Transactions, pursuant to which KKR’sbusiness will be reorganized under the KKR GroupPartnerships. Each KKR Group Partnership will have anidentical number of partner interests and, when held together,one partner interest in each of the KKR Group Partnershipswill represent a KKR Group Partnership Unit. These interestswill allow KPE and KKR’s existing owners to share ratably inthe assets, liabilities, profits, losses and distributions, if any, ofthe KKR Group Partnerships based on their respectivepercentage interests in the KKR Group Partnerships.

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If the conditions to closing the Combination Transaction aresatisfied or waived on or prior to September 30, 2009, thenOctober 1, 2009 would be the date that KPE and KKR’sexisting owners would begin to share ratably in the assets,liabilities, profits, losses and distributions, if any, of theCombined Business and that reporting as a combinedcompany would begin.

Exchange rights . . . . . . . . . . . . . . . . In connection with the Transactions, KPE will enter into anexchange agreement with Group Holdings and KKR Holdingspursuant to which KKR Holdings and certain transferees of itsKKR Group Partnership Units effectively may, up to fourtimes each year, exchange KKR Group Partnership Units heldby them for KPE units on a one-for-one basis, subject tocustomary conversion rate adjustments for splits, unitdistributions and reclassifications and compliance withapplicable lock-up, vesting and transfer restrictions. At GroupHoldings’ election and subject to approval by a majority of theindependent directors of KPE’s general partner, the KKRGroup Partnerships may settle most types of exchanges ofKKR Group Partnership Units with cash in an amount equalto the fair market value of the KPE units that wouldotherwise be deliverable in such exchanges. In the event of aU.S. listing, the U.S. listing entity will enter into similararrangements with KKR Holdings. See ‘‘OrganizationalStructure—Exchange Agreement’’ and ‘‘Certain Relationshipsand Related Transactions—Exchange Agreement.’’

Governance . . . . . . . . . . . . . . . . . . . Upon completion of the Combination Transaction, KPEunitholders will continue to hold interests in KPE and begoverned by KPE’s limited partnership agreement, and KPEunits will continue to be listed and trade on EuronextAmsterdam. KPE’s limited partnership agreement provides forthe management of its business and affairs by its generalpartner, a Guernsey limited liability company that is owned byindividuals who are affiliated with KKR, and which has amajority-independent board of directors. As limited partners,KPE unitholders may not take part in the management orcontrol of the business and affairs of KPE and do not haveany right or authority to act for or to bind KPE or to takepart or interfere in the conduct or management of KPE. KPEunitholders are not entitled to vote on matters relating toKPE, although they are entitled to certain consent rights. See‘‘Governance.’’Following the completion of the Combination Transaction,KPE’s only asset will be the 30% interest in the CombinedBusiness that it holds through Group Holdings. The KKRManaging Partner is the ultimate general partner of GroupHoldings and will manage the business and affairs of GroupHoldings and the KKR Group Partnerships. KPE will not holdsecurities of the KKR Managing Partner. The KKR ManagingPartner has a board of directors that is responsible for the

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oversight of KKR’s business and affairs as well as executiveofficers that are authorized to act on behalf of the KKRManaging Partner or KKR.Prior to a U.S. listing, the audit committee of the generalpartner of KPE will have an oversight function for thefinancial statements of the Combined Business and theindependent directors of the general partner of KPE will havecertain consent and information rights with respect to theCombined Business, including related party transactions. See‘‘Governance—The KKR Managing Partner.’’In particular, the independent directors of KPE’s generalpartner will be responsible for enforcing the rights of KPEand its unitholders under any of the exchange agreement, thetax receivable agreement, the limited partnership agreement ofany KKR Group Partnership, a lock-up agreement, the KPEpartnership agreement, the Controlling Partnership limitedpartnership agreement, limited liability company agreement ofthe KKR Managing Partner or limited partnership agreementof Group Holdings, which are referred collectively to as thecovered agreements, against KKR Holdings and certain of itssubsidiaries and designees, a general partner or limitedpartner of KKR Holdings, or a person who holds apartnership or equity interest in the foregoing entities.In addition to the rights afforded to the independent directorsof KPE’s general partner described above, under the terms ofthe investment agreement to be entered into between theControlling Partnership and KPE, prior to a U.S. listing theconsent of a majority of the independent directors of KPE’sgeneral partner will be required to approve certain relatedparty transactions that involve an aggregate amount in excessof $20 million or would reduce the percentage of KPE’s director indirect equity interest in the KKR Group Partnerships. Inaddition, during the period following the effective date of theCombination Transaction and prior to a U.S. listing of theinterests in the Combined Business, KKR may not allocatemore than 40% of the carried interest earned in relation to itsfunds to its carry pool. During the period following a U.S.listing, KKR may only allocate more than 40% of the carriedinterest to its carry pool with the approval of a majority of theindependent directors of the KKR Managing Partner.

Transfer Restrictions . . . . . . . . . . . . . KPE units and RDUs will continue to be subject to a numberof ownership and transfer restrictions following the completionof the Combination Transaction. For example, a U.S. resident,U.S. entity or other U.S. person may not invest in KPE unitsor RDUs, unless the investor is at all times a ‘‘qualifiedpurchaser’’ as defined in applicable U.S. securities laws.

U.S. Listing . . . . . . . . . . . . . . . . . . . Following the consummation of the Combination Transaction,KPE and KKR will have the right to require that the otheruse its reasonable best efforts to cause interests in the

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Combined Business to be listed and traded on the New YorkStock Exchange or The NASDAQ Stock Market at a futuredate. KKR may exercise this right following the 6-monthanniversary of the date the conditions precedent to theCombination Transaction are satisfied or waived and KPE, atthe discretion of the independent directors of its generalpartner, may exercise this right following the 12-monthanniversary of the date the conditions precedent to theCombination Transaction are satisfied or waived. If such listingoccurs, KPE would make an in-kind distribution of interests inthe Combined Business to KPE unitholders, subject toapplicable laws, rules and regulations, KPE units would ceaseto trade on Euronext Amsterdam and KPE wouldsubsequently be dissolved and delisted from EuronextAmsterdam.

Risk factors . . . . . . . . . . . . . . . . . . . See ‘‘Risk Factors’’ for a discussion of risks you shouldcarefully consider in connection with the CombinationTransaction and Group Holdings units.

KKR’s principal executive offices are located at 9 West 57th Street, Suite 4200, New York, NewYork 10019, and its telephone number is +1 (212) 750-8300. KKR’s website is located at www.kkr.com.KPE’s registered office is located in Trafalgar Court, Les Banques, St. Peter Port, Guernsey GY1 3QL,Channel Islands, and its telephone number is +44-1481-745-001. KPE’s website is located atwww.kkrprivateequityinvestors.com. The information on KKR’s and KPE’s websites is not part of thisconsent solicitation statement and is not being incorporated by reference into this document.

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KKR’s Summary Historical Combined Financial Data

The following summary historical combined financial information and other data of the KKRGroup should be read together with ‘‘Organizational Structure,’’ ‘‘Preliminary Unaudited Pro FormaSegment Information,’’ ‘‘KKR’s Selected Historical Financial and Other Data,’’ ‘‘KKR Management’sDiscussion and Analysis of Financial Condition and Results of Operations’’ and the KKR Group’scombined financial statements and related notes included elsewhere in this consent solicitationstatement. KKR derived the summary historical combined financial data of the KKR Group as ofDecember 31, 2007 and 2008 and for the years ended December 31, 2006, 2007 and 2008 from theKKR Group’s audited combined financial statements included elsewhere in this consent solicitationstatement. KKR derived the summary historical combined financial data of the KKR Group as ofMarch 31, 2008 and 2009 and for the three months ended March 31, 2008 and 2009 from the KKRGroup’s unaudited condensed combined financial statements which are included elsewhere in thisconsent solicitation statement.

The KKR Group is expected to become KKR’s predecessor for accounting purposes only uponcompletion of the Reorganization Transactions and its combined financial statements are expected tobecome KKR’s historical financial statements following the Transactions. However, KKR will notacquire all of the interests in the KKR Group in connection with the Reorganization Transactions and,accordingly, the combined financial statements of the KKR Group may not be indicative of the resultsof operations and financial condition that KKR will have following the completion of the Transactions.

Three Months EndedYear Ended December 31, March 31,

2006 2007 2008 2008 2009($ in thousands) ($ in thousands)

RevenuesFee Income . . . . . . . . . . . . . . . . . . . . . . . . . $ 410,329 $ 862,265 $ 235,181 $ 68,590 $ 39,070

ExpensesEmployee Compensation and Benefits . . . . . . 131,667 212,766 149,182 48,064 45,542Occupancy and Related Charges . . . . . . . . . . 19,295 20,068 30,430 6,538 8,885General, Administrative and Other . . . . . . . . . 78,154 128,036 179,673 30,703 37,403Fund Expenses . . . . . . . . . . . . . . . . . . . . . . 38,350 80,040 59,103 18,232 12,928

Total Expenses . . . . . . . . . . . . . . . . . . . . . 267,466 440,910 418,388 103,537 104,758Investment Income (Loss)

Net Gains (Losses) from Investment Activities . 3,105,523 1,111,572 (12,944,720) (732,974) (720,849)Dividend Income . . . . . . . . . . . . . . . . . . . . . 714,069 747,544 75,441 4,592 700Interest Income . . . . . . . . . . . . . . . . . . . . . . 210,872 218,920 129,601 25,343 27,082Interest Expense . . . . . . . . . . . . . . . . . . . . . (29,542) (86,253) (125,561) (35,359) (22,278)

Total Investment Income (Loss) . . . . . . . . . 4,000,922 1,991,783 (12,865,239) (738,398) (715,345)Income (Loss) Before Taxes . . . . . . . . . . . . . 4,143,785 2,413,138 (13,048,446) (773,345) (781,033)Income Taxes . . . . . . . . . . . . . . . . . . . . . . . 4,163 12,064 6,786 888 1,531

Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . 4,139,622 2,401,074 (13,055,232) (774,233) (782,564)Less: Net Income (Loss) Attributable to

Noncontrolling Interests . . . . . . . . . . . . . 3,039,677 1,598,310 (11,850,761) (656,335) (727,981)Net Income (Loss) Attributable to KKR

Group . . . . . . . . . . . . . . . . . . . . . . . $ 1,099,945 $ 802,764 $ (1,204,471) $ (117,898) $ (54,583)

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Three Months EndedYear Ended December 31, March 31,

2006 2007 2008 2008 2009($ in thousands) ($ in thousands)

Statement of Financial Condition Data (periodend):

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $23,292,783 $32,842,796 $ 22,441,030 $34,342,014 $21,882,923Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 1,281,923 2,575,636 2,590,673 3,318,091 2,656,825Noncontrolling interests . . . . . . . . . . . . . . . . . . 20,318,440 28,749,814 19,698,478 29,694,735 19,196,207Total KKR Group partners’ capital . . . . . . . . . . 1,692,420 1,517,346 151,879 1,329,188 29,891Statement of Cash Flow Data:Net cash used in operating activities . . . . . . . . . $ (5,531,144) $(8,522,501) $ (2,446,156) $(1,254,074) $ (156,829)Net cash (used in) provided by investing activities $ (130,110) $ (112,469) $ (61,746) $ (33,221) $ 33,525Net cash provided by financing activities . . . . . . . $ 5,657,952 $ 8,814,024 $ 2,434,503 $ 1,190,303 $ 178,971Segment Data:

Assets Under ManagementPrivate Markets . . . . . . . . . . . . . . . . . . . . $38,722,700 $42,234,800 $ 35,283,700 $46,722,200 $35,005,000Public Markets . . . . . . . . . . . . . . . . . . . . . 5,150,700 10,980,900 13,167,000 10,992,600 12,335,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . $43,873,400 $53,215,700 $ 48,450,700 $57,714,800 $47,340,000

Fee Related Earnings(1)Private Markets . . . . . . . . . . . . . . . . . . . . $ 140,044 $ 371,413 $ 199,216 $ 24,600 $ 44,055Public Markets . . . . . . . . . . . . . . . . . . . . . 49,871 62,094 43,455 10,655 (319)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 189,915 $ 433,507 $ 242,671 $ 35,255 $ 43,736

Economic Net Income (Loss)(2)Private Markets . . . . . . . . . . . . . . . . . . . . $ 1,069,562 $ 775,014 $ (1,232,316) $ (123,775) $ (51,769)Public Markets . . . . . . . . . . . . . . . . . . . . . 34,546 39,814 36,842 6,765 (336)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,104,108 $ 814,828 $ (1,195,474) $ (117,010) $ (52,105)

Other Data:Private equity dollars invested(3) . . . . . . . . . . . . $ 6,661,698 $14,854,200 $ 3,168,800 $ 1,792,300 $ 18,000Uncalled private equity commitments (period

end)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,597,400 $11,530,400 $ 15,029,700 $15,220,100 $15,424,600

(1) Fee related earnings is a key performance measure used by KKR management for evaluating its tworeportable business segments. The difference between fee related earnings and income before taxes presentedin accordance with GAAP is that fee related earnings represents income before taxes adjusted to: (i) includemanagement fees earned from consolidated funds that were eliminated in consolidation; (ii) exclude expensesof consolidated funds, non-cash employee compensation charges associated with equity interests in KKR’sbusiness, employee compensation charges relating to compensation borne by unconsolidated persons andcharges relating to the amortization of intangible assets; (iii) exclude investment income; and (iv) exclude net(loss) income attributable to noncontrolling interests.

(2) Economic net income (loss), or ENI, is a key performance measure used by KKR management for evaluatingits two reportable business segments. Economic net income (loss) represents income before taxes for theperiods presented. See ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results ofOperations—Segment Operating Performance Measures’’.

(3) ‘‘Private equity dollars invested’’ is the aggregate amount of capital invested by KKR’s private equity fundsand carry-yielding co-investment vehicles in private equity transactions. Such amounts include both capitalcontributed by fund investors and co-investors with respect to which KKR is entitled to a carried interest andcapital contributed by KKR as the general partner of a private equity fund with respect to which it is entitledto returns generated on the invested capital. From KKR’s inception through March 31, 2009, KKR’s maturefunds achieved a multiple of invested capital of 2.2x the amount of capital they invested in private equityinvestments. Multiples of invested capital are calculated before allocations of carried interest and payments ofmanagement fees.

(4) ‘‘Uncalled private equity commitments’’ represent unfunded commitments by partners of KKR’s traditionalprivate equity funds to contribute capital to fund the purchase price to be paid for future portfolio companyinvestments made by the funds. Such amounts do not include capital of KPE or KKR’s fixed income fundsthat may be used to make private equity investments.

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RISK FACTORS

You should carefully consider the following information about these risks, together with the otherinformation contained in this consent solicitation statement in connection with a decision to consent to theCombination Transaction.

Risks Related to KKR’s Business

Difficult market conditions can adversely affect KKR’s business in many ways, including by reducing the valueor performance of the private equity, debt and public equity investments that KKR manages or by reducing theability of KKR’s funds to raise or deploy capital, each of which could negatively impact KKR’s net income andcash flow and adversely affect its financial condition.

KKR’s business is materially affected by conditions in the financial markets and economicconditions throughout the world, such as interest rates, availability of credit, inflation rates, economicuncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices,currency exchange rates and controls and national and international political circumstances (includingwars, terrorist acts or security operations). These factors are outside KKR’s control and may affect thelevel and volatility of securities prices and the liquidity and the value of investments, and KKR may notbe able to or may choose not to manage its exposure to these conditions. The market conditionssurrounding each of KKR’s businesses, and in particular its private equity business, had been quitefavorable for a number of years. A significant portion of the investments of KKR’s private equity fundswere made during this period. Market conditions, however, have significantly deteriorated as comparedto prior periods. Global financial markets have recently experienced considerable declines in thevaluations of equity and debt securities, an acute contraction in the availability of credit and the failureof a number of leading financial institutions. As a result, certain government bodies and central banksworldwide, including the U.S. Treasury Department and the U.S. Federal Reserve, have undertakenunprecedented intervention programs, the effects of which remain uncertain. The U.S. economy hasexperienced and continues to experience significant declines in employment, household wealth, andlending. These events have led to a significantly diminished availability of credit and an increase in thecost of financing. The lack of credit has materially hindered the initiation of new, large-sizedtransactions for KKR’s private markets segment and, together with declines in valuations of equity anddebt securities, has adversely impacted KKR’s recent operating results reflected in its combinedfinancial statements included in this consent solicitation statement. KKR expects that these events willplace additional negative pressure on its operating results going forward. If conditions furtherdeteriorate, KKR’s business could be affected in different ways. KKR’s profitability may also beadversely affected by its fixed costs and the possibility that KKR would be unable to scale back othercosts within a time frame sufficient to match any decreases in net income relating to changes in marketand economic conditions.

KKR’s funds may be affected by reduced opportunities to exit and realize value from theirinvestments, by lower than expected returns on investments made prior to the deterioration of thecredit markets and by the fact that KKR may not be able to find suitable investments for the funds toeffectively deploy capital, which could adversely affect KKR’s ability to raise new funds. In light ofrecent negative market and economic conditions, companies in which KKR has invested mayexperience decreased revenues, financial losses, credit rating downgrades, difficulty in obtaining accessto financing and increased funding costs. These companies may also have difficulty in expanding theirbusinesses and operations or be unable to meet their debt service obligations or other expenses as theybecome due, including expenses payable to KKR. In addition, during periods of adverse economicconditions such as the present, KKR may have difficulty accessing financial markets, which could makeit even more difficult or impossible for KKR to obtain funding for additional investments and harmKKR’s AUM and operating results. The current market downturn, or a specific market dislocation, mayresult in lower investment returns for KKR’s funds, which would further adversely affect KKR’s net

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income. The current adverse conditions may also increase the risk of default with respect to privateequity, credit and public equity investments that KKR manages. KKR is unable to predict wheneconomic and market conditions may become more favorable. Even if such conditions do improvebroadly and significantly over the long term, adverse conditions in particular sectors may cause KKR’sperformance to suffer further.

KKR’s earnings and cash flow are highly variable due to the nature of KKR’s business and KKR does notintend to provide earnings guidance, each of which may cause the value of interests in the Combined Businessto be volatile.

KKR’s earnings are highly variable from quarter to quarter due to the volatility of investmentreturns of most of its funds and other investment vehicles and the fee income earned from its funds.KKR recognizes earnings on investments in its funds based on its allocable share of realized andunrealized gains (or losses) reported by such funds, and a decline in realized or unrealized gains, or anincrease in realized or unrealized losses, would adversely affect KKR’s net income. Fee income, whichKKR recognizes when contractually earned, can vary due to fluctuations in AUM, the number ofinvestment transactions made by its funds, the number of portfolio companies KKR manages and thefee provisions contained in its funds and other investment products. KKR may create new funds orinvestment products or vary the terms of its funds or investment products, which may alter thecomposition or mix of KKR’s income from time to time. KKR may also experience fluctuations in itsresults from quarter to quarter due to a number of other factors, including changes in the values of itsfunds’ investments, changes in the amount of distributions or interest earned in respect of investments,changes in KKR’s operating expenses, the degree to which KKR encounters competition and generaleconomic and market conditions. Such variability may lead to variability in the value of interests in theCombined Business and cause KKR’s results for a particular period not to be indicative of itsperformance in future periods. It may be difficult for KKR to achieve steady growth in net income andcash flow on a quarterly basis, which could in turn lead to large adverse movements in the value ofinterests in the Combined Business.

The timing and receipt of carried interest from KKR’s private equity funds are unpredictable andwill contribute to the volatility of its cash flows. Carried interest from private equity investmentsdepends on its funds’ performance and opportunities for realizing gains, which may be limited. It takesa substantial period of time to identify attractive private equity investment opportunities, to raise all thefunds needed to make an investment and then to realize the cash value (or other proceeds) of aninvestment through a sale, public offering or other exit. To the extent a private equity investment is notprofitable, no carried interest shall be received from KKR’s private equity funds with respect to thatinvestment and, to the extent such investment remains unprofitable, KKR will only be entitled to amanagement fee on that investment. Even if a private equity investment proves to be profitable, it maybe several years before any profits can be realized in cash. KKR cannot predict when, or if, anyrealization of investments will occur. In particular, since the latter half of 2007, the credit dislocationand related reluctance of many finance providers, such as commercial and investment banks, to providefinancing have made it difficult for potential purchasers to secure financing to purchase companies inKKR investment funds’ portfolio, thereby decreasing potential realization events and the potential forcarried interest. A downturn in the equity markets also makes it more difficult to exit investments byselling equity securities. If KKR were to have a realization event in a particular quarter, the event mayhave a significant impact on KKR’s cash flows during the quarter that may not be replicated insubsequent quarters. A decline in realized or unrealized gains, or an increase in realized or unrealizedlosses, would adversely affect KKR’s investment income, which could further increase the volatility ofKKR’s quarterly results.

The partnership documents governing KKR’s traditional private equity funds generally include a‘‘clawback’’ or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to acontingent obligation that may require the general partner to return or contribute amounts to the fund

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for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the term of the fundexceed the amount to which the general partner was ultimately entitled. As of June 30, 2009, theamount of carried interest KKR has received, excluding carried interest received by the generalpartners of the 1996 Fund, that is subject to this contingent repayment obligation was approximately$768 million, assuming that all applicable private equity funds were liquidated at no value. Had theinvestments in such funds been liquidated at their June 30, 2009 fair values, the contingent repaymentobligation would have been approximately $224 million. Under a ‘‘net loss sharing provision,’’ upon theliquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% ofthe net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’straditional private equity vehicles allocate a greater share of their investment losses to KKR relative tothe amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required tobe paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fundregardless of whether any carried interest had previously been distributed. Based on the fair marketvalues as of June 30, 2009, KKR’s obligation under the net loss sharing provisions would have beenapproximately $258 million. If the vehicles were liquidated at zero value, the obligation under the netloss sharing provisions would have been approximately $1,091 million as of June 30, 2009.

KKR principals will remain responsible for any clawback obligations relating to carry distributionsreceived prior to the Transactions up to the aggregate contingent repayment obligation as of June 30,2009 ($224 million) as well as any clawback obligations relating to any carry distributions that theyreceive after the Transactions pursuant to any carried interest allocated directly to them as carry poolparticipants. KKR will be responsible for any other clawback obligations and any amounts due undernet loss sharing arrangements and will indemnify its principals for any personal guarantees that theyhave provided with respect to such amounts.

Changes in the debt financing markets have negatively impacted the ability of KKR’s private equity funds andtheir portfolio companies to obtain attractive financing for their investments and have increased the cost ofsuch financing if it is obtained, which could lead to lower-yielding investments and potentially decreasingKKR’s net income.

Since the latter half of 2007, the markets for debt financing have contracted significantly,particularly in the area of acquisition financings for private equity and leveraged buyout transactions.Large commercial and investment banks, which have traditionally provided such financing, havedemanded higher rates, higher equity requirements as part of private equity investments, morerestrictive covenants and generally more onerous terms in order to provide such financing, and in somecases are refusing to provide financing for acquisitions which would have been readily financed duringthe past several years.

In the event that KKR’s private equity funds are unable to obtain committed debt financing forpotential acquisitions or can only obtain debt at an increased interest rate or on unfavorable terms,KKR’s funds may have difficulty completing otherwise profitable acquisitions or may generate profitsthat are lower than would otherwise be the case, either of which could lead to a decrease in theinvestment income earned by KKR. Any failure by lenders to provide previously committed financingcan also expose KKR to potential claims by sellers of businesses which it may have contracted topurchase. Similarly, the portfolio companies owned by KKR’s private equity funds regularly utilize thecorporate debt markets in order to obtain financing for their operations. To the extent that the currentcredit markets have rendered such financing difficult to obtain or more expensive, this may negativelyimpact the operating performance of those portfolio companies and, therefore, the investment returnson KKR’s funds.

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Adverse economic and market conditions may adversely affect KKR’s liquidity position, which could adverselyaffect its business operations in the future.

KKR expects that its primary liquidity needs will consist of cash required to: (i) continue to growits business, including funding capital commitments made to existing and future funds and any netcapital requirements of its capital markets companies, (ii) service debt obligations, includingindebtedness acquired from KPE in connection with the Combination Transaction, (iii) fund cashoperating expenses, (iv) pay amounts that may become due under its tax receivable agreement withKKR Holdings; and (v) make cash distributions in accordance with its distribution policy. Theseliquidity requirements are significant and, in some cases, involve capital that will remain invested forextended periods of time. On a pro forma basis giving effect to the Combination Transaction, as ofMarch 31, 2009, KKR would have had approximately $1,427.7 million of remaining unfunded capitalcommitments to its private equity funds, including $957.9 million of unfunded commitments acquiredfrom KPE, and a $100 million revolving loan to KFN that had not yet been drawn. KKR’scommitments to its private equity funds will require significant cash outlays over time, and there can beno assurance that KKR will be able to generate sufficient cash flows from realizations of investments tofund them. In addition, as of March 31, 2009, KKR had $139.0 million of borrowings outstanding underits credit facilities (which exclude short-term lines of credit) and $222.3 million of cash and cashequivalents, and KPE had $926.2 million of borrowings outstanding under its credit facility and$642.5 million of cash and cash equivalents. While KKR and KPE each have long-term committedfinancings with substantial facility limits, the terms of those facilities will expire in 2013 and 2012,respectively, and any borrowings thereunder will require refinancing or renewal. If the currentchallenging credit market conditions were to continue or worsen, KKR may not be able to renew all orpart of these credit facilities or find alternate sources of financing on commercially reasonable terms. Inthat event, KKR’s uses of cash could exceed its sources of cash, thereby potentially adversely affectingits liquidity.

KKR depends on its founders and other key personnel, the loss of whose services would have a materialadverse effect on its business, results and financial condition.

KKR depends on the efforts, skills, reputations and business contacts of its principals, including itsfounders, Henry Kravis and George Roberts, and other key personnel, the information and deal flowthey and others generate during the normal course of their activities and the synergies among thediverse fields of expertise and knowledge held by KKR’s professionals. Accordingly, KKR’s success willdepend on the continued service of these individuals, who are not obligated to remain employed withKKR. The loss of the services of any of them could have a material adverse effect on KKR’s revenues,net income and cash flows and could harm KKR’s ability to maintain or grow AUM in existing funds orraise additional funds in the future.

KKR’s principals and other key personnel possess substantial experience and expertise and havestrong business relationships with investors in KKR’s funds and other members of the businesscommunity. As a result, the loss of these personnel could jeopardize KKR’s relationships with investorsin its funds and members of the business community and result in the reduction of AUM or fewerinvestment opportunities. For example, if any of KKR’s principals were to join or form a competingfirm, its business, results and financial condition could suffer.

Furthermore, the agreements governing KKR’s traditional private equity funds and certain fixedincome funds managed by KKR provide that in the event certain ‘‘key persons’’ in these funds (forexample, both of Messrs. Kravis and Roberts) generally cease to actively manage a fund, investors inthe fund will be entitled to: (i) in the case of KKR’s traditional private equity funds, reduce, in wholeor in part, their capital commitments available for further investments; and (ii) in the case of theprivate fixed income funds, withdraw all or any portion of their capital accounts, in each case on an

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investor-by-investor basis. The occurrence of such an event would likely have a significant negativeimpact on KKR’s revenue, net income and cash flow.

The asset management business is intensely competitive.

KKR competes as an asset manager for both investors and investment opportunities. KKR’scompetitors consist primarily of sponsors of public and private investment funds, business developmentcompanies, investment banks, commercial finance companies and operating companies acting asstrategic buyers of businesses. KKR believes that competition for investors is based primarily oninvestment performance; business reputation; the duration of relationships with investors; the quality ofservices provided to investors; pricing; and the relative attractiveness of the types of investments thathave been or are to be made. KKR believes that competition for investment opportunities is basedprimarily on the pricing, terms and structure of a proposed investment and certainty of execution. Anumber of factors serve to increase KKR’s competitive risks:

• a number of KKR’s competitors in some of KKR’s businesses have greater financial, technical,marketing and other resources and more personnel than KKR does;

• several of KKR’s competitors have recently raised, or are expected to raise, significant amountsof capital, and many of them have similar investment objectives to KKR’s, which may createadditional competition for investment opportunities and may reduce the size and duration ofpricing inefficiencies that many alternative investment strategies seek to exploit;

• some of these competitors may also have a lower cost of capital and access to funding sourcesthat are not available to KKR, which may create competitive disadvantages for KKR withrespect to investment opportunities;

• some of KKR’s competitors may have higher risk tolerances, different risk assessments or lowerreturn thresholds, which could allow them to consider a wider variety of investments and to bidmore aggressively than KKR for investments;

• KKR’s competitors that are corporate buyers may be able to achieve synergistic cost savings inrespect of an investment, which may provide them with a competitive advantage in bidding foran investment;

• there are relatively few barriers to entry impeding the formation of new funds, including arelatively low cost of entering these businesses, and the successful efforts of new entrants intoKKR’s various lines of business, including major commercial and investment banks and otherfinancial institutions, have resulted in increased competition;

• some investors may prefer to invest with an investment manager that is not publicly traded ifKKR were to become publicly listed; and

• other industry participants will from time to time seek to recruit KKR’s investment professionalsand other employees away from KKR.

KKR may lose investment opportunities in the future if it does not match investment prices,structures and terms offered by competitors. Alternatively, KKR may experience decreased investmentreturns and increased risks of loss if KKR matches investment prices, structures and terms offered bycompetitors. In addition, if interest rates were to rise or if market conditions for competing investmentproducts improve and such products begin to offer rates of return superior to those achieved by itsfunds, the attractiveness of KKR’s funds relative to investments in other investment products coulddecrease. This competitive pressure could adversely affect KKR’s ability to make successful investmentsand limit its ability to raise future funds, either of which would adversely impact KKR’s business,results of operations and cash flow.

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The structure of KPE and its ownership of Group Holdings units involve complex provisions of U.S. federalincome tax laws for which no clear precedent or authority may be available. These structures also are subjectto potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactivebasis.

The U.S. federal income tax treatment of KPE unitholders depends in some instances ondeterminations of fact and interpretations of complex provisions of U.S. federal income tax laws forwhich no clear precedent or authority may be available. You should be aware that the U.S. federalincome tax rules are constantly under review by persons involved in the legislative process, the InternalRevenue Service, or IRS, and the U.S. Treasury Department, frequently resulting in revisedinterpretations of established concepts, statutory changes, revisions to regulations and othermodifications and interpretations. The present U.S. federal income tax treatment of owning units inKPE may be modified by administrative, legislative or judicial interpretation at any time, and any suchaction may affect investments and commitments previously made. For instance, changes to the U.S.federal tax laws and interpretations thereof could make it more difficult or impossible for KPE to betreated as a partnership that is not taxable as a corporation for U.S. federal income tax purposes, affectthe tax considerations of owning a unit in KPE, change the character or treatment of portions of KPE’sincome (including, for instance, the treatment of carried interest as ordinary income rather than capitalgain) and adversely impact your investment in KPE units. See the discussion below under‘‘—Legislation has been introduced that would, if enacted, preclude KPE following the CombinationTransaction from qualifying as a partnership for U.S. federal income tax purposes. If this or any similarlegislation or regulation were to be enacted and apply to KPE, it could incur a material increase in itstax liability that could result in a reduction in the value of the KPE units.’’

KPE’s organizational documents and agreements permit the Managing Partner to modify theamended and restated partnership agreement from time to time, without the consent of theunitholders, to address certain changes in U.S. federal income tax regulations, legislation orinterpretation. In some circumstances, such revisions could have a material adverse impact on some orall unitholders. Moreover, certain assumptions and conventions will be applied in an attempt to complywith applicable rules and to report income, gain, deduction, loss and credit to unitholders in a mannerthat reflects such unitholders’ beneficial ownership of partnership items, taking into account variation inownership interests during each taxable year because of trading activity. However, those assumptionsand conventions may not be in compliance with all aspects of applicable tax requirements. It is possiblethat the IRS will assert successfully that the conventions and assumptions used by KPE do not satisfythe technical requirements of the Internal Revenue Code and/or Treasury regulations and could requirethat items of income, gain, deductions, loss or credit, including interest deductions, be adjusted,reallocated or disallowed in a manner that adversely affects unitholders.

Legislation has been introduced that would, if enacted, preclude KPE following the Combination Transactionfrom qualifying as a partnership for U.S. federal income tax purposes. If this or any similar legislation orregulation were to be enacted and apply to KPE, it could incur a material increase in its tax liability thatcould result in a reduction in the value of the KPE units.

Legislation has been introduced in the U.S. Congress that would, if enacted, preclude KPEfollowing the Combination Transaction from qualifying as a partnership for U.S. federal income taxpurposes under the publicly traded partnership rules. In June 2007, a bill was introduced in the U.S.Senate that would treat income received by a partner with respect to an interest in an investmentservices partnership as ordinary income received for the performance of services. This income,therefore, would be non-qualifying income under the publicly traded partnership rules, which wouldpreclude KPE from qualifying as a partnership for U.S. federal income tax purposes, thereby increasingKPE’s tax liability, which could result in a reduction of the value of the KPE units. In addition, theU.S. Congress has recently considered other bills relating to the taxation of a partnership providinginvestment services. In April 2009, legislation was introduced in the U.S. Congress that was

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substantially similar to a bill passed by the U.S. House of Representatives in 2008 that would generally(i) treat carried interest as non-qualifying income under the tax rules applicable to publicly tradedpartnerships, which could preclude KPE following the Combination Transaction from qualifying as apartnership for U.S. federal income tax purposes, and (ii) tax carried interest as ordinary income forU.S. federal income tax purposes, rather than in accordance with the character of income derived bythe underlying fund, which is in many cases capital gain. In June 2009, legislation was introduced in theU.S. House of Representatives that would tax as corporations publicly traded partnerships that directlyor indirectly derive any income from investment adviser or asset management services. In addition, theObama administration proposed in its published revenue proposals for 2010 that the current lawregarding the treatment of carried interest be changed to treat such income as income received inconnection with the performance of services and subject to ordinary income tax. If the changessuggested by the administration or any of the proposed legislation was adopted, income attributable tocarried interest may not meet the qualifying income requirements under the publicly traded partnershiprules, which would preclude KPE from qualifying as a partnership for U.S. federal income tax purposesor KPE may otherwise not be permitted to qualify as a partnership for U.S. federal income taxpurposes following the Combination Transaction, thereby increasing KPE’s tax liability, which couldresult in a reduction of the value of the KPE units.

If this legislation, or similar legislation, became law KPE may be treated as a foreign corporation,subject to U.S. federal income tax and branch profits tax on any of its income that is treated aseffectively connected with a U.S. trade or business. If KPE were treated as a U.S. corporation it wouldbe subject to U.S. federal income tax on all of its taxable income and to applicable state, local andother taxes. This would significantly increase KPE’s effective tax rate. The federal statutory rate forcorporations is currently 35%. This could result in a reduction in the value of KPE units. In addition, ifthe proposed legislation is adopted, it could increase the amount of tax KKR’s principals and otherprofessionals and possibly the holders of KKR Group Partnership Units would be required to pay,thereby adversely affecting KKR’s ability to offer attractive incentive opportunities for key personnel.

If KKR cannot retain and motivate its principals and other key personnel and recruit, retain and motivatenew principals and other key personnel, KKR’s business, results and financial condition could be adverselyaffected.

KKR’s most important asset is its people, and its continued success is highly dependent upon theefforts of its principals and other professionals, and to a substantial degree on its ability to retain andmotivate its principals and other key personnel and to strategically recruit, retain and motivate newtalented personnel, including new principals. However, KKR may not be successful in these efforts asthe market for qualified investment professionals is extremely competitive. KKR’s ability to recruit,retain and motivate its professionals is dependent on its ability to offer highly attractive incentiveopportunities. If legislation, such as the legislation proposed in April 2009 were to be enacted, incomeand gains recognized with respect to carried interest would be treated for U.S. federal income taxpurposes as ordinary income rather than as capital gain. Such legislation would materially increase theamount of taxes that KKR, its principals and other professionals and possibly holders of KKR GroupPartnership Units would be required to pay, thereby adversely affecting its ability to offer suchattractive incentive opportunities. See ‘‘—Risks Related to U.S. Taxation’’.

Upon completion of the Transactions, KKR’s principals will hold interests in KKR’s businessthrough KKR Holdings. These individuals will receive financial benefits from KKR’s business in theform of distributions and payments received from KKR Holdings and through their direct and indirectparticipation in the value of KKR Group Partnership Units held by KKR Holdings. Distributions inrespect of these interests may not equal the cash distributions previously received by these individualsprior to the Transactions. In addition, there is no guarantee that the confidentiality and restrictivecovenant agreements to which KKR’s principals will be subject, together with KKR’s otherarrangements with them, will prevent them from leaving KKR, joining KKR’s competitors or otherwise

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competing with KKR or that these agreements will be enforceable in all cases. These agreements willexpire after a certain period of time, at which point each of KKR’s principals would be free to competeagainst KKR and solicit investors in KKR’s funds, clients and employees. Depending on which entity isa party to these agreements, KKR may not be able to enforce them, and these agreements might bewaived, modified or amended at any time without KKR’s consent. See ‘‘Certain Relationships andRelated Party Transactions—Confidentiality and Restrictive Covenant Agreements.’’

KKR strives to maintain a work environment that reinforces its culture of collaboration, motivationand alignment of interests with investors. If KKR does not continue to develop and implement theright processes and tools to manage its changing enterprise and maintain its culture, KKR’s ability tocompete successfully and achieve its business objectives could be impaired, which could negativelyimpact its business, financial condition and results of operations.

Operational risks may disrupt KKR’s businesses, result in losses or limit KKR’s growth.

KKR relies heavily on its financial, accounting and other data processing systems. If any of thesesystems does not operate properly or is disabled, KKR could suffer financial loss, a disruption of itsbusinesses, liability to its funds, regulatory intervention or reputational damage. In addition, KKRoperates in businesses that are highly dependent on information systems and technology. KKR’sinformation systems and technology may not continue to be able to accommodate KKR’s growth, andthe cost of maintaining such systems may increase from its current level. Such a failure toaccommodate growth, or an increase in costs related to such information systems, could have a materialadverse effect on KKR. Furthermore, KKR depends on its principal offices in New York City, wheremost of its administrative personnel are located, for the continued operation of KKR’s business. Adisaster or a disruption in the infrastructure that supports KKR’s businesses, including a disruptioninvolving electronic communications or other services used by KKR or third parties with whom KKRconducts business, or directly affecting its principal offices, could have a material adverse impact onKKR’s ability to continue to operate its business without interruption. KKR’s disaster recoveryprograms may not be sufficient to mitigate the harm that may result from such a disaster or disruption.In addition, insurance and other safeguards might only partially reimburse KKR for its losses, if at all.

The time and attention that KKR’s principals and other employees devote to assets that are not beingcontributed to the KKR Group Partnerships will not financially benefit the KKR Group Partnerships and mayreduce the time and attention these individuals devote to the KKR Group Partnerships’ business.

The investment period for each of the 1987 Fund, the 1993 Fund and the 1996 Fund has ended.As of June 30, 2009, the unrealized value of the investments held by these funds totaled $0.6 billion, orapproximately 1% of KKR’s AUM. Because KKR believes the general partners of these funds will notreceive meaningful proceeds from further realizations, it will not acquire general partner interests inthem in connection with the Reorganization Transactions. KKR will, however, continue to provide thefunds with management and other services until their liquidation. While KKR will not receivemeaningful fees for providing these services, its principals and other employees will be required todevote a portion of their time and attention to the management of those entities. The devotion of thetime and attention of KKR’s principals and employees to those activities will not financially benefit theKKR Group Partnerships and may reduce the time and attention they devote to the KKR GroupPartnerships’ business.

KKR faces risks and uncertainties in developing its new growth initiatives.

Part of KKR’s growth strategy is to develop new business areas, including pursuing investmentopportunities in new asset classes (such as infrastructure and mezzanine) and developing new types ofinvestment structures and products (such as managed accounts and structured products). KKR hasopened new offices in Mumbai, India and Dubai, and also developed a capital markets business in the

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United States, Europe and Asia, which it intends to grow and diversify. As a result, KKR is subject toall of the risks and uncertainties associated with the expansion into any new line of business, includingthe risk that these growth initiatives will not assist KKR in achieving its objectives, will divertmanagement’s attention from its existing businesses or place an excessive burden on its operationalsystems. Any failure of these initiatives to meet or exceed expectations could have an adverse effect onKKR’s results of operations.

Extensive regulation of KKR’s businesses affects its activities and creates the potential for significant liabilitiesand penalties. The possibility of increased regulatory focus could result in additional burdens on KKR’sbusiness. Changes in tax laws and other legislative or regulatory changes could adversely affect KKR.

KKR’s business is subject to extensive regulation. See ‘‘KKR’s Business—Regulation.’’ KKR issubject to regulation by governmental and self-regulatory organizations in the jurisdictions in which itoperates around the world. Many of these regulators, including U.S. and foreign government agenciesand self-regulatory organizations, are empowered to conduct investigations and administrativeproceedings that can result in fines, suspensions of personnel or other sanctions, including censure, theissuance of cease-and-desist orders or the suspension or expulsion of applicable licenses andmemberships. Even if an investigation or proceeding does not result in a sanction or the sanctionimposed against KKR or its personnel by a regulator were small in monetary amount, the adversepublicity relating to the investigation, proceeding or imposition of these sanctions could harm KKR’sreputation and cause it to lose existing clients or fail to gain new clients.

On April 30, 2009, the European Commission published a draft of a proposed EU Directive onAlternative Investment Fund Managers (‘‘AIFM’’). The European Commission is seeking to adopt finallegislation by the end of the 2009 with the legislation becoming law and enforceable in 2011. TheDirective, if adopted in the form proposed, would apply to all AIFMs operating within the EU withmore than A100 million in assets under management. AIFMs would be required to seek authorizationfrom their home jurisdiction within the EU, which would require the disclosure of such information asfair valuation of assets, investment strategy, and markets in which investments are made on a regularbasis. The Directive, if adopted, would also set a threshold for regulatory capital, allow regulators to seta threshold for leverage and create reporting obligations to companies in which a controlling stake isheld. Such rules could potentially impose significant additional costs on the operation of KKR’sbusiness in the EU due to increased reporting and regulatory requirements for its managers.Furthermore, the Directive, if adopted in its current form, could limit, both in absolute terms and incomparison to EU-based investment managers and funds, KKR’s operating flexibility, fund raising andinvestment opportunities, as well as expose KKR to conflicting regulatory requirements in the UnitedStates and the EU.

On January 29, 2009, members of the Senate proposed the Hedge Fund Transparency Act, whichwould apply to private equity funds, venture capital funds, real estate funds and other privateinvestment vehicles with at least $50 million in assets under management. If enacted, the bill wouldrequire such funds to register with the SEC, maintain books and records in accordance with SECrequirements and become subject to SEC examinations and information requests in order to remainexempt from the substantive provisions of the Investment Company Act. In addition, the proposedlegislation requires each fund to file annual disclosures, which would be made public, containingdetailed information about the fund, most notably including the names of all beneficial owners of thefund, an explanation of the fund’s ownership structure and the current value of the fund’s assets undermanagement. The proposed legislation also requires each fund to establish anti-money launderingprograms. KKR cannot predict whether this proposed legislations will be enacted or, if enacted, whatthe final terms of the proposed legislation would require or the impact of such new regulations onKKR’s funds. If enacted, this proposed legislation would likely negatively impact KKR’s funds in anumber of ways, including increasing the funds’ regulatory costs, imposing additional burdens on thefunds’ staff, and potentially requiring the disclosure of sensitive information. In addition, KKR may be

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adversely affected by changes in the interpretation or enforcement of existing laws and rules by thesegovernmental authorities and self-regulatory organizations. On July 15, 2009, the Obama administrationdelivered proposed legislation that, if enacted, would require advisers to hedge funds and other privatepools of capital with over $30 million in assets under management to register as Investment Advisorswith the SEC under the Investment Advisers Act of 1940. The proposed legislation would subjectadvisers to substantial regulatory reporting requirements with respect to assets, leverage, andoff-balance sheet exposure, increase disclosure requirements to investors, creditors and counterparties,and expand the SEC’s examination and enforcement authority. It is impossible to determine the extentof the impact of any new laws, regulations or initiatives that may be proposed, or whether any of theproposals will become law. Compliance with any new laws or regulations could make compliance moredifficult and expensive and affect the manner in which KKR conducts business.

KKR regularly relies on exemptions in the United States from various requirements of theSecurities Act, the Exchange Act, the Investment Company Act of 1940 (the ‘‘Investment CompanyAct’’), and the U.S. Employee Retirement Income Security Act of 1974, or ERISA, in conducting itsasset management activities. These exemptions are sometimes highly complex and may in certaincircumstances depend on compliance by third parties whom KKR does not control. If for any reasonthese exemptions were to become unavailable to KKR, KKR could become subject to regulatory actionor third-party claims and its business could be materially and adversely affected. See ‘‘—Risks Relatedto KKR’s Organizational Structure and the Transactions—If KPE or KKR was deemed to be an‘‘investment company’’ subject to regulation under the Investment Company Act, applicable restrictionscould make it impractical for it to continue its business as contemplated and could have a materialadverse effect on its business.’’ Lastly, the requirements imposed by KKR’s regulators are designedprimarily to ensure the integrity of the financial markets and to protect investors in its funds and arenot designed to protect holders of interests in the Combined Business. Consequently, these regulationsoften serve to limit KKR’s activities. In addition, the regulatory environment in which KKR’s fundinvestors operate may affect its business. For example, changes in state laws may limit investmentactivities of state pension plans. KKR may also be adversely affected as a result of new or revisedlegislation or regulations imposed by the SEC, other governmental regulatory authorities orself-regulatory organizations that supervise the financial markets.

Kohlberg Kravis Roberts & Co. L.P. and its wholly owned subsidiary Kohlberg KravisRoberts & Co. (Fixed Income) LLC are registered as investment advisors under the InvestmentAdvisers Act. As registered investment advisors, these entities are subject to periodic SEC examinationsand other requirements and regulations of the Investment Advisers Act, which relate to, among otherthings, recordkeeping and reporting requirements, disclosure requirements, limitations on agency andprincipal transactions between an advisor and advisory clients. It is impossible to determine the extentof the impact of any new laws, regulations or initiatives that may be proposed, or whether any of theproposals will become law. Compliance with any new laws or regulations could make compliance moredifficult and expensive and affect the manner in which KKR conducts business.

Certain legislation has recently been adopted in Australia, Denmark, Germany, and Italy thatlimits the tax deductibility of interest expense incurred by companies in those countries. Thesemeasures will most likely adversely affect Danish and German portfolio companies in which KKR’sprivate equity funds have investments and limit the benefits of additional investments in thosecountries. KKR’s private equity business is subject to the risk that similar measures might be introducedin other countries in which it currently has investments or plans to invest in the future, or that otherlegislative or regulatory measures that negatively impact its portfolio investments might be promulgatedin any of the countries in which it invests.

KKR is also subject to regulation in the United Kingdom by the Financial Services Authority,which is referred to as the FSA. The FSA has been reviewing the suitability of its regulatory approachin addressing risks posed by the private equity market. The FSA indicated in a feedback statement

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published in June 2007 that it intends to maintain supervisory focus on certain aspects of the privateequity industry which it identified as posing particular risks (especially in relation to conflicts of interestand the prevention of market abuse). The FSA has recently reported its findings from a thematicreview which explored the approach towards conflict management within private equity firms and hasasked FSA-regulated firms which undertake private equity-related business to assess their conflictspolicies and procedures against these findings.

In addition, KKR voluntarily participates in several other transparency initiatives, including thoseorganized by the Private Equity Council (PEC), the British Private Equity and Venture CapitalAssociation (BVCA). the German Private Equity and Venture Capital Association (BVK), the FrenchVenture Capital Association (AFIC), the United Nations and others. Such reporting may divert theattention of KKR’s personnel and the management teams of its portfolio companies, and mayfurthermore place KKR at a competitive disadvantage to the extent that KKR or its portfoliocompanies are required to disclose sensitive business information. If the FSA or other regulatoryagencies in the United Kingdom or elsewhere were to adopt burdensome regulations with respect tothe private equity industry, KKR’s performance may be negatively impacted.

KKR is subject to substantial litigation risks and may face significant liabilities and damage to its professionalreputation as a result of litigation allegations and negative publicity.

The investment decisions KKR makes in its asset management business and the activities of itsinvestment professionals on behalf of KKR’s portfolio companies may subject them and KKR to therisk of third-party litigation arising from investor dissatisfaction with the performance of those funds,the activities of KKR’s portfolio companies and a variety of other litigation claims. See ‘‘KKR’sBusiness—Legal Proceedings.’’

To the extent investors in KKR’s private equity funds suffer losses resulting from fraud, grossnegligence, willful misconduct or other similar misconduct, investors may have remedies against KKR,KKR’s private equity funds, KKR’s principals or KKR’s affiliates under the federal securities law andstate law. Investors in KKR’s funds do not have legal remedies against KKR, the general partners ofKKR’s funds, KKR’s funds, KKR’s principals or KKR’s affiliates solely based on their dissatisfactionwith the investment performance of those funds. While the general partners and investment advisers toKKR’s private equity funds, including their directors, officers, other employees and affiliates, aregenerally indemnified to the fullest extent permitted by law with respect to their conduct in connectionwith the management of the business and affairs of KKR’s private equity funds, such indemnitygenerally does not extend to actions determined to have involved fraud, gross negligence, willfulmisconduct or other similar misconduct.

If any lawsuits were brought against KKR and resulted in a finding of substantial legal liability, thelawsuit could materially adversely affect its business, financial condition or results of operations orcause significant reputational harm to KKR, which could seriously impact its business. KKR depends toa large extent on its business relationships and its reputation for integrity and high-caliber professionalservices to attract and retain investors and to pursue investment opportunities for KKR’s funds. As aresult, allegations of improper conduct by private litigants or regulators, whether the ultimate outcomeis favorable or unfavorable to KKR, as well as negative publicity and press speculation about KKR, itsinvestment activities or the private equity industry in general, whether or not valid, may harm KKR’sreputation, which may be more damaging to its business than to other types of businesses.

In addition, with a workforce composed of many highly paid professionals, KKR faces the risk oflitigation relating to claims for compensation, which may, individually or in the aggregate, be significantin amount. The cost of settling any such claims could negatively impact KKR’s business, financialcondition and results of operations.

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KKR does not know what impact the U.S. government’s various plans to attempt to stabilize the economy willhave on the financial markets or KKR’s business.

Recent developments in the U.S. and global financial markets have illustrated that the currentenvironment is one of extraordinary and unprecedented uncertainty and instability for assetmanagement businesses. With global credit markets experiencing substantial disruption (especially inthe mortgage finance markets) and liquidity shortages, financial instability has spread globally. Inresponse to the financial crises affecting the banking system and financial markets and going concernthreats to investment banks and other financial institutions, the U.S. government enacted theEmergency Economic Stabilization Act of 2008, or EESA, on October 3, 2008. Pursuant to the EESA,the U.S. Treasury has the authority to, among other things, purchase up to $700 billion of mortgage-backed and other securities from financial institutions for the purpose of stabilizing the financialmarkets. In addition, the U.S. government also recently made preferred equity investments in a numberof the largest financial institutions. It is not clear what impact the various plans to attempt to stabilizethe economy will have on the financial markets, including the illiquidity in the global credit marketsand the extreme levels of volatility in the global equity markets. Moreover, while the details of theseinitiatives are subject to change, it is unclear whether KKR and/or is funds will be eligible to participatedirectly in these programs and, therefore, these initiatives may not directly benefit KKR. If any ofKKR’s competitors are able to benefit from these programs, they may gain a significant competitiveadvantage over KKR. In addition, the government may decide to implement these programs inunanticipated ways that have a more direct impact on KKR’s funds or its businesses. For example, thegovernment may decide that it will not purchase certain types of loans or securities which may makethe price of those securities decline. If KKR owns such securities in its funds, such price impacts mayhave an adverse impact on the liquidity and/or performance of its affected funds.

Employee misconduct could harm KKR by impairing its ability to attract and retain clients and subjectingKKR to significant legal liability and reputational harm.

There is a risk that KKR’s employees could engage in misconduct that adversely affects itsbusiness. KKR is subject to a number of obligations and standards arising from its business and itsauthority over the assets it manages. The violation of these obligations and standards by any of KKR’semployees would adversely affect KKR’s clients and KKR. KKR’s business often requires that KKRdeal with confidential matters of great significance to companies in which it may invest. If KKR’semployees were improperly to use or disclose confidential information, KKR could suffer serious harmto its reputation, financial position and current and future business relationships, as well as facepotentially significant litigation. It is not always possible to detect or deter employee misconduct, andthe extensive precautions KKR takes to detect and prevent this activity may not be effective in allcases. If any of KKR’s employees were to engage in misconduct or were to be accused of suchmisconduct, KKR’s business and KKR’s reputation could be adversely affected.

Risks Related to the Assets KKR Manages

As an asset manager, KKR sponsors and manages funds and vehicles that make investmentsworldwide on behalf of third-party investors and, in connection with those activities, are required todeploy KKR’s own capital in those investments. The investments of these funds and vehicles are subjectto many risks and uncertainties, including those that are discussed below. In connection with theCombination Transaction, KKR will acquire the assets of KPE, including the investments of the KPEInvestment Partnership, and manage those assets on KKR’s own behalf. As a result, the gains andlosses on such assets will be reflected in KKR’s net income after the completion of the CombinationTransaction, and the risks set forth below relating to the assets that KKR manages will directly affectits operating performance.

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Poor performance of the investments KKR manages would cause a decline in its net income and cash flow,may obligate KKR to repay some carried interest previously received by it or contribute additional amounts tothe funds managed by it, and could adversely affect KKR’s ability to raise capital for future funds.

In the event that any of the significant investments KKR manages were to perform poorly, its netincome and cash flow would decline because the value of KKR’s AUM would decrease, which wouldresult in a reduction in some of its management fees, and its investment returns would decrease,resulting in a reduction in the carried interest KKR earns. Moreover, KKR could experience losses onits investments of its own capital as a result of poor performance by the investments KKR manages.Furthermore, poor performance of KKR’s funds could give rise to obligations under the ‘‘clawback’’ or,in certain instances, ‘‘net loss sharing’’ provisions in the partnership documents governing KKR’s funds.See ‘‘—KKR’s earnings and cash flow are highly variable due to the nature of KKR’s business andKKR does not intend to provide earnings guidance, each of which may cause the value of interests inthe Combined Business to be volatile.’’ Poor performance of its funds could also make it more difficultfor KKR to raise new capital and investors in KKR’s funds might decline to invest in future funds KKRraises.

In addition, KKR manages approximately $2.9 billion for its separately managed account, or SMA,platform for which it is entitled to receive a fee that is generally based on the net asset value of theassets in the account. While these accounts are generally subject to lock-up periods that preclude aninvestor from withdrawing capital for a specified period of time, a significant portion of these SMAassets are subject to a shortened lock-up period and may be withdrawn at the end of a calendar monthfollowing 30 days notice. In the event an account holder exercised this withdrawal right, KKR would beobligated to liquidate or make an in-kind distribution of the assets to the account holder, which wouldadversely impact the fees received by KKR with respect to such assets and could reduce the NAV ofsimilar assets held by KKR’s other clients, which in turn would adversely impact the fees received byKKR with respect to those assets.

Valuation methodologies for certain assets in KKR’s funds can be subject to significant subjectivity and thefair value of assets established pursuant to such methodologies may never be realized, which could result insignificant losses for KKR’s funds.

There are no readily ascertainable market prices for a substantial majority of illiquid investmentsof KKR’s funds. When determining fair values of investments, KKR uses the last reported market priceas of the statement of financial condition date for investments that have readily observable marketprices. When an investment does not have a readily available market price, the fair value of theinvestment represents the value, as determined by KKR in good faith, at which the investment could besold in an orderly disposition over a reasonable period of time between willing parties other than in aforced or liquidation sale. There is no single standard for determining fair value in good faith and inmany cases fair value is best expressed as a range of fair values from which a single estimate may bederived. When making fair value determinations, KKR typically uses a market multiples approach thatconsiders a specified financial measure (such as EBITDA) and/or a discounted cash flow analysis. KKRalso considers a range of additional factors that it deems relevant, including the applicability of acontrol premium or illiquidity discount, the presence of significant unconsolidated assets and liabilities,any favorable or unfavorable tax attributes, the method of likely exit, estimates of assumed growthrates, terminal values, discount rates, capital structure and other factors. These valuation methodologiesinvolve a significant degree of management judgment.

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Because valuations, and in particular valuations of investments for which market quotations are notreadily available, are inherently uncertain, may fluctuate over short periods of time and may be basedon estimates, determinations of fair value may differ materially from the values that would haveresulted if a ready market had existed. Even if market quotations are available for KKR’s investments,such quotations may not reflect the value that KKR would actually be able to realize because ofvarious factors, including possible illiquidity. KKR partners’ capital could be adversely affected if thevalues of investments that KKR records is materially higher than the values that are ultimately realizedupon the disposal of the investments and changes in values attributed to investments from quarter toquarter may result in volatility in KKR’s AUM and such changes could materially affect the results ofoperations that KKR reports from period to period. KKR cannot assure you that the investment valuesthat it records from time to time will ultimately be realized. KKR also cannot assure you that you willbe able to realize the investment values that are presented in this consent solicitation statement.

Because there is significant uncertainty in the valuation of, or in the stability of the value of,illiquid investments, the fair values of investments reflected in a fund’s NAV do not necessarily reflectthe prices that would actually be obtained by KKR on behalf of the fund when such investments arerealized. Realizations at values significantly lower than the values at which investments have beenreflected in prior fund NAVs would result in losses for the applicable fund and the loss of potentialcarried interest and other fees. Also, if realizations of KKR’s investments produce values materiallydifferent than the carrying values reflected in prior fund NAVs, investors may lose confidence in KKR,which could in turn result in difficulty in raising additional funds.

Even if market quotations are available for KKR’s investments, such quotations may not reflect thevalue that could actually be realized because of various factors, including the possible illiquidityassociated with a large ownership position, subsequent illiquidity in the market for a company’ssecurities, future market price volatility or the potential for a future loss in market value based on poorindustry conditions or the market’s view of overall company and management performance.

In addition, because KKR values its entire portfolio only on a quarterly basis, subsequent eventsthat may have a material impact on those valuations may not be reflected until the next quarterlyvaluation date.

The historical returns attributable to KKR’s funds, including those presented in this consent solicitationstatement, should not be considered as indicative of the future results of its funds or of its future results or ofany returns on KKR Group Partnership Units.

KKR has presented in this consent solicitation statement net and gross IRRs, multiples of investedcapital and realized and unrealized investment values for funds that KKR has sponsored and managed.The historical and potential future returns of the funds that KKR manages are not directly linked toreturns on KKR Group Partnership Units.

Moreover, with respect to the historical returns of KKR’s funds:

• the rates of returns of KKR’s funds reflect unrealized gains as of the applicable valuation datethat may never be realized, which may adversely affect the ultimate value realized from thosefunds’ investments;

• you will not benefit from any value that was created in KKR’s funds prior to the Transactions tothe extent such value has been realized even though such realizations may be subject to certain‘‘clawback’’ obligations under the partnership documents of KKR’s funds;

• the future performance of KKR’s funds will be affected by macroeconomic factors, includingnegative factors arising from recent disruptions in the global financial markets that were notprevalent in the periods relevant to the historical return data above;

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• in some historical periods, the rates of returns of some of KKR’s funds have been positivelyinfluenced by a number of investments that experienced a substantial decrease in the averageholding period of such investments and rapid and substantial increases in value following thedates on which those investments were made; the actual or expected length of holding periodsrelated to investments has increased in recent periods and there can be no assurance that priortrends will re-emerge;

• KKR funds’ returns have benefited from investment opportunities and general market conditionsthat may not repeat themselves, including favorable borrowing conditions in the debt marketsthat have since deteriorated significantly, thereby increasing both the cost and difficulty offinancing transactions, and there can be no assurance that KKR’s current or future funds will beable to avail themselves of comparable investment opportunities or market conditions; and

• KKR may create new funds in the future that reflect a different asset mix in terms of allocationsamong funds, investment strategies, geographic and industry exposure and vintage year.

In addition, future returns will be affected by the risks described elsewhere in this consentsolicitation statement, including risks of the industry sectors and businesses in which a particular fundinvests. See ‘‘Risk Factors—Recent developments in the global financial markets have created a greatdeal of uncertainty for the asset management industry, and these developments may adversely affectKKR’s investments, access to leverage and overall performance.’’

Dependence on significant leverage in investments by KKR’s funds could adversely affect KKR’s ability toachieve attractive rates of return on those investments.

Because many of KKR funds’ investments rely heavily on the use of leverage, KKR’s ability toachieve attractive rates of return on investments will depend on its continued ability to access sufficientsources of indebtedness at attractive rates. For example, KKR’s fixed income funds use varying degreesof leverage when making investments. Similarly, in many private equity investments, indebtedness mayconstitute up to 70% or more of a portfolio company’s total debt and equity capitalization, includingdebt that may be incurred in connection with the investment. An increase in either the general levels ofinterest rates or in the risk spread demanded by sources of indebtedness would make it more expensiveto finance those investments. In addition, increases in interest rates could also decrease the value offixed-rate debt investments that KKR’s funds make. Increases in interest rates could also make it moredifficult to locate and consummate private equity investments because other potential buyers, includingoperating companies acting as strategic buyers, may be able to bid for an asset at a higher price due toa lower overall cost of capital. In addition, a portion of the indebtedness used to finance private equityinvestments often includes high-yield debt securities issued in the capital markets. Availability of capitalfrom the high-yield debt markets is subject to significant volatility, and there may be times when KKRmight not be able to access those markets at attractive rates, or at all, when completing an investment.In particular, there has been little available financing at attractive rates during the latter half of 2007,2008 and 2009 to date, which has significantly reduced KKR’s private equity investment activity.

Investments in highly leveraged entities are also inherently more sensitive to declines in revenues,increases in expenses and interest rates and adverse economic, market and industry developments. Theincurrence of a significant amount of indebtedness by an entity could, among other things:

• subject the entity to a number of restrictive covenants, terms and conditions, any violation ofwhich would be viewed by creditors as an event of default and could materially impact KKR’sability to realize value from its investment;

• give rise to an obligation to make mandatory prepayments of debt using excess cash flow, whichmight limit the entity’s ability to respond to changing industry conditions to the extent additional

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cash is needed for the response, to make unplanned but necessary capital expenditures or totake advantage of growth opportunities;

• limit the entity’s ability to adjust to changing market conditions, thereby placing it at acompetitive disadvantage compared to its competitors who have relatively less debt;

• limit the entity’s ability to engage in strategic acquisitions that might be necessary to generateattractive returns or further growth; and

• limit the entity’s ability to obtain additional financing or increase the cost of obtaining suchfinancing, including for capital expenditures, working capital or other general corporatepurposes.

A leveraged company’s income and equity also tend to increase or decrease at a greater rate thanwould otherwise be the case if money had not been borrowed. As a result, the risk of loss associatedwith a leveraged company is generally greater than for companies with comparatively less debt.

KFN, the publicly-traded specialty finance company managed by KKR and certain other fixedincome funds regularly use and have used significant leverage to finance investments. An inability byKFN to continue to raise or utilize leverage could limit its ability to grow its business or fully executeits business strategy and KFN’s results of operations may be adversely affected. In addition, there canbe no assurance that KFN will be able to refinance any of its indebtedness on commercially reasonableterms or at all. In the absence of improved operating results and access to capital resources, KFNcould face substantial liquidity problems and might be required to dispose of material assets oroperations to meet its debt service and other obligations. The use of leverage also poses a significantdegree of risk and enhances the possibility of a significant loss in the value of the investment portfoliosof certain of the fixed income funds that KKR manages. These funds may borrow money from time totime to purchase or carry securities. The interest expense and other costs incurred in connection withsuch borrowing may not be recovered by appreciation in the securities purchased or carried, suchexpenses and costs could give rise to losses, and the timing and magnitude of such losses could beaccelerated or exacerbated, in the event of a decline in the market value of such securities. Inconnection with such borrowing, these funds may use marketable securities as collateral. Decreases inthe value of such collateral or other marketable securities held by these funds may require the funds topost additional collateral in order to comply with margin, net worth maintenance and borrowing baserequirements. This could adversely impact these funds’ liquidity, cash flows and capital available forinvestment. Gains realized with borrowed funds may cause these funds’ NAVs to increase at faster ratesthan would be the case without borrowings. However, if investment results fail to cover the costs ofborrowings, these funds’ NAVs could also decrease faster than if there had been no borrowings.

Any of the foregoing circumstances could have a material adverse effect on KKR’s financialcondition, results of operations and cash flow.

The due diligence process that KKR undertakes in connection with its investments may not reveal all facts thatmay be relevant in connection with an investment.

Before making its investments, KKR conducts due diligence that it deems reasonable andappropriate based on the facts and circumstances applicable to each investment. The objective of thedue diligence process is to identify attractive investment opportunities based on the facts andcircumstances surrounding an investment, to identify possible risks associated with that investment and,in the case of private equity investments, to prepare a framework that may be used from the date of anacquisition to drive operational achievement and value creation. When conducting due diligence, KKRtypically evaluates a number of important business, financial, tax, accounting, environmental and legalissues in determining whether or not to proceed with an investment. Outside consultants, legal advisers,accountants and investment banks are involved in the due diligence process in varying degrees

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depending on the type of investment. Nevertheless, when conducting due diligence and making anassessment regarding an investment, KKR relies on resources available to it, including informationprovided by the target of the investment and, in some circumstances, third-party investigations. The duediligence process may at times be subjective with respect to newly organized companies for which onlylimited information is available. Accordingly, KKR cannot be certain that the due diligenceinvestigation that it will carry out with respect to any investment opportunity will reveal or highlight allrelevant facts that may be necessary or helpful in evaluating such investment opportunity, including theexistence of contingent liabilities. KKR also cannot be certain that its due diligence investigations willresult in investments being successful or that the actual financial performance of an investment will notfall short of the financial projections KKR used when evaluating that investment.

KKR’s asset management activities involve investments in relatively high-risk, illiquid assets, and KKR mayfail to realize any profits from these activities for a considerable period of time or lose some or all of thecapital invested.

Many of KKR’s funds hold investments in securities that are not publicly traded. In many cases,KKR’s funds may be prohibited by contract or by applicable securities laws from selling such securitiesfor a period of time. KKR’s funds will generally not be able to sell these securities publicly unless theirsale is registered under applicable securities laws, or unless an exemption from such registration isavailable. The ability of many of KKR’s funds to dispose of investments is heavily dependent on thepublic equity markets. For example, the ability to realize any value from an investment may dependupon the ability to complete an initial public offering of the portfolio company in which suchinvestment is made. Even if the securities are publicly traded, large holdings of securities can often bedisposed of only over a substantial length of time, exposing KKR’s investment returns to risks ofdownward movement in market prices during the intended disposition period. Accordingly, undercertain conditions, KKR’s funds may be forced to either sell securities at lower prices than they hadexpected to realize or defer sales that they had planned to make, potentially for a considerable periodof time. KKR has made and expects to continue to make significant capital investments in its currentand future funds. Contributing capital to these funds is risky, and KKR may lose some or the entireprincipal amount of its investments.

The investments of KKR’s funds are subject to a number of inherent risks.

KKR’s results are highly dependent on its continued ability to generate attractive returns from itsinvestments. Investments made by KKR’s private equity and fixed income funds involve a number ofsignificant risks inherent to private equity and fixed income investing, including the following:

• companies in which private equity and fixed income investments are made may have limitedfinancial resources and may be unable to meet their obligations under their securities, whichmay be accompanied by a deterioration in the value of their equity securities or any collateral orguarantees provided with respect to their debt;

• companies in which private equity and fixed income investments are made are more likely todepend on the management talents and efforts of a small group of persons and, as a result, thedeath, disability, resignation or termination of one or more of those persons could have amaterial adverse impact on their business and prospects and the investment made;

• companies in which private equity and fixed income investments are made generally have lesspredictable operating results, may from time to time be parties to litigation, may be engaged inrapidly changing businesses with products subject to a substantial risk of obsolescence and may

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require substantial additional capital to support their operations, finance expansion or maintaintheir competitive position; and

• executive officers, directors and employees of an equity sponsor may be named as defendants inlitigation involving a company in which a private equity investment is made or is being made.

KKR’s private equity investments are typically among the largest in the industry, which involves certaincomplexities and risks that are not encountered in small- and medium-sized investments.

KKR’s private equity funds make investments primarily in companies with large capitalizations,which involves certain complexities and risks that are not encountered in small- and medium-sizedinvestments. For example, larger transactions may be more difficult to finance and exiting larger dealsmay present incremental challenges. In addition, larger transactions may pose greater challenges inimplementing changes in the company’s management, culture, finances or operations, and may entailgreater scrutiny by regulators, labor unions and other third parties. Recently, labor unions have beenmore active in opposing some larger investments by certain private equity firms.

In some deals, the amount of equity capital that is required to complete a large capitalizationprivate equity transaction has increased significantly, which has resulted in some of the largest privateequity transactions being structured as ‘‘consortium transactions.’’ A consortium transaction involves anequity investment in which two or more other private equity firms serve together or collectively asequity sponsors. While KKR has sought to limit where possible the amount of consortium transactionsin which KKR has been involved, it has participated in a significant number of those transactions.Consortium transactions generally entail a reduced level of control by KKR’s firm over the investmentbecause governance rights must be shared with the other private equity sponsors. Accordingly, KKRmay not be able to control decisions relating to a consortium investment, including decisions relating tothe management and operation of the company and the timing and nature of any exit, which couldresult in the risks described in ‘‘—KKR’s funds have made investments in companies that KKR doesnot control, exposing it to the risk of decisions made by others with which KKR may not agree.’’ Anyof these factors could increase the risk that KKR’s larger investments could be less successful. Theconsequences to KKR’s investment funds of an unsuccessful larger investment could be more severegiven the size of the investment.

KKR’s funds have made investments in companies that KKR does not control, exposing it to the risk ofdecisions made by others with which KKR may not agree.

KKR’s funds hold investments that include debt instruments and equity securities of companiesthat it does not control. Such instruments and securities may be acquired by KKR’s funds throughtrading activities or through purchases of securities from the issuer. In addition, KKR’s funds mayacquire minority equity interests, particularly when sponsoring investments as part of a large investorconsortium, and may also dispose of a portion of their majority equity investments in portfoliocompanies over time in a manner that results in the funds retaining a minority investment. Thoseinvestments will be subject to the risk that the company in which the investment is made may makebusiness, financial or management decisions with which KKR does not agree or that the majoritystakeholders or the management of the company may take risks or otherwise act in a manner that doesnot serve KKR’s interests. If any of the foregoing were to occur, the value of investments by KKR’sfunds could decrease and KKR’s financial condition, results of operations and cash flow could suffer asa result.

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KKR expects to make investments in companies that are based outside of the United States, which may exposeit to additional risks not typically associated with investing in companies that are based in the United States.

Many of KKR’s funds invest a significant portion of their assets in the equity, debt, loans or othersecurities of issuers that are based outside of the United States. A substantial amount of theseinvestments consist of private equity investments made by KKR’s private equity funds. For example, asof March 31, 2009, approximately 38.7% of the unrealized value of the investments of those funds wasattributable to foreign investments. Investing in companies that are based outside of the United States,particularly in countries characterized as having emerging markets, involves risks and considerationsthat are not typically associated with investments in companies established in the United States. Theserisks may include the following:

• the possibility of exchange control regulations, restrictions on repatriation of profit oninvestments or of capital invested, political and social instability, nationalization or expropriationof assets;

• the imposition of non-U.S. taxes;

• less liquid markets;

• reliance on a more limited number of commodity inputs, service providers and/or distributionmechanisms;

• adverse fluctuations in currency exchange rates and costs associated with conversion ofinvestment principal and income from one currency into another;

• higher rates of inflation;

• less available current information about an issuer;

• higher transaction costs;

• less government supervision of exchanges, brokers and issuers;

• less developed bankruptcy laws;

• difficulty in enforcing contractual obligations;

• lack of uniform accounting, auditing and financial reporting standards;

• less stringent requirements relating to fiduciary duties;

• fewer investor protections; and

• greater price volatility.

Although KKR expects that most of its funds’ capital commitments will be denominated in U.S.dollars, investments that are denominated in a foreign currency will be subject to the risk that the valueof a particular currency will change in relation to one or more other currencies. Among the factors thatmay affect currency values are trade balances, levels of short-term interest rates, differences in relativevalues of similar assets in different currencies, long-term opportunities for investment and capitalappreciation and political developments. KKR may employ hedging techniques to minimize these risks,but it can offer no assurance that such strategies will be effective. If KKR engages in hedgingtransactions, it may be exposed to additional risks associated with such transactions. See ‘‘—Riskmanagement activities may adversely affect the return on KKR’s investments.’’

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Third party investors in KKR’s funds with commitment-based structures may not satisfy their contractualobligation to fund capital calls when requested by KKR, which could adversely affect a fund’s operations andperformance.

Investors in certain of KKR’s funds make capital commitments to those funds that the funds areentitled to call from those investors at any time during prescribed periods. KKR depends on investorsfulfilling their commitments when it calls capital from them in order for those funds to consummateinvestments and otherwise pay their obligations when due. KKR has not had investors fail to honorcapital calls to any meaningful extent. Any investor that did not fund a capital call would be subject toseveral possible penalties, including having a significant amount of its existing investment forfeited inthat fund. However, the impact of the penalty is directly correlated to the amount of capital previouslyinvested by the investor in the fund and if an investor has invested little or no capital, for instance earlyin the life of the fund, then the forfeiture penalty may not be as meaningful. If investors were to fail tosatisfy a significant amount of capital calls for any particular fund or funds, the operation andperformance of those funds could be materially and adversely affected.

KKR’s equity investments and many of its debt investments often rank junior to investments made by others,exposing KKR to greater risk of losing its investment.

In many cases, the companies in which KKR’s funds invest have, or are permitted to have,outstanding indebtedness or equity securities that rank senior to KKR fund’s investment. By theirterms, such instruments may provide that their holders are entitled to receive payments of distributions,interest or principal on or before the dates on which payments are to be made in respect of KKR’sinvestment. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of acompany in which an investment is made, holders of securities ranking senior to KKR’s investmentwould typically be entitled to receive payment in full before distributions could be made in respect ofits investment. After repaying senior security holders, the company may not have any remaining assetsto use for repaying amounts owed in respect of KKR’s investment. To the extent that any assets remain,holders of claims that rank equally with KKR’s investment would be entitled to share on an equal andratable basis in distributions that are made out of those assets. Also, during periods of financial distressor following an insolvency, the ability of KKR’s funds to influence a company’s affairs and to takeactions to protect their investments may be substantially less than that of the senior creditors.

Risk management activities may adversely affect the return on KKR’s investments.

When managing its exposure to market risks, KKR frequently uses hedging strategies or certainforms of derivative instruments to limit its exposure to changes in the relative values of investmentsthat may result from market developments, including changes in prevailing interest rates and currencyexchange rates. The scope of risk management activities undertaken by KKR varies based on the leveland volatility of interest rates, prevailing foreign currency exchange rates, the types of investments thatare made and other changing market conditions. The use of hedging transactions and other derivativeinstruments to reduce the effects of a decline in the value of a position does not eliminate thepossibility of fluctuations in the value of the position or prevent losses if the value of the positiondeclines. However, such activities can establish other positions designed to gain from those samedevelopments, thereby offsetting the decline in the value of the position. Such transactions may alsolimit the opportunity for gain if the value of a position increases. Moreover, it may not be possible tolimit the exposure to a market development that is so generally anticipated that a hedging or otherderivative transaction cannot be entered into at an acceptable price.

The success of any hedging or other derivative transactions that KKR enters into generally willdepend on its ability to correctly predict market changes. As a result, while KKR may enter into suchtransactions in order to reduce its exposure to market risks, unanticipated market changes may result inpoorer overall investment performance than if the hedging or other derivative transaction had not been

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executed. In addition, the degree of correlation between price movements of the instruments used inconnection with hedging activities and price movements in a position being hedged may vary.Moreover, for a variety of reasons, KKR may not seek or be successful in establishing a perfectcorrelation between the instruments used in a hedging or other derivative transactions and the positionbeing hedged. An imperfect correlation could prevent KKR from achieving the intended result andcould give rise to a loss. In addition, it may not be possible to fully or perfectly limit KKR’s exposureagainst all changes in the value of its investments, because the value of investments is likely to fluctuateas a result of a number of factors, some of which will be beyond KKR’s control or ability to hedge.

Certain of KKR’s funds may make a limited number of investments, or investments that are concentrated incertain geographic regions or asset types, which could negatively affect their performance to the extent thoseconcentrated investments perform poorly.

The governing agreements of KKR’s funds contain only limited investment restrictions and onlylimited requirements as to diversification of fund investments, either by geographic region or asset type.During periods of difficult market conditions or slowdowns in these sectors or geographic regions,decreased revenues, difficulty in obtaining access to financing and increased funding costs may beexacerbated by this concentration of investments, which would result in lower investment returns.

KKR’s funds may make investments that could give rise to a conflict of interest.

KKR’s funds invest in a broad range of asset classes throughout the corporate capital structure.These investments include investments in corporate loans and debt securities, preferred equitysecurities and common equity securities. In certain cases, KKR may manage separate funds that investin different parts of the same company’s capital structure. For example, KKR’s fixed income funds mayinvest in different classes of the same company’s debt and may make debt investments in a companythat is owned by one of KKR’s private equity funds. In those cases, the interests of KKR’s funds maynot always be aligned, which could create actual or potential conflicts of interest or the appearance ofsuch conflicts. For example, one of KKR’s private equity funds could have an interest in pursuing anacquisition, divestiture or other transaction that, in its judgment, could enhance the value of the privateequity investment, even though the proposed transaction would subject one of KKR’s fixed incomefund’s debt investments to additional or increased risks. Similarly, KKR’s ability to effectivelyimplement its public equity strategies may be limited to the extent that contractual obligations enteredinto in the ordinary course of KKR’s traditional private equity business impose restrictions on itsengaging in transactions that KKR may be interested in otherwise pursuing.

KKR may also cause different private equity funds to invest in a single portfolio company, forexample where the fund that made the original investment no longer has capital available to invest.Conflicts may also arise where KKR makes principal investments for its own account and the numberand scope of these principal investments may increase following the completion of the CombinationTransaction. In certain cases, KKR will require that a transaction or investment be approved by anindependent valuation expert, be subject to a fairness opinion, be based on arms-length pricing data orbe calculated in accordance with a formula provided for in a fund’s governing documents prior to thecompletion of the relevant transaction to address potential conflicts of interest. Such instances includeprincipal transactions where KKR or its affiliates warehouses an investment in a portfolio company forthe benefit of one or more KKR funds pending the contribution of committed capital by the investorsin such KKR funds, follow-on investments by a fund other than a fund which made an initialinvestment in a company or transactions in which KKR arranges for a KKR fund to buy a securityfrom, or sell a security to, another KKR fund. Appropriately dealing with conflicts of interest iscomplex and difficult and KKR could suffer reputational damage or potential liability if it fails, orappears to fail, to deal appropriately with conflicts as they arise.

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Risks Related to KKR’s Organizational Structure and the Transactions

Upon completion of the Combination Transaction, KPE and its unitholders will continue to be governed byKPE’s limited partnership agreement, will not control the KKR Managing Partner or vote in the election orremoval of its directors and will have limited ability to influence decisions regarding KKR’s business.

Upon completion of the Combination Transaction, KPE unitholders will continue to hold interestsin KPE and be governed by KPE’s limited partnership agreement. KPE’s limited partnership agreementprovides for the management of its business and affairs by its general partner, a Guernsey limitedcompany that is owned by individuals who are affiliated with KKR, and which has a majority-independent board of directors. KPE unitholders may not take part in the management or control ofthe business and affairs of KPE and do not have any right or authority to act for or to bind KPE or totake part or interfere in the conduct or management of KPE. KPE unitholders are not entitled to voteon matters relating to KPE, although they are entitled to certain consent rights.

Following the completion of the Combination Transaction, KPE’s only asset will be its interests inGroup Holdings. The KKR Managing Partner is the ultimate general partner of Group Holdings andwill manage the business and affairs of Group Holdings and the KKR Group Partnerships. KPE willnot hold securities of the KKR Managing Partner. The KKR Managing Partner, which serves as GroupHoldings’ ultimate general partner and manages KKR’s business and affairs, is owned by KKR’s seniorprincipals, including its founders. Pursuant to its limited liability company agreement, the KKRManaging Partner has a board of directors that will be responsible for the oversight of KKR’s businessand operations. The board of directors, co-chaired by KKR’s founders, appoints the officers of theKKR Managing Partner. KPE, as a holder of interests in Group Holdings, will not control the KKRManaging Partner or its board of directors and, unlike the holders of common stock in a corporation,will have only limited voting rights under the Group Holdings partnership agreement and generally willbe unable to influence decisions regarding KKR’s business. KPE, as a holder of interests in GroupHoldings, also will not have the right to remove or expel the KKR Managing Partner as the ultimategeneral partner of Group Holdings for any reason, with or without cause. Therefore, unlike theshareholders of a corporation, who generally are entitled to propose the nomination of independentdirectors and who may conduct proxy solicitations with respect to the election of directors, KPE and itsunitholders will be unable to effect a change in KKR’s management if they become dissatisfied with theKKR Managing Partner’s performance.

Upon completion of the Combination Transaction, KPE’s investment objective will change from predominantlymaking investments in multiple KKR private equity funds and KKR portfolio companies to a single investmentin KKR itself.

Pursuant to the Combination Transaction, KPE will contribute all of its economic interests in theKPE Investment Partnership, which is comprised of interests in various private equity investments inKKR private equity funds and KKR portfolio companies and other investments selected by KKR, andthe KPE Investment Partnership will become a wholly-owned subsidiary of the KKR GroupPartnerships. Following the Combination Transaction, KPE’s only asset will be its interest in GroupHoldings, the entity through which KPE will hold its interests in the KKR Group Partnerships, and,therefore, you will be exposed to the risks related to KKR’s overall asset management business inaddition to the risks associated with KPE’s ownership interests in investments selected by KKR. See‘‘—Risks Related to KKR’s Business’’. In light of the foregoing, although you will continue to holdKPE units following the Combination Transaction, the timing and composition of cash flows,distributions and earnings associated with KPE’s business will be impacted by different factors and maydiffer significantly as compared to the period prior to the Combination Transaction. In addition, KKRwill no longer be required to make reinvestments in KPE units, and KKR will be permitted to use anyor all of its assets in opportunistic investments. In connection with the Combination Transaction, KPEwill amend or terminate certain of its agreements, policies and procedures. See ‘‘The CombinationTransaction—Amendments to KPE Agreements and Policies’’.

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Potential conflicts of interest may arise among the KKR Managing Partner, KKR’s affiliates and KKR. TheKKR Managing Partner and KKR’s affiliates have limited fiduciary duties to KKR and the holders of KKRGroup Partnership Units, which may permit them to favor their own interests to the detriment of KKR andthe holder of KKR Group Partnership Units.

Upon completion of the Combination Transaction, KPE unitholders will continue to hold interestsin KPE and KPE will continue to be managed by its general partner, which has a majority-independentboard of directors. However, KPE’s only asset will be its interest in Group Holdings. The KKRManaging Partner, which is the ultimate general partner of Group Holdings, will manage the businessand affairs of Group Holdings and the Combined Business, and will be governed by a board ofdirectors that is co-chaired by KKR’s founders, who also serve as KKR’s Co-Chief Executive Officers.Conflicts of interest may arise among the KKR Managing Partner and its affiliates, on the one hand,and KPE and its unitholders, on the other hand. As a result of these conflicts, the KKR ManagingPartner may favor its own interests and the interests of its affiliates over KPE and its unitholders.These conflicts include, among others, the following:

• The KKR Managing Partner determines the amount and timing of the KKR Group Partnership’sinvestments and dispositions, indebtedness, issuances of additional partner interests, tax liabilitiesand amounts of reserves, each of which can affect the amount of cash that is available fordistribution to holders of KKR Group Partnership Units;

• The KKR Managing Partner is allowed to take into account the interests of parties other thanGroup Holdings in resolving conflicts of interest, which has the effect of limiting its duties,including fiduciary duties, to KPE. For example, KKR’s affiliates that serve as the generalpartners of KKR’s funds have fiduciary and contractual obligations to KKR’s fund investors, andsuch obligations may cause such affiliates to regularly take actions that might adversely affectKKR near-term results of operations or cash flow. The KKR Managing Partner would have noobligation to intervene in, or to notify KPE of, such actions by such affiliates;

• Because KKR’s principals will indirectly hold their KKR Group Partnership Units throughentities that are not subject to corporate income taxation and Group Holdings will hold some ofits KKR Group Partnership Units through a wholly-owned subsidiary that is taxable as acorporation, conflicts may arise between KKR’s principals and Group Holdings relating to theselection and structuring of investments;

• As discussed below, the KKR Managing Partner has limited its liability and reduced oreliminated its duties, including fiduciary duties, under the Group Holdings partnershipagreement, while also restricting the remedies available to holders of KKR Group PartnershipUnits for actions that, without these limitations, might constitute breaches of duty, includingfiduciary duties. In addition, KKR has agreed to indemnify the KKR Managing Partner and itsaffiliates to the fullest extent permitted by law, except with respect to conduct involving badfaith, fraud or willful misconduct. By receiving Group Holdings units, KPE will have agreed andconsented to the provisions set forth in the Group Holdings partnership agreement, includingthe provisions regarding conflicts of interest situations that, in the absence of such provisions,might constitute a breach of fiduciary or other duties under applicable law;

• The Group Holdings partnership agreement does not restrict the KKR Managing Partner fromcausing KKR to pay it or its affiliates for any services rendered, or from entering into additionalcontractual arrangements with any of these entities on KKR’s behalf, so long as the terms of anysuch additional contractual arrangements are fair and reasonable to KKR as determined underthe Group Holdings partnership agreement. The independent directors of KPE’s generalpartner’s board of directors will be responsible for, among other things, enforcing the rights ofKPE and its unitholders under certain agreements, against KKR Holdings and certain of its

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subsidiaries and designees, a general partner or limited partner of KKR Holdings, or a personwho holds a partnership or equity interest in the foregoing entities;

• The KKR Managing Partner determines how much debt KKR incurs and that decision mayadversely affect its credit ratings;

• The KKR Managing Partner determines which costs incurred by it and its affiliates arereimbursable by KKR;

• Other than as set forth in the confidentiality and restrictive covenant agreements to whichKKR’s principals will be subject, which may not be enforceable by KKR or otherwise waived,modified or amended, affiliates of the KKR Managing Partner and existing and formerpersonnel employed by the KKR Managing Partner are not prohibited from engaging in otherbusinesses or activities, including those that might be in direct competition with KKR;

• The KKR Managing Partner controls the enforcement of obligations owed to the KKR GroupPartnerships by it and its affiliates; and

• The KKR Managing Partner or the KKR Managing Partner conflicts committee decides whetherto retain separate counsel, accountants or others to perform services for KKR.

See ‘‘Certain Relationships and Related Party Transactions’’ and ‘‘Conflicts of Interest andFiduciary Responsibilities.’’

Certain actions by the KKR Managing Partner’s board of directors require the approval of the Class A sharesof the KKR Managing Partner, all of which are held by KKR’s senior principals.

All of the KKR Managing Partner’s outstanding Class A shares are held by KKR’s seniorprincipals. Although the affirmative vote of a majority of the directors of the KKR Managing Partner isrequired for any action to be taken by the KKR Managing Partner’s board of directors, certainspecified actions approved by the KKR Managing Partner’s board of directors will also require theapproval of a majority of the Class A shares of the KKR Managing Partner. These actions consist ofthe following:

• the entry into a debt financing arrangement by KKR in an amount in excess of 10% of KKR’sexisting long-term indebtedness (other than the entry into certain intercompany debt financingarrangements);

• the issuance by the partnership or KKR’s subsidiaries of any securities that would (i) represent,after such issuance, or upon conversion, exchange or exercise, as the case may be, at least 5%on a fully diluted, as converted, exchanged or exercised basis, of any class of KKR’s or theirequity securities or (ii) have designations, preferences, rights, priorities or powers that are morefavorable than those of KKR Group Partnership Units;

• the adoption by KKR of a shareholder rights plan;

• the amendment of the limited partnership agreement or the limited partnership agreements ofthe KKR Group Partnerships;

• the exchange or disposition of all or substantially all of KKR’s assets or the assets of any KKRGroup Partnership;

• the merger, sale or other combination of the partnership or any KKR Group Partnership with orinto any other person;

• the transfer, mortgage, pledge, hypothecation or grant of a security interest in all or substantiallyall of the assets of the KKR Group Partnerships;

• the appointment or removal of a Chief Executive Officer or a Co-Chief Executive Officer of theKKR Managing Partner or the partnership;

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• the termination of the employment of any officer of the partnership or any of KKR’s subsidiariesor the termination of the association of a partner with any of its subsidiaries, in each case,without cause;

• the liquidation or dissolution of the partnership, the KKR Managing Partner or any KKR GroupPartnership; and

• the withdrawal, removal or substitution of the KKR Managing Partner as KKR’s general partneror any person as the general partner of a KKR Group Partnership, or the transfer of beneficialownership of all or any part of a general partner interest in the partnership or a KKR GroupPartnership to any person other than one of its wholly-owned subsidiaries.

Upon the completion of the Transactions, Messrs. Kravis and Roberts will collectively hold Class Ashares representing a majority of the total voting power of the outstanding Class A shares. Whileneither of them acting alone will be able to control the voting of the Class A shares, they will be ableto control the voting of such shares if they act together.

The control of the KKR Managing Partner may be transferred to a third party without the consent of KPE.

The KKR Managing Partner may transfer its general partner interest to a third party in a mergeror consolidation or in a transfer of all or substantially all of its assets without the consent of KPE.Furthermore, the members of the KKR Managing Partner may sell or transfer all or part of theirlimited liability company interests in the KKR Managing Partner without the approval of KPE, subjectto certain restrictions as described elsewhere in this consent solicitation statement. A new generalpartner may not be willing or able to form new funds and could form funds that have investmentobjectives and governing terms that differ materially from those of KKR’s current funds. A new ownercould also have a different investment philosophy, employ investment professionals who are lessexperienced, be unsuccessful in identifying investment opportunities or have a track record that is notas successful as KKR’s track record. If any of the foregoing were to occur, KKR could experiencedifficulty in making new investments, and the value of its existing investments, its business, its results ofoperations and KKR’s financial condition could materially suffer.

KKR intends to pay periodic distributions to the holders of KKR Group Partnership Units, but its ability to doso may be limited by its holding company structure and contractual restrictions.

Following the completion of the Transactions, KKR intends to pay cash distributions on a quarterlybasis. KKR is a holding company and will have no material assets other than the KKR GroupPartnership Units that KKR will hold through wholly-owned subsidiaries and will have no independentmeans of generating income. Accordingly, KKR intends to cause the KKR Group Partnerships to makedistributions on the KKR Group Partnership Units, including KKR Group Partnership Units that KKRdirectly or indirectly holds, in order to provide it with sufficient amounts to fund distributions it maydeclare. If the KKR Group Partnerships make such distributions, other holders of KKR GroupPartnership Units, including KKR Holdings, will be entitled to receive equivalent distributions pro ratabased on their KKR Group Partnership Units, as described under ‘‘Distribution Policy.’’

The declaration and payment of any future distributions will be at the sole discretion of the KKRManaging Partner, which may change KKR’s distribution policy at any time. The KKR ManagingPartner will take into account general economic and business conditions, KKR’s strategic plans andprospects, the business and investment opportunities, the financial condition and operating results,compensation expense, working capital requirements and anticipated cash needs, contractual restrictionsand obligations, including payment obligations pursuant to the tax receivable agreement, legal, tax andregulatory restrictions, restrictions or other implications on the payment of distributions by KKR to theholders of KKR Group Partnership Units or by its subsidiaries to KKR and such other factors as theKKR Managing Partner may deem relevant. Furthermore, by paying cash distributions rather thaninvesting that cash in KKR’s businesses, KKR risks slowing the pace of its growth, or not having a

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sufficient amount of cash to fund its operations, new investments or unanticipated capital expenditures,should the need arise.

KKR’s ability to characterize such distributions as capital gains or qualified dividend income maybe limited, and you should expect that some or all of such distributions may be regarded as ordinaryincome.

KPE’s intermediate holding company will be required to pay KKR’s principals for most of the benefits relatingto any additional tax depreciation or amortization deductions it may claim as a result of the tax basis step-upit receives in connection with subsequent exchanges of KKR Group Partnership Units and related transactions.

KPE and its intermediate holding company may be required to acquire KKR Group PartnershipUnits from time to time pursuant to the exchange agreement with KKR Holdings. To the extent thisoccurs, the exchanges are, in most circumstances, expected to result in an increase in KPE’sintermediate holding company’s share of the tax basis of the tangible and intangible assets of KKRManagement Holdings L.P., primarily attributable to a portion of the goodwill inherent in KKR’sbusiness, that would not otherwise have been available. This increase in tax basis may increase (for taxpurposes) depreciation and amortization and therefore reduce the amount of income tax KPE’sintermediate holding company would otherwise be required to pay in the future. This increase in taxbasis may also decrease gain (or increase loss) on future dispositions of certain capital assets to theextent tax basis is allocated to those capital assets.

KPE will enter into a tax receivable agreement with KKR Holdings requiring KPE’s intermediateholding company to pay to KKR Holdings or transferees of its KKR Group Partnership Units 85% ofthe amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediateholding company actually realizes (or is deemed to realize, in the case of an early termination paymentby its intermediate holding company or a change of control) as a result of this increase in tax basis, aswell as 85% of the amount of any such savings the intermediate holding company actually realizes (oris deemed to realize) as a result of increases in tax basis that arise due to future payments under theagreement. This payment obligation will be an obligation of KPE’s intermediate holding company andnot of either KKR Group Partnership. In the event that other of KPE’s current or future subsidiariesbecome taxable as corporations and acquire KKR Group Partnership Units in the future, or if KPEbecomes taxable as a corporation for U.S. federal income tax purposes, KKR expects that each suchentity will become subject to a tax receivable agreement with substantially similar terms. While theactual increase in tax basis, as well as the amount and timing of any payments under this agreement,will vary depending upon a number of factors, including the timing of exchanges, the price of KKRGroup Partnership Units at the time of the exchange, the extent to which such exchanges are taxableand the amount and timing of its taxable income, KPE expects that as a result of the size of theincreases in the tax basis of the tangible and intangible assets of the KKR Group Partnerships, thepayments that KPE may be required to make to KKR Holdings will be substantial. KPE may need toincur debt to finance payments under the tax receivable agreement to the extent its cash resources areinsufficient to meet its obligations under the tax receivable agreement as a result of timingdiscrepancies or otherwise. In particular, KPE’s intermediate holding company’s obligations under thetax receivable agreement would be effectively accelerated in the event of an early termination of thetax receivable agreement by KPE’s intermediate holding company or in the event of a change ofcontrol. In these situations, KPE’s obligations under the tax receivable agreement could have asubstantial negative impact on its liquidity.

Payments under the tax receivable agreement will be based upon the tax reporting positions thatthe Managing Partner will determine. KPE is not aware of any issue that would cause the IRS tochallenge a tax basis increase. However, neither KKR Holdings nor its transferees will reimburse KPEfor any payments previously made under the tax receivable agreement if such tax basis increases, or thetax benefits it claims arising from such increase, is successfully challenged by the IRS. As a result, in

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certain circumstances payments to KKR Holdings or its transferees under the tax receivable agreementcould be in excess of the intermediate holding company’s cash tax savings. The intermediate holdingcompany’s ability to achieve benefits from any tax basis increase, and the payments to be made underthis agreement, will depend upon a number of factors, as discussed above, including the timing andamount of KPE’s future income.

If KPE or KKR was deemed to be an ‘‘investment company’’ subject to regulation under the InvestmentCompany Act, applicable restrictions could make it impractical for it to continue its business as contemplatedand could have a material adverse effect on its business.

A person will generally be deemed to be an ‘‘investment company’’ for purposes of the InvestmentCompany Act if:

• it is or holds itself out as being engaged primarily, or proposes to engage primarily, in thebusiness of investing, reinvesting or trading in securities; or

• absent an applicable exemption, it owns or proposes to acquire investment securities having avalue exceeding 40% of the value of its total assets (exclusive of U.S. government securities andcash items) on an unconsolidated basis.

KPE relies on applicable exemptions under the Investment Company Act so that it does not haveto be registered as an investment company under the Investment Company Act. KKR believes that it isengaged primarily in the business of providing asset management services and not in the business ofinvesting, reinvesting or trading in securities. KKR regards itself as an asset management firm and doesnot propose to engage primarily in the business of investing, reinvesting or trading in securities.Accordingly, KKR does not believe that it is, or following the Transactions will be, an ‘‘orthodox’’investment company as defined in Section 3(a)(1)(A) of the Investment Company Act and described inthe first bullet point above. Further, following the completion of the Transactions, KKR will have nomaterial assets other than its equity interest as general partner of one of the KKR Group Partnershipsand its equity interest in a wholly-owned subsidiary, which in turn will have no material assets otherthan the equity interest as general partner of the other Group Partnership. Through these interests,KKR will directly or indirectly be the sole general partners of the KKR Group Partnerships and will bevested with all management and control over the KKR Group Partnerships. KKR does not believe itsequity interest in its wholly-owned subsidiary or its equity interests directly or through its wholly-ownedsubsidiary in the KKR Group Partnerships are investment securities. Moreover, because KKR believesthat the capital interests of the general partners of its funds in their respective funds are neithersecurities nor investment securities, KKR believes that if other exemptions to registration under theInvestment Company Act were to cease to apply, then less than 40% of the partnership’s total assets(exclusive of U.S. government securities and cash items) on an unconsolidated basis after theTransactions would be comprised of assets that could be considered investment securities.

The Investment Company Act and the rules thereunder contain detailed parameters for theorganization and operation of investment companies. Among other things, the Investment CompanyAct and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on theissuance of debt and equity securities, generally prohibit the issuance of options and impose certaingovernance requirements. KKR intends to conduct its operations so that it will not be deemed to be aninvestment company under the Investment Company Act. If anything were to happen which wouldcause the partnership to be deemed to be an investment company under the Investment Company Act,requirements imposed by the Investment Company Act, including limitations on KKR’s capitalstructure, ability to transact business with affiliates (including KKR) and ability to compensate keyemployees, could make it impractical for KKR to continue its business as currently conducted, impairthe agreements and arrangements between and among the partnership, the KKR Group Partnershipsand KKR Holdings, or any combination thereof, and materially adversely affect KKR’s business,financial condition and results of operations. In addition, KKR may be required to limit the amount of

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investments that KKR make as a principal, potentially divest assets acquired in the CombinationTransaction or otherwise conduct KKR’s business in a manner that does not subject it to theregistration and other requirements of the Investment Company Act.

The satisfaction date may occur substantially in advance of the consummation of the CombinationTransaction, and KPE will be subject to the risk that KKR’s business is adversely affected during this period.

Under the terms of the amended and restated purchase and sale agreement, the conditions to theconsummation of the Combination Transaction will be deemed to be irrevocably satisfied or waived onthe first date on which all of the conditions to the consummation of the Combination Transaction havebeen satisfied or waived, which date is referred to as the satisfaction date. If the requisite unitholderconsent is obtained, it is expected that the satisfaction date will occur on or around August 14, 2009 (oran earlier date if consented to by KKR). Notwithstanding the earlier occurrence of the satisfactiondate, the Combination Transaction will not be consummated until October 1, 2009. During the periodfrom the satisfaction date until the consummation of the Combination Transaction, KPE will have noright to terminate the amended and restated purchase agreement or prevent the CombinationTransaction from occurring as a result of changes in KKR’s business. Therefore, even if a materialadverse effect occurs with respect to KKR’s business during this period, the Combination Transactionwill still occur.

KPE’s unit price may decline due to the large number of KKR Group Partnership Units that may beexchanged for KPE units.

In connection with the Combination Transaction, KPE and KKR Holdings will enter into anexchange agreement pursuant to which KKR Holdings and certain of the transferees of its KKR GroupPartnership Units may, up to four times each year, effectively exchange KKR Group Partnership Unitsheld by them for KPE units on a one-for-one basis, subject to customary conversion rate adjustmentsfor splits, unit distributions and reclassifications. In addition, upon completion of the Transactions,KKR may issue additional KKR Group Partnership Units pursuant to its 2009 Equity Incentive Plan.The total number of KKR Group Partnership Units which may initially be issued under the 2009Equity Incentive Plan is equivalent to 15% of the number of fully diluted KKR Group PartnershipUnits outstanding upon completion of the Transactions, which amount may be increased each fiscalyear. For a further description of the 2009 Equity Incentive Plan, including the formula for annualincreases in KKR Group Partnership Units available thereunder and the restrictions on grants to KKRsenior principals, see ‘‘Governance—2009 Equity Incentive Plan’’. The market price of KPE units coulddecline as a result of the exchange or the perception that an exchange may occur of a large number ofKKR Group Partnership units for KPE units after the consummation of the Transactions. Theseexchanges, or the possibility that these exchanges may occur, also might make it more difficult for KPEunitholders to sell KPE units in the future at a time and at a price that they deem appropriate.

Risks Related to U.S. Taxation

If KPE were treated as a corporation for U.S. federal income tax or state tax purposes, then its distributionsto you could be substantially reduced and the value of the units could be adversely affected.

The value of your KPE units depends in part on KPE being treated as a partnership for U.S.federal income tax purposes, which requires that 90% or more of its gross income for every taxableyear consist of qualifying income, as defined in Section 7704 of the Internal Revenue Code, and thatKPE not be required to be register under the Investment Company Act on a continuing basis.Qualifying income generally includes dividends, interest, capital gains from the sale or other dispositionof stocks and securities and certain other forms of investment income. KPE may not meet theserequirements or current law may change so as to cause, in either event, it to be treated as acorporation for U.S. federal income tax purposes. KPE has not requested, nor does it plan to request,a ruling from the IRS on this or any other matter affecting it.

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If KPE failed to meet the qualifying income requirements or if current law were to change and itwas treated as a corporation for U.S. federal income tax purposes, KPE may be treated as foreigncorporation. If this were the case, KPE would be subject to U.S. federal income tax and branch profitstax on any of its income that is treated as effectively connected with a U.S. trade or business.Alternatively, it is possible that if KPE were to be treated as a corporation for U.S. federal income taxpurposes it would be treated as a U.S. corporation subject to tax in the United States. If KPE weretreated as a U.S. corporation for U.S. federal income tax purposes, it would pay U.S. federal, state andlocal income tax on its taxable income at the applicable tax rates. Distributions to you would generallybe taxed again as corporate distributions, and no income, gains, losses, deductions or credits of KPEwould otherwise flow through to you. Because a tax would be imposed upon KPE as a corporation, itsdistributions to you would be substantially reduced which could cause a reduction in the value of theKPE units.

Similarly, if the Controlling Partnership were at some point listed in the United States, the valueof the Controlling Partnership units would also depend in part on the Controlling Partnership beingtreated as a partnership for U.S. federal income tax purposes. This would require the ControllingPartnership to meet the qualifying income requirements discussed above. If the Controlling Partnershipfailed to meet the qualifying income requirements or if current law were to change and the ControllingPartnership were treated as a corporation for U.S. federal income tax purposes, the ControllingPartnership would be treated as a U.S. corporation subject to U.S. federal, state and local income taxon its taxable income at the applicable tax rates. Distributions to holders of the Controlling Partnershipunits would generally be taxed again as corporate distributions, and no income, gains, losses, deductionsor credits of would otherwise flow through to holders of Controlling Partnership units. Because a taxwould be imposed upon the Controlling Partnership as a corporation, its distributions to holders wouldbe substantially reduced, which could cause a reduction in the value of the Controlling Partnershipunits.

Current law may change, causing KPE (or the Controlling Partnership, if it is listed in the UnitedStates) to be treated as a corporation for U.S. federal or state income tax purposes or otherwisepotentially subjecting it to entity level taxation. See ‘‘—Risks Related to KKR’s Business—Legislationhas been introduced that would, if enacted, preclude KPE following the Combination Transaction fromqualifying as a partnership for U.S. federal income tax purposes. If this or any similar legislation orregulation were to be enacted and apply to KPE, it could incur a material increase in its tax liabilitythat could result in a reduction in the value of the KPE units.’’ In addition, because of widespread statebudget deficits, several states are evaluating ways to subject partnerships to entity level taxation throughthe imposition of state income, franchise or other forms of taxation. If any state were to impose a taxupon KPE (or the Controlling Partnership, if it is listed in the United States), distributions to youwould be reduced.

You will be subject to U.S. federal income tax on your share of KPE’s taxable income, regardless of whetheryou receive any cash distributions, and may recognize income in excess of KPE’s cash distributions.

As long as 90% of KPE’s gross income for each taxable year constitutes qualifying income asdefined in Section 7704 of the Internal Revenue Code, the entity is not required to register as aninvestment company under the Investment Company Act on a continuing basis, and assuming there isno change in law, KPE will be treated, for U.S. federal income tax purposes, as a partnership and notas an association or a publicly-traded partnership taxable as a corporation (see ‘‘—Risks Related toKKR’s Business—Legislation has been introduced that would, if enacted, preclude KPE following theCombination Transaction from qualifying as a partnership for U.S. federal income tax purposes. If thisor any similar legislation or regulation were to be enacted and apply to KPE, it could incur a materialincrease in its tax liability that could result in a reduction in the value of the KPE units’’). As a result,a U.S. unitholder will be subject to U.S. federal, state, local and possibly, in some cases, foreign incometaxation on its allocable share of KPE’s items of income, gain, loss, deduction and credit (including its

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allocable share of those items of any entity in which KPE invests that is treated as a partnership or isotherwise subject to tax on a flow through basis) for each of KPE’s taxable years ending with or withinthe unitholder’s taxable year, regardless of whether or when such unitholder receives cash distributions.

You may not receive cash distributions equal to your allocable share of KPE’s net taxable incomeor even the tax liability that results from that income. In addition, certain of the holdings of KPE,including holdings, if any, in a controlled foreign corporation, or a CFC, a passive foreign investmentcompany, or a PFIC, or entities treated as partnerships for U.S. federal income tax purposes, mayproduce taxable income prior to the receipt of cash relating to such income, and holders of KPE unitsthat are U.S. taxpayers may be required to take such income into account in determining their taxableincome. In the event of an inadvertent termination of the partnership status for which the IRS hasgranted limited relief, each holder of KPE units may be obligated to make such adjustments as the IRSmay require to maintain KPE’s status as a partnership. Such adjustments may require the holders ofKPE units to recognize additional amounts in income during the years in which they hold such units. Inaddition, because of KPE’s methods of allocating income and gain among holders of KPE units, youmay be taxed on amounts that accrued economically before you became a unitholder. Consequently,you may recognize taxable income without receiving any cash.

Although KPE expects that the distributions it makes should be sufficient to cover a holder’s taxliability in any given year that is attributable to its investment in KPE, no assurances can be made thatthis will be the case. Accordingly, each holder should ensure that it has sufficient cash flow from othersources to pay all tax liabilities.

Taxable gain or loss on the disposition of certain assets may be allocated to holders of KPE units even if theydid not share in the economic appreciation inherent in such assets.

Generally, KPE and its intermediate holding company will be allocated taxable gains and lossesrecognized by the KKR Group Partnerships based upon its percentage ownership in each GroupPartnership. While gains and losses inherent in the assets as of the date they are contributed to theGroup Partnership will be allocated to the partner who contributed such assets, gains and lossesinherent in assets owned by a partnership, including KPE Investment Partnership, whose partnershipinterests, rather than assets, are contributed to the Group Partnership will be allocated pro rata to thepartners of the Group Partnership. In some circumstances, under the U.S. federal income tax rulesaffecting partners and partnerships, the taxable gain or loss allocated to a unitholder may notcorrespond to that unitholder’s share of the economic appreciation or depreciation in the particularasset. This is primarily an issue of the timing of the payment of tax, rather than a net increase in taxliability, because the gain or loss allocation would generally be expected to be offset as a unitholdersold units. Holders of Controlling Partnership units following a listing in the United States wouldgenerally be subject to similar tax consequences as those discussed here with respect to holders of KPEunits.

KPE may hold or acquire certain investments through an entity classified as a PFIC or CFC for U.S. federalincome tax purposes.

Certain of KPE’s investments may be in foreign corporations or may be acquired through a foreignsubsidiary that would be classified as a corporation for U.S. federal income tax purposes. Such an entitymay be a PFIC for U.S. federal income tax purposes. Similarly, if the Controlling Partnership is listedin the United States, following such listing, it may hold certain investments in foreign corporations ormay acquire investments through a foreign subsidiary that may be treated as PFICs. In addition, it mayhold certain investments in foreign corporations that are treated as controlled foreign corporations(‘‘CFCs’’). Holders of may experience adverse U.S. tax consequences as a result of holding an indirectinterest in a PFIC or CFC. These investments may produce taxable income prior to the receipt of cashrelating to such income, and unitholders that are U.S. taxpayers will be required to take such income

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into account in determining their taxable income. In addition, gain on the sale of a PFIC or CFC maybe taxable at ordinary income rates. See ‘‘Material U.S. Federal Income Tax Considerations—U.S.Taxes—Consequences to U.S. Holders of Common Units—Passive Foreign Investment Companies’’ and‘‘Material U.S. Federal Income Tax Considerations—Consequences of Listing Transaction—ControlledForeign Corporations.’’

Non-U.S. persons face unique U.S. tax issues from owning KPE units that may result in adverse taxconsequences to them.

KPE may be, or may become, engaged in a U.S. trade or business for U.S. federal income taxpurposes, including by reason of investments in U.S. real property holding corporations, in which casesome portion of its income would be treated as effectively connected income with respect to non-U.S.holders, or ECI. To the extent KPE’s income is treated as ECI, non-U.S. holders generally would besubject to withholding tax on their allocable share of such income, would be required to file a U.S.federal income tax return for such year reporting their allocable share of income effectively connectedwith such trade or business and any other income treated as ECI, and would be subject to U.S. federalincome tax at regular U.S. tax rates on any such income (state and local income taxes and filings mayalso apply in that event). Non-U.S. holders that are corporations may also be subject to a 30% branchprofits tax on their distributions of such income. In addition, certain income from U.S. sources that isnot ECI allocable to non-U.S. holders will be reduced by withholding taxes imposed at the highesteffective applicable tax rate. Similarly, if the Controlling Partnership lists in the United States andbecomes engaged in a U.S. trade or business for U.S. federal income tax purposes, including by reasonof investments in U.S. real property holding corporations, some portion of its income would be treatedas ECI with respect to non-U.S. holders of Controlling Partnership units. If this were the case, suchnon-U.S. holders would generally be subject to the same consequences as described above with respectto non-U.S. holders of KPE units.

Holders of KPE units may be subject to state and local taxes and return filing requirements as a result ofowning such units.

In addition to U.S. federal income taxes, holders of KPE units may be subject to other taxes,including state and local taxes, unincorporated business taxes and estate, inheritance or intangible taxesthat are imposed by the various jurisdictions in which KPE does business or owns property now or inthe future, even if the holders of the KPE units do not reside in any of those jurisdictions. Holders ofKPE units may be required to file state and local income tax returns and pay state and local incometaxes in some or all of these jurisdictions. Further, holders of KPE units may be subject to penalties forfailure to comply with those requirements. It is the responsibility of each unitholder to file all U.S.federal, state and local tax returns that may be required of such unitholder. KKR’s counsel has notrendered an opinion on the state or local tax consequences of owning KPE units. Similarly, holders ofControlling Partnership units following a listing in the United States may be required to file state andlocal income tax returns and pay state and local income taxes in some or all of these jurisdictions andgenerally be subject to the same potential tax consequences as described for holders of KPE units.

KPE’s interest in certain of its businesses will be held through the intermediate holding company, which willbe treated as a corporation for U.S. federal income tax purposes; such corporation will be liable for significanttaxes and may create other adverse tax consequences, which could potentially adversely affect the value of theKPE units.

In light of the publicly-traded partnership rules under U.S. federal income tax laws and otherrequirements, KPE will hold its interest in certain of the KKR businesses through an intermediateholding company, which will be treated as a corporation for U.S. federal income tax purposes. Thisintermediate holding company will be liable for U.S. federal income taxes on all of its taxable incomeand applicable state, local and other taxes. These taxes would reduce the amount of distributions

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available to be made on your KPE units. In addition, these taxes could be increased if the IRS were tosuccessfully reallocate deductions or income of the related entities conducting KKR’s business. The taxliability that any such intermediate holding company will incur has not been calculated. Theseadditional taxes have not applied to KPE’s or KKR’s existing owners in its organizational structure ineffect before the Combination Transaction and will not apply to KKR’s existing owners following theCombination Transaction until they exchange their Group Partnership units. In addition, certain assetsand liabilities of KPE will be contributed to the intermediate holding company before being contributedto KKR Management Holdings L.P. The basis of certain assets contributed to the intermediate holdingcorporation may be reduced under the Internal Revenue Code which could result in greater gain (orless loss) and, thus, more U.S. federal income tax in the event of a future disposal of those assets.

Risks Related to the Potential Future Listing of the Combined Business in the United States

KPE and KKR Holdings will have the right to require that the other use its reasonable best effortsto cause interests in the Combined Business to be listed and traded on the New York Stock Exchangeor The NASDAQ Stock Market. KKR Holdings may exercise this right following the 6-monthanniversary of the date the conditions precedent to the Combination Transaction are satisfied or waivedand KPE, at the discretion of the independent directors of its general partner, may exercise this rightfollowing the 12-month anniversary of the date the conditions precedent to the CombinationTransaction are satisfied or waived. To effect such a listing, following the Combination Transaction,KPE would contribute its interests in Group Holdings to the Controlling Partnership in exchange forControlling Partnership units. KKR or KPE, as the case may be, would seek a listing of the ControllingPartnership units, which would represent equity interests in the Combined Business. Such listing wouldnot require further action or consent by KPE unitholders. If such listing occurs, KPE would make anin-kind distribution of the Controlling Partnership units to KPE unitholders, subject to applicable laws,rules and regulations, KPE units would cease to trade on Euronext Amsterdam and KPE wouldsubsequently be dissolved and delisted from Euronext Amsterdam. There can be no assurance that suchlisting will occur in the above time periods or at all. If the listing of the Controlling Partnership unitsdoes occur and the Controlling Partnership becomes a public entity in the United States, the CombinedBusiness may be subject to several additional risks and uncertainties, including those discussed below.

If the Controlling Partnership becomes a U.S. public company, the requirements of being a public entity andsustaining growth may strain KKR’s resources.

If the Controlling Partnership becomes a public company in the U.S., it will be subject to thereporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, and requirementsof the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. These requirements may place a strainon KKR’s systems and resources. The Exchange Act will require that KKR file annual, quarterly andcurrent reports with respect to its business and financial condition. The Sarbanes-Oxley Act will requirethat KKR maintain effective disclosure controls and procedures and internal controls over financialreporting, which are discussed below. In order to maintain and improve the effectiveness of KKR’sdisclosure controls and procedures, significant resources and management oversight will be required.KKR will be implementing additional procedures and processes for the purpose of addressing thestandards and requirements applicable to public companies. In addition, sustaining KKR’s growth willalso require KKR to commit additional management, operational and financial resources to identifynew professionals to join the firm and to maintain appropriate operational and financial systems toadequately support expansion. These activities may divert management’s attention from other businessconcerns, which could have a material adverse effect on KKR’s business, financial condition, results ofoperations and cash flows. KKR will also incur costs that it has not previously incurred for directorfees, investor relations expenses, expenses for compliance with the Sarbanes-Oxley Act and rules of theSEC and the New York Stock Exchange or The NASDAQ Stock Market, hiring additional accounting,legal and administrative personnel, and various other costs relating to being a public company.

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KKR has not evaluated its internal controls over financial reporting for purposes of compliance withSection 404 of the Sarbanes-Oxley Act, should it become a public company.

KKR has not previously been required to comply with requirements of the Sarbanes-Oxley Act,including the internal control evaluation and certification requirements of Section 404 of that statute,and KKR will not be required to comply with all of those requirements until after it has been subjectto the reporting requirements of the Exchange Act for a specified period of time. Accordingly, KKRhas not determined whether or not its existing internal controls over financial reporting systems complywith Section 404. The internal control evaluation required by Section 404 will divert internal resourcesand will take a significant amount of time, effort and expense to complete. If it is determined thatKKR is not in compliance with Section 404, KKR will be required to implement remedial proceduresand re-evaluate its internal control over financial reporting. KKR may experience higher thananticipated operating expenses as well as higher independent auditor and consulting fees during theimplementation of these changes and thereafter. Further, KKR may need to hire additional qualifiedpersonnel in order for it to comply with Section 404. If KKR is unable to implement any necessarychanges effectively or efficiently, its operations, financial reporting or financial results could beadversely affected and KKR could obtain an adverse report on internal controls from its independentregistered public accountants.

The Controlling Partnership, as a limited partnership, would qualify for some exemptions from the corporategovernance and other requirements of the New York Stock Exchange or The NASDAQ Stock Market if itshould become listed in the U.S.

The Controlling Partnership is a limited partnership and as a result would qualify for exceptionsfrom certain corporate governance and other requirements of the rules of the New York StockExchange or The NASDAQ Stock Market if it should become listed in the U.S. Pursuant to theseexceptions, limited partnerships may elect not to comply with certain corporate governancerequirements of the New York Stock Exchange or The NASDAQ Stock Market, including therequirements: (i) that the listed company have a nominating and corporate governance committee thatis composed entirely of independent directors; and (ii) that the listed company have a compensationcommittee that is composed entirely of independent directors. In addition, as a limited partnership,KKR will not be required to hold annual unitholder meetings. Accordingly, you would not have thesame protections afforded to equity holders of entities that are subject to all of the corporategovernance requirements of the New York Stock Exchange or The NASDAQ Stock Market.

KKR’s founders would be able to determine the outcome of any matter that may be submitted for a vote of thelimited partners of the Controlling Partnership

Upon completion of the Transactions, KKR Holdings will own 70% of the KKR Group PartnershipUnits. Due to the foregoing, upon completion of a U.S. listing, KKR’s principals would generally havesufficient voting power to determine the outcome of those few matters that may be submitted for avote of the holders of Controlling Partnership units, including a merger or consolidation of KKR, a saleof all or substantially all of the assets of KKR and amendments to the Controlling Partnershippartnership agreement that may be materially adverse to holders of Controlling Partnership units. Inaddition, following a U.S. listing the Controlling Partnership partnership agreement would containprovisions that enable KKR to take actions that would materially and adversely affect all holders ofControlling Partnership units or a particular class of holders of Controlling Partnership units upon themajority vote of all outstanding voting units, and since more than a majority of KKR’s voting units willbe controlled by KKR principals upon completion of the Transactions, KKR’s founders will have theability to take actions that could materially and adversely affect the holders of Controlling Partnershipunits either as a whole or as a particular class.

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The voting rights of holders of Controlling Partnership units are further restricted by provisions inthe Controlling Partnership limited partnership agreement stating that any Controlling Partnership unitsheld by a person that beneficially owns 20% or more of any class of Controlling Partnership units thenoutstanding (other than the KKR Managing Partner or its affiliates, or a direct or subsequentlyapproved transferee of the KKR Managing Partner or its affiliates) cannot be voted on any matter. TheControlling Partnership’s partnership agreement also contains provisions limiting the ability of theholders of Controlling Partnership units to call meetings, to acquire information about KKR’soperations, and to influence the manner or direction of KKR’s management. The ControllingPartnership’s partnership agreement also does not restrict the KKR Managing Partner’s ability to takeactions that may result in KKR being treated as an entity taxable as a corporation for U.S. federal (andapplicable state) income tax purposes. Furthermore, holders of Controlling Partnership units would notbe entitled to dissenters’ rights of appraisal under the Controlling Partnership limited partnershipagreement or applicable Delaware law in the event of a merger or consolidation, a sale of substantiallyall of KKR’s assets or any other transaction or event.

The amended and restated partnership agreement of the Controlling Partnership will contain provisions thatreduce or eliminate duties (including fiduciary duties) of the KKR Managing Partner and limit remediesavailable to unitholders for actions that might otherwise constitute a breach of duty. It will be difficult forunitholders to successfully challenge a resolution of a conflict of interest by Managing Partner or by itsconflicts committee.

The amended and restated partnership agreement of the Controlling Partnership will containprovisions that require holders of Controlling Partnership units to waive or consent to conduct by theKKR Managing Partner and its affiliates that might otherwise raise issues about compliance withfiduciary duties or applicable law. For example, the Controlling Partnership’s partnership agreementwill provide that when the KKR Managing Partner is acting in its individual capacity, as opposed to inits capacity as the KKR Managing Partner, it may act without any fiduciary obligations to holders ofControlling Partnership units, whatsoever. When the KKR Managing Partner, in its capacity as itsgeneral partner, or KKR’s conflicts committee is permitted to or required to make a decision in its‘‘sole discretion’’ or ‘‘discretion’’ or that it deems ‘‘necessary or appropriate’’ or ‘‘necessary oradvisable,’’ then the KKR Managing Partner or the conflicts committee will be entitled to consider onlysuch interests and factors as it desires, including its own interests, and will have no duty or obligation(fiduciary or otherwise) to give any consideration to any interest of or factors affecting KKR or anyholder of Controlling Partnership units and will not be subject to any different standards imposed bythe Controlling Partnership’s partnership agreement, the Delaware Revised Uniform LimitedPartnership Act, which is referred to as the Delaware Limited Partnership Act, or under any other law,rule or regulation or in equity.

The above modifications of fiduciary duties are expressly permitted by Delaware law. Hence, KKRand holders of Controlling Partnership units will only have recourse and be able to seek remediesagainst the KKR Managing Partner if the KKR Managing Partner breaches its obligations pursuant tothe Controlling Partnership’s partnership agreement. Unless the KKR Managing Partner breaches itsobligations pursuant to the Controlling Partnership’s partnership agreement, KKR and holders ofControlling Partnership units will not have any recourse against the KKR Managing Partner even if theKKR Managing Partner were to act in a manner that was inconsistent with traditional fiduciary duties.Furthermore, even if there has been a breach of the obligations set forth in the ControllingPartnership’s partnership agreement, the Controlling Partnership’s partnership agreement provides thatthe KKR Managing Partner and its officers and directors will not be liable to KKR or holders ofControlling Partnership units, for errors of judgment or for any acts or omissions unless there has beena final and non-appealable judgment by a court of competent jurisdiction determining that the KKRManaging Partner or its officers and directors acted in bad faith or engaged in fraud or willfulmisconduct. These provisions are detrimental to the holders of Controlling Partnership units because

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they restrict the remedies available to unitholders for actions that without those limitations mightconstitute breaches of duty including fiduciary duties.

Whenever a potential conflict of interest exists between KKR and the KKR Managing Partner, theKKR Managing Partner may resolve such conflict of interest. If the KKR Managing Partner determinesthat its resolution of the conflict of interest is on terms no less favorable to KKR than those generallybeing provided to or available from unrelated third parties or is fair and reasonable to KKR, takinginto account the totality of the relationships between KKR and the KKR Managing Partner, then it willbe presumed that in making this determination, the KKR Managing Partner acted in good faith. Aholder of Controlling Partnership units seeking to challenge this resolution of the conflict of interestwould bear the burden of overcoming such presumption. This is different from the situation withDelaware corporations, where a conflict resolution by an interested party would be presumed to beunfair and the interested party would have the burden of demonstrating that the resolution was fair.

Also, if the KKR Managing Partner obtains the approval of the conflicts committee of the KKRManaging Partner, the resolution will be conclusively deemed to be fair and reasonable to KKR andnot a breach by the KKR Managing Partner of any duties it may owe to KKR or holders of ControllingPartnership units. This is different from the situation with Delaware corporations, where a conflictresolution by a committee consisting solely of independent directors may, in certain circumstances,merely shift the burden of demonstrating unfairness to the plaintiff. If you receive a ControllingPartnership unit, you will be treated as having consented to the provisions set forth in the ControllingPartnership’s partnership agreement, including provisions regarding conflicts of interest situations that,in the absence of such provisions, might be considered a breach of fiduciary or other duties underapplicable state law. As a result, unitholders will, as a practical matter, not be able to successfullychallenge an informed decision by the conflicts committee. See ‘‘Conflicts of Interest and FiduciaryResponsibilities.’’

The potential requirement for the Controlling Partnership to convert its financial statements from beingprepared in conformity with accounting principles generally accepted in the United States of America toInternational Financial Reporting Standards may strain its resources and increase its annual expenses.

If the Controlling Partnership becomes a public company in the U.S., the SEC may require in thefuture that it report its financial results under International Financial Reporting Standards (‘‘IFRS’’)instead of under accounting principles generally accepted in the United States of America(‘‘U.S. GAAP’’). IFRS is a set of accounting principles that has been gaining acceptance on aworldwide basis. These standards are published by the London-based International AccountingStandards Board (‘‘IASB’’) and are more focused on objectives and principles and less reliant ondetailed rules than U.S. GAAP. Today, there remain significant and material differences in several keyareas between U.S. GAAP and IFRS which would affect the Controlling Partnership Additionally,U.S. GAAP provides specific guidance in classes of accounting transactions for which equivalentguidance in IFRS does not exist. The adoption of IFRS is highly complex and would have an impact onmany aspects and operations of the Controlling Partnership, including but not limited to financialaccounting and reporting systems, internal controls, taxes, borrowing covenants and cash management.It is expected that a significant amount of time, internal and external resources and expenses over amulti-year period would be required for this conversion.

The Controlling Partnership’s common unit price may decline due to the large number of common unitseligible for future sale and for exchange.

In connection with a U.S. listing, the Controlling Partnership and KKR Holdings will enter into anexchange agreement pursuant to which KKR Holdings and certain of the transferees of its KKR GroupPartnership Units may, up to four times each year, effectively exchange KKR Group Partnership Unitsheld by them for Controlling Partnership units on a one-for-one basis, subject to customary conversion

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rate adjustments for splits, unit distributions and reclassifications. In addition, the ControllingPartnership may issue additional Controlling Partnership units pursuant to its Controlling PartnershipEquity Incentive Plan. The total number of Controlling Partnership units which may initially be issuedunder the Controlling Partnership Equity Incentive Plan is equivalent to 15% of the number of fullydiluted Controlling Partnership units outstanding as of the effective date of the plan, less the numberof awards made pursuant to the 2009 Equity Incentive Plan. See ‘‘U.S. Listing—Controlling PartnershipEquity Incentive Plan’’. The amount may be increased each year to the extent that KKR issuesadditional equity. The market price of Controlling Partnership units could decline as a result of theexchange or the perception that an exchange may occur of a large number of KKR Group Partnershipunits for Controlling Partnership units. These exchanges, or the possibility that these exchanges mayoccur, also might make it more difficult for holders of Controlling Partnership units to sell ControllingPartnership units in the future at a time and at a price that they deem appropriate.

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DISTRIBUTION POLICY

KKR intends to make quarterly cash distributions to holders of its interests in amounts that in theaggregate are expected to constitute substantially all of the cash earnings of its asset managementbusiness each year in excess of amounts determined by the KKR Managing Partner to be necessary orappropriate to provide for the conduct of its business, to make appropriate investments in its businessand its funds and to comply with applicable law and any of its debt instruments or other agreements.For the purposes of its distribution policy, KKR’s cash earnings from its asset management business isexpected to consist of (i) its fee related earnings after deducting non-cash items and certain otheradjustments and (ii) all carry distributions received from its funds which have not been allocated aspart of its carry pool as described under ‘‘Orgaizational Structure.’’

KKR’s distribution policy reflects its belief that distributing substantially all of the cash earnings ofits asset management business will provide transparency for holders of its interests and impose on KKRan investment discipline with respect to the businesses and strategies that it pursues. Assuming theeffective date of the Combination Transaction is October 1, 2009, KKR expects that its first quarterlydistribution will be paid in the first quarter of 2010 in respect of the period from October 1, 2009through December 31, 2009.

Because KPE will make its investment in KKR through a holding company structure and theapplicable holding companies do not own any material cash-generating assets other than their directand indirect holdings in KKR Group Partnership Units, distributions to you will be funded in thefollowing manner:

• First, the KKR Group Partnerships will make distributions to holders of KKR GroupPartnership Units, including the holding companies through which KPE invests, in proportion totheir percentage interests in the KKR Group Partnerships;

• Second, the holding companies through which KPE invests will distribute to KPE the amount ofany distributions that they receive from the Group Partnership, after deducting any applicabletaxes, and

• Third, KPE will distribute to holders of KPE units the amount of any distributions that KPEreceives from its holding companies through which it invests.

The actual amount and timing of distributions will be subject to the discretion of the KKRManaging Partner’s board of directors, and there can be no assurance that distributions will be made asintended or at all. In particular, the amount and timing of distributions will depend upon a number offactors, including, among others, KKR’s available cash and current and anticipated cash needs,including funding of investment commitments and debt service and repayment obligations; generaleconomic and business conditions; KKR’s strategic plans and prospects; KKR’s results of operationsand financial condition; KKR’s capital requirements; legal, contractual and regulatory restrictions onthe payment of distributions by KKR or its subsidiaries, including restrictions contained in its debtagreements, and such other factors as the board of directors of the KKR Managing Partner considersrelevant.

The partnership agreements of the KKR Group Partnerships will provide for cash distributions,which are referred to as tax distributions, to the partners of such partnerships if the KKR ManagingPartner determines that the taxable income of the relevant partnership will give rise to taxable incomefor its partners. The KKR Group Partnerships will make tax distributions only to the extentdistributions from such partnerships for the relevant year was otherwise insufficient to cover such taxliabilities. Generally, these tax distributions will be computed based on an estimate of the net taxableincome of the relevant partnership allocable to a partner multiplied by an assumed tax rate equal tothe highest effective marginal combined U.S. federal, state and local income tax rate prescribed for anindividual or corporate resident in New York, New York (taking into account the nondeductibility of

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certain expenses and the character of KKR’s income). A portion of any such tax distributions receivedby KKR, net of amounts used by its subsidiaries to pay their tax liability, will be distributed to KPE.Such amounts are generally expected to be sufficient to permit U.S. holders of KKR Group PartnershipUnits to fund their estimated U.S. tax obligations (including any federal, state and local income taxes)with respect to their distributive shares of net income or gain, after taking into account any withholdingtax imposed on KKR. There can be no assurance that, for any particular KPE unitholder, suchdistributions will be sufficient to pay the unitholder’s actual U.S. or non-U.S. tax liability.

Historically, KKR typically has made cash distributions to its existing owners when it receivedsignificant distributions from its funds. In addition, KKR has historically made cash distributions to itssenior principals annually in connection with the payment to KKR of management and other fees.These distributions were not made pursuant to any agreement. See ‘‘KKR Management’s Discussionand Analysis of Financial Condition and Results of Operations Expenses—Employee Compensationand Benefits—Expense.’’

Prior to the completion of the Combination Transaction, the KKR Group is expected to make oneor more cash and in-kind distributions to certain of its existing owners. Such distributions are expectedto consist of substantially all available cash-on-hand, certain accrued receivables of its managementcompanies and capital markets subsidiaries and certain personal property (consisting of non-operatingassets) of the management company for its private equity funds. These amounts will not include,however, any accrued monitoring or transaction fees that must be credited against any managementfees that are payable in respect of future periods, the after-tax amount of any management fees thatmay be required to be returned to investors before a carried interest may be paid and any otheramounts that are necessary to provide the Combined Business with sufficient working capital toconduct its business in the ordinary course as of the completion of the Transactions. The actual amountof such distributions will depend on the amounts of available cash-on-hand and accrued receivables ofthe management companies and the book value of such personal property at the time the CombinationTransaction is completed.

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THE COMBINATION TRANSACTION

The Combination Transaction

On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR & Co. L.P. and certain of its affiliates providing for the combination of the asset managementbusiness of KKR with the assets and liabilities of KPE. Upon completion of the CombinationTransaction, KPE would beneficially own a 30% interest in the Combined Business, which would beheld through Group Holdings. The remaining 70% interest in the Combined Business will bebeneficially owned by KKR’s existing owners and will be accounted for in KKR’s consolidated financialstatements as noncontrolling interests. KKR’s combined financial statements include the general partnerof the KPE Investment Partnership, which has historically consolidated the KPE Investment Partnershipas its primary beneficiary. In connection with the Combination Transaction, the KKR GroupPartnerships will acquire all outstanding noncontrolling interests in the KPE Investment Partnership,which will become a wholly-owned subsidiary of the KKR Group Partnerships upon completion of theCombination Transaction.

Legal Requirements and Consent Solicitation

The KPE partnership agreement provides that KKR may enter into and consummate a transactionwith KPE provided that the terms of the transaction are permitted by and approved in accordance withthe provisions of the memorandum and articles of association of KPE’s general partner. Thememorandum and articles of association of KPE’s general partner provide that certain actions,including any transaction between KPE and KKR or its affiliates (other than certain preapprovedtransactions) require the special approval of a majority of the KPE Independent Directors. On July 19,2009, the amended and restated purchase and sale agreement was unanimously approved by the KPEBoard, acting upon the unanimous recommendation of the KPE Independent Directors. See‘‘—Background of the Combination Transaction.’’

Under the KPE partnership agreement, KPE unitholders, in their capacities as limited partners ofKPE, may not take part in the management or control of the business and affairs of KPE. While notrequired by the KPE partnership agreement or by any applicable legal, regulatory or other requirement,KPE has voluntarily elected to undertake a consent solicitation pursuant to which KPE unitholders willbe asked to consent to the Combination Transaction. The decision to voluntarily undertake a consentsolicitation was made based on the extraordinary nature of the transaction. If unitholders holding atleast a majority of the KPE units for which a properly submitted consent form is submitted (excludingKPE units whose consent rights are controlled by KKR or its affiliates) consent to the CombinationTransaction and the other conditions precedent in the amended and restated purchase and saleagreement are satisfied or waived, KKR and KPE will hold a closing of the Combination Transaction assoon as reasonably practicable thereafter. As of the record date for the consent solicitation, KKR or itsaffiliates controlled the consent rights with respect to approximately 3.8% of the KPE units. Trading ofKPE units will continue on Euronext Amsterdam. The effective date of the Combination Transactionwill be the first day following the end of the quarter during which the conditions to closing theCombination Transaction are satisfied or waived, and such date will be the effective date for financialand tax reporting purposes. If conditions to closing the Combination Transaction are satisfied or waivedon or prior to September 30, 2009, then October 1, 2009 would be the date that KPE and KKR’sexisting owners would begin to share ratably in the assets, liabilities, profits, losses and distributions, ifany, of the Combined Business and that reporting as a combined company would begin.

The record date for determining holders of KPE units entitled to receive notice of, and consent to,the consummation of the Combination Transaction is the close of business on July 23, 2009, which forthis purpose is considered to be at 5:30 p.m. (Amsterdam time), except that it is 5:00 p.m. (New YorkCity time) for the holders of RDUs.

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KPE’s general partner expects to distribute this consent solicitation statement to KPE unitholderson or about July 24, 2009. In order to be considered, consents must be properly completed, signed,dated and received by KPE’s general partner before the expiration of the consent solicitation at5:30 p.m. (Amsterdam time) on August 14, 2009, or such later date and time as mutually agreed byKKR and KPE. Please note that your broker or bank may require that you submit your consentinstructions prior to the expiration of the consent solicitation period so that the broker or bank hassufficient time to execute your instructions on your behalf in advance of the expiration time. Since thedetermination of whether the required KPE unitholder consent is obtained is based only on these KPEunits for which a properly submitted consent form is submitted, your failure to submit a consent formwill not affect the outcome of this consent solicitation.

In addition to soliciting consents by mail, KPE’s general partner and its officers, employees andagents may solicit consents in person, by telephone or otherwise. KPE also expects to request thatbrokers, banks and other nominees solicit consents from their principals, and KPE may be required topay such brokers, banks and nominees certain expenses they incur for those activities. Innisfree M&AIncorporated, a proxy soliciting firm, has been retained to assist KPE in the solicitation of consents.

Each KPE unitholder of record as of July 23, 2009 will be entitled to one consent per each unitheld. The approval of the consummation of the Combination Transaction requires the consent of theholders of at least a majority of the KPE units on the record date for which a properly submittedconsent form is submitted, excluding any KPE units whose consent rights are controlled by KKR or itsaffiliates. As of March 31, 2009, KPE had 204,902,226 units outstanding. KPE unitholders may revoketheir consent at any time prior to the earlier of (i) the expiration of the consent solicitation period and(ii) the time that consents of more than 50% of the KPE units (excluding KPE units whose consentrights are controlled by KKR or its affiliates and by any person who has informed KPE in writing thatit will not submit a consent) have been obtained to approve the consummation of the CombinationTransaction. Based upon information available to KPE as of the date of this consent solicitationstatement and the application of the standard in the immediately preceding sentence, KPE unitholderswill not be able to revoke their consent after the consent of an aggregate of 90,357,886 KPE unitsapproving the consummation of the Combination Transaction have been properly completed andproperly submitted. The earlier of the (i) expiration time and (ii) the time that consents of more than50% of the KPE units (excluding KPE units whose consent rights are controlled by KKR or itsaffiliates and by any person who has informed KPE in writing that it will not submit a consent) havebeen obtained to approve the consummation of the Combination Transaction is referred to as the‘‘Revocation Deadline’’. Consents may not be revoked after the Revocation Deadline. KKR hasdiscussed the proposed Combination Transaction with certain KPE unitholders and, in connection withsuch discussions, certain KPE unitholders holding in aggregate approximately 44% of the KPE unitshave entered into agreements to deliver consents to consummate the Combination Transaction oradvised KKR that they intend to support the Combination Transaction subject to the terms of theCombination Transaction conforming to the terms previously described to such unitholders.

Neither the organizational documents of KPE nor applicable law entitle KPE unitholders toexercise any dissenters’ rights of appraisal in connection with the Combination Transaction.

Regulatory Requirements

KPE is authorized by the Guernsey Financial Services Commission as an authorized closed-endedcollective investment scheme. KPE has provided written notice regarding the Combination Transactionto the Guernsey Financial Services Commission, and must provide additional notices in the event ofany further material changes with respect to KPE.

KPE units are admitted to trading and listed on Euronext Amsterdam. As a result thereof, KPE issubject to Dutch securities laws and regulations and supervision by the Authority for the FinancialMarkets in the Netherlands.

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Background of the Combination Transaction

On July 3, 2007, KKR filed with the SEC a registration statement for a proposed initial publicoffering of KKR & Co. L.P. common units. The registration statement related to an aggregate amountof $1.25 billion of KKR & Co. L.P. common units and KKR expected to use the net proceeds from theoffering to grow its business, to make additional capital commitments to its funds and portfoliocompanies, and for general corporate purposes. KKR filed two amendments to the registrationstatement in the second half of 2007 to update the financial information presented in the registrationstatement and to respond to comments from the staff of the SEC. KKR initially expected to completethe proposed offering during the fourth quarter of 2007.

Beginning in late June 2007, the United States experienced considerable turbulence in the housingand sub-prime mortgage markets. Debt and equity markets came under pressure in the latter part of2007 as concerns about an economic slowdown were factored into valuations. In addition, debt andequity underwriting declined meaningfully in the second half of 2007 and into 2008. In light of thesefactors, KKR, in consultation with its advisors, evaluated market conditions and alternative transactionstructures. In the first half of 2008 KKR developed a proposal to combine its asset managementbusiness and the assets of KPE in an all-stock transaction. KKR believed the transaction would bolsterKKR’s position as a leading global asset manager and more fully align KKR’s economic and strategicinterests with those of KPE’s unitholders. The proposed transaction would also address concernsrelating to the trading price of KPE’s units, which traded at a substantial discount to its NAV, andresult in a public listing for KKR & Co. L.P. common units on the New York Stock Exchange.

On June 12, 2008, at a meeting of the board of directors of KPE’s general partner (the ‘‘KPEBoard’’), Messrs. Kravis and Roberts presented an initial proposal from KKR to combine KKR’s assetmanagement business with the assets of KPE in an all-stock transaction. In particular, under suchproposal KKR would have acquired all of the assets of KPE and the consideration offered to theholders of units (including the holders of depositary units) of KPE would have consisted of 20% of theequity interests in the combined entity, while KKR principals would have retained the remaining 80%of the equity interest in the combined entity. In conjunction with the proposed transaction, KKR wouldbecome publicly listed on the New York Stock Exchange. In addition, following completion of theproposed transaction, KPE would be dissolved and delisted from Euronext Amsterdam.

At that meeting, it was noted that Messrs. Kravis and Roberts had interests in the proposedtransaction and therefore, under the organizational documents of KPE’s general partner, thetransaction would require the affirmative vote of a majority of the Independent Directors of the KPEBoard (the ‘‘KPE Independent Directors’’). As a result, Messrs. Christopher Hill, Remmert Laan andGerard Lamarche, the then serving KPE Independent Directors, requested that the KPE Board grantthe KPE Independent Directors the authority to retain one or more financial advisors and legal counselto assist them in evaluating the proposed transaction.

Following the June 12 meeting, the KPE Independent Directors formed a working group referredto as the KPE Independent Directors Steering Committee, which became a forum for regularcoordination, updates and discussions among the KPE Independent Directors and their advisors withrespect to the evaluation of the proposed transaction. The KPE Independent Directors decided toappoint financial, legal, tax, accounting and other advisors, which are referred to as the KPE Advisors,to assist them in their evaluation of the proposed transaction. In selecting their advisors, the KPEIndependent Directors gave consideration to their qualifications, their ability to render their services tothe KPE Independent Directors and KPE independently of KKR and its affiliates, and their experienceand expertise in the areas of business engaged in by KKR and KPE and in transactions of the typecontemplated by the proposed transaction. The KPE Independent Directors decided to retain CitigroupGlobal Markets Limited, which is referred to as Citi, as sole financial advisor to KPE and LazardFreres & Co. LLC, which is referred to as Lazard, as financial advisor to the KPE Independent

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Directors. The KPE Independent Directors also engaged Bredin Prat and Cravath, Swaine &Moore LLP, acting as joint lead legal counsels, De Brauw Blackstone Westbroek N.V. as Dutch counsel,and Ogier, as Guernsey counsel. The terms and conditions of the engagements of the KPE Advisorswere set by the KPE Independent Directors without interference by KKR, and the engagement of theKPE Advisors was subsequently unanimously approved by the full KPE Board.

The KPE Independent Directors also established guidelines relating to their evaluation anddecision-making process regarding the proposed transaction. The guidelines provided the KPEIndependent Directors with the sole authority to, among other things: set up their own operatingprocedures (including participation in meetings, timing and pace of the decision-making process); selecttheir advisors and determine the terms and conditions of such advisors’ engagement; negotiate, directlyor through the KPE Advisors, the terms of the proposed transaction for and on behalf of KPE; andrecommend that the KPE Board approve or decline to approve the proposed transaction or approve itconditional upon certain amendments to its terms. The guidelines were unanimously approved by thefull KPE Board.

Concurrently with the review and discussions regarding the proposed transaction, on or aboutJune 20, 2008, KPE and one of KKR’s affiliates executed a confidentiality agreement and additionalconfidentiality agreements were executed with the various KPE Advisors. Following the execution ofthese confidentiality agreements, the KPE Advisors, on behalf of KPE, commenced their review of theKKR business.

During the period from June 20, 2008 through July 27, 2008, the KPE Advisors held numerousconversations with the advisors of KKR regarding the proposed transaction and KKR’s business andthey negotiated certain terms of the proposed transaction with KKR and its advisors. The KPEAdvisors reported regularly to the KPE Independent Directors and discussed their findings, theprogress of their analysis and related issues among each other and with the KPE Independent Directorson a regular basis.

As a result of the negotiations between the KPE Advisors and KKR and its advisors, on July 3,2008, Mr. Kravis met with the KPE Independent Directors and presented the KPE IndependentDirectors with a revised proposal which included the issuance of contingent value interests, or CVIs,designed to provide protection for the KPE unitholders against a decline in the trading value ofKKR & Co. L.P. common units by providing for the delivery of between 0% and 6% of additionalequity in the Combined Business (or the equivalent amount of cash) on the third anniversary of theclosing date in certain circumstances. On July 13, 2008, KKR submitted an additional revision to theproposal, which provided that the consideration offered would be increased from 20% to 21% ofKKR’s fully diluted equity as of the date of completion of the proposed transaction.

On July 27, 2008, the full KPE Board met, and based on the unanimous recommendation of theKPE Independent Directors, unanimously approved the execution, delivery and performance of, andthe consummation of the proposed transaction. Following the KPE Board meeting, KKR and KPEexecuted a purchase and sale agreement (the ‘‘2008 purchase and sale agreement’’) pursuant to which(i) KKR agreed to acquire all of the assets of KPE and assume all of the liabilities of KPE and itsgeneral partner in exchange for a 21% equity interest in the Combined Business and contingent valueinterests, (ii) the 21% equity interest would be represented by limited partnership units distributed toKPE unitholders and listed on the New York Stock Exchange and (iii) KPE would be dissolved anddelisted from Euronext Amsterdam (the ‘‘2008 proposal’’).

In the second half of 2008, world markets and economies rapidly deteriorated, leading to amongthe worst full-year market and economic performance levels experienced since the 1930s. Equitymarkets across North America, Europe and Asia declined significantly, with a broad-based sell-offacross a wide range of regions and sectors. In the United States, a GDP decline in the fourth quarterof 3.8% represented the greatest decline in more than 25 years. In addition to concerns over weak

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economic trends, a combination of de-levering by institutional investors and a need for liquidity furtherpressured already stressed market pricing.

Taking into account the impact of the dramatic changes in the financial world and markets sinceJuly 2008, during this period and continuing into 2009, KKR and the KPE Independent Directorsengaged in a process of evaluating the advisability of the 2008 proposal.

In the second half of 2008, in light of the change of market conditions, the KPE IndependentDirectors requested additional due diligence to review the then current condition of KKR in order topermit the KPE Independent Directors to continue their evaluation of the advisability of the 2008proposal in light of financial and market conditions. The KPE Independent Directors also requested ananalysis of KPE’s liquidity situation for the upcoming years under various stress situations, as well as anevaluation of sources of additional liquidity. The KPE Independent Directors reviewed this analysiswith Citi and Lazard. Continuing into 2009, the KPE Independent Directors, in consultation with Citiand Lazard, requested additional refinements of this analysis.

On January 12, 2009, KPE announced that Mr. Lamarche had resigned from the KPE Board forpersonal reasons, and on June 19, 2009, KPE announced that Mr. Dieter Rampl had joined the KPEBoard, as a KPE Independent Director.

As part of KKR’s and the KPE Independent Directors’ ongoing evaluation, in March 2009, KKRand the financial advisors of the KPE Independent Directors surveyed certain large unitholders toassess their views on the 2008 proposal. KKR and the KPE Independent Directors’ financial advisorsdid not find strong support for the 2008 proposal.

In light of market conditions and the response from unitholders, on April 24, 2009, KPE and KKRannounced that they had extended to August 31, 2009 from April 27, 2009 the date by which thepending acquisition of all of the assets and liabilities of KPE by KKR was required to be completedbefore either party may, subject to certain conditions, terminate the 2008 purchase and sale agreement.

In May 2009, KKR informed the KPE Independent Directors that it planned to hold discussionsand negotiations with certain KPE unitholders about the state of its business and that of KPE and thecurrent interest level of those unitholders in a combination transaction. On May 31, 2009, in advance ofthose discussions, KKR publicly released an updated presentation regarding its business and thereafterheld discussions with certain KPE unitholders. During those discussions, the KPE unitholders suggestedthat under certain circumstances they would consider consenting to a combination transaction. In June2009, after informing the KPE Independent Directors of these discussions, KKR proposed to suchunitholders on a confidential basis a revised transaction pursuant to which the consideration offered toKPE would consist of 27% of the equity interests in the combined business of KKR and KPE, with noCVI, and 40% of the carried interest from the combined business would be allocated to KKR’s carrypool. Certain unitholders negotiated with KKR to increase the percentage of equity interests to beoffered to KPE. In connection with these discussions, the KPE unitholders agreed to keep thesediscussions and the revised proposal confidential and not to trade their KPE units until the revisedproposal was publicly announced.

Following these discussions and negotiations, on June 23, 2009, KKR made a revised proposal,referred to as the 2009 proposal, to the KPE Independent Directors, and the 2009 proposal waspublicly announced on the same day. Under the terms of the 2009 proposal, as compared to the 2008proposal, upon completion of the combination of KPE’s assets and KKR’s asset management business,the share of equity interests in the Combined Business which KPE would receive would increase from21% to 30% and the CVIs would be eliminated. KKR executives would retain the remainder of theequity and approximately 40% of the carried interest from the Combined Business would be allocatedto KKR’s carry pool. In addition, under the 2009 proposal, KPE would retain its listing on EuronextAmsterdam following completion of the business combination, with KKR and KPE each having the

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right to seek a listing of the Combined Business on the New York Stock Exchange or The NASDAQStock Market after the passage of a specified time period. KKR informed the KPE IndependentDirectors that, based on its discussions and negotiations, holders of approximately 44% of KPE’soutstanding units had indicated that they would consent to, or advised KKR that they would support,the 2009 proposal.

On June 23, 2009, KKR and KPE agreed to extend to October 31, 2009 from August 31, 2009 thedate by which the pending acquisition of all of the assets and liabilities of KPE by KKR was requiredto be completed before either party may, subject to certain conditions, terminate the 2008 purchase andsale agreement, and KPE consented to the submission by KKR to the SEC of an application requestingthe withdrawal of KKR’s registration on form S-1/S-4 in connection with the 2008 proposal.

Consistent with the process guidelines approved by the KPE Independent Directors and the fullKPE Board in connection with the 2008 proposal, from June 23, 2009 through July 19, 2009, the KPEIndependent Directors met regularly among themselves and with the KPE Advisors to evaluate anddiscuss the financial and other terms of the 2009 proposal and the structure of the combined entityfollowing the consummation of the Combination Transaction, both in the context of the KPEIndependent Directors Steering Committee and through various additional meetings, communicationsand discussions on specific topics.

During this period, the KPE Advisors updated their due diligence review of the KKR businesswhich they had conducted in connection with the evaluation by the KPE Independent Directors of the2008 proposal. During this same period, the KPE Independent Directors met with the KPE financialadvisors, Citi and Lazard, on numerous occasions to receive financial advice.

On July 8, 2009, representatives of KKR presented to the KPE Independent Directors andrepresentatives of the KPE Advisors an overview of KKR’s business.

On July 8, 2009, Simpson Thacher & Bartlett LLP, acting as lead legal counsel to KKR, circulatedan initial draft of the amended and restated purchase and sale agreement for the CombinationTransaction, which was then followed by the initial drafts of the forms of ancillary agreements andother documents. The KPE Independent Directors’ legal counsel and KKR’s legal counsel reviewed,negotiated and revised the contractual documentation on behalf of their respective clients, including theamended and restated purchase and sale agreement and the various other agreements and documentsrelating to the structure of the combined group following the consummation of the 2009 proposal andthe potential future U.S. listing.

During the week of July 13, KKR provided the KPE Independent Directors and KPE legaladvisors with copies of agreements with, or other written indication from, various KPE unitholdersrepresenting 44% of the outstanding units stating an intention to execute consents in favor of, orotherwise support, the 2009 proposal.

On July 19, 2009, KKR submitted to the KPE Independent Directors a revised version of theamended and restated purchase and sale agreement and its various exhibits, which reflected extensivediscussions with the KPE Advisors.

On July 19, 2009, the KPE Independent Directors met to consider the 2009 proposal as set forthin the proposed amended and restated purchase and sale agreement. During this meeting,representatives of each of Citi and Lazard made financial presentations and rendered their respectiveoral opinions, confirmed by the delivery of their respective written opinions, that as of July 19, 2009and based upon and subject to the assumptions made, matters considered and limitations on the scopeof review undertaken by each of them, the consideration to be received by KPE in the transaction wasfair, from a financial point of view, to KPE. See ‘‘—Opinions of Financial Advisors.’’ Bredin Prat andCravath, Swaine & Moore LLP also delivered a presentation with respect to (i) the process followed byand legal duties of the board, (ii) the due diligence carried out by them, (iii) the amended and restated

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purchase and sale agreement and related agreements and (iv) the process from the signing of theamended and restated purchase and sale agreement until the completion of the CombinationTransaction.

The KPE Independent Directors unanimously recommended to the Board that the Board approvethe execution, delivery and performance of, and the consummation of the transactions contemplated by,the amended and restated purchase and sale agreement. The KPE Independent Directors unanimouslyrecommended to the Board that the Board recommend that the unitholders of KPE consent to theconsummation of the transactions contemplated by the amended and restated purchase and saleagreement.

Following the meeting of the KPE Independent Directors, the full KPE Board met on July 19,2009, and based on the unanimous recommendation of the KPE Independent Directors, unanimouslyapproved the execution, delivery and performance of, and the consummation of the transactionscontemplated by, the amended and restated purchase and sale agreement by KPE’s general partner.

Following the KPE Board meeting, KKR and KPE executed the amended and restated purchaseand sale agreement and issued a press release announcing the Combination Transaction.

KKR’s Reasons for the Combination Transaction

KKR’s decision to undertake the Combination Transaction is based on, among other factors, itsconclusion that the transaction will benefit KPE unitholders over the long term. The CombinationTransaction provides KPE unitholders with a new opportunity to participate in all the economicbenefits of KKR’s business, as compared to only participating in the capital appreciation of certaininvestments, and will allow KKR’s owners and KPE unitholders to share in attractive growthopportunities. The Combination Transaction will more fully align the interests of KKR’s owners andKPE unitholders as they all will own the equity in the same business and share in the same incomestreams. KPE will gain broad exposure to all of KKR’s activities and will no longer bear the expense offees and carry on their investments, which are currently paid out of KPE’s assets. In addition, KKRbelieves that combining its business with the assets of KPE, while retaining a stock exchange listing anda potential listing on the New York Stock Exchange or The NASDAQ Stock Market, and allocatingmeaningful equity to its people, will allow it to continue to attract, retain and incentivize qualityprofessionals that will benefit its businesses, portfolio companies and other stakeholders. By combiningthe capabilities and brand with those of acquired companies, KKR believes that it will be wellpositioned to create significant value for its investors and other stakeholders. Becoming a public entitywill provide KKR with a currency that it may use to pursue attractive opportunities, includingacquisitions, as they arise.

KPE Reasons for the Combination Transaction

In evaluating the Combination Transaction and in the course of reaching these decisions, the KPEIndependent Directors consulted with the KPE Advisors and considered a variety of factors that theybelieved supported their decisions, including the factors described below. In light of the number andvariety of factors considered in connection with their evaluation of the Combination Transaction, theKPE Independent Directors did not consider it practicable or possible, and did not attempt, to quantifyor otherwise assign relative weights to the specific factors that they considered in reaching theirdetermination. Rather, the KPE Independent Directors viewed their evaluation as being based on thetotality of the information and the factors presented to and considered by them and the analyses andthe investigation conducted by them. The following discussion of the KPE Independent Directors’reasons for recommending the Combination Transaction is not intended to be exhaustive but ratherincludes the principal factors considered by the KPE Independent Directors. Certain informationincluded in the following discussion is forward-looking in nature and, therefore, should be read in lightof the factors discussed under ‘‘Cautionary Note Regarding Forward-Looking Statements.’’

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The KPE Independent Directors considered a number of financial, strategic and other factors,each of which the KPE Independent Directors viewed as generally supporting their recommendation,including:

• the financial terms of the Combination Transaction, including the consideration to be receivedby KPE, consisting of equity interests representing 30% of the Combined Business, uponcompletion of the Combination Transaction;

• their familiarity with the business, management, operations, financial condition, business strategyand prospects of KKR, as well as the risks involved in achieving those prospects, legislative risksand economic market conditions, both on an historical and on a prospective basis;

• the presentation by Citi, as well as the written opinion of Citi delivered to the KPE IndependentDirectors and to the KPE Board of Directors on July 19, 2009, to the effect that, as of the dateof such opinion and based upon and subject to the assumptions made, the matters consideredand the limitations on the scope of the review undertaken by Citi as set forth in Citi’s writtenopinion, the consideration to be received by KPE in the Combination Transaction is fair, from afinancial point of view, to KPE;

• the presentation by Lazard, as well as the written opinion of Lazard, delivered to the KPEIndependent Directors on July 19, 2009, to the effect that, as of the date of such opinion andbased upon and subject to the assumptions made, the matters considered and the limitations onthe scope of the review undertaken by Lazard as set forth in Lazard’s written opinion, theconsideration to be received by KPE in the Combination Transaction is fair, from a financialpoint of view, to KPE;

• their expectation that, following the consummation of the Combination Transaction, theeconomic and strategic interests of KKR will be more fully aligned with those of the KPEunitholders due to the fact that, following completion of the Combination Transaction, KPE and,through their holdings in KPE, the KPE unitholders will have an opportunity to directlyparticipate in all of the economics and resources of KKR’s business, including by receiving ashare of the income streams (including fees and a percentage of the carry) generated by suchbusiness and, unlike KPE’s current returns, the returns on the investments made by KKR willnot be subject to the payment of any fees or carry to KKR by KPE;

• the information provided by KKR regarding the support of the KPE unitholders consulted byKKR for the 2009 proposal, including the copies of agreements with, or other written indicationsfrom, various KPE unitholders representing 44% of the outstanding units stating an intention toexecute consents in favor of or otherwise support the Combination Transaction;

• the apparent lack of strong support for the 2008 proposal among certain large unitholders ofKPE;

• the fact that the financial terms of the Combination Transaction were improved as a result ofKKR’s discussions and negotiations with unitholders;

• the fact that the percentage of future carried interest allocated to KKR’s principals and otherprofessionals cannot exceed 40% without the consent of a majority of the KPE IndependentDirectors prior to the closing of a U.S. listing, and without the approval of a majority of theindependent directors of the KKR Managing Partner after the closing of a U.S. Listing;

• their belief that the unitholders’ consent required pursuant to the amended and restatedpurchase and sale agreement is likely to be obtained promptly, as a result of which theCombination Transaction is likely to be consummated in a timely manner;

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• the relative merits of the Combination Transaction as compared to the 2008 proposal or a standalone strategy in light of current global financial and economic conditions, the market outlookfor KPE and KPE’s prospects;

• the unfavorable market reaction to the inclusion of the CVIs included as part of the 2008proposal;

• their belief that the Combination Transaction would address potential liquidity issues that KPEmight otherwise experience on a stand alone basis;

• their expectation that, while currently KPE principally benefits only from KKR’s private equitybusiness, following the completion of the Combination Transaction, KPE will benefit fromKKR’s increasingly diversified asset management business, which comprises the private equitybusiness as well as the fixed income, mezzanine and capital markets businesses;

• their expectation that all KPE assets will be retained in the combined entity and redeployed andthat KPE will therefore continue to participate in the future returns of the existing and futureinvestments of the KPE Investment Partnership;

• their expectation that growth opportunities will arise for KPE from KKR’s expansion into newlines of business, such as the contemplated development of infrastructure and mezzanine funds,managed accounts and KKR’s capital markets business, which opportunities would not haveotherwise been available to KPE;

• KKR’s intention to make regular distributions of cash earnings related to its asset managementbusiness, in comparison to KPE, which currently only makes cash distributions in an amountgenerally expected to be sufficient to permit KPE unitholders in the United States to fund theirestimated U.S. tax obligations;

• the expected tax-free nature of the Combination Transaction for the KPE unitholders;

• the existence of a number of procedural safeguards relating to the evaluation and consummationof the Combination Transaction, including:

• the fact that, consistent with the procedures implemented in connection with the 2008proposal and in accordance with the authority then granted by the KPE Board, the KPEIndependent Directors continued to follow their own process for evaluating theCombination Transaction and to have the sole authority to negotiate for and on behalf ofKPE the terms and conditions of the amended and restated purchase and sale agreement;

• the fact that the KPE Independent Directors continued to receive advice and assistancefrom their own separate financial and legal advisors;

• the fact that the KPE Independent Directors had ultimate authority to recommend to theKPE Board whether or not to proceed with the Combination Transaction;

• the fact that each of Citi and Lazard has been selected by the KPE Independent Directorsas independent of KKR and qualified to provide fairness opinions on the CombinationTransaction, that the KPE Independent Directors are of the opinion that the terms of theCombination Transaction are not likely to result in any material prejudice to the KPEunitholders and that, therefore, the Combination Transaction meets the arm’s lengthrequirement of the Guernsey Authorised Closed-Ended Investment Scheme Rules 2008;

• the fact that other than customary fees payable to the KPE Independent Directors (thatwere not contingent on the KPE Independent Directors recommendation of theCombination Transaction), the KPE Independent Directors will not receive anyconsideration in connection with the Combination Transaction; and

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• the fact that the completion of the Combination Transaction is conditioned upon theaffirmative consent to the Combination Transaction of KPE unitholders representing at leasta majority of the KPE units for which a properly submitted consent form is submitted(excluding from both the numerator and the denominator the common units whose consentrights are controlled by KKR or its affiliates), notwithstanding the fact that there is no legal,regulatory or contractual requirement to obtain such approval;

• the fact that after a certain period of time following the completion of the CombinationTransaction, each of KKR and KPE will have the ability to seek a listing of KPE’s equityinterests in the Combined Business on the New York Stock Exchange or The NASDAQ StockMarket, and the belief that, following a U.S. listing, KPE unitholders would benefit fromincreased liquidity; and

• KKR’s proposed governance arrangements for the entities comprising the Combined Businessand the resulting protections afforded to KPE, as a unitholder of KKR, which arose in part fromnegotiations among the KPE Independent Directors and their legal advisors and KKR and itslegal advisors, including:

• Upon consummation of the Combination Transaction and until the closing of a U.S.listing, without the prior consent of a majority of the KPE Independent Directors, KKRis not permitted to (i) enter into any amendment to certain significant agreementsgoverning entities comprising the Combined Business (the ‘‘Covered Agreements’’)that, in KKR’s reasonable judgment, is or will result in a conflict of interest or have amaterially disproportional impact on KPE or (ii) subject to specified exceptions, enterinto any related-party transactions that involve more than $20 million or would diluteKPE’s direct or indirect equity interest in the Combined Business; and

• After the closing of a U.S. listing, the board of directors of the KKR Managing Partnerwould be comprised of a majority of directors who meet the independence standardsfor service on a board of directors pursuant to the Exchange Act and the applicablelisting standards of the New York Stock Exchange or The NASDAQ Stock Market, asapplicable, as well as Messrs. Kravis and Roberts.

The KPE Independent Directors also considered a number of uncertainties, risks and otherpotentially negative factors associated with the Combination Transaction, including:

• the fact that, with respect to KKR’s active and future funds and co-investment vehicles thatprovide for carried interest in the Combined Business, under the terms of the 2008 proposal allof such carried interest earned in relation to these funds would have been allocated pro rata tothe equity holders in the Combined Business, while under the terms of the CombinationTransaction KKR intends to allocate to its principals and other professionals up to 40% of suchcarried interest and the remainder of the carried interest pro rata to the equity holders in theCombined Business, which percentage may, prior to a U.S. Listing, be increased only with theapproval of a majority of the KPE Independent Directors and may, after the U.S. Listing, beincreased only with the approval of the majority of the independent directors of the KKRManaging Partner;

• the fact that difficult market conditions, including access to capital and financing, have negativelyimpacted KKR’s net income, cash flow, liquidity and financial condition and could continue todo so;

• the fact that recent disruption in the credit, financial and stock markets have resulted inuncertainty regarding the outlook for alternative asset managers and private equity vehicles;

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• the fact that KKR’s earnings and cash flow are highly variable and that KKR does not intend toprovide earnings guidance, which may increase the volatility of the trading price of KPE’scommon units following the Combination Transaction;

• the fact that KKR’s intermediate holding company will indirectly hold, among other things, aninterest in KKR’s fee operating business and will be taxed as a corporation under U.S. federalincome tax laws;

• the possibility that the KPE unitholders may not approve the Combination Transaction;

• the fact that the completion of the Combination Transaction is conditioned upon the affirmativeconsent to the Combination Transaction of KPE unitholders representing at least a majority ofthe KPE units for which a properly submitted consent form is submitted, in comparison to the2008 proposal, which was conditioned upon the affirmative consent of KPE unitholdersrepresenting at least a majority of all outstanding KPE units, in both cases, excluding from boththe numerator and the denominator the common units whose consent rights are controlled byKKR or its affiliates and the fact that unitholder consents will cease to be revocable and therequisite unitholder consent will be deemed to have been received upon the receipt of theconsent of the holders of at least a majority of all outstanding KPE units, excluding from boththe numerator and the denominator the common units whose consent rights are controlled byKKR or its affiliates and any common units whose consent rights are controlled by a person whohas informed KPE in writing that it will not submit a consent form in response to this consentsolicitation;

• the fact that as a result of the Combination Transaction, the interests held by the KPEunitholders would be transferred from a business investing in assets to a business that is alsoengaged in asset management;

• the fact that, unlike the 2008 proposal, the equity interests in the Combined Business issued toKPE will not be listed in the U.S. immediately after the completion of the combination of KPE’sassets and KKR’s asset management business;

• the fact that KPE unitholders will have no right to demand appraisal of the fair value of theirKPE units under Guernsey, Dutch or any other law, even if they do not consent to theCombination Transaction;

• the fact that KPE is not a party to the arrangements pursuant to which the interests in KKRHoldings held by KKR’s principals will be subject to vesting and transfer restrictions andaccordingly, such restrictions can be changed at any time without KPE’s consent;

• the risk that proposed legislation may result in income of KPE becoming subject to corporatelevel tax;

• the risk of pending legislation in the United States and the European Union that might result inKKR becoming subjected to increased and more burdensome regulation in a number of areasaffecting KKR’s business and organization;

• the fact that, because the conditions to the completion of the Combination Transaction will bedeemed to be irrevocably satisfied or waived on the first date on which all of the conditions setforth in the amended and restated purchase and sale agreement have been satisfied or waivedthough the effectiveness of the Combination Transaction is not expected to occur untilOctober 1, 2009, the closing of the Combination Transaction may occur despite the occurrenceof certain events subsequent to the satisfaction date which otherwise would have resulted in thefailure of the conditions set forth in the amended and restated purchase and sale agreement tobe satisfied;

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• the risk that the Combined Business may be responsible for a portion of the clawbackobligations and net loss sharing amounts in respect of past carried interest paid to KKR’sprincipals and other professionals;

• the risk that the Combination Transaction may not be tax free for KPE unitholders injurisdictions other than the United States;

• the fact that KPE’s unitholders will not control the KKR Managing Partner or vote to elect orremove its directors;

• the fact that the KKR Managing Partner and its affiliates have only limited fiduciaryresponsibilities, which may permit them to favor their own interests to the detriment of KPE andits unitholders; and

• the fees and expenses associated with the Combination Transaction.

In reaching their decision to recommend the execution of the amended and restated purchase andsale agreement, the KPE Independent Directors considered the fact that Citi and Lazard have notcommitted to update their respective opinions with respect to the 2009 proposal to take into accountcircumstances or events occurring after the date on which those opinions were issued.

In recommending the Combination Transaction, the KPE Independent Directors believed that thepotential uncertainties, risks and other potentially negative factors mentioned above were offset by thepotential benefits that the KPE Independent Directors expect the KPE unitholders to receive as aresult of the Combination Transaction.

Opinions of Financial Advisors

Opinion of Citigroup Global Markets Limited

KPE (acting through its general partner, KKR Guernsey GP Limited) retained Citi as its solefinancial advisor in connection with the Combination Transaction. In connection with this engagement,Citi agreed to only accept instructions from the KPE Independent Directors and KPE requested thatCiti evaluate the fairness, from a financial point of view, to KPE of a number of common unitsrepresenting limited partnership interests of Group Holdings to be received in the CombinationTransaction (collectively referred to as, the ‘‘Consideration’’). On July 19, 2009, at a meeting of theKPE Independent Directors, Citi rendered an oral opinion, which was confirmed by delivery of awritten opinion dated the same date, to the effect that, as of such date and based upon and subject tothe assumptions made, matters considered and limitations on the scope of review undertaken by Citi asset forth in its opinion, the Consideration was fair, from a financial point of view, to KPE.

The full text of Citi’s written opinion, dated July 19, 2009, which describes the assumptions made,procedures followed, matters considered and limitations on the review undertaken, is attached to thisconsent solicitation statement as Appendix C and is incorporated herein by reference. You are urged toread Citi’s opinion carefully and in its entirety. Citi’s opinion was provided to the KPE Board and theKPE Independent Directors in connection with their evaluation, from a financial point of view, of theConsideration to be received by KPE in the Combination Transaction. Citi’s opinion does not addressthe underlying business decision of KPE to effect the Combination Transaction, the relative merits ofthe Combination Transaction as compared to any alternative business strategies that might exist forKPE or the effect of any other transaction in which KPE might engage (including the transactioncontemplated by the previous purchase and sale agreement, dated as of July 27, 2008, by and amongKPE and the other parties thereto) and does not constitute a recommendation to any holder of KPEunits as to how such holder of KPE units should consent to, or how such holder of KPE units shouldact on, any matters relating to the proposed Combination Transaction. Citi did not express anyopinion as to what the value of the Group Holdings units actually will be when issued pursuant to the

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Combination Transaction or the price at which the Group Holdings units (or any instruments for orinto which Group Holdings units may be exchanged or converted) may trade at any time.

Under the terms of Citi’s engagement, KPE has agreed to pay Citi for its financial advisoryservices in connection with the Combination Transaction an aggregate fee of $12 million, a significantportion of which is payable upon consummation of the Combination Transaction. KPE also has agreedto reimburse Citi for reasonable travel and other transaction-related expenses incurred by Citi inperforming its services, including reasonable fees and out-of-pocket expenses of Citi’s outside legalcounsel, and to indemnify Citi and related persons against liabilities, including liabilities under thefederal securities laws, arising out of its engagement (other than liabilities finally judicially determinedto result from the bad faith or gross negligence of Citi or such persons); provided, however, that themaximum amount of fees of Citi’s outside counsel (other than with respect to indemnification) to bereimbursed by KPE shall be A200,000.

Citi and its affiliates in the past have provided, and currently provide, services to KPE and KKRunrelated to the Combination Transaction, for which services Citi and such affiliates have received andexpect to receive compensation. These services include (i) providing extensive financial advisory, capitalmarkets and lending services to KKR, its affiliates or its portfolio companies in various transactions andproposed transactions, (ii) acting as joint global coordinator and bookrunner for KPE’s initial publicoffering in 2006, (iii) acting as lead arranger on a $1 billion revolving credit facility for KPE in 2007and (iv) having a role in relation to KKR’s filed and now withdrawn initial public offering in 2007, andKKR has informed Citi that it would have a role in any future initial public offering of KKR in theevent that the Combination Transaction does not occur. In addition, in the event of a primary offeringby Group Holdings following consummation of the Combination Transaction, KKR has indicated toCiti that it may have a role in such offering. In addition, Citi and its affiliates have provided services toportfolio companies of KKR and KPE, for which they have received compensation. In the ordinarycourse of its business, Citi and its affiliates may actively trade or hold the securities of KPE and KKRor their respective affiliates for its own account or for the account of its customers and, accordingly,may at any time hold a long or short position in such securities. In addition, Citi and its affiliates(including Citigroup Inc. and its affiliates) may maintain relationships with KPE, KKR and theirrespective affiliates.

The KPE Independent Directors selected Citi to provide certain financial advisory services inconnection with the Combination Transaction (i) based on Citi’s familiarity with and knowledge ofKKR’s business and structure resulting, in particular, from Citi’s role in relation to the filed and nowwithdrawn initial public offering of KKR in 2007, and (ii) in light of Citi’s undertakings in itsengagement letter with KPE that (x) its past and existing relationships with KKR and its affiliateswould not preclude Citi from acting independently of KKR and its affiliates and in the best interest ofKPE and the KPE Independent Directors in rendering its services for the purposes of the CombinationTransaction, (y) in preparing and rendering any work product in connection with the KPE IndependentDirectors’ role in recommending the key terms for the Combination Transaction, Citi would act in thebest interests of KPE and the KPE Independent Directors and would act independently of and will notbe influenced by KKR or any of its affiliates, and (z) during the term of its engagement, without theconsent of the KPE Independent Directors, Citi would not provide M&A advisory services or new debtor equity financing services to KKR in connection with the Combination Transaction or any othersimilar extraordinary transaction involving a combination of the businesses of KPE and KKR, and Citiwould not accept any fees in respect of such matters from KKR or any of its affiliates except, for theavoidance of doubt, for any reimbursement of expenses incurred in connection with the filed andwithdrawn initial public offering of KKR in 2007.

Citi is an internationally recognized investment banking firm engaged in, among other things, thevaluation of businesses and their securities in connection with mergers and acquisitions, restructurings,

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leveraged buyouts, negotiated underwritings, competitive biddings, secondary distributions of listed andunlisted securities, private placements and valuations for estate, corporate and other purposes.

Opinion of Lazard Freres & Co. LLC

KPE (acting through its general partner, KKR Guernsey GP Limited) retained Lazard to performfinancial advisory services for the KPE Independent Directors in connection with the CombinationTransaction and, if requested, to render an opinion to the KPE Independent Directors as to thefairness, from a financial point of view, to KPE of a number of common units representing limitedpartnership interests of Group Holdings to be received by KPE in the Combination Transaction(collectively referred to as, the ‘‘Consideration’’). On July 19, 2009, the KPE Independent Directorsreceived an oral opinion from Lazard, which oral opinion was subsequently confirmed by delivery of awritten opinion dated the same date, to the effect that, as of the date of its opinion and subject to theassumptions made, matters considered and limitations on the scope of review undertaken by Lazard asset forth in its opinion, the Consideration to be paid in the Combination Transaction was fair, from afinancial point of view, to KPE.

The full text of the Lazard opinion is attached as Appendix D to this consent solicitationstatement and is incorporated herein by reference. The description of the Lazard opinion set forth inthis consent solicitation statement is qualified in its entirety by reference to the full text of the Lazardopinion set forth as Appendix D. You are urged to read the Lazard opinion in its entirety for adescription of the procedures followed, assumptions made, matters considered and qualifications andlimitations on the review undertaken by Lazard in connection with the opinion. We encourage you toread Lazard’s opinion and this section carefully and in their entirety.

Lazard’s opinion was directed to the KPE Independent Directors and only addresses the fairness,from a financial point of view, of the Consideration to be paid in the Combination Transaction to KPE.Lazard’s opinion does not address the relative merits of the Combination Transaction as compared toany other transaction or business strategy in which KPE might engage (including the transactioncontemplated by the previous purchase and sale agreement, dated July 27, 2008 (the ‘‘previouspurchase and sale agreement’’), among KPE and the other parties thereto) or the merits of theunderlying decision by KPE to engage in the Combination Transaction, and is not intended to anddoes not constitute a recommendation to any holder of KPE units as to whether such holder of KPEunits should consent to, or how such holder of KPE units should act with respect to, the CombinationTransaction or any matter relating thereto. Lazard’s opinion was necessarily based on economic,monetary, market and other conditions as in effect on, and the information made available to Lazardas of, the date of the Lazard opinion. In particular, Lazard notes that the recent unusual volatility andvalues in the credit, financial and stock markets have resulted in uncertainty regarding the long-termoutlook for alternative asset managers and private equity vehicles such that traditional long-termvaluation perspectives are currently of less relevance. Lazard assumes no responsibility for updating orrevising its opinion based on circumstances or events occurring after the date of the Lazard opinion.Lazard did not express any opinion as to the price at which common units of KPE may trade at anytime or as to the price at which the Group Holdings units (or any instruments for or into which suchunits may be exchanged or converted) may trade at any time.

Lazard’s opinion and financial analyses were not the only factors considered by the KPEIndependent Directors in their evaluation of the Combination Transaction and should not be viewed asdeterminative of their views or the views of KPE’s management.

KPE paid Lazard a fee of $2 million upon the announcement of the transaction pursuant to theprevious purchase and sale agreement and has agreed to pay to Lazard a fee of $5 million, whichamount will become payable upon the consummation of the Combination Transaction, in connectionwith Lazard’s services as financial advisor to the KPE Independent Directors. KPE also agreed to

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reimburse Lazard for all reasonable document production charges and certain out-of-pocket expensesincurred in connection with Lazard’s engagement, including with respect to travel costs and fees ofoutside legal counsel, and to indemnify Lazard and related parties against liabilities, including liabilitiesunder the federal securities laws, arising out of its engagement (other than liabilities finally judiciallydetermined to result primarily from the bad faith or gross negligence of Lazard or such persons);provided however, that the maximum amount of fees of Lazard’s outside counsel (other than withrespect to such indemnification) to be reimbursed by KPE shall not exceed A100,000 without theconsent (which shall not be unreasonably withheld) of the KPE Independent Directors.

The KPE Independent Directors selected Lazard to provide certain financial advisory services tothe KPE Independent Directors in connection with the Combination Transaction. In selecting Lazard,the KPE Independent Directors relied on (i) Lazard’s reputation, expertise and experience, and(ii) Lazard’s confirmation in its engagement letter that Lazard (x) was not aware of any conflict ofinterest that it has with respect to its engagement, and (y) did not believe that its past and existingrelationships with KKR and its affiliates would impact the ability of Lazard to act or preclude Lazardfrom acting independently of KKR and its affiliates (other than KPE) in rendering its services to theKPE Independent Directors for the purposes of the Combination Transaction. In rendering its opinion,Lazard was not authorized to, and did not, solicit indications of interest from third parties regarding apotential transaction acquiring all or a part of KPE, nor has Lazard participated in negotiation of theterms of the Combination Transaction.

Lazard in the past has provided, is currently providing and in the future may provide financialadvisory, capital markets, and investment banking services to KKR and its affiliates unrelated to theCombination Transaction for which it has received and may receive compensation, including, withoutlimitation, (i) acting as financial advisor to Rockwood in its sale of Groupe Novasep, (ii) acting asfinancial advisor to TDC in its sale of Bite Lietuva, (iii) acting as financial advisor to the steeringcommittee of the secured creditors in connection with Masonite International Inc.’s Chapter 11proceedings, (iv) acting as financial advisor to Jazz Pharmaceuticals Inc. and acting as placement agentin connection with an offering of its common stock, and (v) acting as financial advisor to CapmarkFinancial Group Inc. regarding debt and capital structure matters. Lazard and its affiliates haveprovided services to portfolio companies of KKR and KPE, for which they have received compensation.In addition, in the ordinary course of their respective businesses, affiliates of Lazard and LFCMHoldings LLC (an entity indirectly owned in large part by managing directors of LazardFreres & Co. LLC) may actively trade securities of KPE, KKR or their respective affiliates for theirown accounts and for the accounts of their customers and, accordingly, may at any time hold a long orshort position in such securities. The issuance of Lazard’s opinion was approved by Lazard’s opinioncommittee.

Lazard is an internationally recognized investment banking firm and is continually engaged in thevaluation of businesses and their securities in connection with mergers and acquisitions, negotiatedunderwritings, secondary distributions of listed and unlisted securities, private placements, leveragedbuyouts, and valuations for real estate, corporate and other purposes.

Recommendation of the KPE Independent Directors; KPE Board Approval

The KPE Independent Directors have unanimously recommended to the KPE Board that the KPEBoard approve the execution, delivery and performance of the amended and restated purchase and saleagreement and the consummation of the transactions contemplated thereby. Taking into account thisrecommendation, the KPE Board unanimously approved the entry into the amended and restatedpurchase and sale agreement and the transactions contemplated thereby.

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The Amended and Restated Purchase and Sale Agreement

This section of the consent solicitation statement describes the material terms of the amended andrestated purchase and sale agreement. The following summary is qualified in its entirety by reference tothe complete text of the amended and restated purchase and sale agreement.

The amended and restated purchase and sale agreement is attached as Appendix A to this consentsolicitation statement and is incorporated herein by reference in order to provide you with informationregarding its terms. It is not intended to provide any other factual information about KKR or KPE.Such information can be found elsewhere in this consent solicitation statement.

The representations, warranties and covenants contained in the amended and restated purchaseand sale agreement were made only for purposes of the amended and restated purchase and saleagreement and as of specific dates and may be subject to more recent developments, were solely forthe benefit of the parties to the amended and restated purchase and sale agreement, may be subject tolimitations agreed upon by the contracting parties, including being qualified by confidential disclosuresmade for the purposes of allocating risk between the parties to the amended and restated purchase andsale agreement instead of establishing these matters as facts, and may apply standards of materiality ina way that is different from what may be viewed as material by you or by other investors. For theforegoing reasons, you should not rely on the representations, warranties and covenants or anydescriptions thereof as characterizations of the actual state of facts or condition of KKR or KPE or anyof KKR or its respective subsidiaries or affiliates.

KKR expects to complete the Combination Transaction on October 1, 2009, if KPE has receivedthe consent of KPE unitholders holding at least a majority of the KPE units for which a properlysubmitted consent form is submitted (excluding from the numerator and denominator KPE units whoseconsent rights are controlled by KKR and its affiliates) and all other conditions to the completion ofthe Combination Transaction have been satisfied or waived. The requisite unitholder consent will bedeemed to be obtained, and the condition relating thereto will be deemed to be satisfied, if the consentof holders of at least a majority of the KPE units outstanding (excluding from the numerator and thedenominator any KPE units whose consent rights are controlled by KKR or its affiliates and any KPEunits whose consent rights are controlled as of the applicable record date by a person who hasinformed KPE in writing that it will not submit a consent form in response to this consent solicitation)has been obtained.

Satisfaction Date and Effective Time

All of the conditions to the completion of the Combination Transaction will be deemed to beirrevocably satisfied or waived on the first date on which all of the conditions set forth in the amendedand restated purchase and sale agreement have been satisfied or waived, which is referred to as thesatisfaction date; provided that in no event will the satisfaction date be prior to August 14, 2009 unlessthe Controlling Partnership has consented to an earlier satisfaction date. The transfer of assets andassumption of liabilities contemplated by the amended and restated purchase and sale agreement willnot be effected until 12:01 am Eastern Time, on October 1, 2009 or, in the event the satisfaction datehas not occurred on or prior to October 1, 2009, 12:01 am Eastern Time on the first day of KKR’sfiscal quarter immediately succeeding the fiscal quarter in which the satisfaction date occurs which isreferred to as the effective time (provided that in the event that the Controlling Partnership and KKRHoldings have not performed certain of their obligations under the amended and restated purchase andsale agreement during the period from the satisfaction date to the effective time in the mannerrequired by the amended and restated purchase and sale agreement, the effective time will not occurwithout the consent of KPE). Therefore, notwithstanding the occurrence of the satisfaction date, thebeneficial ownership of the assets and liabilities of KPE and KKR will be retained by KPE and KKR,

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respectively, until the effective time and KKR and KPE will not begin to share in or receive any of theassets, liabilities, profits, losses or distributions of the Combined Business until the effective time.

Conditions to Completion of the Combination Transaction

Conditions to the Parties’ Obligations

Each party’s obligation to complete the Combination Transaction is subject to the satisfaction orwaiver on the satisfaction date of each of the following conditions:

• the holders of at least a majority of the KPE units for which a properly completed consent formis properly submitted (excluding from the numerator and the denominator the KPE units whoseconsent rights are controlled by KKR or its affiliates) shall have consented to the CombinationTransaction and such consent shall be in full force and effect;

• any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,as amended, relating to the Combination Transaction shall have expired or been terminated;

• no order, injunction, judgment, award or decree issued by any court, administrative agency orcommission or other governmental authority or instrumentality, legislative body or self-regulatoryorganization of competent jurisdiction, which is referred to together as a governmental entity, orother legal restraint or prohibition preventing the consummation of the Combination Transactionshall be in effect; and

• no law, statute, rule, ordinance or regulation shall have been enacted, entered, promulgated orenforced by any governmental entity that prohibits or makes illegal the consummation of theCombination Transaction.

Additional Conditions to KKR’s Obligations

The obligation of the Controlling Partnership and its affiliates to complete the CombinationTransaction is also subject to the satisfaction or waiver on the satisfaction date of the followingadditional conditions:

• the representations and warranties of KPE set forth in the amended and restated purchase andsale agreement must be true and correct as of the date of the amended and restated purchaseand sale agreement and (except to the extent such representations and warranties are expresslylimited to an earlier date) as of the satisfaction date as though made on and as of such date,except where the failure to be so true and correct (without giving effect to any materiality or‘‘material adverse effect’’ or similar qualifiers set forth in such representations and warranties),individually or in the aggregate, has not had and would not reasonably be expected to have amaterial adverse effect on the KPE Investment Partnership;

• KPE must have performed in all material respects all of its obligations required to be performedby it under the amended and restated purchase and sale agreement at or prior to the satisfactiondate;

• since the date of the amended and restated purchase and sale agreement, there shall not havebeen any effect, event, change, occurrence or development that has had or would reasonably beexpected to have, individually or in the aggregate, a material adverse effect on the KPEInvestment Partnership; and

• each of the investment agreement, the exchange agreement and the tax receivable agreementshall have been duly authorized, executed and delivered by the Seller.

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Conditions to KPE’s Obligations

KPE’s obligation to complete the Combination Transaction is also subject to the satisfaction orwaiver on the satisfaction date of the following additional conditions:

• the Controlling Partnership’s representation and warranties set forth in the amended andrestated purchase and sale agreement relating to the accuracy and conformity to applicable legalrequirements of the press release issued in connection with the announcement of the amendedand restated purchase and sale agreement must be true and correct as of the date of theamended and restated purchase and sale agreement, except where the failure to be so true andcorrect, individually or in the aggregate, has not had and would not reasonably be expected tohave a material adverse effect on the holders of KPE units;

• the Controlling Partnership’s other representations and warranties and the representations andwarranties of KKR Holdings and Group Holdings set forth in the amended and restatedpurchase and sale agreement must be true and correct as of the date of the amended andrestated purchase and sale agreement and (except to the extent such representations andwarranties are expressly limited to an earlier date) as of the satisfaction date as though made onand as of such date, except where the failure to be so true and correct (without giving effect toany materiality or ‘‘material adverse effect’’ or similar qualifiers set forth in such representationsand warranties), individually or in the aggregate, has not had and would not reasonably beexpected to have a material adverse effect on Group Holdings (in the case of the ControllingPartnership’s and Group Holdings’ representations and warranties) or KKR Holdings (in thecase of the representations and warranties of KKR Holdings), in each case after giving effect tothe Reorganization Transactions, but in the case of Group Holdings, excluding the KPEInvestment Partnership and its subsidiaries;

• the Controlling Partnership, Group Holdings and KKR Holdings must each have performed inall material respects all of the obligations required to be performed by each under the amendedand restated purchase and sale agreement at or prior to the satisfaction date;

• since the date of the amended and restated purchase and sale agreement, there shall not havebeen any effect, event, change, occurrence or development that has had or would reasonably beexpected to have, individually or in the aggregate, a material adverse effect on the holders ofKPE units; and

• each of the investment agreement, the exchange agreement, the tax receivable agreement, theamended limited partnership agreement of Group Holdings, the amended limited partnershipagreements for each of the KKR Group Partnerships and the lock-up agreements shall havebeen duly authorized, executed and delivered by each of the parties thereto (other than KPE).

For purposes of the amended and restated purchase and sale agreement, the term ‘‘materialadverse effect’’ means, with respect to any person (other than the holders of KPE units), a materialadverse effect on the business, results of operations or financial condition of such person and anyperson (other than the KPE Investment Partnership and its subsidiaries in the case of Group Holdings)whose financial results are consolidated with such person (including, in Group Holdings’ case, KKR’sfunds), taken as a whole, and, with respect to the holders of KPE units, a material adverse effect onthe overall economic value to be received as of the date of the amended and restated purchase andsale agreement by KPE as a result of the Combination Transaction, taken as a whole. For purposes ofdetermining whether there has been a material adverse effect with respect to the holders of KPE units,any effect, development, change or occurrence that does not generally affect holders of a materialproportion of KPE units will be disregarded. In addition, in determining whether a material adverseeffect has occurred or would reasonably be expected to occur, there shall be excluded any effect, event,development, occurrence or change on the referenced person to the extent the cause thereof is:

• changes in general economic or political conditions;

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• changes in the financial or securities markets generally, except to the extent the referencedperson, taken as a whole, together with any person (other than the KPE Investment Partnershipand its subsidiaries in the case of Group Holdings) whose financial results are consolidated withsuch person is materially disproportionately affected thereby as compared with other participantsin the applicable industry or industries in which any such persons operate;

• entry into or announcement of the execution of the amended and restated purchase and saleagreement;

• the commencement, occurrence or continuation of any war, armed hostilities or acts ofterrorism;

• general changes or developments in the industries in which the referenced person operates,except to the extent the referenced person, taken as a whole, together with any person (otherthan the KPE Investment Partnership and its subsidiaries in the case of Group Holdings) whosefinancial results are consolidated with such person is materially disproportionately affectedthereby as compared with other participants in the applicable industry or industries in which anysuch persons operate;

• changes in law, rules, regulations, GAAP or interpretations thereof, except to the extent thereferenced person, taken as a whole, together with any person (other than the KPE InvestmentPartnership and its subsidiaries in the case of Group Holdings) whose financial results areconsolidated with such person is materially disproportionately affected thereby as compared withother participants in the applicable industry or industries in which any such persons operate; and

• with respect to the KPE Investment Partnership, any actions or omissions on the part of KPEthat are directed by the Controlling Partnership or any of its affiliates including KPE’s generalpartner or KPE, acting through KPE’s general partner, except for such actions or omissions ofKPE or its general partner that are due to the taking of any action, or failure to take any action,by the KPE Independent Directors (in their capacity as such).

The amended and restated purchase and sale agreement provides that the exclusions identifiedabove shall not include, and in determining whether a material adverse effect has occurred or wouldreasonably be expected to occur there may be taken into account, any effect, event, development,change or occurrence the cause of which is certain enacted changes in United States tax law, rules,regulations or interpretations thereof.

The Controlling Partnership and KPE have agreed to use their reasonable best efforts to take, orcause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisableto ensure that the conditions set forth in the amended and restated purchase and sale agreement andsummarized above are satisfied and to consummate the transactions contemplated by the amended andrestated purchase and sale agreement as promptly as practicable. However, neither KKR nor KPE arerequired to take, or agree to take, any action if the taking of such action would reasonably be expectedto have, individually or in the aggregate, a material adverse effect on Group Holdings or KPE, asapplicable.

No Solicitations of Alternative Transactions

The amended and restated purchase and sale agreement contains provisions prohibiting KPE fromseeking an alternative transaction to the Combination Transaction. Under these ‘‘no solicitation’’provisions, KPE has agreed that it will not directly or indirectly:

• solicit, initiate, knowingly encourage, or take any action intended to, or which could reasonablybe expected to, facilitate the making by any person of an acquisition proposal, as describedbelow, or any inquiry or proposal that could reasonably be expected to lead to an acquisitionproposal;

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• participate in any discussions or negotiations regarding an acquisition proposal or any inquirythat constitutes or could reasonably be expected to lead to an acquisition proposal;

• furnish to any person any information or data with respect to it or any of its assets or otherwisecooperate with or take any action to knowingly facilitate any proposal that constitutes or couldreasonably be expected to lead to an acquisition proposal; or

• enter into any letter of intent, memorandum of understanding or other agreement orunderstanding relating to, or that could reasonably be expected to lead to, an acquisitionproposal.

For purposes of the amended and restated purchase and sale agreement, the term ‘‘acquisitionproposal’’ means any inquiry, proposal or offer, whether or not conditional, from any person other thanthe Controlling Partnership or its affiliates relating to any direct or indirect acquisition of (i) anyinterests in the KPE Investment Partnership, (ii) 20% or more of the outstanding KPE units or(iii) 20% or more of the consolidated assets of the KPE Investment Partnership.

Termination

The amended and restated purchase and sale agreement may be terminated at any time prior tothe satisfaction date (or the effective time of the Combination Transaction in the case of thetermination right described in the first and second bullets below):

• by mutual written consent of the Controlling Partnership and KPE;

• if any governmental entity of competent jurisdiction issues an order, injunction, judgment, awardor decree or takes any other action permanently enjoining, restraining or otherwise prohibitingthe Combination Transaction and such order, injunction, judgment, award, decree or otheraction shall have become final and non-appealable; however, the right to so terminate theagreement will not be available to a party who has not used its reasonable best efforts to causesuch order, injunction, judgment, award, decree or other action to be vacated, annulled or lifted;

• if the consent of the holders of at least a majority of the KPE units for which a properlysubmitted consent form is submitted (excluding KPE units whose consent rights are controlledby KKR or its affiliates) to consummate the Combination Transaction is not obtained prior tothe expiration of the consent solicitation (and the expiration date is not extended); however theright to so terminate the amended and restated purchase and sale agreement will not beavailable to any party whose failure to fulfill any of its obligations under the amended andrestated purchase and sale agreement has been a principal cause of the failure of such consentto be obtained;

• if the satisfaction date has not occurred on or before October 31, 2009; however, the right to soterminate the amended and restated purchase and sale agreement will not be available to aparty whose failure to fulfill any of its obligations under the amended and restated purchase andsale agreement has been the cause of, or resulted in, the failure of the Combination Transactionto be completed by that date; or

• subject to a cure right under certain circumstances, if any of the mutual conditions or any of theconditions to a party’s obligations to completion of the Combination Transaction becomeincapable of being satisfied on or before October 31, 2009; however, the right to so terminatethe amended and restated purchase and sale agreement will not be available to any party that isthen in breach of any representation, warranty, covenant or agreement that would cause any ofthe mutual conditions or any of the other party’s conditions to completion of the CombinationTransaction not to be satisfied.

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Conduct of Business Pending the Combination Transaction

Under the amended and restated purchase and sale agreement, the Controlling Partnership hasagreed that, during the period from the date of the amended and restated purchase and sale agreementuntil the effective time of the Combination Transaction, except as expressly contemplated or permittedby the amended and restated purchase and sale agreement, as required by applicable law, statute, rule,ordinance or regulation or with the prior written consent of KPE, the Controlling Partnership will, andwill cause Group Holdings and each of the entities whose financial results will be consolidated withGroup Holdings upon the consummation of the Reorganization Transactions (other than KKR’sconsolidated funds and the KPE Investment Partnership), which is referred to as the consolidatedpersons, to conduct their respective businesses in all material respects in the usual, regular and ordinarycourse.

In addition to the above agreements regarding the conduct of business generally, subject to certainexceptions, the Controlling Partnership has agreed to the following specific restrictions:

• the Controlling Partnership shall not, and shall not permit any consolidated person to, amend itsorganizational documents in any manner that would adversely affect the holders of KPE units inany material respect;

• the Controlling Partnership shall not, and shall not permit any consolidated person to, changeaccounting methods other than those required by GAAP or the SEC;

• the Controlling Partnership shall not, and shall not permit any consolidated person to, subdivide,reclassify, issue, sell, redeem, purchase or otherwise acquire equity interests other than (A) toGroup Holdings or another consolidated person, (B) grants of equity awards to any officer,employee, consultant, director or other service provider of Group Holdings or any of itsaffiliates but only to the extent such grants do not, and will not, reduce the percentage of KPE’sdirect or indirect ownership percentage of the KKR Group Partnerships to below 30% of theoutstanding KKR Group Partnership Units, (C) issuances not involving securities of theControlling Partnership or Group Holdings to third parties pursuant to an arms-lengthtransaction, (D) issuances not involving securities of the Controlling Partnership or GroupHoldings to persons who will hold a direct or indirect equity interest in KKR Holdings followingthe Reorganization Transactions so long as any equity interests so issued will constitute interestscontributed to the Combined Business or (E) redemptions or repurchases of equity securities orinterests or options, warrants or rights relating thereto or securities convertible into orexchangeable therefor from former or departing employees, members, partners, or consultants ofany consolidated person consistent with such consolidated person’s ordinary practice;

• the Controlling Partnership shall not, and shall not permit any consolidated person to, declare,pay set aside or make any dividend or other distribution other than distributions to aconsolidated person;

• the Controlling Partnership shall not, and shall not permit any consolidated person to, enter intoa related party transaction as such term is defined in Item 404(a) of Regulation S-K under theSecurities Act other than any such transaction the terms of which are no less favorable to theControlling Partnership, or the consolidated person, as applicable, than those that would beavailable on an arm’s-length basis with a third party;

• the Controlling Partnership shall not, and shall not permit Group Holdings to, adopt, enter into,amend or modify any arrangement that would provide additional compensation, enhancedseverance, vesting acceleration or certain other benefits as a result of the ReorganizationTransactions or any other compensation or benefits that are related to, contingent upon, or thevalue of which would be calculated on the basis of Group Holdings units;

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• the Controlling Partnership and certain of its affiliates shall not incur or assume anyindebtedness for borrowed money or guarantee any such indebtedness; and

• the Controlling Partnership shall not take, and shall not permit any consolidated person tocommit or agree to take, any of the foregoing actions that the Controlling Partnership or suchconsolidated persons are prohibited from taking pursuant to the restrictions relating to theconduct of the Controlling Partnership’s business in the amended and restated purchase and saleagreement.

Notwithstanding the foregoing, the Controlling Partnership and the consolidated persons are notprohibited or otherwise prevented from expanding their existing businesses or entering new lines ofbusiness in the asset management or financial services industries.

Prior to the completion of the Combination Transaction, the KKR Group is expected to make oneor more cash and in-kind distributions to certain of its existing owners. See ‘‘Distribution Policy.’’

Additional Agreements

The amended and restated purchase and sale agreement contains covenants relating to (i) thepreparation by KPE and the Controlling Partnership of this consent solicitation document, (ii) theControlling Partnership using its reasonable best efforts to complete the Reorganization Transactions inthe manner contemplated by the amended and restated purchase and sale agreement and (iii) the useby KKR Holdings of its reasonable best efforts to take, or cause to be taken, such actions as arenecessary so that upon completion of the Combination Transaction, all of the interests in the KPEInvestment Partnership (and in certain cases direct assets of the KPE Investment Partnership) are,directly or indirectly, contributed to the KKR Group Partnerships from Group Holdings in exchangefor a direct or indirect controlling interest and 30% of the outstanding KKR Group Partnership Units(it being understood that KKR Group Partnership Units that are issued to third parties pursuant to anarms-length transaction shall not be deemed outstanding for the purposes of calculating GroupHoldings’ interest in the Combined Business).

Change of Recommendation by the KPE Independent Directors

At any time prior to the obtaining of the requisite consent of the KPE unitholders, the KPEIndependent Directors may change their recommendation to the KPE Board in response to anymaterial events or circumstances, if the KPE Independent Directors have concluded in good faith, afterconsultation with, and taking into account the advice of, their outside legal counsel, that had suchmaterial events or circumstances occurred and/or been known to the KPE Independent Directors priorto the date of the amended and restated purchase and sale agreement, the KPE Independent Directorswould, in compliance with their fiduciary duties under applicable law, not have recommended, or wouldhave modified the terms of their recommendation, to the KPE Board that the KPE Board approve theamended and restated purchase and sale agreement and the transactions contemplated by the amendedand restated purchase and sale agreement.

Amendment; Waiver

The amended and restated purchase and sale agreement may be amended by the parties thereto.All amendments must be in writing signed by all parties. Any amendment by KPE will be valid only ifapproved by all of the KPE Independent Directors. At any time prior to the completion of theCombination Transaction, each party may:

• extend the time for the performance of any of the obligations or other acts of the other partyprovided for in the amended and restated purchase and sale agreement;

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• waive any inaccuracies in the representations and warranties of the other party contained in theamended and restated purchase and sale agreement or in any document delivered by the otherparty pursuant to the amended and restated purchase and sale agreement; and

• waive compliance by the other party with any of the agreements or conditions contained in theamended and restated purchase and sale agreement.

Expenses

All costs and expenses incurred in connection with the amended and restated purchase and saleagreement shall be paid by the party incurring such costs and expenses, except that, if theconsummation of the Combination Transaction occurs, (i) all costs and expenses incurred by KPE or itsgeneral partner shall be paid by Group Holdings and (ii) all other costs and expenses incurred inconnection with the amended and restated purchase and sale agreement shall be paid by one or moreconsolidated persons in which KPE directly or indirectly has a 30% economic interest (it beingunderstood that KKR Group Partnership Units that are issued to third parties pursuant to an arm’slength transaction and any interests that allocate carried interest to KKR’s carry pool shall not bedeemed outstanding for purposes of calculating KKR’s interest in a consolidated person).

Actions of KPE

The amended and restated purchase and sale agreement provides that during the period from thedate of the amended and restated purchase and sale agreement until the earlier of the effective time ofthe Combination Transaction and the termination of the amended and restated purchase and saleagreement, the KPE Independent Directors, acting based on the affirmative vote of a majority of theKPE Independent Directors, will be entitled to implement on behalf of KPE the transactionscontemplated by the amended and restated purchase and sale agreement, to exercise the rights of KPEunder the amended and restated purchase and sale agreement and to enforce the amended andrestated purchase and sale agreement against the Controlling Partnership, Group Holdings or KKRHoldings.

Representations and Warranties

The amended and restated purchase and sale agreement contains representations and warrantiesmade by the Controlling Partnership, Group Holdings, KKR Holdings and KPE as of specific dates.The statements embodied in those representations were made for purposes of the amended andrestated purchase and sale agreement between the parties and are subject to qualifications andlimitations agreed by the parties in connection with negotiating the terms of the agreement. Inaddition, certain representations and warranties were made as of a specified date, may be subject tocontractual standards of materiality different from what may be viewed as material to unitholders ormay have been used for the purpose of allocating risk between the parties rather than establishingmatters as facts.

The Controlling Partnership, Group Holdings, KKR Holdings and KPE have made representationsand warranties in the amended and restated purchase and sale agreement relating to, among otherthings:

• organization and similar organizational matters;

• authorization of the amended and restated purchase and sale agreement and absence ofconflicts; and

• consents and approvals.

In addition, the Controlling Partnership and Group Holdings have made representations andwarranties in the amended and restated purchase and sale agreement relating to:

• financial statements;

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• undisclosed liabilities;

• internal controls;

• capital structure;

• absence of a material adverse effect;

• non-applicability of the Investment Company Act;

• compliance with applicable laws;

• permits;

• legal proceedings;

• taxes;

• material contracts;

• benefit plans;

• brokers’ fees;

• communications materials;

• registration rights; and

• intellectual property.

The representations and warranties contained in the amended and restated purchase and saleagreement will expire upon the closing of the Combination Transaction and none of suchrepresentations and warranties or any rights arising out of any breach thereof, will survive the closingof the Combination Transaction.

Indemnification and Insurance

The amended and restated purchase and sale agreement provides that, for a period of six yearsafter completion of the Combination Transaction (or until such earlier time that comparable provisionsof the investment agreement described below become effective), the KKR Group Partnerships willindemnify each present and former director and officer of the general partner of KPE and certainother persons serving in a similar role against all losses, liabilities, damages, judgments and finesincurred in connection with any suit, claim, action, proceeding, arbitration or investigation arising outof or related to actions taken by them in their capacity as directors or officers of the general partner ofKPE or taken by them at the request of KPE or the general partner of KPE. In addition, the amendedand restated purchase and sale agreement also provides that the KKR Group Partnerships willindemnify the Controlling Partnership, Group Holdings, KPE, each present and former director andofficer of the general partner of KPE and certain other persons serving a similar role against all losses,liabilities, damages, judgments and fines (except to the extent any such losses, liabilities, damages,judgments or fines arise out of or are based upon certain information concerning the KPE IndependentDirectors that is furnished by or on behalf of the KPE Independent Directors) to which any of themmay become subject under the Securities Act, Exchange Act, or other applicable law, statute, rule orregulation insofar as such losses, liabilities, damages, judgments and fines arise out of or are basedupon any untrue statement or alleged untrue statement of a material fact contained in this consentsolicitation statement, the press release issued in connection with the execution of the amended andrestated purchase and sale agreement or any other document issued by the Controlling Partnership,KPE or any of their respective affiliates in connection with, or otherwise relating to, the transactionscontemplated by the amended and restated purchase and sale agreement, or arise out of or are basedupon the omission or alleged omission to state therein a material fact required to be stated therein ornecessary to make the statements therein, in the light of the circumstances under which they weremade, not misleading.

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The amended and restated purchase and sale agreement also provides that, from the effective timeuntil the occurrence of the closing contemplated by the investment agreement described below, KPEshall maintain directors’ and officers’ liability insurance for the benefit of the directors and officers andformer directors and officers of the general partner of KPE containing at least the same coverage asthe existing directors’ and officers’ liability insurance of the general partner of KPE, except that(i) KPE shall use its commercially reasonable efforts to increase the coverage limit for such insurancecoverage to $100 million and (ii) KPE shall not be permitted to expend annually in excess of an agreedupon cap of the premium currently paid by it, and if the annual premium exceeds that amount, thenKPE must obtain a policy with the greatest coverage available for a cost not exceeding such amount.

The Investment Agreement

This section of the consent solicitation statement describes the material terms of the investmentagreement. The following summary is qualified in its entirety by reference to the complete text of theform of investment agreement. It is a condition to the Combination Transaction that the parties enterinto the investment agreement in substantially the form attached hereto as Appendix B, which isexpected to occur on the satisfaction date.

The form of investment agreement is incorporated by reference herein in order to provide youwith information regarding its terms. It is not intended to provide any other factual information aboutKKR or KPE. Such information can be found elsewhere in this consent solicitation statement.

The representations, warranties and covenants contained in the investment agreement are madeonly for purposes of the investment agreement and as of specific dates and may be subject to morerecent developments, are solely for the benefit of the parties to the investment agreement, may besubject to limitations agreed upon by the contracting parties, including being qualified by confidentialdisclosures made for the purposes of allocating risk between the parties to the investment agreementinstead of establishing these matters as facts, and may apply standards of materiality in a way that isdifferent from what may be viewed as material by you or by other investors. For the foregoing reasons,you should not rely on the representations, warranties and covenants or any descriptions thereof ascharacterizations of the actual state of facts or condition of KKR or KPE or any of KKR’s respectivesubsidiaries or affiliates.

U.S. Listing

The investment agreement provides that the Controlling Partnership and KPE each have the rightto require that the other use its reasonable best efforts to cause KPE to contribute its unitsrepresenting limited partner interests in Group Holdings to KKR in exchange for an equivalent numberof Controlling Partnership units and, in connection therewith, the Controlling Partnership units receivedby KPE to be listed and traded on the New York Stock Exchange or The NASDAQ Stock Market (the‘‘U.S. listing’’) by delivering an election notice to the other party. The Controlling Partnership ispermitted to deliver such notice at any time after 6 months following the date of the investmentagreement, and KPE is permitted to deliver such notice at any time after 12 months following the dateof the investment agreement. If an election notice is delivered, the Controlling Partnership will, afterpromptly advising and consulting with KPE, be entitled in its sole discretion to take any and all actionsthat it deems necessary or appropriate in order to effectuate the U.S. listing and any transactionsancillary thereto, including selecting the stock exchange on which to effect the U.S. listing anddetermining whether to appoint one or more dealer managers or information agents in connectiontherewith and whether to effectuate a separate primary offering of the Controlling Partnership units(on an underwritten basis or otherwise) simultaneously therewith.

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Registration Statement and Efforts

In the event that an election notice is delivered by the Controlling Partnership or KPE, theControlling Partnership is required to prepare a registration statement on such form as the ControllingPartnership in consultation with its legal counsel shall determine to be appropriate under the ExchangeAct and, if applicable, the Securities Act for the Controlling Partnership Units to be issued to, anddistributed by, KPE pursuant to the investment agreement and to have the registration statementdeclared effective by the SEC as promptly as practicable. The investment agreement also contains acovenant that requires the Controlling Partnership and KPE to use their respective reasonable bestefforts to complete the U.S. listing and the actions ancillary thereto in the manner contemplated by theinvestment agreement, provided that neither party is required to take any action if the taking of suchaction would reasonably be expected to have, individually or in the aggregate, a material adverse effecton the Controlling Partnership.

Consent Rights

From the date of the investment agreement until the closing of the U.S. listing (which is referredto as the consent period) without the prior consent of a majority of the KPE Independent Directors,the Controlling Partnership and the consolidated persons are not permitted to (i) enter into anyamendment to certain agreements if in the Controlling Partnership’s reasonable judgment the enteringinto such amendment, is or will result in a conflict of interest or would have a materiallydisproportional impact on KPE or (ii) subject to specified exceptions, engage in certain related-partytransactions. In addition, upon the Controlling Partnership’s request, the KPE Independent Directorsare required to review any other transaction that the Controlling Partnership submits to them for thepurposes of determining whether a conflict of interest exists with respect to such transaction and thatsuch transaction is in compliance with the respective organizational documents of the relevant parties.Upon a determination by a majority of the KPE Independent Directors that any such transaction is incompliance with the respective organizational documents, such transaction will not be void or voidableas a result of any conflict of interest existing between the parties to such transaction and neither theControlling Partnership nor any of its affiliates will have any liability to KPE, any affiliate thereof, orany person that has an equity interest in KPE, the Controlling Partnership or any of its affiliates as aresult of, or arising from, any such transaction. During the Consent Period, (w) upon KPE’s request,the Controlling Partnership has agreed to take, or cause to be taken, any action to enforce theControlling Partnership’s rights directly or through one or more entities controlled by the ControllingPartnership, under any Covered Agreement against certain of the Controlling Partnership’s affiliates,(x) allocations to the carry pool may not exceed 40%, (y) the consent of a majority of the KPEIndependent Directors will be required to approve certain related party transactions that involve anaggregate amount in excess of $20 million or would reduce the percentage of KPE’s direct or indirectequity interest in the KKR Group Partnerships, and (z) upon reasonable notice the ControllingPartnership has agreed to take, or cause to be taken, all actions necessary to provide the auditcommittee of the board of directors of the general partner of KPE or the KPE Independent Directorswith access during normal business hours to the books, personnel, and records of the members of theControlling Partnership and the consolidated persons, and any financial statements generatedtherefrom, relating to the activities of the Controlling Partnership and the consolidated persons.

Ongoing Reporting Obligations

Until the closing of the U.S. listing, the Controlling Partnership has agreed to cooperate in goodfaith with KPE to take such actions as may be reasonably necessary or advisable to comply with thefinancial reporting obligations of KPE under applicable law.

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Change in Structure

Under the terms of the investment agreement, the Controlling Partnership is permitted to elect toeffect the transactions contemplated by the investment agreement in a different manner in response tocertain changes of law relating to tax or to permit the Controlling Partnership to be treated as acontinuation of KPE for U.S. federal income tax purposes provided that no alteration may be made tothe extent such alteration would reasonably be expected to have an adverse impact in more than aninsignificant respect on KPE, the Controlling Partnership or the holders of KPE units, without theconsent of KPE, which consent may not be unreasonably withheld or delayed. In addition, each of theControlling Partnership and KPE have agreed to use its reasonable best efforts to effect the U.S.listing, and the other transactions contemplated by the investment agreement in a manner such thatholders of KPE units will recognize no income, gain or loss for U.S. federal income tax purposesprovided that to the extent there is a change in law so that such transactions may not be effected ascurrently contemplated without recognition by holders of KPE units of income, gain or loss for U.S.federal income tax purposes, then each of the Controlling Partnership and KPE are required to usereasonable best efforts to effect the transactions in a manner that attempts to minimize the recognitionof income or gain for U.S. federal income tax purposes except to the extent that (i) the transactionsand resulting structure results in an adverse impact in more than an insignificant respect to theControlling Partnership, its subsidiaries or KKR Holdings or (ii) the Controlling Partnership and KPEhave agreed that there are other considerations that outweigh the recognition of income or gain forU.S. federal income tax purposes by the holders of KPE units. The Controlling Partnership is alsopermitted to assign all of its rights and obligations under the investment agreement to an affiliate ofthe Controlling Partnership with the prior consent of KPE, which may not be unreasonably withheld ordelayed.

Dissolution Transactions

As of, or as promptly as practicable after, the U.S. listing, KPE will take, and the ControllingPartnership will cause the directors of the KPE Board who are not KPE Independent Directors toauthorize all actions necessary or advisable to, among other things, (i) distribute the ControllingPartnership units to the holders of KPE units, (ii) cause the KPE units to be delisted from, and tocease to be traded on, Euronext Amsterdam by NYSE Euronext, the regulated market of EuronextAmsterdam N.V. and (iii) cause KPE to be dissolved and liquidated by its general partner acting asliquidator, in accordance with KPE’s limited partnership agreement and the Limited Partnerships(Guernsey) Law, 1995.

Conditions to Closing the U.S. Listing

Each party’s obligation to consummate the U.S. listing is subject to the satisfaction or waiver ofeach of the following conditions:

• the Controlling Partnership units to be issued to KPE shall have been authorized for listing onthe New York Stock Exchange or The NASDAQ Stock Market (subject to official notice ofissuance);

• the registration statement relating to the Controlling Partnership units to be issued to, anddistributed by, KPE shall have become effective under the Securities Act and/or Exchange Act,provided (i) there is not any requirement that the Controlling Partnership or any of its affiliatesbecome subject to regulation under the Investment Company Act and (ii) no stop ordersuspending the effectiveness of the registration statement has been issued and no proceedingsfor a similar purpose have been initiated or threatened by the SEC;

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• no order, injunction, judgment, award or decree issued by any governmental entity or other legalrestraint or prohibition preventing the consummation of the U.S. listing and or the distributionof the Controlling Partnership units to the KPE unitholders shall be in effect;

• KPE shall have contributed its Group Holdings units to the Controlling Partnership in exchangefor Controlling Partnership units; and

• KPE shall have received a customary comfort letter and negative assurance letter relating toinformation contained in the registration statement relating to the Controlling Partnership unitsto be issued to, and distributed by, KPE.

Treatment of KPE Unit Appreciation Rights

Upon the closing of the U.S. listing, except as otherwise agreed in writing between the ControllingPartnership and a holder of a unit appreciation right issued under KPE’s 2007 Equity Incentive Plan,(i) each outstanding unit appreciation right for which the exercise price per KPE unit of such unitappreciation right equals or exceeds the closing price per KPE unit on Euronext Amsterdam on thefinal trading day of KPE units will be cancelled without the payment of any consideration in respectthereof and (ii) each other outstanding unit appreciation right will be converted into a fully vested unitappreciation right, on the same terms and conditions that were applicable under such unit appreciationright, with respect to a number of Controlling Partnership units equal to the number of KPE unitssubject to such unit appreciation right immediately prior to the closing of the U.S. listing with anexercise price per Controlling Partnership unit equal to the per unit exercise price for such unitappreciation right and any such converted unit appreciation right and all obligations with respectthereto will be assumed by the Controlling Partnership.

Indemnification and Insurance

The investment agreement provides that, for a period of six years after the closing of the U.S.listing, the KKR Group Partnerships will indemnify each present and former director and officer of thegeneral partner of KPE and certain other persons serving in a similar role against all losses, liabilities,damages, judgments and fines incurred in connection with any suit, claim, action, proceeding,arbitration or investigation arising out of or related to actions taken by them in their capacity asdirectors or officers of the general partner of KPE or taken by them at the request of KPE or thegeneral partner of KPE. In addition, the investment agreement also provides that the KKR GroupPartnerships will indemnify the Controlling Partnership, KPE, each present and former director andofficer of the general partner of KPE and certain other persons serving a similar role against all losses,liabilities, damages, judgments and fines to which any of them may become subject under the SecuritiesAct, the Exchange Act, or other applicable law, statute, rule or regulation insofar as such losses,liabilities, damages, judgments and fines arise out of or are based upon any untrue statement or allegeduntrue statement of a material fact contained in the registration statement relating to the ControllingPartnership units to be issued to, and distributed by KPE or any other document issued by theControlling Partnership, KPE or any of their respective affiliates in connection with, or otherwiserelating to, the U.S. listing, or arise out of or are based upon the omission or alleged omission to statetherein a material fact required to be stated therein or necessary to make the statements therein, in thelight of the circumstances under which they were made, not misleading.

The investment agreement also provides that the Controlling Partnership will, subject to an agreedupon premium cap, obtain directors’ and officers’ liability insurance for the benefit of the directors andofficers (and former directors and officers) of the general partner of KPE which will (i) be effective fora period from the date of the dissolution of KPE through and including the date that is six years aftersuch date, (ii) cover claims arising out of or relating to any action, statement or omission of suchdirectors and officers whether on or before the date of such dissolution (including the transactions

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contemplated by the investment agreement and the decision making process by the directors of thegeneral partner of KPE in connection therewith) to the same extent as the directors and officers of theKKR Managing Partner acting in their capacities as the directors and officers of the general partner ofKPE are insured with respect thereto, and (iii) contain a coverage limit of $100 million and coverageterms and conditions, including exclusions, substantially comparable to the directors’ and officers’liability insurance in effect on the date of the amended and restated purchase and sale agreement.

Termination

The investment agreement may be terminated at any time prior to the closing of the U.S. listing bymutual written consent of KKR and KPE.

Amendment; Waiver

The investment agreement may be amended by the parties thereto. All amendments must be inwriting signed by all parties. Any amendment by KPE will be valid only if approved by all of the KPEIndependent Directors. At any time prior to the completion of the U.S. listing, each party may:

• extend the time for the performance of any of the obligations or other acts of the other partyprovided for in the investment agreement;

• waive any inaccuracies in the representations and warranties of the other party contained in theinvestment agreement or in any document delivered by the other party pursuant to theinvestment agreement; and

• waive compliance by the other party with any of the agreements or conditions contained in theinvestment agreement.

Amendments to KPE Agreements and Policies

In connection with the consummation of the Combination Transaction, certain amendments will bemade to the existing organizational documents of KPE’s general partner and the KPE InvestmentPartnership and to certain other agreements to which KPE is a party and certain other policies of KPEto reflect the fact that in connection with the consummation of the Combination Transaction, certainamendments will be made to the existing organizational documents of KPE’s general partner and theKPE Investment Partnership and to certain other agreements to which KPE is a party and certain otherpolicies of KPE to reflect the fact, following the Combination Transaction, (i) KPE’s sole asset will beits equity interest in the Combined Business, (ii) the limited partner interests held by KPE in the KPEInvestment Partnership will be contributed to the Combined Business, (iii) KPE investors will no longerpay management fees and carry on their investment and (iv) except with respect to certain mattersdescribed under ‘‘Conflicts of Interest and Fiduciary Duties,’’ the Combined Business and anyinvestments that it makes will be overseen and managed by the KKR Managing Partner rather than thegeneral partner of KPE. These changes include (a) a termination of KPE’s current investmentagreement that requires KKR to acquire common units of KPE with the proceeds of certain cashdistributions that it receives, (b) modifications to the types of services provided by KKR to KPE,(c) changes to the policies relating to the information that KPE publishes regarding investments andfinancial results and (d) a grant of permission to invest any assets in opportunistic investments, subjectto certain tax considerations.

Lock-Up Agreement

In addition to the transfer restrictions that individuals who hold interests in KKR Holdings aresubject to, KKR Holdings and certain other KKR entities have agreed that, without the prior writtenconsent of a majority of the KPE Independent Directors, they will not, during the period ending

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180 days after the effective date of the Combination Transaction (i) offer, pledge, sell, contract to sell,sell any option or contract to purchase, purchase any option or contract to sell, grant any option, rightor warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any KKR GroupPartnership Units or any securities convertible into or exercisable or exchangeable for KKR GroupPartnership Units; or (ii) enter into any swap or other arrangement that transfers to another, in wholeor in part, any of the economic consequences of ownership of the KKR Group Partnership Units;whether any such transaction described above is to be settled by delivery of KKR Group PartnershipUnits or such other securities, in cash or otherwise. These restrictions do not apply to certain sales,distributions and transfers.

Accounting Treatment

The Combination Transaction will be accounted for as an acquisition of noncontrolling interestsreflecting the fact that the KKR senior principals will retain control over the KPE InvestmentPartnership. Since the financial statements of the KPE Investment Partnership are already included inthe historical combined financial statements, this transaction will have the effect of reallocating incomeand equity to KKR that was previously attributable to noncontrolling interests. However, the ownershipof KKR will also increase due to the participation of KPE as equity holders in the Combined Business.

Consistent with the accounting guidance for such a transaction, the Combination Transaction willbe reflected as an equity transaction and no gain or loss will be recognized in net income. The carryingamount of the historical noncontrolling interest attributable to KPE will be reduced to zero with anoffsetting amount recognized as a component of equity in the consolidated financial statements ofKKR. Additionally, the carrying amount of the KPE Investment Partnership will not be changed as aresult of the acquisition of these noncontrolling interests. See ‘‘Preliminary Unaudited Pro FormaSegment Information.’’

Interests of Directors and Executive Officers in the Combination Transaction

Through their affiliation with us, each of the KKR Managing Partner’s executive officers may bedeemed to have the following interests relating to the Combination Transaction:

• KKR and affiliated entities hold beneficial ownership of approximately 3.8% of KPE’soutstanding units;

• Pursuant to KKR’s services agreement with KPE, KKR is entitled to receive a management feebased upon the aggregate amount of KPE’s equity;

• The services agreement with KPE requires KPE to indemnify KKR and its affiliates with respectto all losses or damages arising from acts not constituting bad faith, willful misconduct or grossnegligence;

• The services agreement with KPE requires KPE to reimburse KKR for certain direct expenses,which payments total $4.4 million during the year ended December 31, 2008;

• Each investment that is made by the KPE Investment Partnership is generally subject to either acarried interest or incentive distribution right, which entitles KKR to receive a portion of theprofits generated by the investment;

• Pursuant to KKR’s license agreement with KPE, KKR has granted KPE and certain relatedentities a non-exclusive, royalty-free license to use the name ‘‘KKR’’; and

• KKR PEI Associates, L.P., an entity that is owned by KKR investment professionals, includingMessrs. Kravis and Roberts, holds the general partner interest in the KPE InvestmentPartnership.

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In addition to being directors and executive officers of the KKR Managing Partner, Messrs. Kravisand Roberts also are members of the KPE Board. In their capacity as members of the KPE Board,Messrs. Kravis and Roberts, as well as the KPE Independent Directors, may be deemed to have thefollowing interests relating to the Combination Transaction:

• The amended and restated purchase and sale agreement provides that each present and formerdirector of the KPE Board will be indemnified as described above under ‘‘—The Amended andRestated Purchase and Sale Agreement—Indemnification and Insurance’’;

• The amended and restated purchase and sale agreement provides that KPE will maintaindirectors’ and officers’ liability insurance for the benefit of the directors and officers of KPE’sgeneral partner; and

• The KPE Independent Directors receive ongoing fees for service in such capacity and, inconnection with the Combination Transaction, the KPE Independent Directors will also beentitled to receive customary fees that are not contingent on their recommendation of theCombination Transaction. However, none of the KPE Independent Directors holds an equityinterest in KPE.

Finally, the chief financial officer of KPE’s general partner is KKR’s employee and may be deemedto have each of the following interests described above (other than those specifically attributable onlyto the KPE Independent Directors). In addition, certain of KKR’s employees who provide services toKPE are entitled to indemnification under the amended and restated purchase and sale agreement andhold KPE unit appreciation rights in an amount less than 1% of the aggregate KPE units outstandingwhich will become fully vested and immediately exercisable upon the consummation of theCombination Transaction.

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THE CONSENT SOLICITATION

General

The consent of the holders of KPE units is being sought to consummate the CombinationTransaction.

Record Date

The record date for determining holders of KPE units entitled to receive notice of, and consent to,the consummation of the Combination Transaction is the close of business on July 23, 2009, which forthis purpose is considered to be 5:30 p.m. (Amsterdam time), except that it is 5:00 p.m. (New York Citytime) for the holders of RDUs. On the record date, there were 204,902,226 KPE units outstanding.

Consent Required

Neither the KPE limited partnership agreement nor any applicable legal, regulatory or otherrequirement requires the consent of the holders of KPE units. Nevertheless, based on the extraordinarynature of the transaction, KKR and KPE agreed in the amended and restated purchase and saleagreement that the consummation of the Combination Transaction would require the consent of theholders of at least a majority of the KPE units for which a properly submitted consent form issubmitted, excluding any KPE units whose consent rights are controlled by KKR or its affiliates, whichis referred to as the requisite unitholder consent.

As of the record date for the consent solicitation, KKR or its affiliates controlled the consentrights with respect to approximately 3.8% of the KPE units. Obtaining the requisite unitholder consentis a condition to completion of the Combination Transaction. If the requisite unitholder consent is notobtained, the Combination Transaction will not be completed. The conditions to the consummation ofthe Combination Transaction, including the obtaining of the requisite unitholder consent, will beconsidered irrevocably satisfied on the first date on which all of the conditions have been satisfied orwaived and the effective date of the Combination Transaction will be the first day following the end ofthe quarter during which the conditions are first satisfied or waived.

Recommendation

The board of directors of KPE’s general partner, acting upon the unanimous recommendation ofthe KPE Independent Directors, unanimously approved the amended and restated purchase and saleagreement and the consummation of the transactions contemplated thereby. The board of directors ofKPE’s general partner unanimously recommends that the holders of KPE units consent to theconsummation of the Combination Transaction. When considering the board of directors’recommendation, you should be aware that certain of the directors may have financial interests in theCombination Transaction that may be different from, or in addition to, the interests of holders of KPEunits. See ‘‘The Combination Transaction—Interests of Directors and Executive Officers in theCombination Transaction’’.

Delivery of Consents

Consents must be received by 5:30 p.m. (Amsterdam time) on August 14, 2009, or, if theexpiration time is extended, such later time.

Since your KPE units are held in ‘‘street name’’ through a broker or bank, in order to submit yourconsent you must contact your broker or bank and follow the instructions provided by your broker orbank. Please note your broker or bank may require you to provide your instructions prior to theexpiration time in order to allow sufficient time to execute the consent on your behalf. If you do notinstruct your broker or bank on whether or not you would like to consent, your broker or bank

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generally will not have the discretion to provide consent on your behalf. If you fail to instruct yourbroker or bank, it will not affect the outcome of this consent solicitation.

If you are a holder of restricted depositary units of KPE, please see the section below entitled‘‘—Holders of Restricted Depositary Units of KPE’’ for the procedures that should be followed inorder to provide your consent.

Expiration Time and Tabulation

The consent solicitation is currently scheduled to expire at 5:30 p.m. (Amsterdam time) onAugust 14, 2009. You should contact your broker or bank and follow the instructions provided by yourbroker or bank to ensure your consent is delivered in advance of the expiration time. If the requisiteunitholder consent has not been obtained by the scheduled expiration of the consent solicitation, theconsent solicitation may be extended from time to time upon the request of either KKR or KPE. If theexpiration time is extended, KPE will announce the new expiration time no later than the first businessday following the date on which the expiration time would have otherwise occurred. Under the termsof the amended and restated purchase and sale agreement, each of KKR and KPE has the right toterminate the amended and restated purchase and sale agreement if the requisite unitholder consent isnot obtained, and the other conditions have not been satisfied or waived on or prior to October 31,2009. The consents will be tabulated by The Bank of New York Mellon, which is KPE’s transfer agent,promptly following the expiration of the solicitation period.

Revocation

You may revoke your consent at any time prior to the earlier of (i) the expiration of the consentsolicitation period and (ii) the time that the consent of the holders of more than 50% of the KPE units(excluding from the numerator and denominator KPE units whose consent rights are controlled byKKR or its affiliates and by any person who has informed KPE in writing that it will not submit aconsent) have been obtained to approve the consummation of the Combination Transaction. The earlierof the (i) expiration time and (ii) the time that consents of the holders of more than 50% of the KPEunits (excluding from the numerator and denominator KPE units whose consent rights are controlledby KKR or its affiliates and by any person who has informed KPE in writing that it will not submit aconsent) have been obtained to approve the consummation of the Combination Transaction is referredto as the ‘‘Revocation Deadline’’. Your consent may not be revoked after the Revocation Deadline. Thecondition to the Combination Transaction relating to the obtaining of unitholder consent will bedeemed to be satisfied on date of the the applicable Revocation Deadline, assuming the requisiteunitholder consent has been received as of such date. KPE will announce that the Revocation Deadlinehas occurred on the first business day following the date of the Revocation Deadline. If you desire torevoke your consent prior to the Revocation Deadline, you should contact your broker or bank andfollow the instructions provided by your broker or bank. If you are a holder of restricted depositaryunits of KPE, please see the section below entitled ‘‘—Holders of Restricted Depositary Units of KPE’’for the procedures that should be followed in order to revoke your consent.

Holders of Restricted Depositary Units of KPE

If you own restricted depositary units of KPE, you will be mailed a consent form which should beused to instruct The Bank of New York Mellon, as Depositary, as to whether or not you wish toconsent to the Combination Transaction with respect to the KPE units underlying the restricteddepositary units that you own as of the record date. This consent form must be returned to theDepositary by no later than 5:00 p.m. (New York City time) on August 11, 2009 so that the Depositaryhas sufficient time to tabulate instructions in advance of the expiration time. Alternatively, you maysubmit your consent over the telephone or the Internet by following the instructions set forth on theconsent form you receive. If you sign and send in your consent form to the Depositary and do not

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indicate whether or not you would like to consent, the Depositary will consent to the consummation ofthe Combination Transaction with respect to the KPE units underlying your restricted depositary unitsof KPE. If you do not instruct the Depositary on whether or not you would like to consent, theDepositary will not have the discretion to provide consent on your behalf. If you fail to return aproperly submitted consent form to the Depositary or fail to properly instruct the Depositary bytelephone or over the Internet prior to 5:00 p.m. (New York City time) on August 11, 2009, it will notaffect the outcome of this consent solicitation.

Amendment/Waiver

KPE and KKR expressly reserve the right, in their sole discretion, to waive any condition to theCombination Transaction and/or amend or modify any of the terms of the amended and restatedpurchase and sale agreement and/or the Combination Transaction. To the extent a waiver, modificationor amendment is not material and adverse to the holders of KPE units, as determined by the board ofdirectors of KPE’s general partner, any consents submitted prior to any such waiver, modification oramendment will continue to be valid and will not be affected by any such waiver, modification oramendment. In the event a waiver, modification or amendment is material and adverse to the holdersof KPE units, as determined by the board of directors of KPE’s general partner, holders of KPE unitswhose consents have been submitted prior to such waiver, modification or amendment will be notifiedas to the method by which they will be asked to reconfirm their consent.

Solicitation of Consents

KPE will pay the cost of the consent solicitation. In addition to soliciting consents by mail, KPE’sgeneral partner and its officers, employees and agents may solicit consents in person, by telephone orotherwise. No director, officer or employee of the general partner of KPE will be specificallycompensated for these activities. KPE also intends to request that brokers, banks and other nomineessolicit consents from their principals, and KPE will pay the brokers, banks and other nominees certainexpenses they incur for those activities. Innisfree M&A Incorporated, a proxy soliciting firm, has beenretained to assist KPE in the solicitation of consents.

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PROPOSAL—APPROVAL OF THE COMBINATION TRANSACTION

On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR pursuant to which, among other things, KPE agreed to contribute all of its assets and liabilities,including its interests in the KPE Investment Partnership, to KKR in exchange for a 30% interest inthe Combined Business, which KPE will hold through its interests in Group Holdings.

Upon completion of the Combination Transaction, KKR will directly or indirectly contribute all ofthe interests of the KPE Investment Partnership and any other assets acquired from KPE to the KKRGroup Partnerships in exchange for KKR Group Partnership Units. Certain of these KKR GroupPartnership Units will be held through an intermediate holding company that will be taxable as acorporation for U.S. federal income tax purposes. These KKR Group Partnership Units will initiallyprovide KPE, through its interests in Group Holdings, with a 30% economic interest in each of theKKR Group Partnerships and allow it to share ratably in the assets, liabilities, profits, losses anddistributions, if any, of the KKR Group Partnerships. The balance of the KKR Group PartnershipUnits will be held by KKR’s existing owners through their interests in KKR Holdings and will beaccounted for in KKR’s consolidated financial statements as noncontrolling interests. KKR’s combinedfinancial statements include the general partner of the KPE Investment Partnership, which hashistorically consolidated the KPE Investment Partnership as the primary beneficiary. In connection withthe Combination Transaction, the KKR Group Partnerships will acquire all outstanding noncontrollinginterests in the KPE Investment Partnership, which will become a wholly-owned subsidiary of the KKRGroup Partnerships.

The Combination Transaction is conditioned upon, among other things, the consent of KPEunitholders representing at least a majority of the KPE units for which a properly submitted consentform is submitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates).The record date for determining holders of KPE units entitled to receive notice of, and consent to, theconsummation of the Combination Transaction is the close of business on July 23, 2009.

The board of directors of KPE’s general partner, acting upon the unanimous recommendation ofthe KPE Independent Directors, unanimously approved the entry into the amended and restatedpurchase and sale agreement and the transactions contemplated thereby. The board of directors ofKPE’s general partner recommends that the holders of KPE units consent to the approval of theconsummation of the Combination Transaction.

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23JUL200900115586

ORGANIZATIONAL STRUCTURE

The following diagram illustrates the ownership and organizational structure that KKR will haveimmediately after the completion of the Transactions.

Management CompaniesCapital Markets Companies

KPEInvestment Partnership(3)

General PartnersFunds and Co-Investments

KKRManagement Holdings L.P.

KKRFund Holdings L.P.

KKRManagement Holdings

Corp.(1)

KKR Group Holdings L.P.

KPE(Euronext Amsterdam) KKR & Co. L.P.

KKR Management LLC

KKR Holdings L.P.

GP 30%

GP 30%

LP 100%GP (No Economics)

GP (No Economics)

KKR Group Partnerships

KKR Group (2)

LP 70%LP 70%

KKR Principals

KKR Senior Principals

KPE Investors

Notes:

(1) Except for KKR Management Holdings Corp., certain of KKR’s foreign subsidiaries and certainsubsidiaries of the KPE Investment Partnership, which will be taxable as corporations for U.S.federal income tax purposes, all entities are treated as partnerships or disregarded entities for U.S.federal income tax purposes.

(2) For information concerning the interests in the KKR Group that will be owned by the KKR GroupPartnerships or retained by minority investors upon completion of the Transactions, see‘‘—Components of KKR’s Business Owned by the KKR Group Partnerships.’’

(3) For information concerning the contribution of the KPE Investment Partnership and the otherassets of KPE to the KKR Group Partnerships, see ‘‘—Combination Transaction’’ and‘‘Organizational Structure.’’

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The KKR Group

Prior to the Transactions, KKR’s business was conducted by a number of combined andconsolidated entities that operated under the common control of KKR’s senior principals and wereunder the common ownership of KKR’s principals and other existing owners. These entities, whichcomprised the KKR Group, included:

• KKR’s management companies and capital markets companies, which generate management,advisory and incentive fees earned from all of KKR’s funds, managed accounts, portfoliocompanies, capital markets transactions and other investment products;

• the general partners of the 1996 Fund, the European Fund, the Millennium Fund, the EuropeanFund II, the 2006 Fund, the Asian Fund, the European Fund III, the KPE InvestmentPartnership, the entities that are entitled to receive carry from KKR’s principal protected privateequity product and the entities that are entitled to receive carry from KKR’s co-investmentvehicles, which receive carried interest from private equity investments that are made throughsuch entities as well as returns on investments made by or on behalf of the general partnersalongside fund investors;

• the general partners of certain fixed income funds managed by KKR, which control theoperations of such funds; and

• the consolidated subsidiaries of the foregoing.

The KKR Group is expected to become KKR’s predecessor for accounting purposes and itsfinancial statements are expected to become KKR’s historical financial statements only uponcompletion of the Reorganization Transactions, which will take place only if unitholders representing atleast a majority of the KPE units for which a properly submitted consent form is submitted (excludingKPE units whose consent rights are controlled by KKR or its affiliates) consent to the CombinationTransaction. Because the legal entities that comprise the KKR Group are under the common control ofKKR’s senior principals and will be under their common control following the completion of theReorganization Transactions, KKR will account for the Reorganization Transactions as a transfer ofinterests under common control. Certain portions of the Transactions, however, will be accounted for asacquisitions of noncontrolling interests as described under ‘‘Preliminary Unaudited Pro Forma SegmentInformation.’’

KKR Group Partnerships

Following the date that the conditions to closing the Combination Transaction are satisfied orwaived and prior to the effective date of the Combination Transaction, KKR will complete theReorganization Transactions, pursuant to which KKR’s business will be reorganized under the KKRGroup Partnerships. The reorganization will involve a contribution of equity interests in KKR’s businessthat are held by KKR’s principals to the KKR Group Partnerships in exchange for newly issued partnerinterests in the KKR Group Partnerships. No cash will be received in connection with such exchanges.Each Group Partnership will have an identical number of partner interests and, when held together,one partner interest in each of the KKR Group Partnerships will represent a KKR Group PartnershipUnit. Upon the completion of the Transactions, KPE, through its interest in Group Holdings, willinitially hold 30% of the outstanding KKR Group Partnership Units and KKR’s principals, throughtheir interests in KKR Holdings, will initially hold 70% of the outstanding KKR Group PartnershipUnits. These interests will allow KPE and KKR’s existing owners to share ratably in the assets,liabilities, profits, losses and distributions, if any, of the KKR Group Partnerships based on theirrespective percentage interests in the KKR Group Partnerships.

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Components of KKR’s Business Owned by the KKR Group Partnerships

Upon completion of the Transactions, KKR’s business will be conducted through the KKR GroupPartnerships and Group Holdings will serve as the general partner of those entities. Except for thenoncontrolling interests in KKR’s funds that are held by fund investors, interests in the general partnersof the 1996 Fund and the Retained Interests described below, the KKR Group Partnerships will own:

• all of the controlling and economic interests in KKR’s fee-generating management companiesand capital markets companies, which will allow KPE to share ratably in the management,advisory and incentive fees earned from all of KKR’s funds, managed accounts, portfoliocompanies, capital markets transactions and other investment products;

• controlling and economic interests in the general partners of KKR’s funds and the entities thatare entitled to receive carry from KKR’s co-investment vehicles, which will allow KPE to shareratably in the carried interest received by them as well as any returns on investments made by oron behalf of the general partners after the completion of the Transactions; and

• all of the controlling and economic interests in the KPE Investment Partnership and the otherassets of KPE, which will allow KPE to share ratably in the returns that they generate.

With respect to KKR’s active and future funds and co-investment vehicles that provide for carriedinterest, KKR intends to continue to allocate to its principals, other professionals and selected otherindividuals who work in these operations a portion of the carried interest earned in relation to thesefunds as part of its carry pool. KKR expects to allocate approximately 40% of the carry it receives fromthese funds and vehicles to its carry pool, although this percentage may fluctuate over time. Prior to aU.S. listing, allocations to the carry pool may not exceed 40% and, following such a listing, allocationsto the carry pool may exceed 40% only with the approval of a majority of the independent directors ofthe KKR Managing Partner.

In connection with the Transactions, certain minority investors will retain the following additionalinterests in KKR’s business and such interests will not be acquired by the KKR Group Partnerships:

• controlling and economic interests in the general partners of the 1996 Fund, which interests willnot be contributed to the KKR Group Partnerships due to the fact that the general partners arenot expected to receive meaningful proceeds from further realizations;

• noncontrolling economic interests that will allocate to a former principal and such person’sdesignees an aggregate of 1% of the carried interest received by general partners of KKR’sfunds and 1% of KKR’s other profits until a future date;

• noncontrolling economic interests that will allocate to certain of KKR’s former principals andtheir designees a portion of the carried interest received by the general partners of KKR’sprivate equity funds that was allocated to them with respect to private equity investments madeduring such former principals’ tenure with KKR;

• noncontrolling economic interests that will allocate to certain of KKR’s current and formerprincipals all of the capital invested by or on behalf of the general partners of KKR’s privateequity funds before the completion of the Transactions and any returns thereon as well as anyrealized carried interest distributions that are actually received but not distributed by the generalpartners prior to the Transactions; and

• a noncontrolling economic interest that will allocate to a third party an aggregate of 2% of theequity in the KKR Group’s capital markets business.

The interests described in the immediately preceding bullets (other than interests in the generalpartners of the 1996 Fund) are referred to as the Retained Interests. As of March 31, 2009, theRetained Interests, the general partners in the 1996 Fund and the carry pool allocations referred toabove collectively accounted for approximately $150 million of partners’ capital. Following the

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completion of the Transactions, the Retained Interests will be reflected in KKR’s financial statementsas noncontrolling interests even though such interests are not included in the Combined Business.Except for the Retained Interest in KKR’s capital markets business, these interests generally areexpected to run-off over time, thereby increasing the interests of the KKR Group Partnerships in theentities that comprise KKR’s business.

You should note that the interests that the KKR Group Partnerships will own, as described above,do not represent all of the interests in the KKR Group that are reflected in its combined financialstatements included elsewhere in this consent solicitation statement or interests in all of the entitiesthat KKR has sponsored over time. In addition, as described elsewhere in this consent solicitationstatement, KKR is required to consolidate in KKR’s financial statements the funds over which itexercises substantive controlling rights and operational discretion, despite the fact that the substantialmajority of the economic interests in those entities are held by third party fund investors. Theseinterests have been allocated to such third party fund investors as noncontrolling interests in KKR’sfinancial statements. Except for interests in the KPE Investment Partnership that will be acquired fromKPE in the Combination Transaction, KKR will not acquire any of the economic interests in KKR’sfunds that are held by fund investors. See ‘‘Organizational Structure’’ and ‘‘The CombinationTransaction.’’ For financial and other information that presents the KKR Group’s results without givingeffect to the consolidation of KKR’s funds, see ‘‘Preliminary Unaudited Pro Forma SegmentInformation’’ and ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results ofOperations—Business Segments.’’

Group Holdings

Group Holdings, of which KPE will be the sole limited partner, is the entity through which KPEwill hold its interests in the KKR Group Partnerships, and Group Holdings will directly or indirectlyserve as the general partner of the KKR Group Partnerships. As is commonly the case with limitedpartnerships, the limited partnership agreement of Group Holdings provides for the management ofKKR’s business and affairs by a general partner rather than a board of directors. The KKR ManagingPartner serves as the ultimate general partner of Group Holdings and the KKR Group Partnerships.

The KKR Managing Partner

As is commonly the case with limited partnerships, the limited partnership agreement of GroupHoldings provides for the management of KKR’s business and affairs by a general partner rather thana board of directors. The KKR Managing Partner serves as the ultimate general partner of GroupHoldings and the KKR Group Partnerships. The KKR Managing Partner has a board of directors thatis co-chaired by KKR’s founders Henry Kravis and George Roberts, who also serve as KKR’s Co-ChiefExecutive Officers and, in such positions, are authorized to appoint other officers of the partnership.The KKR Managing Partner will not have any economic interest in the Controlling Partnership otherthan a single limited partnership unit.

KPE unitholders do not hold securities of the KKR Managing Partner and are not entitled to votein the election of its directors or other matters affecting its governance. Only those persons holdinglimited liability company interests in the KKR Managing Partner will be entitled to vote in the electionor removal of its directors, on proposed amendments to its charter documents or on other matters thatrequire approval of its equity holders. See ‘‘Governance’’ and ‘‘U.S. Listing—The KKR ManagingPartner.’’

KKR Holdings

Upon completion of the Transactions, KKR’s principals will hold interests in KKR’s businessthrough KKR Holdings, which will own all of the outstanding KKR Group Partnership Units that KPEdoes not own through Group Holdings. These individuals will receive financial benefits from KKR’s

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business in the form of distributions and payments received from KKR Holdings and through theirdirect and indirect participation in the value of KKR Group Partnership Units held by KKR Holdings.As a result, certain profit-based cash amounts that were previously paid by KKR will no longer be paidby the firm and will be borne by KKR Holdings.

The interests that these individuals hold in KKR Holdings will be subject to transfer restrictionsand, except for interests held by its founders and approximately 33% of the interests held by otherexecutives, will be subject to vesting requirements. The transfer restrictions period will last for aminimum of (i) one year with respect to one-half of the interests vesting on a vesting date and (ii) twoyears with respect to the other one-half of the interests vesting on such vesting date. For interests thatare vested upfront, the transfer restrictions will be applied assuming the closing date is the vesting date.While employed by the firm, these individuals will also be subject to minimum retained ownership rulesrequiring them to continuously hold at least 25% of their vested interests.

KKR expects that approximately 6% of the unvested interests will time vest over a period rangingfrom 6 months to 3 years, approximately 43% of the unvested interests will time vest over a 5 yearperiod and approximately 18% of the unvested interests will be subject to both performance-basedvesting and time-based vesting. Interests that are subject to performance-based vesting and time-basedvesting may vest over a period of up to 8 years. Vesting of certain transfer restricted interests will besubject to the holder not being terminated for cause and complying with the terms of his or herconfidentiality and restrictive covenant agreement during the transfer restrictions period. See‘‘Governance—Confidentiality and Restrictive Covenant Agreements.’’ The transfer and vestingrestrictions applicable to these interests may not be enforceable in all cases and can be waived,modified or amended by KKR Holdings at any time without the consent of KKR.

In connection with the Transactions, KKR Holdings intends to use a portion of its equity in thecombined company to grant equity based awards to junior employees, support staff, consultants andother personnel not covered above. While the form and amount of awards to be granted under theplan have not yet been determined, they will be made and funded by KKR Holdings and will not diluteKPE’s interests in the Combined Business at closing. KKR Holdings expects that these awards will besubject to vesting and other conditions that are customary in nature.

2009 Equity Incentive Plan

In connection with the Transactions, KKR intends to adopt its 2009 Equity Incentive Plan foremployees, consultants, directors, officers and senior advisors. The plan will contain customary termsfor equity incentive plans for U.S. publicly traded asset managers and will allow for the issuance ofvarious forms of awards, including restricted equity awards, unit appreciation rights, options and otherequity based awards. The plan will be administered by the board of directors of the KKR ManagingPartner. See ‘‘Governance—2009 Equity Incentive Plan’’.

Exchange Agreement

In connection with the Combination Transaction, KPE and KKR Holdings will enter into anexchange agreement pursuant to which KKR Holdings and certain of the transferees of its KKR GroupPartnership Units may, up to four times each year, effectively exchange KKR Group Partnership Unitsheld by them for KPE units on a one-for-one basis, subject to customary conversion rate adjustmentsfor splits, unit distributions and reclassifications. At the election of the KKR Group Partnerships andsubject to approval by a majority of the independent directors of KPE’s general partner, the KKRGroup Partnerships may settle most types of exchanges of KKR Group Partnership Units with cash inan amount equal to the fair market value of the KPE units that would otherwise be deliverable in suchexchanges. If the KKR Group Partnerships elect to settle an exchange of KKR Group PartnershipUnits with cash from operations (rather than sales of securities), the net assets of the KKR GroupPartnerships will decrease and the KKR Group Partnership Units that are acquired in the exchange will

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be canceled, which will result in a corresponding reduction in the number of fully diluted units thatKPE has outstanding following the exchange. As a result of the cancellation of the KKR GroupPartnership Units that are acquired in the exchange, KPE’s percentage ownership of the KKR GroupPartnerships will increase and KKR Holdings’ percentage ownership will decrease. Upon completion ofa listing of the interests in the Combined Business in the United States, the Controlling Partnershipand KKR Holdings will enter into an exchange agreement with substantially similar terms.

Interests in KKR Holdings that are held by KKR’s principals will be subject to significant transferrestrictions and vesting requirements that, unless waived, modified or amended, will limit the ability ofKKR’s principals to cause KKR Group Partnership Units to be exchanged under the exchangeagreement so long as the applicable vesting and transfer restrictions apply. The general partner of KKRHoldings, which will initially be controlled by KKR’s founders, will have sole authority for waiving,modifying or amending any applicable vesting or transfer restrictions. Pursuant to a lock-up agreementthat KKR will enter into with KKR Holdings, exchanges cannot be effected for 180 days after thecompletion of the Combination Transaction, subject to certain exceptions.

Tax Receivable Agreement

The acquisition by KPE’s intermediate holding company of KKR Group Partnership Units fromKKR Holdings or transferees of its KKR Group Partnership Units from time to time pursuant to theexchange agreement may result in an increase in KPE’s intermediate holding company’s share of thetax basis of the tangible and intangible assets of KKR Management Holdings L.P., primarily attributableto a portion of the goodwill inherent in KKR’s business, that would not otherwise have been available.This increase in tax basis may increase (for tax purposes) depreciation and amortization deductions andtherefore reduce the amount of tax KPE’s intermediate holding company would otherwise be requiredto pay in the future. This increase in tax basis may also decrease gain (or increase loss) on futuredispositions of certain capital assets to the extent tax basis is allocated to those capital assets. However,there will only be an increase in tax basis to the extent a holder of KKR Group Partnership Unitseffectively exchanges their KKR Management Holdings L.P. units for KPE units in a taxable exchange.If the effective exchange is structured as a tax free exchange, no increase in tax basis will occur. Undercertain circumstances, transferees of KKR Group Partnership Units will have the right to exchangetheir KKR Management Holdings L.P. units in a tax-free manner, thus not resulting in an increase intax basis.

KPE will enter into a tax receivable agreement with KKR Holdings requiring KPE’s intermediateholding company to pay to KKR Holdings or transferees of its KKR Group Partnership Units 85% ofthe amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediateholding company actually realizes (or is deemed to realize, in the case of an early termination paymentby its intermediate holding company or a change of control) as a result of this increase in tax basis, aswell as 85% of the amount of any such savings the intermediate holding company actually realizes (oris deemed to realize) as a result of increases in tax basis that arise due to future payments under theagreement. Although KKR is not aware of any issue that would cause the IRS to challenge a tax basisincrease, neither KKR Holdings, KPE nor their transferees will reimburse KKR for any paymentspreviously made under the tax receivable agreement if such tax basis increase, or the benefits of suchincreases, were successfully challenged by the IRS. See ‘‘Certain Relationships and Related PartyCombination Transaction—Tax Receivable Agreement.’’ In the event that other of KPE’s current orfuture subsidiaries become taxable as corporations and acquire KKR Group Partnership Units in thefuture, or if KPE becomes taxable as a corporation for U.S. federal income tax purposes, each willbecome subject to a tax receivable agreement with substantially similar terms. Upon completion of alisting of the interests in the Combined Business in the United States, the Controlling Partnership andKKR Holdings will enter into a tax receivable agreement with substantially similar terms.

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KKR PRIVATE EQUITY INVESTORS, L.P.

The foregoing description presents certain information concerning KPE and the market for KPE units.This information should be read in conjunction with the financial report of KPE, including the financialstatements of KPE, the consolidated financial statements of the KPE Investment Partnership and the relatednotes included on KPE’s website www.kkrprivateequityinvestors.com as well as ‘‘KKR Management’sDiscussion and Analysis of Financial Condition and Results of Operations’’ and ‘‘The CombinationTransaction’’.

KPE

KKR Private Equity Investors, L.P. is a Guernsey limited partnership that seeks to create long-termvalue by participating in private equity and other investments identified by KKR. As of June 30, 2009,KPE’s investments consisted of 100% of the limited partner interests of KKR PEI Investments, L.P.,which is referred to as the KPE Investment Partnership. The KPE Investment Partnership’s portfolio iscomprised of: (i) KKR’s private equity funds (the European Fund, the Millennium Fund, the 2006Fund, the European Fund II, the Asian Fund, the European Fund III), (ii) co-investments in 13portfolio companies of KKR’s private equity funds, (iii) three negotiated equity investments, (iv) aninvestment in a fixed income fund that KKR manages and (v) temporary investments.

KPE is subject to the supervision of Guernsey Financial Services Commission and marketsupervision by the Authority for the Financial Markets in the Netherlands. KPE is governed by itsgeneral partner’s board of directors, which is required to have a majority of independent directors.

Net Asset Value

As of March 31, 2009, KPE’s NAV was $2,626.1 million, or $12.82 per unit. Based on preliminaryunaudited information, KPE expects that its net asset value as of June 30, 2009 will be approximately$3.0 billion, or between approximately $14.55 and $14.75 per unit, and that as of June 30, 2009, basedon preliminary unaudited information, the KPE Investment Partnership had a cash balance ofapproximately $810 million, approximately $940 million outstanding on its $1.0 billion five-year seniorsecured credit facility, and remaining capital commitments related to limited partner interests in KKR’sprivate equity funds of approximately $930 million.

KPE had 204,550,001 outstanding units for all periods before March 31, 2008 and 204,902,226outstanding units as of March 31, 2008 and for all periods thereafter. KPE’s NAV per unit for thefollowing eight quarters was as follows(1):

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23JUL2009221228916/30/07$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

9/30/07 12/31/07 3/31/08 6/30/08 9/30/08 12/31/08 3/31/09

$26.12 $25.77$24.36

$23.02 $22.25

$18.85

$12.78 $12.82

(1) Represents the NAV net of distributions paid. KPE has paid the following distributions since itsformation in April 2006:

Cash Distribution Paid perRecord Date Payment Date Common Unit

December 1, 2006 December 15, 2006 $0.19August 31, 2007 September 17, 2007 0.24

$0.43

The KPE Investment Partnership’s net assets were comprised of the following, with amounts inthousands, as of March 31, 2009:

Net Assets Percent of Total

Private equity investments:Co-investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,220,469 46.3%Private equity funds . . . . . . . . . . . . . . . . . . . . . . . . . . 1,162,992 44.2Negotiated equity investments . . . . . . . . . . . . . . . . . . 667,857 25.4

3,051,318 115.9Temporary investments . . . . . . . . . . . . . . . . . . . . . . . . . 638,444 24.3Non-private equity fund investment . . . . . . . . . . . . . . . . 58,482 2.2Revolving credit agreement . . . . . . . . . . . . . . . . . . . . . . (926,193) (35.2)Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (350,000) (13.3)Other, net(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,186 6.1

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,632,237 100.0%

Allocation of net assets to the general partner . . . . . . . . $ 5,645 0.2%Allocation of net assets to KPE . . . . . . . . . . . . . . . . . . . 2,626,592 99.8

$2,632,237 100.0%

(1) Other, net included a receivable of $200.4 million related to the sale of certain interestsin co-investments, the cash proceeds of which were received in April 2009.

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KPE Units

Trading Price

The table below shows the closing price of KPE units, which are admitted to listing and trading onEuronext Amsterdam under the symbol ‘‘KPE’’ at the close of the regular trading session on June 23,2009, the last trading day before the public announcement of KKR’s revised proposal for theCombination Transaction, and July 23, 2009, the most recent trading day for which that informationwas available as of the date of this consent solicitation statement.

Date KPE Closing Price

June 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.50July 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.50

The following table sets forth, for the periods indicated, the high and low closing sale prices perKPE unit as reported on Euronext Amsterdam.

KPE UnitsCalendar Quarter High Low

2008First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18.40 $11.45Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.03 $12.75Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.90 $ 9.40Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8.78 $ 2.10

2009First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.50 $ 1.97Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.00 $ 2.88Third Quarter (through July 23, 2009) . . . . . . . . . . . . . . . . . . . . $ 6.50 $ 5.35

Holders

KPE estimates that, as of December 31, 2008, there were approximately 1,580 holders of its units.Because the laws and regulations applicable to KPE do not require KPE holders to file regulatorydisclosure reports regarding their beneficial ownership of KPE units, KPE is unable to determine withreasonable certainty which of its holders currently beneficially own more than five percent of its units.

As of June 30, 2009, KKR executives held, through two affiliated investment vehicles,approximately 1.5% of KPE’s outstanding units. In addition, as of such date one or more investmentfunds that are managed by KKR held approximately 2.3% of KPE’s outstanding units. In addition,KPE’s sole officer may be deemed to beneficially own certain of the KPE units held by these vehiclesand funds. No other director of KPE beneficially owns any KPE units.

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PRELIMINARY UNAUDITED PRO FORMA SEGMENT INFORMATION

The following preliminary unaudited pro forma statements of operations segment information forthe year ended December 31, 2008 and the three months ended March 31, 2009 and the preliminaryunaudited pro forma statement of financial condition segment information as of March 31, 2009 giveeffect to the KFI Transaction, the Reorganization Transactions and the Combination Transaction, as ifsuch transactions had been completed as of January 1, 2008 with respect to the preliminary unauditedpro forma statements of operations segment information and as of March 31, 2009 with respect to thepreliminary unaudited pro forma statement of financial condition segment information. Thispreliminary unaudited pro forma segment information is based on historical segment information of theKKR Group and historical financial information of KPE and the KPE Investment Partnership. Theadjustments described in the accompanying notes are based on information that is currently availableand determinable and on assumptions that management believes are reasonable in order to reflect, ona pro forma basis, the impact of the transaction aspects described herein on the historical segmentfinancial information of the KKR Group.

This preliminary unaudited pro forma segment information is included for informational purposesonly and is preliminary in nature due to the fact that not all information relating to the ReorganizationTransactions and the Combination Transaction is currently available and determinable. This informationdoes not purport to show the pro forma impact of any transactions or arrangements relating to theReorganization Transactions and the Combination Transaction other than those specifically describedherein or the pro forma impact of any transactions or arrangements on the financial condition of thereportable business segments of the KKR Group or the combined statements of financial condition andstatements of income of the KKR Group presented in accordance with GAAP. In addition, thisinformation does not purport to show the actual segment or financial statement results that the KKRGroup would have had if the Reorganization Transactions and the Combination Transaction hadoccurred on the date indicated, or had KKR operated as a public company during the periodspresented, or for any future period.

This preliminary unaudited pro forma segment information is subject to change as additionalinformation concerning the Reorganization Transactions and the Combination Transaction becomesavailable or determinable. This information will also differ from any pro forma financial information ofthe KKR Group that gives effect to the impact of the Reorganization Transactions and theCombination Transaction on the face of the combined financial statements of the KKR Group that arepresented in accordance with GAAP. See ‘‘Reconciliation of Segment Reporting to Financial StatementReporting and Net Income,’’ ‘‘Basis of Presentation,’’ and ‘‘Notes to Preliminary Unaudited Pro FormaSegment Information—Transactions and Adjustments Excluded from Pro Forma Presentation.’’ You arecautioned not to place undue reliance on this information.

Basis of Presentation

Financial Statements

The KKR Group is considered the predecessor of KKR for accounting purposes and its historicalcombined financial statements will be the historical financial statements of KKR following thecompletion of the Reorganization Transactions and the Combination Transaction. In accordance withGAAP, the historical combined financial statements of the KKR Group consolidate a number of fundsthat are sponsored by the KKR Group, including the KPE Investment Partnership, despite the fact thatthe KKR Group has only a minority economic interest in those entities. The consolidated funds consistof those funds in which the KKR Group holds a general partner or managing member interest thatgives it substantive controlling rights over such funds as well as the KPE Investment Partnership inwhich the KKR Group holds a variable interest and has been determined to be the primary beneficiary.

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These consolidated entities, which include the KPE Investment Partnership, are collectively referred toas the ‘‘Consolidated Entities.’’

As a result of the consolidation of the Consolidated Entities, the combined financial statements ofthe KKR Group reflect the assets, liabilities, revenues, expenses and cash flows of the ConsolidatedEntities on a gross basis. The majority of the economic interests in the Consolidated Entities, which areheld by third-party investors, are reflected as noncontrolling interests. Substantially all of themanagement fees and certain other amounts that the KKR Group earns from the Consolidated Entitiesare eliminated in combination. However, because those amounts are earned from noncontrollinginterest holders, the KKR Group’s allocable share of the net income from the Consolidated Entities isincreased by the amounts eliminated. Accordingly, the consolidation of the Consolidated Entities doesnot have an effect on the amounts of net income attributable to KKR Group or to KKR Group’spartners’ capital.

While the consolidation of the Consolidated Entities does not have an effect on the amounts ofnet income attributable to KKR Group or partners’ capital reported by the KKR Group, theconsolidation does significantly impact other aspects of the combined financial statement presentationof the KKR Group. This is due to the fact that the assets, liabilities, income and expenses of theConsolidated Entities are reflected on a gross basis while the allocable share of those amounts that areattributable to noncontrolling interest holders are reflected as single line items. The single line items inwhich the assets, liabilities, income and expense attributable to noncontrolling interest holders arerecorded consist of ‘‘noncontrolling interests’’ which are included in the equity section of the statementsof financial condition and ‘‘net income attributable to noncontrolling interests’’ in the statements ofoperations.

Segment Information

The historical segment financial information of the KKR Group is presented as supplementaldisclosure for the reportable business segments of the KKR Group in accordance with Statement ofFinancial Accounting Standards No. 131, ‘‘Disclosures about Segments of an Enterprise and RelatedInformation.’’ This standard is based on a management approach, which requires segment presentationbased on the financial reporting used by management to make operating decisions, assess performanceand allocate resources. The KKR Group has historically operated through two reportable businesssegments: Private Markets and Public Markets. Subsequent to the Reorganization Transactions and theCombination Transaction, KKR expects to operate through three reportable segments as described in‘‘Notes to Preliminary Unaudited Pro Forma Segment Information—KKR Group SegmentInformation.’’

Management of the KKR Group makes operating decisions, assesses performance and allocatesresources based on financial and operating data and measures that are presented without giving effectto the consolidation of any of the Consolidated Entities. As a result, unlike the reporting in thecombined financial statements of the KKR Group, the KKR Group’s segment reporting does not giveeffect to the consolidation of the Consolidated Entities. The exclusion of the Consolidated Entities insegment reporting results in: (i) the inclusion of management fees and incentive fees in fee income thatwould otherwise be eliminated in combination, (ii) the exclusion of investment income and expensesand the exclusion of corresponding charges and credits that are attributable to noncontrolling interestsheld by third-party investors in the Consolidated Entities, (iii) the exclusion of assets and liabilities thatare attributable to noncontrolling interests held by third-party investors and (iv) the exclusion of equitythat is accounted for as noncontrolling interests. All inter-segment transactions are eliminated in thesegment presentation.

Given the differences between the combined financial statement presentation and the segmentreporting of the KKR Group, the preliminary unaudited pro forma segment information presented in

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this document, including the adjustments described in the accompanying notes, will differ from proforma financial information of the KKR Group that gives effect to the impact of the ReorganizationTransactions and the Combination Transaction and related adjustments on the KKR Group’s combinedfinancial statements. This preliminary unaudited pro forma segment information should not beconsidered as a substitute for pro forma financial information of the KKR Group that gives effect tothe impact of the Reorganization Transactions and the Combination Transaction and relatedadjustments on the KKR Group’s combined financial statements or for the combined financialstatements of the KKR Group presented in accordance with GAAP.

KFI Transaction

Prior to May 30, 2008, the KKR Group held all of the equity interests in the parent of themanagement companies for the KKR Group’s Public Markets segment other than certainnoncontrolling interests that allocated 35% of the net income generated by the parent company to thenoncontrolling interest holders. On May 30, 2008, the KKR Group entered into an agreement toacquire all of these noncontrolling interests for cash consideration in the KFI Transaction. As a resultof the KFI Transaction, the KKR Group now owns all of the equity interests in the parent of themanagement companies for its Public Markets segment and is entitled to 100% of the net income andcash flows generated by the management companies.

Reorganization Transactions

Prior to the completion of the Combination Transaction, KKR will complete the ReorganizationTransactions pursuant to which KKR’s business will be reorganized under the KKR Group Partnerships.The reorganization will involve a contribution of equity interests in KKR’s business that are held byKKR principals to the KKR Group Partnerships in exchange for KKR Group Partnership Units. Nocash will be received in connection with such exchanges. KKR principals will hold their KKR GroupPartnership Units through KKR Holdings. As a result of the Reorganization Transactions, certainminority investors will retain the following interests in KKR’s business and such interests will not beacquired by the KKR Group Partnerships:

• controlling and economic interests in the general partners of the 1996 Fund, which interests willnot be contributed to the KKR Group Partnerships due to the fact that the general partners arenot expected to receive meaningful proceeds from further realizations;

• noncontrolling economic interests that will allocate to a former principal and such person’sdesignees an aggregate of 1% of the carried interest received by general partners of KKR’sfunds and 1% of KKR’s other profits until a future date;

• noncontrolling economic interests that will allocate to certain of KKR’s former principals andtheir designees a portion of the carried interest received by the general partners of KKR’sprivate equity funds that was allocated to them with respect to private equity investments madeduring such former principals’ tenure with KKR;

• noncontrolling economic interests that will allocate to certain of KKR’s current and formerprincipals all of the capital invested by or on behalf of the general partners of KKR’s privateequity funds before the completion of the Transactions and any returns thereon as well as anyrealized carried interest distributions that are actually received but not distributed by the generalpartners prior to the Transactions; and

• a noncontrolling economic interest that will allocate to a third party an aggregate of 2% of theequity and any returns thereon in the KKR Group’s capital markets business.

The controlling and economic interests in the 1996 Fund and the general partners of the 1996Fund described above will no longer be reflected in the combined financial statements of the KKR

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Group following the completion of the Reorganization Transactions and the Combination Transaction,due to the fact that such interests will not be acquired by the KKR Group Partnerships. The othernoncontrolling economic interests described in the immediately preceding bullets, which are referred toas ‘‘Retained Interests,’’ are currently reflected in partners’ capital of the KKR Group, but will beaccounted for as noncontrolling interests in the combined financial statements subsequent to thecompletion of the Reorganization Transactions, because such interests will be held at a subsidiary level.The income and expense attributable to the Retained Interests will be accounted for as net incomeattributable to noncontrolling interests in the statements of operations. The allocable share of equityattributable to the Retained Interests will be accounted for as noncontrolling interests in the equitysection of the statement of financial condition.

In addition, with respect to KKR’s active and future funds and co-investment vehicles that providefor carried interest, KKR intends to continue to allocate to its principals, other professionals andselected other individuals who work in these operations, a portion of the carried interest earned inrelation to these funds as part of its carry pool. KKR expects to allocate approximately 40% of thecarry it receives from its funds and co-investment vehicles to its carry pool, although this percentagemay fluctuate over time. Prior to a U.S. listing, allocations to the carry pool may not exceed 40% and,following such a listing, allocations to the carry pool may exceed 40% only with the approval of amajority of the independent directors of the KKR Managing Partner. The allocable share of incomeand expense attributable to these interests will be accounted for as net income attributable tononcontrolling interests in the preliminary unaudited pro-forma segment information. The allocableshare of equity attributable to these interests will be accounted for as noncontrolling interests in thepreliminary unaudited pro forma segment information.

Combination Transaction

In connection with the Combination Transaction, KKR will acquire all of the assets and liabilitiesof KPE, including its interests in the KPE Investment Partnership, and KPE will receive KKR GroupPartnership Units representing a 30% interest in the Combined Business. Units in one of the KKRGroup Partnerships will be held through an intermediate holding company that will be taxable as acorporation for U.S. federal, state and local income tax purposes. See Note (II) under ‘‘Transactionsand Adjustments Excluded from Pro Forma Presentation.’’ The balance of the KKR Group PartnershipUnits will be held by current KKR principals through their interests in KKR Holdings and will beaccounted for in the combined financial statements of KKR as noncontrolling interests.

106

All amounts in the following tables and notes to preliminary unaudited pro-forma segmentinformation are in thousands ($000’s).

KKR Group Total Reportable Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and

the Combination TransactionThree Months Ended March 31, 2009

Total Adjustments Adjustments TotalReportable for KFI and for ReportableSegments Reorganization Combination SegmentsHistorical Transactions Transaction As Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $139,723 $ — $ (8,232)(g)(h) $ 131,491

Employee Compensation and Benefits . . . . . . . . . . . . . . 45,542 (6,304)(d) —(h) 39,238Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . 50,445 (79)(a) 1,733(f)(g)(h) 52,099

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,987 (6,383) 1,733 91,337

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . 43,736 6,383 (9,965) 40,154Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (95,930) 10,241(a) 17,383(f)(h) (68,306)(f)Net Loss attributable to noncontrolling interests . . . . . . . (89) (49,172)(b) 75(h)(i) (49,186)(j)

Economic Net (Loss) Income . . . . . . . . . . . . . . . . . . . . $(52,105) $ 65,796 $ 7,343 $ 21,034(j)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $298,857 $ (69,522)(a) $3,960,571(f)(g)(h) $4,189,906Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259,084 (8,173)(d) 1,339,940(f)(g)(h) 1,590,851Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . 9,883 81,165(b) 26,208(h)(i) 117,256(j)KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . 29,890 (142,514)(a)(b)(d) 2,594,423(f)(g)(h)(i) 2,481,799(j)

KKR Group Private Markets Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and

the Combination TransactionThree Months Ended March 31, 2009

Private Adjustments Adjustments PrivateMarkets for KFI and for MarketsSegment Reorganization Combination Segment

Historical Transactions Transaction As Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $127,795 $ — $(8,384)(g)(h) $ 119,411

Employee Compensation and Benefits . . . . . . . . . . . . . . . 39,416 (5,577)(d) (2,249)(h) 31,590Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 44,324 (79)(a) (1,093)(h) 43,152

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,740 (5,656) (3,342) 74,742

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . 44,055 5,656 (5,042) 44,669Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (95,913) 10,241(a) 5,132(f)(h) (80,540)Net Loss attributable to noncontrolling interests . . . . . . . . (89) (49,176)(b) 1,798(h)(i) (47,467)(j)

Economic Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . $(51,769) $ 65,073 $(1,708) $ 11,596(j)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $245,814 $ (69,522)(a) $ 1,902(f)(g)(h) $ 178,194Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249,893 (7,333)(d) (15,834)(h) 226,726Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . 9,883 80,718(b) 2,483(h)(i) 93,084(j)KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . (13,962) (142,907)(a)(b)(d) 15,253(f)(g)(h)(i) (141,616)(j)

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KKR Group Public Markets Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and

the Combination TransactionThree Months Ended March 31, 2009

Public Adjustments Adjustments PublicMarkets for KFI and for MarketsSegment Reorganization Combination Segment

Historical Transactions Transaction As Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,928 $ — $(39)(g) $11,889

Employee Compensation and Benefits . . . . . . . . . . . . . . . . . . . . 6,126 (727)(d) — 5,399Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,121 — — 6,121

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,247 (727) — 11,520

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (319) 727 (39) 369Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17) — — (17)Net Income attributable to noncontrolling interests . . . . . . . . . . . . — 4(b) —(i) 4(j)

Economic Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ (336) $ 723 $(39) $ 348(j)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $53,043 $ — $(12)(g) $53,031Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,191 (840)(d) — 8,351Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 447(b) — 447(j)KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . 43,852 393(b)(d) (12)(g) 44,233(j)

KKR Group Capital Markets & Principal Activities Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination

TransactionThree Months Ended March 31, 2009

Capital CapitalMarkets & Markets &Principal Adjustments Adjustments PrincipalActivities for KFI and for ActivitiesSegment Reorganization Combination Segment

Historical(e) Transactions Transaction As Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 191(h) $ 191

Employee Compensation and Benefits . . . . . . . . . . . . . . — — 2,249(h) 2,249Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 9,965(f) — (7,139)(g)(h) 2,826

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,965 — (4,890) 5,075

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . (9,965) — 5,081 (4,884)Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,417(f) — (5,166)(f)(h) 12,251Net Income attributable to noncontrolling interests . . . . . . — — (1,723)(h)(i) (1,723)(j)

Economic Net Income . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,452 $ — $ 1,638 $ 9,090(j)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,971,684(f) $ — $(13,003)(f)(g)(h) $3,958,681Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,339,952(f) — 15,822(g)(h) 1,355,774Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . — — 23,725(h)(i) 23,725(j)KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . 2,631,732(f) — (52,550)(f)(g)(h) 2,579,182(j)

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KKR Group Total Reportable Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and

the Combination TransactionYear Ended December 31, 2008

TotalTotal Adjustments Adjustments Reportable

Reportable for KFI and for SegmentsSegments Reorganization Combination AsHistorical Transactions Transaction Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 639,604 $ — $ (43,057)(g)(h) $ 596,547

Employee Compensation and Benefits . . . . . . . . . . . . . . 149,182 (37,184)(d) —(h) 111,998Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 247,751 (411)(a) 25,460(f)(g)(h) 272,800

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396,933 (37,595) 25,460 384,798

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . 242,671 37,595 (68,517) 211,749Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,431,761) 117,405(a) (2,299,594)(f)(h) (3,613,950)Net Income (Loss) attributable to noncontrolling interests . . 6,384 (684,513)(b)(c) (23,681)(h)(i) (701,810)(j)

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,195,474) $ 839,513 $(2,344,430) $(2,700,391)(j)

KKR Group Private Markets Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and

the Combination TransactionYear Ended December 31, 2008

Private Adjustments Adjustments PrivateMarkets for KFI and for MarketsSegment Reorganization Combination Segment

Historical Transactions Transaction As Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 563,536 $ — $(59,151)(g)(h) $ 504,385

Employee Compensation and Benefits . . . . . . . . . . . . . . . 136,807 (32,264)(d) (7,094)(h) 97,449Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 227,513 (411)(a) (5,820)(h) 221,282

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364,320 (32,675) (12,914) 318,731

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 199,216 32,675 (46,237) 185,654Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,431,569) 117,405(a) 78,783(f)(h) (1,235,381)Net Loss attributable to noncontrolling interests . . . . . . . . (37) (678,574)(b) 30,650(h)(i) (647,961)(j)

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,232,316) $ 828,654 $ 1,896 $ (401,766)(j)

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KKR Group Public Markets Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and

the Combination TransactionYear Ended December 31, 2008

Public Adjustments Adjustments PublicMarkets for KFI and for MarketsSegment Reorganization Combination Segment

Historical Transactions Transaction As Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $76,068 $ — $(2,117)(g) $73,951

Employee Compensation and Benefits . . . . . . . . . . . . . . . . 12,375 (4,920)(d) — 7,455Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . 20,238 — — 20,238

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,613 (4,920) — 27,693

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,455 4,920 (2,117) 46,258Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (192) — — (192)Net Income attributable to noncontrolling interests . . . . . . . . 6,421 (5,939)(b)(c) (21)(i) 461(j)

Economic Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,842 $10,859 $(2,096) $45,605(j)

KKR Group Capital Markets & Principal Activities Segment Pro Forma InformationAfter Adjustments for the KFI Transaction, the Reorganization Transactions and

the Combination TransactionYear Ended December 31, 2008

Capital CapitalMarkets & Markets &Principal Adjustments Adjustments PrincipalActivities for KFI and for ActivitiesSegment Reorganization Combination Segment As

Historical(e) Transactions Transaction Adjusted

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 18,211(h) $ 18,211

Employee Compensation and Benefits . . . . . . . . . . . . . . — — 7,094(h) 7,094Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . 68,517(f) — (37,237)(g)(h) 31,280

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,517 — (30,143) 38,374

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . (68,517) — 48,354 (20,163)Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,304,387)(f) — (73,990)(f)(h) (2,378,377)Net Loss attributable to noncontrolling interests . . . . . . . — — (54,310)(h)(i) (54,310)(j)

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . $(2,372,904) $ — $ 28,674 $(2,344,230)(j)

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Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s))

1. KKR Group Segment Information

The KKR Group is a global alternative asset manager with principal executive offices in New Yorkand Menlo Park, California. Its franchise offers a broad range of asset management services to publicand private market investors and provides capital markets solutions for the firm, its portfolio companiesand clients. With respect to certain funds that it sponsors, the KKR Group commits to contribute aspecified amount of equity as the general partner of the fund (ranging from approximately 2% to 4%of a fund’s total capital commitments) to fund a portion of the acquisition price for the fund’sinvestments.

The KKR Group earns ongoing management, advisory and incentive fees for providing investmentmanagement, advisory and other services to its funds, co-investment vehicles, managed accounts andportfolio companies, and it generates transaction-specific advisory income from capital marketstransactions. It earns additional investment income from investing its own capital alongside its investorsand from the carried interest it receives from funds and co-investment vehicles. A carried interestentitles the sponsor of a fund to a disproportionate share of the investment gains that are generated onthird-party capital that is invested. Following the completion of the Transactions, KKR’s net income willalso reflect returns on assets acquired from KPE.

The historical combined financial statements of the KKR Group include the results of eight of theKKR Group’s private equity funds (including the KPE Investment Partnership) and two of the KKRGroup’s fixed income funds (the ‘‘KKR Funds’’) and the general partners and management companiesof those funds. The KKR Group operates as a single professional services firm and carries out itsbusiness activities under the ‘‘KKR’’ brand name. The entities comprising the KKR Group are underthe common control of the senior principals of the KKR Group, who are actively involved in the KKRGroup’s operations and management.

For management reporting purposes, the KKR Group has historically operated through tworeportable business segments: Private Markets and Public Markets. Within its private market segmenton a historical basis, the KKR Group conducted capital markets activities. However, the size and scopeof such activities was insignificant and did not justify a separately reportable business segment.Accordingly, the results of such activities were not included as a separate segment.

Subsequent to the Combination Transaction, it is anticipated that the business of the KPEInvestment Partnership and our capital markets activities will be accounted for by KKR as a separatereportable business segment referred to as the Capital Markets and Principal Activities segment.Accordingly, the results of such businesses have been presented separately under such caption in thepreliminary unaudited pro forma segment information of KKR.

• The Private Markets segment is comprised of KKR’s global private equity and infrastructurebusinesses, which manage and sponsor a group of investment funds and co-investment vehiclesthat invest capital for long-term appreciation, either through controlling ownership of a companyor strategic minority positions, in global private equity and infrastructure assets. These fundsbuild on KKR’s sourcing advantage and the strong industry knowledge, operating expertise andregulatory and stakeholder management skills of KKR’s professionals, operating consultants andsenior advisors to identify attractive investment opportunities and create and realize value forinvestors.

• The Public Markets segment is comprised of KKR’s fixed income and mezzanine financebusinesses, as well as other businesses that invest primarily in publicly traded securities. Throughthese businesses, KKR manages a number of investment funds, structured finance vehicles and

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Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

1. KKR Group Segment Information (Continued)

separately managed accounts that invest primarily in bank loans, high yield securities, distressedand rescue financings, private debt investments and mezzanine instruments. These funds,vehicles and accounts leverage KKR’s global investment platform, experienced investmentprofessionals and ability to adapt its investment strategies to different market conditions tocapitalize on investment opportunities that may arise at every level of the capital structure.

• The Capital Markets and Principal Activities segment will combine the assets acquired fromKPE with the capital markets business of KKR. KKR’s capital markets business supports thefirm, its portfolio companies and clients by providing tailored capital markets advice anddeveloping and implementing both traditional and non-traditional capital solutions forinvestments and companies seeking financing. Its activities consist primarily of capital marketsadvisory services, arranging debt and equity financing for transactions, placing and underwritingsecurities offerings and structuring new investment products. The assets that KKR will acquirefrom KPE are expected to provide the combined business with a significant source of capital tofurther grow and expand KKR’s business, increase its participation in its existing portfolio ofbusinesses and further align KKR’s interests with those of its investors and other stakeholders.KKR believes that the resources of its capital markets business combined with the investmentexpertise of its investment professionals will provide an attractive means for growing anddeveloping this asset base over time.

All inter-segment transactions are eliminated in the segment presentation.

Management of the KKR Group makes operating decisions, assesses performance and allocatesresources based on financial and operating data and measures that are presented without giving effectto the consolidation of any of the Consolidated Entities. As a result, unlike the reporting in thecombined financial statements of the KKR Group, the KKR Group’s segment reporting does not giveeffect to the consolidation of the Consolidated Entities. See ‘‘Basis of Presentation.’’

Economic net income (‘‘ENI’’) and fee related earnings (‘‘FRE’’) are key performance measuresused by management. ENI is a measure of profitability for the Company’s reportable segments andrepresents income before taxes less net income attributable to noncontrolling interests, non-cashemployee compensation charges associated with equity interests in the KKR business, anycompensation borne by KKR Holdings, and certain non-cash amortization charges. FRE representsincome before taxes adjusted to: (i) exclude the expenses of consolidated funds, non-cash employeecompensation charges associated with equity interests in the KKR Group’s business, and anycompensation borne by KKR Holdings; (ii) include management fees earned from consolidated fundsthat were eliminated in consolidation; (iii) exclude investment income; and (iv) exclude amortization ofintangibles assets. These measures are used by management in making resource deployment and otheroperational decisions.

2. Adjustments for the Reorganization Transactions

Because the legal entities that comprise the KKR Group are under the common control of thesenior principals and will be under the common control of the senior principals following thecompletion of the Reorganization Transactions, the Reorganization Transactions will be accounted foras a transfer of interests under common control. Accordingly, KKR will carry forward into its combinedfinancial statements the value of assets, liabilities and noncontrolling interests in the combined entitiesrecognized in the KKR Group’s combined financial statements. All references to ENI in the following

112

Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

2. Adjustments for the Reorganization Transactions (Continued)

notes with the exception of Note (j) represent ENI before allocation to KKR Holdings. See Note (j)for allocation to KKR Holdings.

(a) This amount has been adjusted to reflect the elimination of the financial results of the generalpartners of the 1996 Fund, because the KKR Group Partnerships will not acquire an interest in thosegeneral partners in connection with the Reorganization Transactions due to the fact that the generalpartners of those funds are not expected to receive meaningful proceeds from further realizations.Those general partners are entitled to carried interests that allocate to them a percentage of the netprofits generated on the fund’s investments, subject to certain requirements. The funds also paymanagement fees to the KKR Group in exchange for management and other services. Subsequent tothe transactions, KKR will continue to collect a management fee from the 1996 Fund.

The elimination of the financial results of the general partners of the 1996 Fund resulted in theelimination of $411 of expenses and $117,405 of investment loss for the year ended December 31, 2008and $79 of expenses and $10,241 of investment loss for the three months ended March 31, 2009. As ofMarch 31, 2009, the elimination of the financial results of the general partners of the 1996 Fundresulted in the elimination of $69,522 of total segment assets and a corresponding reduction inpartners’ capital. While the management fee paid by the 1996 Fund is eliminated as an inter-companytransaction in the combined financial statements of the KKR Group, it is not eliminated in thehistorical segment information of the KKR Group due to the fact that segment results are presentedwithout giving effect to the consolidation of the Consolidated Entities. Accordingly, no pro formaadjustments have been made to management fees or fee income related to the 1996 Fund for theperiods indicated.

(b) This amount has been adjusted to reflect the inclusion of additional noncontrolling interestsrepresenting the Retained Interests, as well as the inclusion of 40% of carried interest allocated toKKR principals and other individuals who participate in its carry pool. Because capital investmentsmade by or on behalf of the general partners of the KKR Group’s private equity funds following thecompletion of the Reorganization Transactions and the Combination Transaction will be held by theKKR Group Partnerships, no pro forma adjustments have been made to the pro forma statements ofoperations segment information to eliminate the financial results of any capital investments made on orafter January 1, 2008. See ‘‘Reorganization Transactions—Conversion into a Holding PartnershipStructure’’ for a description of the Retained Interests.

For the year ended December 31, 2008 and the three months ended March 31, 2009, the inclusionof the Retained Interests not relating to capital invested by or on behalf of the general partners of theKKR Funds since January 1, 2008, as well as the inclusion of 40% of carried interest allocated to KKRprincipals and other individuals who participate in its carry pool impacted net loss attributable tononcontrolling interests by $(678,574) and $(49,176) in the Private Markets segment, respectively, and$482 and $4, in the Public Markets segment, respectively. ENI was impacted during such periods bycorresponding inverse amounts.

On a pro forma basis as of March 31, 2009, the inclusion of the noncontrolling economic intereststhat will allocate: (i) to a former principal 1% of the carried interest received by the general partner ofKKR’s funds and 1% of KKR’s other profits, (ii) to certain of KKR’s former principals and theirdesignees a portion of the carried interest received by the general partner of KKR’s private equityfunds that was allocated to them with respect to private equity investments made during their tenure,(iii) to certain of KKR’s current partners and former principals capital invested by or on behalf of thegeneral partners of KKR’s private equity funds and (iv) the 40% of carried interest earned from funds

113

Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

2. Adjustments for the Reorganization Transactions (Continued)

and co-investment vehicles that provide for carried interest impacted noncontrolling interests by$(3,562), $8,374, $300,216 and $(224,310) in the Private Markets segment, respectively, and $447, $0, $0and $0 in the Public Markets segment, respectively. Partners’ capital was impacted by correspondinginverse amounts.

The Retained Interests, as well as the 40% of carried interest allocated to KKR principals andother individuals who participate in its carry pool discussed above include the impact of any amountsallocable from the adjustments in footnotes (c) and (d).

(c) This amount has been adjusted to reflect the KFI Transaction, which resulted in theelimination of net income attributable to noncontrolling interests that previously allocated 35% of theENI generated by the management companies of the Public Markets segment to holders of suchinterests. The elimination of these noncontrolling interests reduced net income attributable tononcontrolling interests by $(6,421) for the year ended December 31, 2008. ENI was impacted duringsuch period by a corresponding inverse amount. There were no such adjustments as of and for thethree months ended March 31, 2009.

(d) This amount has been adjusted to reflect the exclusion of certain profit-based cash amountsthat were previously paid by KKR, but which will no longer be borne by KKR following theTransactions, and the inclusion of certain base salaries that KKR will pay its principals following theTransactions in accordance with its compensation program. Following the Transactions, KKR principalswill receive (i) financial benefits from KKR’s business in the form of distributions and paymentsreceived from KKR Holdings and through their direct and indirect participation in the value of KKRGroup Partnership Units held by KKR Holdings, and (ii) annual cash compensation in the form ofpayments from KKR that will exclude the profit-based cash amounts referred to above.

For the year ended December 31, 2008 and the three months ended March 31, 2009, thesearrangements resulted in a net decrease in employee compensation and benefits of $32,264 and $5,577in the Private Markets segment, respectively, and $4,920 and $727 in the Public Markets segment,respectively. As of March 31, 2009, these arrangements reduced total liabilities by $7,333 and $840 inthe Private Markets segment and Public Markets segment, respectively, and increased partners’ capitalby corresponding inverse amounts. See Note (I) under ‘‘Transactions and Adjustments Excluded fromPro Forma Presentation’’ for information relating to certain, largely non-cash, employee compensationand benefits expenses that will be recorded in KKR’s financial statements following the ReorganizationTransactions and the Combination Transaction.

3. Adjustments for the Combination Transaction

(e) It is anticipated that the business of the KPE Investment Partnership will be accounted for byKKR in a separate reportable business segment referred to as the Capital Markets and PrincipalActivities segment. Accordingly, the results of such business have been presented separately under suchcaption in the preliminary unaudited pro forma segment information of KKR.

(f) This amount has been adjusted to reflect: (i) the inclusion of 100% of the historical financialresults of the KPE Investment Partnership and KPE, (ii) the elimination of carried interest allocatedfrom certain investments in limited partner interests of the KPE Investment Partnership to the generalpartners of Consolidated Entities in the KKR Group Partnerships and (iii) the elimination of amountsallocated to the general partner of the KPE Investment Partnership pursuant to its capital interest.While the KPE Investment Partnership will pay a carried interest to subsidiaries of KKR following the

114

Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

3. Adjustments for the Combination Transaction (Continued)

Combination Transaction, the payments will be eliminated as inter-segment transactions, because theKPE Investment Partnership will be wholly-owned by the KKR Group Partnerships and included withinthe Capital Markets and Principal Activities segment.

For the year ended December 31, 2008 and the three months ended March 31, 2009: (i) theinclusion of 100% of the historical financial results of the KPE Investment Partnership and KPEincreased the investment loss of the Capital Markets and Principal Activities segment by $2,304,387 andincreased investment income in the Capital Markets and Principal Activities segment by $17,417,respectively, and increased other operating expenses in the Capital Markets and Principal Activitiessegment by $68,517 and $9,965, respectively, (ii) the elimination of carried interest allocated fromcertain investments in limited partner interests of the KPE Investment Partnership to the generalpartners of the Consolidated Entities in the KKR Group Partnerships reduced investment loss of thePrivate Markets segment by $69,861 and $3,849, respectively, and impacted the Capital Markets andPrincipal Activities segment by corresponding amounts, and (iii) the elimination of amounts allocatedto the general partner of the KPE Investment Partnership pursuant to its capital interest reducedinvestment loss of the Private Markets segment by $4,793 for year ended December 31, 2008 andincreased investment loss of the Private Markets segment by $34 for three months ended March 31,2009.

As of March 31, 2009: (i) the inclusion of 100% of the historical financial results of the KPEInvestment Partnership increased total assets of the Capital Markets and Principal Activities segment by$3,971,684 and increased total liabilities of the Capital Markets and Principal Activities segment by$1,339,952, resulting in a net increase in partners’ capital of $2,631,732 for such segment, (ii) theelimination of carried interest allocated from certain investments in limited partner interests of theKPE Investment Partnership to the general partners of Consolidated Entities in the Group Partnershipincreased total assets of the Private Markets segment by $31,262 and decreased total assets of theCapital Markets and Principal Activities segment by a corresponding amount, and (iii) the eliminationof amounts allocated to the general partner of the KPE Investment Partnership pursuant to its capitalinterest reduced total assets of the Private Markets segment by $5,645. Except as noted above, each ofthese adjustments impacted partners’ capital by corresponding inverse amounts in their respectivesegments.

(g) This amount has been adjusted to reflect the elimination of the management and incentivefees paid by the KPE Investment Partnership under its services agreements with the KKR Group.While the KPE Investment Partnership will pay a management and incentive fee to subsidiaries ofKKR in an amount to be determined following the Combination Transaction, the payments will beeliminated as inter-segment transactions because the KPE Investment Partnership will be wholly-ownedby the KKR Group Partnerships and included within the Capital Markets and Principal Activitiessegment. For the year ended December 31, 2008 and the three months ended March 31, 2009, theelimination reduced management fees of the Private Markets segment by $40,940 and $8,193,respectively, reduced management fees of the Public Markets segment by $2,117 and $39, respectivelyand reduced expenses of the Capital Markets and Principal Activities segment by $43,057 and $8,232,respectively.

As of March 31, 2009, the elimination of the management and incentive fees under its servicesagreements with the KKR Group reduced total assets of the Private Markets segment, the PublicMarkets segment and Capital Markets and Principal Activities segment by $1,394, $12, and $4,062,respectively, and decreased liabilities in the Capital Markets and Principal Activities segment by $12.

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Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

3. Adjustments for the Combination Transaction (Continued)

Each of these adjustments impacted partners’ capital by corresponding amounts in their respectivesegments.

(h) These amounts have been adjusted to reflect the inclusion of KKR’s capital markets activitiesin KKR’s Capital Markets and Principal Activities segment rather than in the private markets segment.Prior to the Combination Transaction, KKR’s capital markets activities were included in its PrivateMarkets segment. For the year ended December 31, 2008 and the three months ended March 31, 2009,this adjustment impacted the following within the Capital Markets and Principal Activities segment:(i) increased fee income by $18,211 and $191, respectively, (ii) increased employee compensation andbenefits expense by $7,094 and $2,249, respectively, (iii) increased other operating expenses by $5,820and $1,093, respectively, (iv) increased investment loss by $4,129 for the year ended December 31, 2008and decreased investment income by $1,317 for three months ended March 31, 2009, respectively, and(v) impacted net loss attributable to noncontrolling interests by $(37) and $(89), respectively. Theequivalent captions within the Private Markets segment were impacted by corresponding inverseamounts.

As of March 31, 2009, the inclusion of our capital markets activities in KKR’s Capital Markets andPrincipal Activities segment impacted the following within such segment: increased assets by $22,321,increased liabilities by $15,834, and increased noncontrolling interests by $9,883. The equivalentcaptions within the Private Markets segment were impacted by corresponding inverse amounts and eachof these adjustments impacted partners’ capital by corresponding amounts in their respective segments.

(i) The amounts allocable to Retained Interests from the adjustments described in footnotes(e) through (h) for the year ended December 31, 2008 and three months ended March 31, 2009impacted net loss attributable to noncontrolling interests by $30,613 and $1,709 in the Private Marketssegment, respectively, $(21) and $0 in the Public Markets segment, respectively, and $(54,273) and$(1,634) in the Capital Markets and Principal Activities segment, respectively. ENI during such periodswas impacted by corresponding inverse amounts. As of March 31, 2009, the inclusion of thesenoncontrolling interests impacted noncontrolling interests by $12,366 in the Private Markets segmentand $13,842 in the Capital Markets and Principal Activities segment.

(j) Following the completion of the Combination Transaction, 70% of economic net income andpartners’ capital will be allocated to noncontrolling interests representing the KKR Group PartnershipUnits that will be indirectly held by KKR principals through KKR Holdings. For the year endedDecember 31, 2008 and the three months ended March 31, 2009, the noncontrolling interests describedabove would impact net loss attributable to noncontrolling interests by $(281,236) and $8,117 in thePrivate Markets segment, respectively, $31,924 and $244 in the Public Markets segment, respectively,and $(1,640,961) and $6,363 in the Capital Markets and Principal Activities segment, respectively. ENIwould be impacted during such periods by corresponding inverse amounts resulting in ENI allocable toKKR Group of $(120,530) and $3,479 in the Private Markets segment, respectively, $13,681 and $104 inthe Public Markets segment, respectively, and $(703,269) and $2,727 in the Capital Markets andPrincipal Activities segment, respectively.

As of March 31, 2009, the noncontrolling interests described above would impact noncontrollinginterests by $(99,132) in the Private Markets segment, $30,963 in the Public Markets segment, and$1,805,428 in the Capital Markets and Principal Activities segment. KKR Group Partners’ capital ineach respective segment would be impacted by corresponding inverse amounts, resulting in KKR Grouppartners’ capital of $(42,484) in the Private Markets segment, $13,270 in the Public Markets segment,and $773,754 in the Capital Markets and Principal Activities segment.

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Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

3. Adjustments for the Combination Transaction (Continued)

None of the adjustments described in this footnote (j) have been reflected within the PreliminaryUnaudited Pro Forma Segment Information.

4. Transactions and Adjustments Excluded from Pro Forma Presentation

(I) Following the Reorganization Transactions and the Combination Transaction, KKR principalswill receive financial benefits from KKR’s business in the form of distributions or payments receivedfrom KKR Holdings and through their direct or indirect participation in the value of KKR GroupPartnership Units held by KKR Holdings. As a result, certain profit-based cash amounts that werepreviously paid by KKR will no longer be paid by the firm and will be borne by KKR Holdings. Aportion of the interests in KKR Holdings that will entitle KKR principals to participate in the value ofKKR Group Partnership Units held by KKR Holdings will be subject to vesting and a portion of thedistributions or payments made to such individuals from KKR Holdings will be subject to discretionaryallocation.

The above arrangements are expected to give rise to periodic employee compensation and benefitscharges in the consolidated financial statements of KKR, despite the fact that substantially all of theeconomic consequences of such arrangements will be borne solely by KKR principals. Except for anycash-settled awards that may be granted under KKR’s equity incentive plan, in the future, theseemployee compensation and benefits charges will consist of non-cash charges. No pro formaadjustments have been made to reflect these charges, because management’s segment reportingexcludes the impact of non-cash employee compensation charges associated with equity interests in theKKR business as well as any compensation borne by KKR Holdings. No pro forma adjustments havebeen made to reflect the possibility of cash charges associated with grants of cash-settled awards underKKR’s equity incentive plan, because no awards will be made under the equity incentive plan inconnection with the Transactions. Adjustments for the various employee compensation chargesdescribed above would be included, however, in any pro forma financial information giving effect to theimpact of the Reorganization Transactions and the Combination Transaction on the face of thecombined financial statements of the KKR Group.

(II) The preliminary unaudited pro forma segment information presents ENI, which as previouslydescribed, is a measure of profitability that represents income before taxes less net income attributableto noncontrolling interests, non-cash employee charges associated with equity interests in the KKRbusiness, any compensation borne by KKR Holdings, and certain non-cash amortization charges. TheKKR Group has historically operated as a group of partnerships for U.S. federal income tax purposesand, in the case of certain entities located outside the United States, corporate entities for foreignincome tax purposes. Because most of the entities in the KKR Group are taxed as partnerships, theincome of the KKR Group generally has been allocated to, and the resulting tax liability generally hasbeen borne by, partners and the KKR Group is not currently taxed at the entity level in the UnitedStates, other than unincorporated business tax in New York City. Accordingly, income tax provisionsreflected in the KKR Group’s historical combined financial statements primarily have been attributableto the New York City unincorporated business tax and foreign income taxes imposed on certain entitieslocated outside the United States.

Following the Reorganization Transactions and the Combination Transaction, the KKR GroupPartnerships and their subsidiaries will continue to operate as partnerships for U.S. federal income taxpurposes and, in the case of certain entities located outside the United States, corporate entities forforeign income tax purposes. Accordingly, those entities will continue to be subject to New York City

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Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

4. Transactions and Adjustments Excluded from Pro Forma Presentation (Continued)

unincorporated business taxes or foreign income taxes. Management Holdings units owned by GroupHoldings will be held through an intermediate holding company that will be taxable as a corporationfor U.S. federal income tax purposes. As a result of such holding structure, we expect that the earningsof Management Holdings units will be subject to a blended federal, state and local effective tax rate ofapproximately 43% under current law as of March 31, 2009. This rate has been estimated based on theholding structure immediately following the completion of the Transactions and could fluctuate basedon factors including but not limited to changes in applicable tax law, changes in structure, and changesin the jurisdictions where the Company conducts its business activities. Accordingly, Group Holdingswill record a provision for its current and deferred income tax expense in its combined statements ofoperations and current and deferred tax assets or tax liabilities on its combined statements of financialcondition in accordance with GAAP.

As noted above, an adjustment has been made to record the historical financial results of the KPEInvestment Partnership in the Capital Markets and Principal Activities segment. Although 100% ofthose historical financial results have been recorded in that segment, the Reorganization Transactionsand the Combination Transaction will cause a portion of the KPE Investment Partnership’s assets to becontributed to, and held indirectly by, the intermediate holding company.

The determination of which KPE Investment Partnership assets will be contributed to theintermediate holding company is based upon several factors including business, tax and regulatoryconsiderations, as well as the composition, value and adjusted tax bases of the KPE InvestmentPartnership’s assets at the time of the Combination Transaction. Because any of these factors is subjectto change prior to consummating the Reorganization Transactions and the Combination Transaction,the determination of which of the KPE Investment Partnership’s assets will be contributed to theintermediate holding company will be made as close to closing of the transactions as practicable.Furthermore, because a pro forma allocation of the KPE Investment Partnership’s assets could differfrom those assets which will ultimately be contributed to the intermediate holding company, the proforma tax impact of those assets upon the intermediate holding company may not be illustrative of theactual tax position of the intermediate holding company.

Accordingly, no pro forma adjustment for income taxes has been presented in the above financialstatements.

(III)The partnership documents governing KKR’s traditional private equity funds generally includea ‘‘clawback’’ or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to acontingent obligation that may require the general partner to return or contribute amounts to the fundfor distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the term of the fundexceed the amount to which the general partner was ultimately entitled. As of June 30, 2009, theamount of carried interest KKR has received, excluding carried interest received by the generalpartners of the 1996 Fund, that is subject to this contingent repayment obligation was approximately$768 million, assuming that all applicable private equity funds were liquidated at no value. Had theinvestments in such funds been liquidated at their June 30, 2009 fair values, the contingent repaymentobligation would have been approximately $224 million. Under a ‘‘net loss sharing provision,’’ upon theliquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% ofthe net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s

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Notes to Preliminary Unaudited Pro Forma Segment Information

(All amounts are in thousands ($000’s)) (Continued)

4. Transactions and Adjustments Excluded from Pro Forma Presentation (Continued)

traditional private equity vehicles allocate a greater share of their investment losses to KKR relative tothe amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required tobe paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fundregardless of whether any carried interest had previously been distributed. Based on the fair marketvalues as of June 30, 2009, KKR’s obligation under the net loss sharing provisions would have beenapproximately $258 million. If the vehicles were liquidated at zero value, the obligation under the netloss sharing provisions would have been approximately $1,091 million as of June 30, 2009.

KKR principals will remain responsible for any clawback obligations relating to carry distributionsreceived prior to the Transactions up to the aggregate contingent repayment obligation as of June 30,2009 ($224 million) as well as any clawback obligations relating to any carry distributions that theyreceive after the Transactions pursuant to any carried interest allocated directly to them as carry poolparticipants. KKR will be responsible for any other clawback obligations and any amounts due undernet loss sharing arrangements and will indemnify its principals for any personal guarantees that theyhave provided with respect to such amounts.

(IV)KKR and KPE will incur various expenses to complete the Reorganization Transactions andthe Combination Transaction. These expenses include fees and expenses of the financial advisors, legaland other advisors engaged by each of KKR and KPE, transaction-related accounting and audit costs,fees and expenses of agents engaged to provide various services in connection with the ReorganizationTransactions and the Combination Transaction, filing fees with regulatory bodies, listing fees and othermiscellaneous costs. No pro forma adjustments have been made to reflect these expenses due to thefact that they currently are not objectively determinable.

(V) Following the Reorganization Transactions and the Combination Transaction, KKR may incurcosts associated with being a publicly traded entity that exceed those already incurred by KPE. Suchcosts may include new or increased expenses for such items as insurance, directors’ fees, accountingwork, legal advice, investor relations and compliance with applicable regulatory requirements, includingcosts associated with periodic or current reporting obligations relating to the Combined Company. Nopro forma adjustments have been made to reflect such costs due to the fact that they currently are notobjectively determinable.

(VI)Prior to the completion of the Combination Transaction, the KKR Group is expected to makeone or more cash and in-kind distributions to certain of its existing owners. Such distributions areexpected to consist of substantially all available cash-on-hand, certain accrued receivables of itsmanagement companies and capital markets subsidiaries and certain personal property (consisting ofnon-operating assets) of the management company for its private equity funds. These amounts will notinclude, however, any accrued monitoring or transaction fees that must be credited against anymanagement fees that are payable in respect of future periods, the after-tax amount of anymanagement fees that may be required to be returned to investors before a carried interest may bepaid and any other amounts that are necessary to provide the Combined Business with sufficientworking capital to conduct its business in the ordinary course as of the completion of the Transactions.The actual amount of such distributions will depend on the amounts of available cash-on-hand andaccrued receivables of the management companies and the book value of such personal property at thetime the Combination Transaction is completed.

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KKR’S SELECTED HISTORICAL FINANCIAL AND OTHER DATA

The following tables set forth the selected historical combined financial data of the KKR Group asof and for the years ended December 31, 2004, 2005, 2006, 2007 and 2008 and as of March 31, 2009and 2008 and for the three months ended March 31, 2008 and 2009. KKR derived the selectedhistorical combined data of the KKR Group as of December 31, 2007 and 2008 and for the yearsended December 31, 2006, 2007 and 2008 from the audited combined financial statements includedelsewhere in this consent solicitation statement. KKR derived the selected historical combined data ofthe KKR Group as of March 31, 2009 and for the three months ended March 31, 2008 and 2009 fromthe condensed predecessor combined financial statements included elsewhere in this consent solicitationstatement. KKR derived the selected historical combined data of the KKR Group as of December 31,2004, 2005 and 2006 and for the years ended December 31, 2004 and 2005 from the audited combinedfinancial statements of the KKR Group which are not included in this consent solicitation statement.The unaudited combined financial statements of the KKR Group have been prepared on substantiallythe same basis as the KKR Group’s audited combined financial statements and include all adjustmentsthat KKR considers necessary for a fair presentation of KKR’s combined financial position and resultsof operations for all periods presented. KKR will not acquire all of the interests in the KKR Group inconnection with the Reorganization Transactions and, accordingly, the combined financial statements ofthe KKR Group may not be indicative of the results of operations and financial condition that KKRwill have following the completion of the Transactions. You should read the following data togetherwith the ‘‘Organizational Structure,’’ ‘‘Preliminary Unaudited Pro Forma Segment Information,’’ ‘‘KKRManagement’s Discussion and Analysis of Financial Condition and Results of Operations’’ and theKKR Group’s combined financial statements and related notes included elsewhere in this consentsolicitation statement.

Three Months EndedYear Ended December 31, March 31,

2004 2005 2006 2007 2008 2008 2009($ in thousands) ($ in thousands)

Statements of Operations Data:RevenuesFee income . . . . . . . . . . . . . . . . . $ 183,462 $ 232,945 $ 410,329 $ 862,265 $ 235,181 $ 68,590 $ 39,070ExpensesEmployee compensation and benefits . 69,956 79,643 131,667 212,766 149,182 48,064 45,542Occupancy and related charges . . . . . 10,688 13,534 19,295 20,068 30,430 6,538 8,885General, administrative and other . . . 36,931 54,336 78,154 128,036 179,673 30,703 37,403Fund expenses . . . . . . . . . . . . . . . 16,470 20,778 38,350 80,040 59,103 18,232 12,928Total expenses . . . . . . . . . . . . . . . 134,045 168,291 267,466 440,910 418,388 103,537 104,758Investment Income (Loss)Net gains (losses) from investment

activities . . . . . . . . . . . . . . . . . 3,026,396 2,984,504 3,105,523 1,111,572 (12,944,720) (732,974) (720,849)Dividend income . . . . . . . . . . . . . . 14,611 729,926 714,069 747,544 75,441 4,592 700Interest income . . . . . . . . . . . . . . 54,060 27,166 210,872 218,920 129,601 25,343 27,082Interest expense . . . . . . . . . . . . . . (524) (697) (29,542) (86,253) (125,561) (35,359) (22,278)Total investment income (loss) . . . . . 3,094,543 3,740,899 4,000,922 1,991,783 (12,865,239) (738,398) (715,345)Income (loss) before taxes . . . . . . . . 3,143,960 3,805,553 4,143,785 2,413,138 (13,048,446) (773,345) (781,033)Income taxes . . . . . . . . . . . . . . . . 6,265 2,900 4,163 12,064 6,786 888 1,531Net Income (loss) . . . . . . . . . . . . . 3,137,695 3,802,653 4,139,622 2,401,074 (13,055,232) (774,233) (782,564)

Less: Net income (loss) attributableto noncontrolling interests . . . . . 2,358,458 2,870,035 3,039,677 1,598,310 (11,850,761) (656,335) (727,981)

Net income (loss) attributable toKKR group . . . . . . . . . . . . . . $ 779,237 $ 932,618 $ 1,099,945 $ 802,764 $ (1,204,471) $ (117,898) $ (54,583)

Statement of Financial Condition(period end):

Total assets . . . . . . . . . . . . . . . . . $9,701,478 $13,369,412 $23,292,783 $32,842,796 $ 22,441,030 34,342,014 $21,882,923Total liabilities . . . . . . . . . . . . . . . 313,672 418,778 1,281,923 2,575,636 2,590,673 3,318,091 2,656,825Noncontrolling interests . . . . . . . . . 8,352,342 11,518,013 20,318,440 28,749,814 19,698,478 29,694,735 19,196,207Total partners’ capital . . . . . . . . . . . 1,035,464 1,432,621 1,692,420 1,517,346 151,879 1,329,188 29,891

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KKR MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the combined financialstatements of the KKR Group and the related notes included elsewhere in this consent solicitation statement.The historical combined financial data discussed below reflects the historical results and financial positionof the KKR Group, which is expected to become the predecessor of the Combined Business for accountingpurposes upon the completion of the Reorganization Transactions. There can be no assurance that theReorganization Transactions will be consummated or that the other conditions to the CombinationTransaction will be satisfied or waived. While the historical combined financial statements of the KKRGroup are expected to become the historical financial statements of the Combined Business following thecompletion of the Transactions, the data does not give effect to the Transactions and is not necessarilyrepresentative of the future results and financial condition of the Combined Business. See ‘‘OrganizationalStructure’’ and ‘‘Preliminary Unaudited Pro Forma Segment Information.’’ In addition, this discussion andanalysis contains forward-looking statements and involves numerous risks and uncertainties, including thosedescribed under ‘‘Cautionary Note Regarding Forward-Looking Statements’’ and ‘‘Risk Factors.’’ Actualresults may differ materially from those contained in any forward-looking statements.

Overview

Led by Henry Kravis and George Roberts, KKR is a global alternative asset manager with$50.8 billion in AUM as of June 30, 2009, and a 33-year history of leadership, innovation andinvestment excellence. When KKR’s founders started the firm in 1976, they established the principlesthat guide KKR’s business approach today, including a patient and disciplined investment process; thealignment of KKR’s interests with those of its investors, portfolio companies and other stakeholders;and a focus on attracting world-class talent.

KKR’s franchise offers a broad range of asset management services to public and private marketinvestors and provides capital markets solutions for the firm, its portfolio companies and clients.Throughout its history, KKR has consistently been a leader in the private equity industry, havingcompleted more than 165 private equity investments with a total transaction value in excess of$425 billion. In recent years, KKR has grown its business by expanding its geographical presence,building businesses in new areas, such as credit and infrastructure, that complement its private equityexpertise and strengthening its client interaction and capital markets activities. Today, with over575 employees across the globe, KKR believes it has a preeminent global platform for sourcing andmaking investments in multiple asset classes and throughout a company’s capital structure.

KKR conducts its business through offices in New York, Menlo Park, San Francisco, Houston,Washington, D.C., London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney, whichprovides a global platform for sourcing transactions, raising capital and carrying out capital marketsactivities. KKR has grown its AUM significantly, from $15.1 billion as of December 31, 2004 to$50.8 billion as of June 30, 2009, representing a compounded annual growth rate of 30.9%. KKR’sgrowth has been driven by value that it has created through its operationally focused investmentapproach, expansion into new lines of business, innovation in the products that it offers investors, anincreased focus on providing tailored solutions to its clients, and the integration of capital marketsdistribution activities. KKR’s relationships with investors have provided the firm with a stable source ofcapital for investments, and KKR anticipates that they will continue to do so.

As a global alternative asset manager, KKR earns ongoing management, advisory and incentivefees for providing investment management, advisory and other services to its funds, co-investmentvehicles, managed accounts and portfolio companies, and it generates transaction-specific advisoryincome from capital markets transactions. It earns additional investment income from investing its owncapital alongside its investors and from the carried interest it receives from funds and co-investment

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vehicles. A carried interest entitles the sponsor of a fund to a disproportionate share of the investmentgains that are generated on third-party capital that is invested. Following the completion of theTransactions, KKR’s net income will also reflect returns on assets acquired from KPE.

Combination Transaction

On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR & Co. L.P. and certain of its affiliates providing for the combination of the asset managementbusiness of KKR with the assets and liabilities of KPE. Upon completion of the CombinationTransaction, KPE would beneficially hold a 30% interest in the Combined Business and KKR’s existingowners would beneficially hold a 70% interest in the Combined Business. KKR’s existing owners arenot selling any equity interests in the Transactions. KPE is a Guernsey limited partnership that isadmitted to listing and trading on Euronext Amsterdam by NYSE Euronext under the symbol ‘‘KPE.’’All of KPE’s investments are made through the KPE Investment Partnership, which represents onlymaterial assets are the interests that it holds in the KPE Investment Partnership. KPE had a net assetvalue of approximately $2.6 billion as of March 31, 2009.

Business Segments

Historically, KKR has operated through two reportable business segments for managementreporting purposes: private markets and public markets (formerly referred to as private equity and fixedincome). Within its private markets segment, KKR has also conducted capital markets activities. Inconnection with the Combination Transaction, KKR will acquire all of the assets of KPE, including itsinterests in the KPE Investment Partnership. It intends to manage these assets with its capital marketsbusiness and to account for the combined operations as a newly reported business segments referred toas capital markets and principal activities. For the historical periods presented in this consentsolicitation document, segment information is presented based on KKR’s current segment presentationin accordance with GAAP.

Private Markets

KKR’s private markets segment is comprised of its global private equity and infrastructurebusinesses, which manage and sponsor a group of investment funds and co-investment vehicles thatinvest capital for long-term appreciation, either through controlling ownership of a company orstrategic minority positions, in global private equity and infrastructure assets. These funds build onKKR’s sourcing advantage and the strong industry knowledge, operating expertise and regulatory andstakeholder management skills of KKR’s professionals, operating consultants and senior advisors toidentify attractive investment opportunities and create and realize value for investors.

Since the firm’s inception through March 31, 2009, KKR has raised 14 investment funds withapproximately $59.3 billion of capital commitments to invest in private equity and infrastructureopportunities, often in connection with leveraged buyouts, build-ups and growth equity investments, andhas sponsored a number of fee and carry paying co-investment structures that allow it to commitadditional capital to transactions. As of June 30, 2009, the segment had $37.5 billion of AUM and itsactively investing funds included geographically differentiated investment funds and co-investmentvehicles with over $15.1 billion of unused capital commitments, providing a significant source of capitalthat may be deployed globally. During the year ended December 31, 2008 and the three months endedMarch 31, 2009, the segment generated approximately $1.2 billion and $51.8 million of economic netloss, respectively.

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Public Markets

KKR’s public markets segment is comprised of its fixed income business, including credit andmezzanine finance businesses, as well as other businesses that invest primarily in publicly tradedsecurities or private debt. Through these businesses, KKR manages a number of investment funds,structured finance vehicles and separately managed accounts that invest primarily in bank loans, highyield securities, distressed and rescue financings, private debt investments and mezzanine instruments.These funds, vehicles and accounts leverage KKR’s global investment platform, experienced investmentprofessionals and ability to adapt its investment strategies to different market conditions to capitalizeon investment opportunities that may arise at every level of the capital structure.

KKR operates its public markets businesses through a subsidiary that serves as the managementcompany to its fixed income funds, managed accounts and structured finance vehicles. Prior to May 30,2008, KKR owned all of the equity in parent company other than certain noncontrolling interests thatallocated 35% of the net income generated by the parent to certain of its executives on an annualbasis. On May 30, 2008, KKR acquired all of these outstanding interests in order to further integrateits operations, enhance the existing collaboration among its investment professionals and accelerate thegrowth of its business. This transaction is referred to as the ‘‘KFI Transaction.’’ As a result of the KFITransaction, KKR now owns 100% of the equity interests in the parent and is entitled to all of the netincome and related cash flows generated by the public markets segment.

Capital Markets and Principal Activities

KKR’s capital markets and principal activities segment will combine the assets acquired from KPEwith the capital markets business of KKR. KKR’s capital markets business supports the firm, itsportfolio companies and clients by providing tailored capital markets advice and developing andimplementing both traditional and non-traditional capital solutions for investments and companiesseeking financing. Its activities consist primarily of capital markets advisory services, arranging debt andequity financing for transactions, placing and underwriting securities offerings and structuring newinvestment products. To allow it to carry out these activities, the firm has obtained broker-dealerlicenses in the United States, Canada, the United Kingdom, Dubai, Australia and Japan and hasreceived passporting authority to act as a broker-dealer broadly in the European Economic Area.

The assets that KKR will acquire from KPE are expected to provide the Combined Business with asignificant source of capital to further grow and expand KKR’s business, increase its participation in itsexisting portfolio of businesses and further align KKR’s interests with those of its investors and otherstakeholders. KKR believes that the resources of its capital markets business combined with theinvestment expertise of its investment professionals will provide an attractive means for growing anddeveloping this asset base over time. On a pro forma basis giving effect to the completion of theCombination Transaction, KKR’s capital markets and principal activities segment would have had netassets of approximately $2.6 billion as of March 31, 2009.

Business Environment

As a global alternative asset manager, KKR is affected by financial and economic conditions in theUnited States, Europe, Asia and elsewhere in the world. Although the diversity of its operations andproduct lines has allowed KKR to generate attractive returns in different business climates, businessconditions characterized by low or declining interest rates and strong equity markets generally provide amore positive environment for it to generate attractive returns on existing investments. KKR maybenefit, however, from periods of market volatility and disruption which allow it to use its large capitalbase and experience with troubled companies and distressed securities to make investments at attractiveprices and on favorable terms.

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Beginning in late June 2007, the United States experienced considerable turbulence in the housingand sub-prime mortgage markets, which had a significant negative impact on other fixed incomemarkets. Equity markets came under pressure in the latter part of 2007 as concerns of an economicslowdown were factored into valuations. As a result of reduced liquidity and greater volatility, severalcommercial and investment banks and hedge funds significantly reduced the carrying value of some oftheir fixed income holdings, threatening general market liquidity. The effects of these events eventuallybecame more far-reaching and pervasive. Global financial markets have experienced considerabledeclines in the valuations of equity and debt securities, an acute contraction in the availability of creditand the failure of a number of leading financial institutions. As a result, certain government bodies andcentral banks worldwide, including the U.S. Treasury Department and the U.S. Federal Reserve, haveundertaken unprecedented intervention programs, the effects of which remain uncertain.

Deteriorating conditions in fixed income markets deterred lenders from committing to new seniorloans and high yield debt. Debt underwriting declined meaningfully beginning in the second half of2007 and the backlog resulting from pending private equity-led transactions reached record levels. Thisbacklog, coupled with other poor-performing fixed income securities, materially hindered lenders’willingness to fund new, large-sized acquisitions. As a consequence of reduced borrowing ability, thevolume of new private equity acquisitions declined significantly in the second half of 2007, 2008 and thefirst quarter of 2009. Recently announced private equity-led acquisitions have mostly been smaller insizes, with less leverage and less favorable terms for the debt provided, all of which has had asignificant impact on the private equity industry and KKR’s business. The duration of currentconditions in the credit and high-yield debt markets is unknown.

World markets and economies continued to deteriorate in 2008, leading to some of the worstfull-year market and economic performance levels experienced since the 1930s. In the United States, aGDP decline in the fourth quarter of 3.8% represented the greatest decline in more than 25 years. Acombination of asset pricing declines and investor withdrawals reduced the value of equity and fixedincome mutual fund and hedge fund holdings globally. In addition to concerns over weak economictrends, a combination of de-levering by institutional investors and a need for liquidity further pressuredalready stressed market pricing. Equity markets across North America, Europe and Asia declined in arange of 40 to 60% during 2008, with a broad-based sell-off across a wide range of regions and sectors.Commodity prices, which increased to record highs in mid-2008, dropped precipitously in the secondhalf as demand declines caused excess supply. High yield credit spreads widened by 1,100 basis pointsduring the year.

Global economies weakened further in the first quarter of 2009, with several developed nationsofficially in a recession and emerging nations experiencing slowing growth. The consumer price index(CPI) increased 0.5% in the first quarter of 2009 and declined 0.4% on a year-over-year basis, the first12-month decline in over 50 years. Credit trends worsened across most consumer and commercial assetclasses. Overall, market performance in the first quarter of 2009 was more variable as compared to thefourth quarter of 2008.

Government intervention in the United States, Europe and Asia has continued in 2009. Severalfinancial and other institutions have required government support in the form of guarantees or capitalinjections, although some institutions have made arrangements to end the assistance they originallyreceived. Other initiatives have been taken to potentially stimulate lending, consumer spending and thefunctioning of debt capital markets were announced during the first quarter of 2009. The dollar amountof stimulus spending announced by governments worldwide is unprecedented. While some financialinstitutions have announced that they will repay government support they have received, theeffectiveness of the above measures is still unknown.

The external shocks to the financial services industry have, and likely will continue, to reshape thecompetitive landscape. Some of the largest financial institutions have been acquired, required

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government bailouts or are shedding businesses. The largest brokerage firms have become bank holdingcompanies. Lenders continue to severely restrict commitments to new debt, limiting industry-wideleveraged acquisition activity levels in both corporate and real estate markets. General acquisitionactivity has continued to decline, which has had a significant impact on several of KKR’s investmentbusinesses. The duration of current economic and market conditions is unknown. KKR’s businesses arematerially affected by conditions in the financial markets and economic conditions in the United States,Western Europe, and Asia and to some extent elsewhere in the world.

Market Conditions

KKR’s ability to grow its revenue and net income depends on its ability to continue to attractcapital and investors, secure investment opportunities, obtain financing for transactions, consummateinvestments and deliver attractive investment returns. These factors are impacted by a number ofmarket conditions, including:

• The strength and competitive dynamics of the alternative asset management industry, includingthe amount of capital invested in, and withdrawn from, alternative investments. KKR’s share ofthe capital that is allocated to alternative assets depends on the strength of KKR’s investmentperformance relative to the investment performance of its competitors. The amount of capitalthat it attracts and its investment returns directly affect the level of its AUM, which in turnaffects the fees, carried interest and other amounts that it earns in connection with its assetmanagement activities.

• The strength and liquidity of debt markets. KKR’s private equity funds use debt financing tofund portfolio company acquisitions, while its fixed income funds make significant investments indebt instruments and, in some cases, use varying degrees of leverage to enhance returns andfund working capital. As a result, KKR’s business generally benefits from strong and liquid debtmarkets that support its funds’ investment activities, although periods of market volatility anddisruption may create attractive investment opportunities, particularly for fixed income funds.

As discussed under the caption ‘‘—Business Environment’’ above, significant deterioration in thedebt markets that began in the third quarter of 2007 has had a negative impact on KKR’sbusiness. Among other effects, these developments have increased the cost and difficulty offinancing leveraged buyout transactions—thereby significantly reducing private equity activity—and impacted valuations and returns of fixed income funds. Increases in rates and spreads couldfurther impact returns by making debt financing less readily available and more expensive forprivate equity investments and adversely impacting the values of existing fixed incomeinvestments. A reduction in leverage ratios or more restrictive covenants and other credit termscould also negatively impact KKR’s business.

• The strength and liquidity of equity markets. Strong equity market conditions enable KKR’sprivate equity funds to increase the value of and to effect realizations of their portfolio companyinvestments. Equity market conditions also affect the carried interest that KKR receives. After aprolonged period of positive performance and liquidity, equity markets have recently experiencedconsiderable declines and volatility in the United States and in other markets. The U.S.,European and Asian economies have experienced and continue to experience significant declinesin employment, household wealth, and lending, which may further negatively impact equitymarkets. Although certain government bodies and central banks worldwide, including the U.S.Treasury Department and the U.S. Federal Reserve, have undertaken unprecedentedintervention programs aimed at, among other things, stabilizing equity markets, the effects ofthese programs remain uncertain. As a result of these negative market conditions, it has becomemore difficult for us to exit private equity investments profitably through offerings in the public

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markets, and KKR’s realized gains on such investments have declined significantly over earlierperiods.

• Market volatility. Volatility within the debt and equity markets increases both the opportunitiesand risks within KKR’s segments and directly affects the performance of KKR’s funds. Similarly,fluctuations in interest rates and foreign currency exchange rates, if not suitably hedged, mayaffect the performance of KKR’s funds. Historical trends in these markets are not necessarilyindicative of KKR’s future performance. Recently, volatility in the equity markets anddisruptions in the debt markets have made it more challenging to profit from investments. Ifthese conditions continue, their negative impact on KKR’s business may become morepronounced.

For a more detailed description of the manner in which economic and financial market conditionsmay materially affect the results of operations and financial condition of the Combined Business, see‘‘Risk Factors—Risks Related to KKR’s Business.’’

Indirect Public Ownership as a Result of the Transactions

As a privately owned firm, KKR has consistently approached its business and investments with along-term view. Both in building and expanding its business and in determining the types of investmentsto make, KKR has focused on the best outcomes for its business, investors and stakeholders measuredover a period of years rather than on short-term financial performance. However, KKR’s results ofoperations are affected by the timing of investments and changes in the value of investments, each ofwhich may vary significantly over the short-term.

KKR intends to maintain its long-term focus after the Transactions and as it pursues its strategicgrowth initiatives, even though this may lead to increased volatility in results from period to period.While a significant portion of the management and monitoring fees paid by KKR’s funds and portfoliocompanies are earned pursuant to multi-year contracts, other amounts that it earns, such astransaction-specific advisory fees, incentive fees and carried interest, are subject to significant variabilitybased on transaction volume and size, as well as investment performance. KKR does not intend topermit the short-term perspectives to influence its business approach, its operational, strategic orinvestment decisions, its duties or commitments to investors or its focus on creating value over thelong-term.

Impact of the Transactions

The KKR Group is expected to become the predecessor of the Combined Business for accountingpurposes and its historical combined financial statements are expected to become the historicalfinancial statements of the Combined Business only upon completion of the Combination Transaction.There can be no assurance that the Combination Transaction will be consummated or that the otherconditions to the Combination Transaction will be satisfied or waived. The entities comprising the KKRGroup are under the common control of the firm’s senior principals. Because the legal entities thatcomprise the KKR Group are under the common control of the firm’s senior principals and willcontinue to be under their common control following the completion of the Transactions, KKR willaccount for the Transactions as a transfer of interests under common control.

While the combined financial statements of the KKR Group are expected to become the historicalfinancial statements of the Combined Business following the completion of the Transactions asdescribed above, the financial statements of the Combined Business for future periods will differ from

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the financial statements of the KKR Group in many significant respects. In particular, following thecompletion of the Transactions:

• KKR will deconsolidate both the 1996 Fund and the fund’s general partners, because the KKRGroup Partnerships will not acquire an interest in those general partners in connection with theTransactions;

• KKR will include noncontrolling interests that will allocate to a former principal and suchperson’s designees an aggregate of 1% of the carried interest received by general partners of theKKR funds and 1% of KKR’s profits until a future date;

• KKR will include noncontrolling interests that will allocate to certain of its former principals andtheir designees a portion of the carried interest received by the general partners of the privateequity funds that was allocated to them with respect to private equity investments made duringsuch former principals’ tenure with KKR;

• KKR will include noncontrolling interests that will allocate to certain of its current and formerprincipals all of the capital invested by or on behalf of the general partners of the private equityfunds before the completion of the Transactions and any returns thereon as well as any realizedcarried interest distributions that are actually received but not distributed by the general partnersprior to the Transactions;

• KKR will include noncontrolling interests representing the KKR Group Partnership Units thatKKR Holdings will hold in the KKR Group Partnerships, which interests will allocate to KKRHoldings 70% of the equity in the Combined Business upon completion of the Transactions;

• KKR will allocate to its principals and their designees 40% of the carried interest received bythe general partners of the private equity funds with respect to private equity investments madeprior to the Transactions and a potentially variable percentage of the carried interest received bythe general partners of the private equity funds with respect to private equity investments madeafter the Transactions;

• KKR will make one or more cash and in-kind distributions to certain of its existing owners priorto the completion of the Transactions representing substantially all available cash-on-hand,certain accrued receivables of its management companies and capital markets subsidiaries andcertain personal property (consisting of non-operating assets) of the management company forits private equity funds; and

• KKR will record a provision for corporate income taxes on the income of the intermediateholding company through which KPE will hold its interest in one of the KKR GroupPartnerships, which intermediate holding company will be taxable as a corporation for U.S.federal income tax purposes.

In addition, as a result of the Combination Transaction, the KPE Investment Partnership willbecome a wholly-owned subsidiary of the Combined Business and all of its assets, liabilities, revenues,expenses and cash flows will become part of the Combined Business. Because the KPE InvestmentPartnership is consolidated in KKR’s combined financial statements, the Combination Transaction willbe accounted for as an acquisition of noncontrolling interests in a consolidated entity with the KKRGroup being treated as the accounting acquirer. Such acquisition will result in the elimination ofconsolidated amounts attributable to KPE unitholders that were previously recorded in KKR’scombined financial statements as net loss (income) attributable to noncontrolling interests (statement ofoperations) and noncontrolling interests (statement of financial condition), which in turn will impactthe consolidated amounts of income before taxes, net income and partners’ capital that are reported.While the acquisition may result in a reduction in the management fees that are reported in KKR’sprivate markets segment, the corresponding expense previously incurred by the KPE InvestmentPartnership will be reduced by the same amount. Accordingly, the prospective impact on KKR’s

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financial results relating to the Combination Transaction will include increased investment income (loss)and expenses, excluding management fee expenses.

Impact of the KFI Transaction

KKR operates its public markets businesses through a subsidiary that serves as the managementcompany to its fixed income funds, managed accounts and structured finance vehicles. Prior to May 30,2008, KKR owned all of the equity in parent company other than certain noncontrolling interests thatallocated 35% of the net income generated by the parent to certain of its executives on an annualbasis. On May 30, 2008, KKR acquired all of these outstanding interests in order to further integrateits operations, enhance the existing collaboration among its investment professionals and accelerate thegrowth of its business. This transaction is referred to as the ‘‘KFI Transaction.’’ As a result of the KFITransaction, KKR now owns 100% of the equity interests in the parent and is entitled to all of the netincome and related cash flows generated by the public markets segment.

While not part of the Transactions, on May 30, 2008, KKR completed the KFI Transactionpursuant to which it acquired noncontrolling interests in the subsidiary through which KKR operates itspublic markets businesses. These noncontrolling interests allocated 35% of the net income generated bythe subsidiary to certain of its executives on an annual basis. The KFI Transaction is accounted for asan acquisition of noncontrolling interests using the purchase method of accounting with the KKRGroup being treated as the accounting acquirer. As a result of the KFI Transaction, KKR now owns100% of the equity interests in its public markets business and is entitled to all of the net income andrelated cash flows generated by the segment. KKR expects to amortize certain finite-lived intangiblesrecognized in connection with the acquisition over their estimated useful lives, which will give rise toperiodic non-cash amortization charges in KKR’s statement of operations.

Pro Forma Segment Information

Due to the differences described above, the KKR Group’s combined financial statements andrelated historical data included in this consent solicitation statement are not necessarily representativeof KKR’s future results of operations and financial condition. To provide additional informationillustrating the impact that the changes described above will have on KKR’s results of operations andfinancial condition, KKR has presented elsewhere in this consent solicitation statement unaudited proforma segment financial information for the year ended December 31, 2008 and as of and for the threemonths ended March 31, 2009. This data gives pro forma effect to the Transactions, the KFITransaction and certain other arrangements entered into in connection therewith as if such transactionsand arrangements had been completed as of January 1, 2008 with respect to the unaudited condensedpro forma statements of operations and as of March 31, 2009 with respect to the unaudited pro formastatement of financial condition. Such information has been included for informational purposes onlyand does not purport to reflect the results of operations or financial position that would have occurredhad the transactions referred to above occurred on the dates indicated. See ‘‘Preliminary UnauditedPro Forma Segment Information.’’

Basis of Financial Presentation

Combined Results

Impact of the Consolidation of KKR’s Funds on KKR’s Financial Presentation

In accordance with GAAP, a substantial number of KKR’s funds are consolidated in thepredecessor combined financial statements of the KKR Group notwithstanding the fact KKR holds onlya minority economic interest in those funds. Consolidated funds consist of those funds in which KKR,through the ownership interests of its senior principals, holds a general partner or managing memberinterest that gives it substantive controlling rights over such funds as well as the KPE Investment

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Partnership in which KKR’s predecessor holds a variable interest and has been determined to be theprimary beneficiary. With respect to its consolidated funds, KKR generally has operational discretionand control over the funds and investors do not hold any substantive rights that would enable them toimpact the funds’ ongoing governance and operating activities.

As noted above, in connection with the Transactions, the KKR Group will deconsolidate the 1996Fund, but will continue to consolidate the other consolidated funds that are currently consolidated inits combined financial statements. Those other consolidated funds consist of the European Fund, theMillennium Fund, the European Fund II, the 2006 Fund, the Asian Fund, the European Fund III, theKPE Investment Partnership and certain fixed income funds. Except for interests in the KPEInvestment Partnership, KKR will not acquire any of the economic interests in such entities that areheld by third party investors. In the case of the KPE Investment Partnership, KKR will acquire all ofthe interests in the entity that are held by KPE and such entity will become a wholly-owned subsidiaryas described below. See ‘‘Preliminary Unaudited Pro Forma Segment Information.’’ In addition,because KKR expects to continue to maintain a controlling interest in funds that its sponsors andmanages, it is likely that KKR will consolidate additional funds in future periods.

When a fund is consolidated, KKR reflects the assets, liabilities, revenues, expenses and cash flowsof the consolidated fund on a gross basis. The majority of the economic interests in the consolidatedfund, which are held by third party investors, are reflected as noncontrolling interests. Substantially allof the management fees and certain other amounts that KKR earns from the consolidated fund areeliminated in combination. However, because those amounts are earned from noncontrolling interests,its allocable share of the net income from the consolidated fund is increased by the amountseliminated. Accordingly, the consolidation of the consolidated fund does not have an effect on theamounts of income before taxes, net income or partners’ capital that the KKR Group reports.

While the consolidation of a consolidated fund does not have an effect on the amounts of netincome attributable to partners’ capital that the KKR Group reports, the consolidation doessignificantly impact other aspects of KKR’s combined financial statement presentation. This is due tothe fact that the assets, liabilities, income and expenses of the consolidated fund are reflected on agross basis while the allocable share of those amounts that are attributable to noncontrolling interestsare reflected as single line items. The single line items in which the assets, liabilities, income andexpense attributable to noncontrolling interests are recorded are captioned as noncontrolling interestsin the statement of financial condition and net income attributable to noncontrolling interests in thestatement of operations.

Segment Results

The KKR Group presents the results of its reportable business segments in accordance withStatement of Financial Accounting Standards No. 131, ‘‘Disclosures about Segments of an Enterpriseand Related Information.’’ See ‘‘—Business Segments.’’ This standard is based on a managementapproach, which requires segment presentation based on internal organization and the internal financialreporting used by management to make operating decisions, assess performance and allocate resources.All inter-segment transactions are eliminated in the segment presentation.

KKR’s management makes operating decisions, assesses performance and allocates resources basedon financial and operating data and measures that are presented without giving effect to theconsolidation of any of the funds that it manage. As a result, unlike the reporting in the predecessorcombined financial statements, the KKR Group’s segment reporting does not give effect to theconsolidation of any funds. The exclusion of consolidated funds in segment reporting results in theinclusion of management fees and incentive fees in fee income that would otherwise be eliminated incombination, the exclusion of investment income and expenses that are attributable to noncontrollinginterests held by third-party investors and the exclusion of net income attributable to noncontrollinginterests. See ‘‘—Combined Results—Impact of the Consolidation of KKR’s Funds on the Presentationof Investment Income’’ and ‘‘—Key Financial Measures—Segment Operating and PerformanceMeasures.’’

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Key Financial Measures

Revenues

Fee Income

Combined fee income consists primarily of ongoing management, advisory and incentive fees itearns from providing investment management, advisory and other services to its funds, managedaccounts and portfolio companies as well as transaction-specific advisory income from capital marketstransactions. These fees are based on the contractual terms of the management and other agreementsthat KKR enters into with its funds, managed accounts and portfolio companies. A substantial portionof advisory fees earned in connection with managing portfolio companies are shared with fundinvestors.

Combined fee income does not include the management fees that it earns from consolidated funds,because those fees are eliminated in consolidation as transactions between consolidated entities.However, because those management fees are earned from, and funded by, third-party investors whohold noncontrolling interests in the consolidated funds, net income attributable to KKR Group isincreased by the amount of the management fees that are eliminated in consolidation. Accordingly,while the consolidation of funds impacts the amount of fee income that are recognized on a combinedbasis, it does not affect the ultimate amount of net income attributable to KKR Group or partners’capital recognized in the combined financial statements.

Expenses

Employee Compensation and Benefits Expense

Employee compensation and benefits expense historically has consisted primarily of the basesalaries and profit-based cash amounts that KKR has paid personnel who are not senior principals.Because compensation arrangements with those individuals involve a significant performance-basedbonus component, employee compensation and benefits expense generally fluctuates based on ouroverall financial performance. Employee compensation and benefits expense is not borne by fundinvestors and is not offset by credits attributable to our fund investors’ noncontrolling interests inconsolidated funds. Such expenses have grown in recent periods as a result of the expansion of KKR’sbusiness, which has increased the number of its salaried employees.

Unlike other personnel, compensation expense relating to senior principals has not beenhistorically reflected for services they have provided. Instead, those individuals have relied on cashdistributions that they have received on their equity interests in the firm. Because those cashdistributions have been paid to senior principals in their capacities as owners of a business, thedistributions have been accounted for as distributions of partners’ capital rather than employeecompensation and benefits expense and, accordingly, have not been reflected as employeecompensation and benefits expense in our statements of operations.

Upon completion of the Transactions, KKR’s principals will in aggregate receive the majority oftheir financial benefits from KKR’s business in the form of distributions and payments received fromKKR Holdings and through their direct and indirect participation in the value of KKR GroupPartnership Units held by KKR Holdings. While KKR employees, including its senior principals, willreceive base salaries from KKR following the Transactions, certain profit-based cash amounts that werepreviously paid by KKR to its principals will no longer be paid by KKR and will be borne by KKRHoldings. Although KKR will not bear the economic costs of those payments, it expects to recordcertain non-cash compensation charges in its financial statements reflecting them. It also expects torecord periodic non-cash charges reflecting the vesting of interests in KKR Holdings. See‘‘—Contractual Obligations, Commitments and Contingencies’’.

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Upon completion of the Transactions, KKR expects to allocate approximately 40% of the carry itreceives from its funds and co-investment vehicles to its carry pool, although this percentage mayfluctuate over time. Prior to a U.S. listing, allocations to the carry pool may not exceed 40% and,following such a listing, allocations to the carry pool may exceed 40% only with the approval of amajority of the independent directors of KKR’s ultimate general partner. Subsequent to the completionof the Transactions, this allocation of investment income to principals and their designees under thisarrangement is expected to be reflected as employee compensation and benefits expense in KKR’scombined financial statements prepared under GAAP.

General, Administrative and Other Expense

General, administrative and other expense consists primarily of professional fees paid to legaladvisors, accountants, senior advisors and consultants; insurance costs; travel and related expenses;communications and information services; depreciation and amortization charges and other general andoperating expenses. These expenses have increased in recent years due to overhead resulting from theexpansion and growth of KKR business and fees paid to KKR’s senior advisors that are based in parton returns generated by KKR’s investments General, administrative and other expense is not borne byfund investors and are not offset by credits attributable to fund investors’ noncontrolling interests inconsolidated funds.

Fund Expenses

Fund expenses consist primarily of costs incurred in connection with potential investments that donot result in completed transactions (such as travel expenses, professional fees and research costs) andother costs associated with administering private equity funds. A substantial portion of fund expensesare borne by fund investors.

Investment Income (Loss)

KKR recognizes investment income with respect to carried interests in investments of privateequity funds, capital invested by or on behalf of the general partners of funds and the noncontrollinginterests that third party fund investors hold in consolidated funds. Grants of restricted equity intereststhat the firm has historically received from KFN in respect of the management services have beenincluded in investment income when vested. When the equity interests vest, these interests are reflectedas investments on the statement of financial condition and investment income or loss is thereafterrecognized in connection with changes in their fair value and any dividends or distributions paid on theshares.

Net Gains (Losses) from Investment Activities

New gains from investment activities consist primarily of the unrealized and realized gains andlosses on investments that are made by funds. Unrealized gains or losses result from changes in the fairvalue of these investments during a period. Upon disposition of an investment, previously recognizedunrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in thecurrent period. While this reversal generally does not affect the amount of net gains that arerecognized from investment activities, it does impact the cash flows recorded. See ‘‘—CriticalAccounting Policies—Fair Value of Investments.’’

Dividend Income

Dividend income consists primarily of the dividends and distributions that private equity fundsreceive from portfolio companies in which they invest. Private equity funds recognize dividend income

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primarily in connection with dispositions of operations by portfolio companies and other significantportfolio company transactions.

Interest Income

Interest income consists primarily of interest that is paid on KKR’s cash balances, the fixed incomeinstruments in which consolidated funds invest and, to a lesser extent, interest payments that privateequity funds are paid when they provide bridge financing to a portfolio company in connection with aportfolio company acquisition.

Interest Expense

Interest expense consists primarily of interest that is payable by funds or their general partners inconnection with indebtedness that they incur to finance investments. A significant portion of KKR’shistorical interest expense relates to long-term indebtedness that is used by fixed income funds toleverage their investments and indebtedness incurred by KPE under its credit agreement. KKR’straditional private equity funds do not incur debt at the fund level, although some private equity fundshave made investments in consolidated special purpose vehicles that use leverage to enhance returns ofstructured minority investments.

The balance of KKR’s interest expense historically has consisted of short-term borrowings that areused by the general partners of private equity funds and the firm’s management companies and capitalmarkets companies for working capital purposes. KKR maintains two primary credit agreements withseparate financial institutions, which provide additional sources of long-term liquidity. Following thecompletion of the Transactions, all of KPE’s indebtedness will be included in the indebtedness of theKKR and any associated interest expense will be attributable to the firm.

Impact of the Consolidation of KKR’s Funds on the Presentation of Investment Income

Due to the consolidation of a majority of KKR’s funds, the amount of investment income that isallocable to carried interests and capital investments is not readily shown in the accompanyingcombined financial statements. Instead, the portion of investment income that is allocable to carriedinterests and capital investments, after allocating amounts to noncontrolling interests, is reflected in netincome attributable to KKR Group. Because the substantial majority of KKR’s funds are consolidatedand because KKR holds only a minority economic interest in its funds’ investments, its allocable shareof its funds’ investment income is significantly less than the total amount of investment incomepresented in the accompanying combined financial statements.

Income Taxes

KKR has historically operated as a group of partnerships for U.S. federal income tax purposesand, in the case of certain entities located outside the United States, corporate entities for foreignincome tax purposes. Because most of these entities are taxed as partnerships, the firm’s income isgenerally allocated to, and the resulting tax liability is generally borne by, its principals and KKRgenerally are not taxed at the entity level. The income taxes included in the accompanying predecessorcombined financial statements are attributable to the New York City unincorporated business tax andforeign income taxes imposed on certain entities located outside the United States.

Following the Transactions, the KKR Group Partnerships and some of their subsidiaries willoperate as partnerships for U.S. federal income tax purposes and, in the case of certain entities locatedoutside the United States, corporate entities for foreign income tax purposes. Accordingly, thoseentities will continue to be subject to New York City unincorporated business taxes or foreign incometaxes, as the case may be. In addition, the intermediate holding company through which KPE will holdits equity in KKR Management Holdings L.P. will be subject to U.S. federal income tax and applicable

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state, local and other taxes, which may be significant. The tax on the intermediate holding company willbe reflected in KKR’s future results.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests represents the ownership interests thatunaffiliated third parties hold in entities that are consolidated in the KKR Group’s financial statements.The allocable share of income and expense attributable to those interests is accounted for as netincome attributable to noncontrolling interests. Historically, the amount of net income attributable tononcontrolling interests has been substantial and has resulted in significant charges and credits in thestatements of operations. For the historical periods presented in this consent solicitation document,noncontrolling interests consisted primarily of:

• noncontrolling interests that investors held in consolidated funds, which economic interestsallocated to the fund investors approximately 88% of the combined total assets as of March 31,2009 and resulted in net benefits of approximately $(656.3) million and $(728.0) million,respectively, during the year ended December 31, 2008, and the three months ended March 31,2009, respectively;

• noncontrolling interests that allocated 35% of the net income generated by KKR’s publicmarkets segment to certain of its executives on an annual basis through May 30, 2008; and

• a noncontrolling interest that allocated to a third party an aggregate of 2% of the equity inKKR’s capital markets business.

On May 30, 2008, KKR acquired all outstanding noncontrolling interests in its public marketssegment and now owns 100% of the entity. In connection with the Combination Transaction, KKR willsimilarly acquire all outstanding noncontrolling interests in the KPE Investment Partnership, which willbecome a wholly-owned subsidiary of the firm. While these acquisitions will reduce the noncontrollinginterests that are included in KKR’s consolidated statement of financial condition and the relatedcharges and credits for such items previously recorded in its combined statement of operations, KKRexpects to continue to recognize substantial net income attributable to noncontrolling interestsfollowing the completion of the Transactions, and such items will continue to give rise to significantcharges and credits in its statements of operations.

In particular, upon completion of the Transactions, KKR expects that noncontrolling interests willconsist of:

• noncontrolling interests that will allocate to a former principal and such person’s designees anaggregate of 1% of the carried interest received by general partners of the KKR funds and 1%of KKR’s profits until a future date;

• noncontrolling interests that will allocate to certain of its former principals and their designees aportion of the carried interest received by the general partners of the private equity funds withrespect to private equity investments made during such former principals’ tenure with KKR;

• noncontrolling interests that will allocate to certain of its current and former principals all of thecapital invested by or on behalf of the general partners of the private equity funds before thecompletion of the Transactions and any returns thereon;

• KKR will include noncontrolling interests representing the KKR Group Partnership Units thatKKR Holdings will hold in the KKR Group Partnerships, which interests will allocate to KKRHoldings 70% of the equity in the Combined Business upon completion of the Transactions;

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• a noncontrolling economic interest that will allocate to a third party an aggregate of 2% of theequity in the KKR Group’s capital markets business; and

• noncontrolling interests that investors hold in KKR’s consolidated funds.

Assets Under Management

AUM represents the assets with respect to which KKR is entitled to receive a fee or carriedinterest. KKR calculates its AUM as of any date as the sum of: (i) the fair value of the investments ofits traditional private equity funds and its carry-yielding co-investment vehicles and other KKRsponsored investment vehicles plus the capital that it is entitled to call from investors in such funds andvehicles with respect to their unfunded capital commitments; (ii) the net asset value of certain of itsfixed income funds, managed accounts and other private equity products; (iii) the NAV of the KPEInvestment Partnership; (iv) the equity of KFN; and (v) the par value of outstanding tranches ofstructured finance vehicles that it manages. As a result of raising new funds with sizeable capitalcommitments, KKR’s AUM has increased significantly over the periods discussed below.

Increases in the AUM of funds will generally result in increases in KKR’s net income. To theextent that increases in AUM consist of permanent capital, the related increases in fee income wouldbe expected to continue during future periods. With respect to traditional private equity funds,management fees are calculated based on the amount of capital committed to a fund during theinvestment period (typically the first six years of a fund’s life) and thereafter on the cost basis of thefund’s investments, which causes the fees to be reduced over time as investments are liquidated. As ofMarch 31, 2009, approximately 68.9% of the AUM in KKR’s traditional private equity funds wereassociated with funds whose management fees were calculated based on capital commitments.

Segment Operating and Performance Measures

Fee Related Earnings

Fee related earnings are a profit measure that is reported by KKR’s two reportable businesssegments. The difference between fee related earnings and income before taxes presented inaccordance with GAAP is that fee related earnings represent income (loss) before taxes adjusted to:(i) exclude the expenses of consolidated funds, non-cash employee compensation charges associatedwith equity interests in KKR’s business and employee compensation charges relating to compensationborne by unconsolidated persons; (ii) include management fees earned from consolidated funds thatwere eliminated in consolidation; (iii) exclude investment income; (iv) exclude amortization ofintangibles assets; and (v) exclude net income attributable to noncontrolling interests. See‘‘—Combination Transaction—Capital Markets and Principal Activities.’’ KKR believes suchadjustments are meaningful because management makes operating decisions and assesses theperformance of KKR’s business based on financial and operating metrics and data that are presentedwithout the consolidation of any of KKR’s investment funds.

KKR’s current operations are managed based in part on KKR’s reported levels of fee relatedearnings, which consist primarily of management, advisory and incentive fees earned from all of KKR’sfunds, managed accounts, portfolio companies, capital markets transactions and other investmentproducts. Subsequent to the Transactions, KKR will continue to focus on growing its fee relatedearnings and use segment fee related earnings levels to make operating decisions and assess theperformance of its business, because those amounts will directly affect the returns to its owners.

Segment Economic Net Income

Economic net income, or ENI, is a key performance measure used by management when makingoperating decisions, assessing operating performance and allocating resources. ENI represents income

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before taxes adjusted to (i) exclude net income attributable to noncontrolling interests, (ii) excludenon-cash employee compensation charges associated with equity interests in KKR’s business andemployee compensation charges relating to compensation borne by KKR Holdings, and (iii) excludecharges relating to the amortization of intangible assets. Because the accompanying predecessorcombined financial statements do not include any significant non-cash employee compensation chargesassociated with equity interests in KKR’s business, employee compensation charges relating tocompensation borne by unconsolidated persons or any significant charges relating to the amortizationof intangible assets or deferred financing costs, ENI is the equivalent of income before taxes, lessamortization of intangible assets, for the historical periods presented. See ‘‘Preliminary Unaudited ProForma Segment Information.’’

Combination Transaction; Capital Markets and Principal Activities Segment

In connection with the Combination Transaction, the KPE Investment Partnership will become awholly-owned subsidiary of the KKR Group Partnerships and all of its assets, liabilities, revenues,expenses and cash flows will become KKR’s. Because the KPE Investment Partnership will no longer beconsidered a consolidated fund, the acquisition will result in the elimination of management fees fromKKR’s fee related earnings previously recorded by KKR’s private markets segment. While theacquisition will therefore impact the results of KKR’s private markets segment, including reportedlevels of fee related earnings and ENI, KKR will report new financial results relating to the net assetsacquired, including investment income and expense, in KKR’s Capital Markets and Principal Activitiessegment following the Combination Transaction.

Private Equity Dollars Invested

Private equity dollars invested is the aggregate amount of capital invested by KKR’s private equityfunds and carry-yielding co-investment vehicles in private equity transactions during a reporting period.Such amounts include both capital contributed by fund investors and co-investors with respect to whichKKR is entitled to a carried interest and capital contributed by it as the general partner of a privateequity fund with respect to which it is entitled to profits generated on the invested capital. KKR usesprivate equity dollars invested as a measure of the productivity of its investment activities and as anindicator of potential returns that KKR may realize in future periods from its current private equityinvestments. From KKR’s inception through March 31, 2009, its first eleven traditional private equityfunds (representing all of KKR’s private equity funds that have invested at least 36 months) achieved amultiple of invested capital of 2.2x the amount of capital they invested in private equity investments.

Combined Results of Operations

The following is a discussion of KKR’s predecessor combined results of operations for the yearsended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2009 and 2008. Youshould read this discussion in conjunction with the information included under ‘‘—Basis of FinancialPresentation—Combined Results’’ and the predecessor combined financial statements and related notesincluded elsewhere in this consent solicitation statement. For a more detailed discussion of the factorsthat affected the results of operations of KKR’s two business segments in these periods, see‘‘—Segment Analysis.’’

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The following tables set forth information regarding KKR’s combined results of operations for theyears ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2008 and 2009.

Three months endedYear Ended December 31, March 31,

2006 2007 2008 2008 2009($ in thousands) ($ in thousands)

RevenuesFee income . . . . . . . . . . . . . . . . . . $ 410,329 $ 862,265 $ 235,181 $ 68,590 $ 39,070

ExpensesEmployee compensation and

benefits . . . . . . . . . . . . . . . . . . . . 131,667 212,766 149,182 48,064 45,542Occupancy and related charges . . . . 19,295 20,068 30,430 6,538 8,885General, administrative and other . . 78,154 128,036 179,673 30,703 37,403Fund expenses . . . . . . . . . . . . . . . . 38,350 80,040 59,103 18,232 12,928

Total expenses . . . . . . . . . . . . . . . 267,466 440,910 418,388 103,537 104,758Investment Income (Loss)

Net gains (losses) from investmentactivities . . . . . . . . . . . . . . . . . . . 3,105,523 1,111,572 (12,944,720) (732,974) (720,849)

Dividend income . . . . . . . . . . . . . . 714,069 747,544 75,441 4,592 700Interest income . . . . . . . . . . . . . . . 210,872 218,920 129,601 25,343 27,082Interest expense . . . . . . . . . . . . . . . (29,542) (86,253) (125,561) (35,359) (22,278)

Total investment income (loss) . . . 4,000,922 1,991,783 (12,865,239) (738,398) (715,345)Income (loss) before taxes . . . . . . . . . 4,143,785 2,413,138 (13,048,446) (773,345) (781,033)

Income taxes . . . . . . . . . . . . . . . . . 4,163 12,064 6,786 888 1,531Net Income (loss) . . . . . . . . . . . . . . 4,139,622 2,401,074 (13,055,232) (774,233) (782,564)

Less: Net income (loss)attributable to noncontrollinginterests . . . . . . . . . . . . . . . . . 3,039,677 1,598,310 (11,850,761) (656,335) (727,981)

Net income (loss) attributable toKKR group . . . . . . . . . . . . . . . $ 1,099,945 $ 802,764 $ (1,204,471) $ (117,898) $ (54,583)

Assets under management (periodend) . . . . . . . . . . . . . . . . . . . . . . . . $43,873,400 $53,215,700 $ 48,450,700 $57,714,800 $47,340,000

Three months ended March 31, 2009 compared to three months ended March 31, 2008

Fee Income

Fee income was $39.1 million for the three months ended March 31, 2009, a decrease of$29.5 million, or 43.0%, from the three months ended March 31, 2008. The decrease was primarily dueto a $16.6 million decrease in transaction fees resulting from the absence of fee-generating investmentsduring the first quarter of 2009 compared to two transaction-fee generating private equity investmentsduring the first quarter of 2008 with a total transaction value of $3.5 billion. In addition, managementfees relating to these funds decreased $3.8 million primarily due to the unfavorable financialperformance of certain fixed income funds resulting from adverse credit market conditions as well asreduced base management fee rates for all investor classes for certain fixed income funds. Theseadverse conditions resulted in increases in net realized and unrealized losses on investments, derivativesand foreign exchange at certain fixed income funds consistent with those experienced in the broadercredit markets. Further, monitoring fees decreased $3.4 million reflecting a decrease in the average

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monitoring fee received, and fee income relating to KKR’s capital markets business decreased$7.9 million as a result of a comparatively soft transaction environment in the first quarter of 2009.Offsetting these decreases was a $2.2 million increase in fees associated with the formation of newKKR sponsored funds as well as an increase in capital managed on behalf of third party investors.

Expenses

Expenses were $104.8 million for the three months ended March 31, 2009, an increase of$1.2 million, or 1.2%, from the three months ended March 31, 2008. The increase was primarily due toan increase in general and administrative expenses of $6.7 million primarily as a result of an increase inexpenses at KKR’s public markets segment reflecting the growth of that segment as well as an increasein professional fees associated with the growth of KKR’s private equity funds. Additionally, occupancyand related charges increased $2.3 million reflecting the opening of new offices in Houston,Washington, D.C. and Mumbai subsequent to March 31, 2008 as well as an increase in existing officespace. Offsetting these increases was a decrease in employee compensation and benefits of $2.5 millionreflecting lower incentive compensation in connection with less favorable financial performance whencompared to the prior period partially offset by the hiring of additional personnel after March 31, 2008in connection with the expansion of KKR’s business. Additionally, fund expenses decreased $5.3 millionprimarily as a result of a decrease in transaction related expenses attributable to unconsummatedtransactions during the period reflecting a lower level of transaction activity.

Net Losses from Investment Activities

Net losses from investment activities were $720.8 million for the three months ended March 31,2009, a decrease of $12.1 million compared to net losses from investment activities of $732.9 million forthe three months ended March 31, 2008. The following is a summary of the components of net lossesfrom investment activities:

Three months endedMarch 31, March 31,

2009 2008($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,368 $ 173,757Unrealized Losses from Sales of Investments and

Realization of Gains . . . . . . . . . . . . . . . . . . . . . . . . . . (16,499) (162,194)Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (124,889) (11,483)Unrealized Gains from Sales of Investments and

Realization of Losses . . . . . . . . . . . . . . . . . . . . . . . . . 115,234 4,600Unrealized Gains from Changes in Fair Value . . . . . . . . . 683,273 792,099Unrealized Losses from Changes in Fair Value . . . . . . . . (1,406,336) (1,529,753)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (720,849) $ (732,974)

The lower level of net losses from investment activities from the prior period of $12.1 million wasprimarily attributable to a decrease in net unrealized losses of $270.9 million resulting primarily fromlower overall decreases in the market value of KKR’s investment portfolio. These decreases werepartially offset by realization activity that represented a net loss in the first quarter of 2009 of$96.5 million and a net gain in the first quarter of 2008 of $162.3 million resulting in a net unfavorablevariance in realization activity from the prior period of $258.8 million. Substantially all of KKR’s netlosses from investment activities are related to its private equity investments.

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Dividend Income

Dividend income was $0.7 million for the three months ended March 31, 2009, a decrease of$3.9 million, or 84.8%, from the three months ended March 31, 2008. KKR’s dividends are generallyearned in connection with sales of significant operations or other restructuring transactions undertakenby KKR’s portfolio companies resulting in available cash that is distributed to KKR’s private equityfunds. During the three months ended March 31, 2009, KKR received $0.6 million of dividends fromone portfolio company and an aggregate of $0.1 million of comparatively smaller dividends from otherinvestments. During the three months ended March 31, 2008, KKR received $4.0 million of dividendsfrom two portfolio companies and an aggregate of $0.6 million of comparatively smaller dividends fromother investments.

Interest Income

Interest income was $27.1 million for the three months ended March 31, 2009, an increase of$1.7 million, or 6.9%, from the three months ended March 31, 2008. The increase primarily reflects anincrease of $11.0 million in income earned from higher average cash balances at KKR’s traditionalprivate equity funds. Offsetting this increase were decreases of $7.8 million at KPE following thedeployment of a greater percentage of its cash to investments, and $1.5 million at KKR’s managementcompanies resulting from lower average cash balances.

Interest Expense

Interest expense was $22.3 million for the three months ended March 31, 2009 a decrease of$13.1 million, or 37.0%, from the three months ended March 31, 2008. Average outstanding borrowingswere $2.4 billion and $2.2 billion for the three months ended March 31, 2009 and 2008, respectively,however the weighted average interest rate was lower during the first quarter of 2009 as compared tothe prior period. Approximately $15.1 million of the overall decrease was attributable to decreasedborrowings at KPE and leveraged structures used by KPE and KKR’s traditional private equity funds toenhance returns on certain assets. Offsetting these decreases were increases at KKR’s managementcompany and capital markets business of $2.0 million reflecting an increased level of borrowings duringthe period.

Loss Before Taxes

Due to the factors described above, loss before taxes was $781.0 million for the three monthsended March 31, 2009, an increase of $7.7 million compared to loss before taxes of $773.3 million forthe three months ended March 31, 2008.

Net Loss Attributable to Noncontrolling Interests

Net loss attributable to noncontrolling interests was $728.0 million for the three months endedMarch 31, 2009, an increase of $71.6 million compared to net loss attributable to noncontrollinginterests of $656.3 million for the three months ended March 31, 2008. The increase reflects a higherproportion of private equity losses allocated to noncontrolling interests during the first quarter of 2009under the terms of the funds’ governing documents.

Assets Under Management

KKR’s AUM were $47.3 billion as of March 31, 2009, a decrease of $10.4 billion, or 18.0%, fromMarch 31, 2008. The decrease was due primarily to $12.7 billion of net unrealized losses resulting fromchanges in the market values of KKR’s portfolio companies in its private markets segment, a$1.1 billion decrease in the capital relating to a certain fixed income fund and structured financevehicles that KKR manages, and $0.4 billion of distributions from its traditional private equity funds

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comprised of $0.3 billion of realized gains and $0.1 billion of original cost. These decreases were offsetby an increase in the capital commitments to the European Fund III of $0.9 billion, a $0.5 billionincrease associated with the formation of new KKR sponsored investment vehicles, and a $2.4 billionincrease associated with capital managed on behalf of third party investors at KKR’s public marketssegment.

Year ended December 31, 2008 Compared to Year ended December 31, 2007

Fee Income

Fee income was $235.2 million for the year ended December 31, 2008, a decrease of$627.1 million, or 72.7%, from the year ended December 31, 2007. The decrease was primarily due to a$660.0 million decrease in transaction fees resulting from a lower combined completed transactionvalue during the period. During the year ended December 31, 2008, KKR completed four transactionfee-generating private equity investments with a total completed transaction value of $4.4 billion,compared to thirteen transaction fee-generating private equity investments with a total transactionvalue of $141.6 billion during the year ended December 31, 2007. In addition, management andincentive fees relating to KFN decreased $27.9 million primarily as a result of KFN experiencingadverse credit market conditions. These adverse conditions resulted in significant increases in netrealized and unrealized losses on investments, derivatives and foreign exchange at KFN consistent withthose experienced in the broader credit markets. These increased losses resulted in KFN not achievingcertain benchmark returns and other performance targets compared to the prior period when suchreturns and targets had been met. Offsetting these decreases was a $41.8 million increase in monitoringfees reflecting an increase in the average monitoring fee received as well as the receipt of anon-recurring $15.0 million advisory fee from one of KKR’s portfolio companies. During the yearended December 31, 2008, KKR had 33 portfolio companies that were paying an average fee of$3.0 million, compared with 40 portfolio companies that were paying an average fee of $1.7 millionduring the year ended December 31, 2007. In addition, fee income relating to KKR’s capital marketsbusiness increased $18.2 million as a result of its formation in late 2007, and management fees atKKR’s credit strategy funds increased $0.8 million primarily as a result of increased assets undermanagement on which KKR is entitled a fee.

Expenses

Expenses were $418.4 million for the year ended December 31, 2008, a decrease of $22.5 million,or 5.1%, from the year ended December 31, 2007. The decrease was primarily due to a $63.6 milliondecrease in employee compensation and benefits resulting from a decrease in incentive compensationin connection with less favorable financial performance when compared to the prior period, offset byincreases relating to the hiring of additional personnel after December 31, 2007 in connection with theexpansion of KKR’s business. Additionally, fund expenses decreased $20.9 million primarily as a resultof a decrease in transaction related expenses that were attributable to unconsummated transactionsduring the period. Offsetting these decreases was an increase in general and administrative expenses of$51.6 million primarily as a result of an increase in expenses at KKR’s newly formed capital marketsbusiness and an increase in professional fees reflecting the overall growth of KKR’s existing businesses.Additionally, occupancy and related charges increased $10.4 million reflecting the opening of newoffices in Beijing, Sydney, Houston and Washington, D.C. subsequent to December 31, 2007 as well asan increase in existing office space.

Net Gains (Losses) from Investment Activities

Net losses from investment activities were $12.9 billion for the year ended December 31, 2008, adecrease of $14.0 billion compared to net gains from investment activities of $1.1 billion for the year

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ended December 31, 2007. The following is a summary of the components of net gains (losses) frominvestment activities:

Year endedDecember 31, December 31,

2008 2007($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 446,856 $ 1,885,562Unrealized Losses from Sales of Investments and

Realization of Gains . . . . . . . . . . . . . . . . . . . . . . . . . (345,477) (1,709,601)Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (193,446) (328,461)Unrealized Gains from Sales of Investments and

Realization of Losses . . . . . . . . . . . . . . . . . . . . . . . . 101,402 255,720Unrealized Gains from Changes in Fair Value . . . . . . . . 2,681,711 4,732,096Unrealized Losses from Changes in Fair Value . . . . . . . (15,635,766) (3,723,744)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(12,944,720) $ 1,111,572

The overall decrease in net gains (losses) from investment activities from the prior period wasprimarily attributable to a net decrease in changes in unrealized gains (losses) of $12.8 billion resultingprimarily from decreases in the market value of KKR’s investment portfolio and to a lesser extent adecline in net realized gains of $1.3 billion resulting primarily from a lower level of sales activity duringthe period. Substantially all of KKR’s net gains (losses) from investment activities are related to itsprivate equity investments.

Dividend Income

Dividend income was $75.4 million for the year ended December 31, 2008, a decrease of$672.1 million, or 89.9%, from the year ended December 31, 2007. KKR’s dividends are generallyearned in connection with sales of significant operations or other restructuring transactions undertakenby KKR’s portfolio companies resulting in available cash that is distributed to KKR’s private equityfunds. During the year ended December 31, 2008, KKR received $74.2 million of dividends from twoportfolio companies and an aggregate of $1.2 million of comparatively smaller dividends. During theyear ended December 31, 2007, KKR received $717.7 million of dividends from eight portfoliocompanies and an aggregate of $29.8 million of comparatively smaller dividends from four portfoliocompanies.

Interest Income

Interest income was $129.6 million for the year ended December 31, 2008, a decrease of$89.3 million, or 40.8%, from the year ended December 31, 2007. The decrease primarily reflects a$63.7 million decrease in interest income earned in KKR’s public markets segment that was attributableto the deconsolidation, during the second quarter of 2007, of one of the structured finance vehiclesmanaged by KKR as well as a decrease of $66.6 million in interest income earned from cashmanagement activities at KPE following the deployment of a greater percentage of its cash toinvestments. Cash management activities resulting in lower cash balances at KKR’s managementcompanies resulted in a decrease in interest income of $7.3 million. Offsetting these decreases wereincreases in income earned from cash management activities at KKR’s traditional private equity fundsof $48.3 million.

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Interest Expense

Interest expense was $125.6 million for the year ended December 31, 2008, an increase of$39.3 million, or 45.5%, from the year ended December 31, 2007 and average outstanding borrowingswere $2.2 billion and $1.5 billion for the year ended December 31, 2008 and 2007, respectively. Theincrease was primarily attributable to increased borrowings at KPE and leveraged structures used byKPE and KKR’s traditional private equity funds to enhance returns on certain assets which collectivelyresulted in the recognition of $61.2 million of additional interest expense. In addition, interest expenseincreased at KKR’s management company and capital markets business by $9.8 million. This increasewas due primarily to an increase in borrowings at the management company resulting in an additional$5.1 million in interest expense as well as the amortization of deferred financing costs incurred inconnection with credit agreements entered into in early 2008 of $4.7 million. These increases wereoffset by a decrease of $31.7 million in KKR’s public markets segment resulting primarily from thedeconsolidation, during the second quarter of 2007, of one of the structured finance vehicles managedby KKR.

Income (Loss) before Taxes

Due to the factors described above, loss before taxes was $13.0 billion for the year endedDecember 31, 2008, a decrease of $15.4 billion compared to income before taxes of $2.4 billion for theyear ended December 31, 2007.

Net (Loss) Income Attributable to Noncontrolling Interests

Net (loss) income attributable to noncontrolling interests was $11.9 billion for the year endedDecember 31, 2008, a decrease of $13.5 billion compared to income attributable to noncontrollinginterests of $1.6 billion for the year ended December 31, 2007. The decrease primarily reflects netlosses attributable to noncontrolling interests, which were driven by the overall changes in thecomponents of net gains (losses) from investment activities described above.

Assets Under Management

KKR’s AUM were $48.5 billion as of December 31, 2008, a decrease of $4.7 billion, or 9.0%, fromDecember 31, 2007. The decrease was due primarily to the $12.7 billion of net unrealized lossesresulting from changes in the market values of KKR’s portfolio companies in its private marketssegment, a $1.8 billion decrease in the capital relating to one fixed income fund and certain structuredfinance vehicles that KKR manages, and $0.6 billion of distributions from KKR’s traditional privateequity funds comprised of $0.5 billion of realized gains and $0.1 billion of original cost. Thesedecreases were offset by the formation of the European Fund III, which received $6.4 billion of capitalcommitments from fund investors during 2008 and $4.0 billion increase associated with capital managedon behalf of third party investors at KKR’s public markets segment.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Fee Income

Fee income was $862.3 million for the year ended December 31, 2007, an increase of$452.0 million, or 110.2%, from the year ended December 31, 2006. The increase was primarily due toa $425.1 million increase in transaction fees earned in KKR’s private markets segment, which wasattributable to a significant increase in the total value of private equity transactions completed during2007 relative to 2006. During 2007, KKR completed 13 transaction fee-generating private equityinvestments with a total combined value of $141.6 billion, compared to 11 transaction fee-generatingprivate equity investments during 2006 with a total transaction value of $104.8 billion. A number of thetransactions completed during 2007 entitled KKR to share a greater proportion of the overalltransaction fees compared to the prior year. In addition, management and incentive fees relating to the

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KKR Strategic Capital Funds increased $14.1 million due to their formation in the fourth quarter of2006, and incentive fees relating to certain of KKR’s fixed income funds increased $9.7 million resultingprimarily from the receipt of such fees beginning late in the second quarter of 2006. The remainder ofthe overall increase in fee income resulted primarily from an increase in monitoring fees of$11.5 million in KKR’s private markets segment reflecting an increase in the number of portfoliocompanies paying monitoring fees as well as an increase in the average monitoring fee received. Duringthe twelve months ended December 31, 2007, KKR had 40 portfolio companies that were paying anaverage fee of $1.7 million, compared with 37 portfolio companies that were paying an average fee of$1.3 million during the twelve months ended December 31, 2006. Offsetting these increases weredecreases in management and incentive fees received from KFN of $8.4 million primarily as a result ofKFN not achieving certain benchmark returns and other performance targets compared to the priorperiod when such targets had been met.

Expenses

Expenses were $440.9 million for the year ended December 31, 2007, an increase of $173.4 million,or 64.8%, from the year ended December 31, 2006. The increase was primarily due to an $81.1 millionincrease in employee compensation and benefits expense resulting from higher incentive compensationreflecting KKR’s improved financial performance during 2007 as well as the hiring of additionalpersonnel during the year ended December 31, 2007 in connection with the continued expansion ofKKR’s business. In addition, general, administrative and other expenses increased $49.9 millionresulting from the growth of KKR’s business, and included increases in professional fees, travel andentertainment expenses and to a lesser extent the opening of KKR’s Tokyo office and the formation ofKPE in the second quarter of 2006. Fund expenses increased $41.7 million as a result of a $20.8 millionincrease in expenses incurred in KKR’s private markets segment in connection with the organization ofnewly formed funds and the placement of limited partner interests in such funds as well as an increasein transaction related expenses of $12.6 million that were attributable to unconsummated transactionsduring the period. Total transaction related expenses attributable to unconsummated transactionsamounted to $40.7 million and $28.1 million for the years ended December 31, 2007 and 2006,respectively.

Net Gains from Investment Activities

Net gains from investment activities were $1.1 billion for the year ended December 31, 2007, adecrease of $2.0 billion, or 64.5%, from the year ended December 31, 2006. The following is asummary of the components of net gains from investment activities:

Year EndedDecember 31, December 31,

2007 2006($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,885,562 3,380,548Unrealized Losses from Sales of Investments and

Realization of Gains . . . . . . . . . . . . . . . . . . . . . . . . . . (1,709,601) (2,891,770)Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (328,461) (135,617)Unrealized Gains from Sales of Investments and

Realization of Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 255,720 138,873Unrealized Gains from Changes in Fair Value . . . . . . . . . 4,732,096 3,435,690Unrealized Losses from Changes in Fair Value . . . . . . . . . (3,723,744) (822,201)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,111,572 $3,105,523

The overall decrease in net gains from investment activities from the prior period was primarilyattributable to a decline in net realized gains of $1.7 billion resulting primarily from lower average

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realizations during the year as well as a net decrease in changes in unrealized gains (losses) of$0.3 billion resulting primarily from smaller net increases in the fair value of KKR’s portfolio.Substantially all of KKR’s net gains from investment activities are related to its private equityinvestments.

Dividend Income

Dividend income was $747.5 million for the year ended December 31, 2007, an increase of$33.4 million, or 4.7%, from the year ended December 31, 2006. KKR’s dividends are generally earnedin connection with sales of significant operations or other restructuring transactions undertaken byKKR’s portfolio companies resulting in available cash that is distributed to KKR’s private equity funds.During 2007, KKR received $717.7 million of dividends from eight portfolio companies and anaggregate of $29.8 million of comparatively smaller dividends from four portfolio companies. During2006, KKR received $546.0 million of dividends from three portfolio companies and an aggregate of$168.1 million of comparatively smaller dividends from five portfolio companies.

Interest Income

Interest income was $218.9 million for the year ended December 31, 2007, an increase of$8.0 million, or 3.8%, from the year ended December 31, 2006. The increase primarily reflects a$38.6 million increase in interest income earned in KKR’s public markets segment that was attributableto the formation of certain fixed income funds managed by KKR in the fourth quarter of 2006 and a$12.1 million increase in interest earned from cash management activities at its managementcompanies. This increase was offset by $42.7 million of decreases in interest income earned from cashmanagement activities at KPE following the deployment of a greater percentage of its cash toinvestments.

Interest Expense

Interest expense was $86.3 million for the year ended December 31, 2007, an increase of$56.8 million, or 192.5%, from the year ended December 31, 2006. Average outstanding borrowingswere $1.5 billion and $0.6 billion for the years ended December 31, 2007 and 2006, respectively. Theincreased interest expense was primarily attributable to borrowings at KPE and leveraged structuresused by KPE and KKR’s traditional private equity funds to enhance returns on certain assets, whichcollectively resulted in the recognition of $50.1 million of additional interest expense, as well as$19.3 million of additional interest expense incurred by the KKR Strategic Capital Funds, which wereformed in the fourth quarter of 2006. These increases were offset by a $12.7 million decrease ininterest expense at the general partners of KKR’s traditional private equity funds resulting from adecrease in short-term borrowings during the period.

Income before Taxes

Income before taxes was $2.4 billion for the year ended December 31, 2007, a decrease of$1.7 billion, or 41.8%, from the year ended December 31, 2006.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $1.6 billion for the year endedDecember 31, 2007, a decrease of $1.4 billion, or 46.7%, from the year ended December 31, 2006. Thedecrease primarily reflects a reduction in the total investment income attributable to noncontrollinginterests, which was driven by the overall changes in the components of investment income describedabove.

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Assets Under Management

KKR’s AUM were $53.2 billion as of December 31, 2007, an increase of $9.3 billion, or 21.2%,from December 31, 2006. The increase was due primarily to the formation of the Asian Fund, whichreceived $4.0 billion of capital commitments from fund investors during the first half of 2007, anincrease in the capital commitments to the 2006 Fund of $1.5 billion during 2007 (bringing total capitalcommitments in the 2006 Fund to $17.6 billion as of December 31, 2007), a $1.4 billion increaseassociated with the formation of carry-yielding co-investment vehicles and KKR’s principal protectedprivate equity product, $0.9 billion of net unrealized gains resulting from changes in the market valuesof KKR’s portfolio companies in its private markets segment and a $5.8 billion increase in the capitalrelating to one fixed income fund and structured finance vehicles that KKR manages. These increasesoffset $4.3 billion of distributions from KKR’s traditional private equity funds comprised of $2.6 billionof realized gains and $1.7 billion of original cost.

Segment Analysis

The following is a discussion of the results of KKR’s two reportable business segments for theyears ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2008 and 2009.You should read this discussion in conjunction with the information included under ‘‘—Basis ofFinancial Presentation—Segment Results’’ and the predecessor combined financial statements andrelated notes included elsewhere in this consent solicitation statement.

Private Markets Segment

The following tables set forth information regarding the results of operations and certain keyoperating metrics for KKR’s private markets segment for the years ended December 31, 2006, 2007 and2008 and the three months ended March 31, 2008 and 2009.

Three months endedYear Ended December 31, March 31,

2006 2007 2008 2008 2009($ in thousands) ($ in thousands)

Fee incomeManagement fees . . . . . . . . . . . . . . . . $ 181,371 $ 231,527 $ 426,005 $ 78,833 $ 103,802Advisory fees . . . . . . . . . . . . . . . . . . . 172,950 537,126 137,531 37,740 23,993

Total fee income . . . . . . . . . . . . . . . $ 354,321 $ 768,653 $ 563,536 $ 116,573 $ 127,795Expenses

Employee compensation and benefits . . 92,950 187,540 136,807 43,412 39,416Other operating expenses . . . . . . . . . . . 121,327 209,700 227,513 48,561 44,324

Total expenses . . . . . . . . . . . . . . . . . 214,277 397,240 364,320 91,973 83,740Fee related earnings . . . . . . . . . . . . . . . . 140,044 371,413 199,216 24,600 44,055Investment income (loss) . . . . . . . . . . . . . 929,518 403,601 (1,431,569) (148,310) (95,913)Income (loss) before taxes . . . . . . . . . . . . 1,069,562 775,014 (1,232,353) (123,710) (51,858)(Loss) Income Attributable to

Noncontrolling Interests . . . . . . . . . . . . — — (37) 65 (89)Economic net income (loss) . . . . . . . . . . $ 1,069,562 $ 775,014 $(1,232,316)$ (123,775)$ (51,769)

Assets under management (period end) . . $38,722,700 $42,234,800 $35,283,700 $46,722,200 $35,005,000

Private equity dollars invested . . . . . . . . . $ 6,661,698 $14,854,200 $ 3,168,800 $ 1,792,300 $ 18,000

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Three months ended March 31, 2009 Compared to Three months ended March 31, 2008

Fee Income

Fee income in KKR’s private markets segment was $127.8 million for the three months endedMarch 31, 2009, an increase of $11.2 million, or 9.6%, from the three months ended March 31, 2008.The increase was primarily due to a $25.0 million increase in management fees which was the net resultof (i) an increase of $22.2 million relating to the formation of the European III fund which beganearning fees in the second quarter of 2008; (ii) a decrease of $11.3 million in connection with themovement of the European II fund from the investment period to the post-investment period whichhas the effect of reducing the management fee rate; (iii) an increase of $13.8 million associated with areduction in accrued management fee refunds attributable to a decline in the performance of certain ofKKR’s private equity funds; and (iv) an increase of $7.3 million associated with a reduction in waivedmanagement fees attributable to a decline in investment activity at KKR’s private equity funds.Offsetting this net increase is a decrease in management fees of $7.0 million primarily attributable to adecrease in fees at KPE in connection with a decline in NAV as well as lower invested capital atcertain of KKR’s older private equity funds. In addition, monitoring fees increased $4.3 millionreflecting a lower level of credits earned by the limited partners under fee sharing arrangements inKKR’s traditional private equity funds. Offsetting these increases was a decrease in transaction fees of$10.2 million resulting from the absence of transaction fee-generating private equity investments duringthe first quarter of 2009 compared to two transaction fee-generating private equity investments duringthe first quarter of 2008 with a total transaction value of $3.5 billion. Additionally, fee income relatingto KKR’s capital markets business decreased $7.9 million as a result of a comparatively soft transactionenvironment in the first quarter of 2009.

Expenses

Expenses in KKR’s private markets segment were $83.7 million for the three months endedMarch 31, 2009, a decrease of $8.2 million, or 9.0%, from the three months ended March 31, 2008. Thedecrease was primarily due to a $4.0 million decrease in employee compensation and benefits resultingfrom a decrease in incentive compensation in connection with less favorable financial performancewhen compared to the prior period, partially offset by the hiring of additional personnel afterMarch 31, 2008 in connection with the expansion of KKR’s business. Additionally, fund expensesdecreased $5.3 million primarily as a result of a decrease in transaction related expenses attributable tounconsummated transactions during the period reflecting a lower level of transaction activity. Partiallyoffsetting these decreases were increases in occupancy and related charges reflecting the opening ofnew offices in Houston, Washington, D.C. and Mumbai subsequent to March 31, 2008 as well as anincrease in existing office space.

Fee Related Earnings

Due primarily to the increase in fee income described above, fee related earnings in KKR’s privatemarkets segment were $44.1 million for the three months ended March 31, 2009, an increase of$19.5 million, or 79.1%, from the three months ended March 31, 2008.

Investment Loss

Investment loss was $95.9 million for the three months ended March 31, 2009, a decrease of$52.4 million for the three months ended March 31, 2008. Investment loss was comprised of net losses

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from investment activities of $94.3 million, dividends of $0.2 million and net interest expense of$1.8 million. The following is a summary of the components of net loss from investment activities:

Three months endedMarch 31, March 31,

2009 2008($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 462 $ 38,658Unrealized Losses from Sales of Investments and Realization

of Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (349) (37,319)Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,317) —Unrealized Gains from Sales of Investments and Realization

of Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,298 —Unrealized Gains from Changes in Fair Value . . . . . . . . . . . 55,129 123,329Unrealized Losses from Changes in Fair Value . . . . . . . . . . . (149,553) (275,778)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (94,330) $(151,110)

The lower level of investment loss from the prior period of $56.8 million was primarily attributableto a decrease in net unrealized losses of $96.3 million resulting primarily from lower overall decreasesin the market value of KKR’s investment portfolio. These decreases were partially offset by realizationactivity that represented a net loss in the first quarter of 2009 of $0.8 million and a net gain in the firstquarter of 2008 of $38.7 million resulting in a net unfavorable variance in realization activity from theprior period of $39.5 million. Carried interest represented a loss of $(69) million and $(133) million oftotal investment loss for the three months ended March 31, 2009 and 2008, respectively. KKR’sallocated share of dividends decreased $1.0 million as a result of fewer dividends as well as a loweraverage dividend received during 2009. Net interest was represented by net interest expense of$1.8 million during the first quarter of 2009 as compared to net interest income of $1.6 million duringthe first quarter of 2008. This $3.4 million variance was due primarily to increased borrowings as wellas lower average cash balances.

Economic Net Loss

Economic net loss in KKR’s private markets segment was $51.8 million for the three months endedMarch 31, 2009, a decrease of $72 million compared to economic net loss of $123.8 million for thethree months ended March 31, 2008. The reduced investment loss described above was the maincontributor to the period over period decrease in economic net loss.

Assets Under Management

AUM in KKR’s private markets segment were $35.0 billion as of March 31, 2009, a decrease of$11.7 billion, or 25.1%, from March 31, 2008. The decrease was due primarily to $12.7 billion of netunrealized losses resulting from changes in the market values of KKR’s portfolio companies in KKR’sprivate markets segment and $0.4 billion of distributions from KKR’s traditional private equity fundscomprised of $0.3 billion of realized gains and $0.1 billion of original cost. These decreases were offsetby an increase in the capital commitments to the European Fund III of $0.9 billion and a $0.5 billionincrease associated with the formation of new KKR sponsored investment vehicles.

Private Equity Dollars Invested

Private equity dollars invested were $18 million for the three months ended March 31, 2009, adecrease of $1.8 billion, or 99.0%, from the three months ended March 31, 2008. The decrease was dueto a decrease in the number of private equity transactions closed during the first quarter of 2009. As of

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March 31, 2009, KKR’s traditional private equity funds had $14.8 billion of remaining unused capitalcommitments that could be called for investment in new private equity transactions.

Year ended December 31, 2008 Compared to Year ended December 31, 2007

Fee Income

Fee income in KKR’s private markets segment was $563.5 million for the year endedDecember 31, 2008, a decrease of $205.1 million, or 26.7%, from the year ended December 31, 2007.The decrease was primarily due to a decrease in transaction fees earned in KKR’s private marketssegment of $457.3 million resulting from a lower combined completed transaction value during theperiod. During the year ended December 31, 2008 KKR completed four transaction fee-generatingprivate equity investments with a total completed transaction value of $4.4 billion, compared to thirteentransaction fee-generating private equity investments with a total transaction value of $141.6 billionduring the year ended December 31, 2007. Offsetting these decreases was an increase in managementfees relating to KKR’s private equity funds of $194.5 million. The increase was primarily due to the netresult of (i) an increase of $100.6 million relating to the formation of the European III fund whichbegan earning fees in the second quarter of 2008 as well as a full year of fees in 2008 relating to theAsian Fund formed in mid-2007; (ii) a decrease of $21.3 million in connection with the movement ofthe European II fund from the investment period to the post-investment period which has the effect ofreducing the management fee rate; (iii) an increase of $59.3 million associated with a reduction inaccrued management fee refunds attributable to a decline in the performance of certain of KKR’sprivate equity funds; and (iv) an increase of $66.6 million associated with a reduction in waivedmanagement fees attributable to a decline in investment activity at KKR’s private equity funds.Offsetting this net increase is a decrease in management fees of $10.7 million primarily attributable toa decrease in fees at KPE in connection with a decline in NAV as well as lower invested capital atcertain of KKR’s older private equity funds. In addition, monitoring fees increased $39.5 million inKKR’s private markets segment reflecting an increase in the average monitoring fee received and feeincome relating to KKR’s capital markets activities increased $18.2 million as a result of the formationof KKR’s capital markets business in late 2007.

Expenses

Expenses in KKR’s private markets segment were $364.3 million for the year ended December 31,2008, a decrease of $32.9 million, or 8.3%, from the year ended December 31, 2007. The decrease wasprimarily due to a $50.7 million decrease in employee compensation and benefits resulting from adecrease in incentive compensation in connection with less favorable financial performance whencompared to the prior period, offset by increases relating to the hiring of additional personnel afterDecember 31, 2007 in connection with the expansion of KKR’s business. Additionally, Fund Expensesdecreased $23.2 million as a result of a decrease in transaction related expenses that were attributableto unconsummated transactions during the period. Offsetting these decreases were increases in generaland administrative expenses of $31.0 million primarily as a result of an increase in expenses at KKR’snewly formed capital markets business and an increase in professional fees reflecting the overall growthof KKR’s business. Additionally, occupancy and related charges increased $10.0 million reflecting theopening of new offices in Beijing, Sydney, Houston, and Washington, D.C. subsequent to December 31,2007, as well as an increase in existing office space.

Fee Related Earnings

Due primarily to the reduction in fee income described above, fee related earnings in KKR’sprivate markets segment were $199.2 million for the year ended December 31, 2008, a decrease of$172.2 million, or 46.4%, from the year ended December 31, 2007. The significant decrease in fee

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income, as described above, was the main contributor to the year over year decrease in fee relatedearnings.

Investment Income (Loss)

Investment losses were $1.4 billion for the year ended December 31, 2008, a decrease of$1.8 billion compared to investment income of $403.6 million for the year ended December 31, 2007.Investment income was comprised of net losses from investment activities of $1.4 billion, dividends of$18.7 million and net interest expense of $1.8 million. The following is a summary of the componentsof net gains from investment activities:

Year endedDecember 31, December 31,

2008 2007($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,396 $ 413,248Unrealized Losses from Sales of Investments and

Realization of Gains . . . . . . . . . . . . . . . . . . . . . . . . . . (76,952) (352,352)Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,571) (61,286)Unrealized Gains from Sales of Investments and

Realization of Losses . . . . . . . . . . . . . . . . . . . . . . . . . 4,121 54,051Unrealized Gains from Changes in Fair Value . . . . . . . . . 514,250 1,025,713Unrealized Losses from Changes in Fair Value . . . . . . . . (1,962,642) (852,826)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,448,398) $ 226,548

The overall decrease in net gains from investment activities compared to the prior period wasprimarily attributable to a net decrease in changes in unrealized gains (losses) of $1.4 billion resultingprimarily from net decreases in the market value of KKR’s investment portfolio and to a lesser extent adecline in net realized gains of $279.1 million resulting primarily from a lower level of sales activityduring the period. KKR’s allocated share of dividends decreased $144.0 million as a result of fewerdividends as well as a lower average dividend received during 2008 while net interest expense increased$16.3 million primarily as a result of increased borrowings as well as the amortization of deferredfinancing costs incurred in connection with credit agreements entered into in early 2008 at KKR’smanagement company and capital markets business. Carried interest represented $(1.2) billion of totalinvestment losses for the year ended December 31, 2008 and $0.3 billion of total investment income forthe year ended December 31, 2007.

Economic Net Income (Loss)

Economic net loss in KKR’s private markets segment was $1.2 billion for the year endedDecember 31, 2008, a decrease of $2.0 billion compared to economic net income of $0.8 billion for theyear ended December 31, 2007. The investment losses described above were the main contributors tothe period over period decrease in economic net income.

Assets Under Management

AUM in KKR’s private markets segment were $35.3 billion as of December 31, 2008, a decrease of$6.9 billion, or 16.4%, from December 31, 2007. The decrease was due primarily to $12.7 billion of netunrealized losses resulting from changes in the market values of KKR’s portfolio companies in itsprivate markets segment and $0.6 billion of distributions from its traditional private equity fundscomprised of $0.5 billion of realized gains and $0.1 billion of original cost. Offsetting these decreaseswere increases associated with the formation of the European Fund III, which received $6.4 billion ofcapital commitments from fund investors during the year ended December 31, 2008

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Private Equity Dollars Invested

Private equity dollars invested were $3.2 billion for the year ended December 31, 2008, a decreaseof $11.7 billion, or 78.5%, from the year ended December 31, 2007. The decrease was due primarily toa decrease in the number of private equity transactions closed during the year ended December 31,2008. As of December 31, 2008, KKR’s traditional private equity funds had $14.9 billion of remainingunused capital commitments that could be called for investment in new private equity transactions.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Fee Income

Fee income in KKR’s private markets segment was $768.7 million for the year endedDecember 31, 2007, an increase of $414.4 million, or 116.9%, from the year ended December 31, 2006.The increase was primarily due to a $335.7 million increase in transaction fees earned in KKR’s privatemarkets segment, which was attributable to a significant increase in the total value of private equitytransactions completed during 2007 relative to 2006. During 2007, KKR completed 13 transactionfee-generating private equity investments with a total combined value of $141.6 billion, compared to 11transaction-fee generating private equity investments during 2006 with a total transaction value of$104.8 billion. A number of the transactions completed during 2007 entitled KKR to share a greaterproportion of the overall transaction fees compared to the prior year. In addition, management feesrelating to KKR’s traditional private equity funds increased $28.2 million as a result of the formation ofthe Asian Fund during 2007 as well as a full year of fees for the 2006 Fund, which was formed duringthe third quarter of 2006. Management fees relating to KPE increased $21.9 million as a result of itsformation during the second quarter of 2006. The remainder of the overall increase in fee incomeresulted from an increase in monitoring fees reflecting an increase in the number of portfoliocompanies paying monitoring fees as well as an increase in the average monitoring fee received.

Expenses

Expenses in KKR’s private markets segment were $397.2 million for the year ended December 31,2007, an increase of $182.9 million, or 85.3%, from the year ended December 31, 2006. The increasewas primarily due to a $94.6 million increase in employee compensation and benefits resulting fromadditional personnel hired in connection with the continued expansion of KKR’s business as well ashigher incentive compensation reflecting its improved financial performance during 2007. In addition,general, administrative and other expenses increased $41.2 million resulting from the growth of KKR’sbusiness, and included increases in professional fees, travel and entertainment expenses and to a lesserextent the opening of KKR’s Tokyo office. Fund expenses increased $41.7 million as a result of a$20.8 million increase in expenses incurred in connection with the organization of newly formed fundsand the placement of limited partner interests in such funds as well as an increase in transactionrelated expenses of $12.6 million that were attributable to unconsummated transactions during theperiod. Total transaction related expenses attributable to unconsummated transactions amounted to$40.7 million and $28.1 million for the years ended December 31, 2007 and 2006, respectively.

Fee Related Earnings

Fee related earnings in KKR’s private markets segment were $371.4 million for the year endedDecember 31, 2007, an increase of $231.4 million, or 165.3%, from the year ended December 31, 2006.The significant increase in fee income, as described above, was the main contributor to the year overyear increase in fee related earnings.

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Investment Income

Investment income was $403.6 million for the year ended December 31, 2007, a decrease of$525.9 million, or 56.6%, from the year ended December 31, 2006. Investment income in theDecember 31, 2007 period was comprised of net gains from investment activities of $226.5 million,dividends of $162.6 million and net interest income of approximately $14.5 million. The following is asummary of the components of net gains from investment activities:

Year EndedDecember 31, December 31,

2007 2006($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 413,248 $ 764,001Unrealized Losses from Sales of Investments and

Realization of Gains . . . . . . . . . . . . . . . . . . . . . . . . . . (352,352) (616,317)Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61,286) (20,119)Unrealized Gains from Sales of Investments and

Realization of Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 54,051 30,781Unrealized Gains from Changes in Fair Value . . . . . . . . . 1,025,713 812,535Unrealized Losses from Changes in Fair Value . . . . . . . . . (852,826) (185,592)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 226,548 $ 785,289

The overall decrease in net gains from investment activities from the prior period was primarilyattributable to a decline in net realized gains of $391.9 million resulting primarily from a lower level ofsales activity during the year as well as a net decrease in changes in unrealized gains (losses) of$166.8 million resulting from smaller net increases in the fair value of KKR’s investment portfolio.KKR’s allocated share of dividends increased $13.2 million as a result of higher average dividendsreceived during 2007. Net interest income increased $19.7 million as a result of higher average cashbalances at KKR’s management company during 2007 as well as a lower level of borrowing by thegeneral partners of KKR’s traditional private equity funds. Carried interest represented $306 millionand $719 million of total investment income for the year ended December 31, 2007 and 2006,respectively.

Economic Net Income

Economic net income in KKR’s private markets segment was $775.0 million for the year endedDecember 31, 2007, a decrease of $294.6 million, or 27.5%, from the year ended December 31, 2006.The decrease in investment income, as described above, was the main contributor to the year over yeardecrease in economic net income.

Assets Under Management

KKR’s AUM were $42.2 billion as of December 31, 2007, an increase of $3.5 billion, or 9.0%, fromDecember 31, 2006. The increase was due primarily to the formation of the Asian Fund, which received$4.0 billion of capital commitments from fund investors during 2007, an increase in the capitalcommitments to the 2006 Fund of $1.5 billion during 2007 (bringing total capital commitments in the2006 Fund to $17.6 billion as of December 31, 2007), a $1.4 billion increase associated with theformation of carry-yielding co-investment vehicles and KKR’s principal protected private equity productand $0.9 billion of net unrealized gains resulting from changes in the market values of KKR’s portfoliocompanies in its private markets segment. These increases offset $4.3 billion of distributions fromKKR’s traditional private equity funds comprised of $2.6 billion of realized gains and $1.7 billion oforiginal cost.

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Private Equity Dollars Invested

Private equity dollars invested were $14.9 billion for the year ended December 31, 2007, anincrease of $8.2 billion, or 122.4%, from the year ended December 31, 2006. The increase reflected anincrease in the number of the companies that KKR acquired, as well as an increase in the averagetransaction size. As of December 31, 2007, KKR’s traditional private equity funds had $11.5 billion ofremaining unused capital commitments that could be called for investment in new private equitytransactions.

Public Markets Segment

The following tables set forth information regarding the results of operations and certain keyoperating metrics for KKR’s public markets segment for the years ended December 31, 2006, 2007 and2008 and the three months ended March 31, 2008 and 2009.

Three months endedYear Ended December 31, March 31,

2006 2007 2008 2008 2009($ in thousands) ($ in thousands)

Fee incomeManagement fees . . . . . . . . . . . . . . . $ 55,994 $ 68,194 $ 62,030 $ 16,127 $ 11,928Advisory fees . . . . . . . . . . . . . . . . . . . 9,119 11,421 14,038 3,333 —Incentive fees . . . . . . . . . . . . . . . . . . 15,613 23,335 — — —

Total fee income . . . . . . . . . . . . . . $ 80,726 $ 102,950 $ 76,068 $ 19,460 $ 11,928

ExpensesEmployee compensation and benefits . 18,662 24,507 12,375 4,651 6,126Other operating expenses . . . . . . . . . . 12,193 16,349 20,238 4,154 6,121

Total expenses . . . . . . . . . . . . . . . . 30,855 40,856 32,613 8,805 12,247Fee related earnings (deficit) . . . . . . . . . 49,871 62,094 43,455 10,655 (319)Investment income (loss) . . . . . . . . . . . . 10,103 984 (192) (85) (17)Income (Loss) before taxes . . . . . . . . . . 59,974 63,078 43,263 10,570 (336)Income attributable to noncontrolling

interests(1) . . . . . . . . . . . . . . . . . . . . 25,428 23,264 6,421 3,805 —Economic net income (loss) . . . . . . . . . . $ 34,546 $ 39,814 $ 36,842 $ 6,765 $ (336)

Assets under management (period end) . $5,150,700 $10,980,900 $13,167,000 $10,992,600 $12,335,000

(1) Noncontrolling interests represents the minority interests that other members held in themanagement company for KKR’s credit strategy funds prior to May 30, 2008. On May 30, 2008,KKR entered into an agreement to purchase the remaining outstanding interests in KFI, whichhad previously been included within noncontrolling interests in the accompanying combinedfinancial statements. The KFI Transaction was completed upon the execution of such agreement.As a result of the KFI Transaction, KKR owns all of the equity interests in the parent of themanagement companies for KKR’s public markets funds and are entitled to all of the net incomeand cash flows generated by the management companies.

Three months ended March 31, 2009 Compared to Three months ended March 31, 2008

Fee Income

Fee income in KKR’s public markets segment was $11.9 million for the three months endedMarch 31, 2009, a decrease of $7.5 million, or 38.7%, from the three months ended March 31, 2008.

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This decrease was primarily due to the unfavorable financial performance of certain fixed income fundsresulting from adverse credit market conditions as well as reduced base management fee rates for allinvestor classes for the KKR Strategic Capital Funds. These adverse conditions resulted in increases innet realized and unrealized losses on investments, derivatives and foreign exchange at certain fixedincome funds consistent with those experienced in the broader credit markets. Additionally, share basedmanagement fees decreased by $2 million as a result of declines in KFN’s share price.

Expenses

Expenses in KKR’s public markets segment were $12.2 million for the three months endedMarch 31, 2009, an increase of $3.4 million, or 39.1%, from the three months ended March 31, 2008.This increase was driven by an increase in employee compensation and benefits expense ofapproximately $1.5 million as a result of an increase in stock-based compensation costs and theadoption by the public markets segment of the KKR’s broader profit sharing plan. Additionally, generaland administrative expenses and occupancy related costs increased approximately $1.9 million reflectingthe overall growth of the public markets segment.

Fee Related Earnings (Deficit)

Due primarily to the reduction in fee income described above, KKR’s public markets segment hada fee related deficit of $0.3 million for the three months ended March 31, 2009 compared to feerelated earnings of $10.7 million for the three months ended March 31, 2008.

Economic Net Loss

Due primarily to the reduction in fee income described above, KKR’s public markets segment hadan economic net loss of $0.3 million for the three months ended March 31, 2009 compared toeconomic net income of $6.8 million for the three months ended March 31, 2008.

Assets Under Management

AUM in KKR’s public markets segment was $12.3 billion as of March 31, 2009, an increase of$1.3 billion, or 12.2%, from March 31, 2008. The increase was due primarily to a $2.4 billion increaseassociated with capital managed on behalf of third party investors. This increase was partially offset bya decrease of $1.1 billion in capital relating to the unfavorable financial performance of certain fixedincome funds that KKR manages.

Year ended December 31, 2008 Compared to Year ended December 31, 2007

Fee Income

Fee income in KKR’s public markets segment was $76.1 million for the year ended December 31,2008, a decrease of $26.9 million, or 26.1%, from the year ended December 31, 2007. This decreasewas primarily due to the absence of incentive fees from certain fixed income funds in 2008 due tocertain fixed income funds’ unfavorable financial performance. For the year ended December 31, 2007,KFN and SCF Incentive Fee Income were $17.5 million and $5.8 million, respectively. Additionally,share based management fees decreased by $12.3 million as a result of declines in KFN’s share price.These decreases were partially offset by an increase in base management fees of $4.2 million due to anincrease in assets under management, relating to one fixed income fund and certain structured financevehicles that KKR manage as well as a $4.5 million increase associated with capital managed on behalfof third party investors.

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Expenses

Expenses in KKR’s public markets segment were $32.6 million for the year ended December 31,2008, a decrease of $8.2 million, or 20.2%, from the year ended December 31, 2007. This decrease wasdriven by a decrease in employee compensation and benefits expense of $12.1 million as a result oflower incentive compensation driven by less favorable performance when compared to the prior period.Partially offsetting this decrease were increases in general and administrative expenses of $3.4 millionand occupancy expenses of $0.5 million resulting from the overall growth in the public marketssegment.

Fee Related Earnings

Fee related earnings in KKR’s public markets segment were $43.5 million for the year endedDecember 31, 2008, a decrease of $18.6 million, or 30.0%, from the year ended December 31, 2007.The decrease in fee income, as described above, was the main contributor to the year over yeardecrease in fee related earnings.

Investment Income (Losses)

Investment losses were $0.2 million for the year ended December 31, 2008, a decrease of$1.2 million compared to investment income of $1.0 million for the year ended December 31, 2007.This decrease was primarily driven by a decrease in dividend income due to the majority of KFNoptions and shares held by KKR’s public markets segment being distributed during the third quarter of2007.

Income Attributable to Noncontrolling Interests

Income attributable to noncontrolling interests was $6.4 million for the year ended December 31,2008, a decrease of $16.8 million, or 72.4%, from the year ended December 31, 2007. The decreasereflects a lower level of fee related earnings in the current period as well as the purchase of thenoncontrolling interests in KFI on May 30, 2008.

Economic Net Income

Due primarily to the reduction in fee income described above, offset by the purchase ofnoncontrolling interests in KFI on May 30, 2008, economic net income in KKR’s public marketssegment was $36.8 million for the year ended December 31, 2008, a decrease of $3.0 million, or 7.5%,from the year ended December 31, 2007.

Assets Under Management

AUM in KKR’s public markets segment was $13.2 billion as of December 31, 2008, an increase of$2.2 billion, or 20.0%, from December 31, 2007. The increase was due primarily to a $4.0 billionincrease associated with capital managed on behalf of third party investors offset by a $1.8 billiondecrease in the capital relating to one fixed income fund and certain structured finance vehicles thatKKR manages.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Fee Income

Fee income in KKR’s public markets segment was $103.0 million for the year ended December 31,2007, an increase of $22.2 million, or 27.6%, from the year ended December 31, 2006. This increasewas primarily due to the formation of certain fixed income funds managed by KKR during the fourthquarter of 2006, which resulted in incremental management fees of $21.0 million. Additionally,

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incentive fees from KFN increased by $9.7 million due to KFN’s improved performance for themajority of the quarters in 2007 compared to the corresponding quarters in 2006. Offsetting theseincreases was a decrease in management fees received from KFN of $8.5 million resulting from areduction in the amount of share-based management fees earned, which was driven by declines inKFN’s share price.

Expenses

Expenses in KKR’s public markets segment were $40.9 million for the year ended December 31,2007, an increase of $10.0 million, or 32.4%, from the year ended December 31, 2006. The increasewas primarily due to an increase in employee compensation and benefits of $5.8 million, which wasattributable to an increase in the amount of incentive compensation paid to existing personnelcorresponding to increased incentive fees earned, and, to a lesser extent, the hiring of additionalpersonnel to support the growth of KKR’s public markets segment since December 31, 2006.Additionally, general, administrative, and other expenses increased $4.2 million primarily from theformation of certain fixed income funds managed by KKR during the fourth quarter of 2006.

Fee Related Earnings

Fee related earnings in KKR’s public markets segment were $62.1 million for the year endedDecember 31, 2007, an increase of $12.2 million, or 24.4%, from the year ended December 31, 2006.The significant increase in fee income, as described above, was the main contributor to the year overyear increase in fee related earnings.

Investment Income

Investment income was $1.0 million for the year ended December 31, 2007, a decrease of$9.1 million, or 90.1%, from the year ended December 31, 2006. The decrease was due primarily todepreciation in the fair value of vested KFN options and shares of $6.9 million that KKR received formanagement services to that fund. In addition, the majority of the KFN options and shares held byKKR’s public markets segment were distributed during the second quarter of 2007 and, as a result,dividend income from KFN shares decreased by $2.2 million.

Income Attributable to Noncontrolling Interests

Income attributable to noncontrolling interests was $23.3 million for the year ended December 31,2007, a decrease of $2.2 million, or 8.6%, from the year ended December 31, 2006. While incomeincreased overall from the prior period, the holders of the noncontrolling interests were entitled to alower allocable sharing of earnings from the public markets segment.

Economic Net Income

Due to the factors described above, economic net income in KKR’s public markets segment was$39.8 million for the year ended December 31, 2007, an increase of $5.3 million, or 15.4%, from theyear ended December 31, 2006.

Assets Under Management

AUM in KKR’s public markets segment were $11.0 billion as of December 31, 2007, an increase of$5.8 billion, or 111.5%, from December 31, 2006. The increase was primarily due to $5.0 billion ofadditional capital raised by structured finance vehicles and additional capital contributions of$0.8 billion received in the KKR Strategic Capital Funds.

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Liquidity and Capital Resources

Historical Liquidity and Capital Resources

KKR requires capital to fund investments, grow its business and support its working capitalrequirements. Historically, KKR has funded investments using the capital resources of its existingowners, capital committed by its fund investors and indebtedness incurred by its funds and its portfoliocompanies. KKR generally has used the capital resources of its existing owners, accumulated netincome from its business activities or short-term borrowings to fund its working capital requirementsand to support its new business and growth initiatives.

KKR has managed its historical liquidity and capital requirements by focusing on its cash flowsbefore the consolidation of its funds and the effect of normal changes in assets and liabilities, whichKKR anticipates will be settled for cash within one year. KKR’s primary cash flow activities on adeconsolidated basis involve: (i) generating cash flow from operations; (ii) funding capital commitmentsthat KKR makes to its funds as general partners (which amounts are eliminated when KKR consolidatefunds); (iii) generating income from investment activities; (iv) funding its growth initiatives; and(v) distributing cash flow to its owners. Normal movements in KKR’s short-term assets and liabilities donot affect its distribution decisions given its current and historically available borrowing capability.

The accompanying combined statements of cash flows, however, include the cash flows of itsconsolidated funds despite the fact that KKR has only a minority economic interest in those funds. Theassets of consolidated funds, on a gross basis, are substantially larger than the assets of its business and,accordingly, have a substantial effect on the cash flows reflected in KKR’s combined statements of cashflows. The primary cash flow activities of KKR’s consolidated funds involve: (i) raising capital fromfund investors; (ii) using the capital of fund investors to make investments; (iii) financing certaininvestments with indebtedness; (iv) generating cash flows through the realization of investments; and(v) distributing cash flows from the realization of investments to fund investors. Because KKR’sconsolidated funds are treated as investment companies for accounting purposes, these cash flowamounts are included in its cash flows from operations.

Three months ended March 31, 2009 and 2008

Net Cash Used in Operating Activities

KKR’s net cash used in operating activities was $0.2 billion and $1.3 billion during the threemonths ended March 31, 2009 and 2008, respectively. These amounts primarily included: (i) purchasesof investments by KKR’s consolidated funds, net of proceeds from sales of investments, of $9.2 millionand $(1.2) billion during the three months ended March 31, 2009 and 2008, respectively; (ii) netrealized (losses) gains on investments of the consolidated funds of $(96.5) million and $162.3 millionduring the three months ended March 31, 2009 and 2008, respectively; (iii) change in unrealized losseson investments allocable to KKR Group and noncontrolling interests of $0.6 billion and $0.9 billion forthe three months ended March 31, 2009 and 2008, respectively; and (iv) loss attributable tononcontrolling interests of $0.7 billion and $0.7 billion during the three months ended March 31, 2009and 2008, respectively. These amounts are reflected as operating activities in accordance withinvestment company accounting.

Net Cash Provided By (Used) in Investing Activities

KKR’s net cash provided by (used) in investing activities was $33.5 million and $(33.2) millionduring the three months ended March 31, 2009 and 2008, respectively. KKR’s investing activitiesincluded the purchases of furniture, equipment and leasehold improvements of $3.9 million and$6.3 million, as well as a reduction (increase) in restricted cash and cash equivalents of $37.4 millionand $(26.9) million for the three months ended March 31, 2009 and 2008, respectively.

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Net Cash Provided by Financing Activities

KKR’s net cash provided by financing activities was $0.2 billion, and $1.2 billion during the threemonths ended March 31, 2009 and 2008, respectively. KKR’s financing activities primarily included:(i) contributions made by, net of distributions made to, the investors of its consolidated funds, reflectedin its historical combined financial statements as noncontrolling interests, of $0.2 billion and $1.6 billionduring the three months ended March 31, 2009 and 2008, respectively; (ii) repayment of debtobligations net of proceeds received of $18.0 million and $(0.3) billion for the three months endedMarch 31, 2009 and 2008, respectively; and (iii) distributions to, net of contributions by, its equityholders of $0.1 billion and $0.1 billion during the three months ended March 31, 2009 and 2008,respectively.

Years Ended December 31, 2008, 2007 and 2006

Net Cash Used in Operating Activities

KKR’s net cash used in operating activities was $2.4 billion, $8.5 billion and $5.5 billion during theyears ended December 31, 2008, 2007 and 2006, respectively. These amounts primarily included:(i) purchases of investments by KKR’s consolidated funds, net of proceeds from sales of investments, of$1.9 billion, $11.8 billion and $4.4 billion during the years ended December 31, 2008, 2007, and 2006,respectively; (ii) net realized gains on investments of the consolidated funds of $0.3 billion, $1.6 billionand $3.2 billion during the years ended December 31, 2008, 2007 and 2006, respectively; (iii) change inunrealized losses on investments allocable to KKR Group and noncontrolling interests of $13.2 billion,$0.4 billion and $0.1 billion for the years ended December 31, 2008, 2007 and 2006, respectively; and(iv) (loss) gain attributable to noncontrolling interests of $(11.9) billion, $1.6 billion and $3.0 billionduring the years ended December 31, 2008, 2007 and 2006, respectively. These amounts are reflected asoperating activities in accordance with investment company accounting.

Net Cash Used in Investing Activities

KKR’s net cash used in investing activities was $61.7 million, $112.5 million and $130.1 millionduring the years ended December 31, 2008, 2007 and 2006, respectively. KKR’s investing activitiesincluded the purchases of furniture, fixtures, equipment and leasehold improvements of $13.1 million,$17.1 million and $21.8 million, as well as a reduction in restricted cash and cash equivalents of$4.5 million, $95.4 million and $108.3 million for the years ended December 31, 2008, 2007 and 2006,respectively. In addition, during the second quarter of 2008, KKR purchased all outstandingnoncontrolling interests in KFI for $44.2 million and now own 100% of the entity.

Net Cash Provided by Financing Activities

KKR’s net cash provided by financing activities was $2.4 billion, $8.8 billion, and $5.7 billion duringthe years ended December 31, 2008, 2007, and 2006, respectively. KKR’s financing activities primarilyincluded: (i) contributions made by, net of distributions made to, the investors in KKR’s consolidatedfunds, reflected in its historical combined financial statements as noncontrolling interests, of$2.8 billion, $7.1 billion and $5.8 billion during the years ended December 31, 2008, 2007 and 2006,respectively; (ii) repayment of debt obligations net of proceeds received of $(0.2) billion, $2.6 billion,and $0.7 billion for the years ended December 31, 2008, 2007 and 2006, respectively; and(iii) distributions to, net of contributions by, KKR’s equity holders of $0.1 billion, $0.9 billion and$0.8 billion during the years ended December 31, 2008, 2007 and 2006, respectively.

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Future Sources of Cash and Liquidity Needs

Liquidity Needs

KKR expects that its primary liquidity needs will consist of cash required to: (i) continue to growits business, including funding capital commitments made to existing and future funds and any netcapital requirements of its capital markets companies, (ii) service debt obligations, includingindebtedness acquired in connection with the Combination Transaction, (iii) fund cash operatingexpenses, (iv) pay amounts that may become due under its tax receivable agreement with KKRHoldings; and (v) make cash distributions in accordance with KKR’s distribution policy. See‘‘Distribution Policy.’’ KKR may also require cash to fund contingent obligations under clawback andnet-loss sharing arrangements. See ‘‘KKR Management’s Discussion and Analysis of FinancialCondition and Results of Operations—Contractual Obligations, Commitments and Contingencies’’.KKR believes that the sources of liquidity described below will be sufficient to fund its working capitalrequirements for the next 12 months.

As described under ‘‘Business,’’ the agreements governing KKR’s traditional private equity fundsgenerally require the general partners of the funds to make minimum capital commitments to thefunds, which usually range from 2% to 4% of a fund’s total capital commitments at final closing. Thefollowing table presents KKR’s unfunded general partner capital commitments to its traditional privateequity funds as of March 31, 2009:

Original UnfundedPrivate Equity Funds Commitment Commitment

($ in thousands)2006 Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $375,000 $107,962Asian Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 76,820European Fund III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,600 284,980Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $768,600 $469,762

In connection with the Combination Transaction, KKR will acquire the KPE InvestmentPartnership, which has directly or indirectly made additional capital commitments to certain of itsconsolidated funds. As of March 31, 2009, approximately $958 million of these capital commitmentsremained unfunded.

Historically KKR has funded capital commitments with cash from operations that otherwise wouldbe distributed to its owners. Following the completion of the Transactions, KKR expects to fund anycapital contributions that the general partners are required to make to a fund with future operatingcash flows and other sources of liquidity available to us.

In connection with the Transactions, KPE will enter into an exchange agreement with GroupHoldings and KKR Holdings pursuant to which Group Holdings, KKR Holdings and certaintransferees of their respective KKR Group Partnership Units effectively may, up to four times eachyear, exchange KKR Group Partnership Units held by them for KPE units on a one-for-one basis,subject to customary conversion rate adjustments for splits, unit distributions and reclassifications andcompliance with applicable lock-up, vesting and transfer restrictions. At KPE’s election, it may settlemost types of exchanges of KKR Group Partnership Units with cash in an amount equal to the fairmarket value of the KPE units that would otherwise be deliverable in such exchanges. In addition, KPEand KKR Holdings will enter into a tax receivable agreement requiring KPE’s intermediate holdingcompany to pay to KKR Holdings, KPE or transferees of their KKR Group Partnership Units 85% ofthe amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediateholding company actually realizes (or is deemed to realize, in the case of an early termination paymentby KPE’s intermediate holding company or a change of control) as a result of this increase in tax basis,as well as 85% of the amount of any such savings the intermediate holding company actually realizes

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(or is deemed to realize) as a result of increases in tax basis that arise due to future payments underthe agreement. See ‘‘Certain Relationships and Related Party Combination Transaction—Tax ReceivableAgreement.’’

While the actual increase in tax basis and amount and timing of any payments under the taxreceivable agreement will vary depending upon a number of factors, including the timing of exchanges,the price of KPE units at the time of the exchange, the extent to which such exchanges are taxable andthe amount and timing of taxable income, KKR expects that as a result of the size of the increases inthe tax basis of the tangible and intangible assets of the KKR Group Partnerships, the payments thatmay be required to make could be substantial. KKR does not currently anticipate that these paymentswill impact its liquidity needs, as they generally will be made only to the extent that the intermediateholding company actually realizes cash savings as exchanges of KKR Group Partnership Units byKKR’s principals. However, the intermediate holding company’s obligations under the tax receivableagreement would be effectively accelerated upon the occurrence of an early termination of the taxreceivable agreement by the intermediate holding company or certain mergers, asset sales and otherforms of business combinations or other changes of control. In these situations, the obligations underthe tax receivable agreement could have a substantial negative impact on KKR’s liquidity. In the eventthat other of KKR’s current or future subsidiaries become taxable as corporations and acquire KKRGroup Partnership Units in the future, or if the Group Holdings or its subsidiaries become taxable as acorporation, for U.S. federal income tax purposes, each will become subject to a tax receivableagreement with substantially similar terms.

KKR intends to make quarterly cash distributions to holders of its interests in amounts that in theaggregate are expected to constitute substantially all of the cash earnings of its asset managementbusiness each year in excess of amounts determined by the KKR Managing Partner to be necessary orappropriate to provide for the conduct of its business, to make appropriate investments in its businessand its funds, to comply with applicable law and any of its debt instruments or other agreements. See‘‘Distribution Policy.’’ KKR’s distribution policy reflects its belief that distributing substantially all of thecash earnings of its asset management business will provide transparency for holders of its interests andimpose on KKR an investment discipline with respect to the businesses and strategies that it pursues.Because KKR will not know what the cash earnings of its asset management business will be for anyyear until the end of such year, KKR expects that its first three quarterly distributions in respect of anygiven year will generally be smaller than the final quarterly distribution in respect of such year.Assuming the effective date of the Combination Transaction is October 1, 2009, KKR expects that itsfirst quarterly distribution will be paid in the first quarter of 2010 in respect of the period fromOctober 1, 2009 through December 31, 2009.

Sources of Cash

Following the Transactions, KKR’s principal source of cash will consist of cash and cash equivalentscontributed to the KKR Group Partnerships as part of the Combination Transaction. KKR will alsoreceive cash from time to time from: (i) its operating activities, including the management, advisory andincentive fees earned from all of its funds, managed accounts, portfolio companies, capital marketstransactions and other investment products; (ii) realizations on carried interest and assets in its capitalmarkets and principal segment; (iii) realized returns that are generated on investments that are madewith capital invested by or on behalf of the general partners of its funds following the Transactions; and(iv) borrowings under the credit facilities described below.

KKR has access to funding under various credit facilities that it has entered into in connectionwith major financial institutions. Following the completion of the Transactions, KKR will also have

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borrowing availability under a credit facility that KPE has entered into with a syndicate of lenders. Thefollowing is a summary of the principal terms of these facilities:

• In February 2008, the management company for KKR’s private equity funds entered into acredit agreement with a major financial institution providing for revolving borrowings of up to$1 billion with a $50 million sublimit for swingline notes and a $25 million sublimit for letters ofcredit. This facility has a term of three years that expires on February 2011, which may beextended through February 2013, at the option of KKR. As of March 31, 2009, $100 million wasoutstanding under this facility and the interest rate on such borrowings was approximately 1.0%as of March 31, 2009.

• In February 2008, the management company for KKR’s private equity funds renewed its$25 million line of credit with a major financial institution. The facility expired in February 2009and was not renewed. As of March 31, 2009, $25 million was outstanding and the interest rateon such borrowings was approximately 3.3%. During April 2009, the amount outstanding wasrepaid.

• In February 2008, the holding company for KKR’s capital markets business entered into a creditagreement with a major financial institution. The credit agreement provides for revolvingborrowings of up to $700 million with a $500 million sublimit for letters of credit. This facilityhas a term of five years. There was $14 million outstanding under this agreement as ofMarch 31, 2009. As of March 31, 2009, the interest rate on borrowings under this agreement was2.1%. In March 2009, the agreement was amended to reduce the amounts available on revolvingborrowings from $700 million to $500 million.

• In June 2007, the KPE Investment Partnership entered into a credit agreement with a syndicateof lenders. The credit agreement provides for up to $1.0 billion of senior secured credit, subjectto availability under a borrowing base determined by the value of certain investments pledged ascollateral security for obligations under the agreement. The facility has a term of five years. Theborrowing base is subject to certain investment concentration limitations and the value of theinvestments constituting the borrowing base is subject to certain advance rates based on type ofinvestment. In October 2008, Lehman Commercial Paper Inc., an original lender under thecredit agreement with an initial $75.0 million commitment, filed for bankruptcy and wasresponsible for funding an additional $45.6 million in commitments as of March 31, 2009. Dueto Lehman’s bankruptcy, KPE believes that Lehman will not fund any part of its remainingcommitments. Therefore, the remaining availability under the Credit Agreement has effectivelybeen reduced from $73.8 million absent Lehman’s bankruptcy to $28.2 million in unfundedcommitments as of March 31, 2009, or from $1.0 billion to $925.0 million in total commitments,unless Lehman’s commitments are assigned to another existing or new lender. There can be noassurance that any lender will assume any part of Lehman’s commitment under the creditagreement. As of March 31, 2009, borrowings outstanding under this credit agreement amountedto $926.2 million.

From time to time, KKR may borrow amounts to satisfy general short-term needs of the businessby opening short-term lines of credit with established financial institutions. These amounts are generallyrepaid within 30 days, at which time such short-term lines of credit would close. As of March 31, 2009,there was $40.2 million outstanding under such lines of credit.

In addition, certain of KKR’s consolidated funds, including the KPE Investment Partnership, haveentered into financing arrangements in connection with specific investments with the objective ofenhancing returns. Such financing arrangements include $1,146.4 million of financing provided throughtotal return swaps and $168.5 million of financing provided through a term loan and revolving creditfacility. The debt outstanding at our consolidated funds has been entered into with the objective of

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enhancing returns, and is not a direct obligation of the general partners of KKR’s private equity fundsor its management companies.

Contractual Obligations, Commitments and Contingencies

In the ordinary course of business, KKR and its consolidated funds enter into contractualarrangements that may require future cash payments. The following table sets forth informationrelating to the anticipated future cash payments that were associated with those contractual obligationsas of March 31, 2009.

Payments due by PeriodType of Contractual Obligations <1 Year 1 to 3 Years 3 to 5 Years >5 Years Total

($ in millions)Before Consolidation of Funds:Capital commitments to traditional private

equity funds(1) . . . . . . . . . . . . . . . . . . . . . . . $469.8 $ — $ — $ — $ 469.8Debt payment obligations . . . . . . . . . . . . . . . . . 25.0 100.0 14.0 — 139.0Interest obligations on debt . . . . . . . . . . . . . . . 1.0 1.8 0.3 — 3.1Lease obligations . . . . . . . . . . . . . . . . . . . . . . . 29.0 51.4 41.8 105.8 228.0Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $524.8 $153.2 $ 56.1 $ 105.8 $ 839.9After Consolidation of Funds:Equity commitments(2) . . . . . . . . . . . . . . . . . . $ — $ — $ — $ — $ —Debt payment obligations(3) . . . . . . . . . . . . . . . 65.2 100.0 1,286.6 968.5 2,420.3Interest obligations on debt(3) . . . . . . . . . . . . . 66.6 174.4 133.7 59.8 434.5Lease obligations . . . . . . . . . . . . . . . . . . . . . . . 29.0 51.4 41.8 105.8 228.0Total(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $160.8 $325.8 $1,462.1 $1,134.1 $3,082.8

(1) These capital commitments represent commitments by the general partners of KKR’s traditionalprivate equity funds to contribute capital to fund a portion of the purchase price paid for eachportfolio company investment made by the fund. Following the completion of the CombinationTransaction, such amounts will also include capital commitments that have directly or indirectlybeen made by the KPE Investment Partnership to certain of KKR’s consolidated funds. As ofMarch 31, 2009, approximately $957.9 million of KPE’s capital commitments remained unfunded.Because capital contributions are due on demand, the above commitments have been presented asfalling due within one year. However, given the size of such commitments and the rates at whichKKR’s funds make investments, KKR expects that the capital commitments presented above willbe called over a period of several years, if not longer. See ‘‘—Liquidity and Capital Resources—Future Sources of Cash and Liquidity Needs—Liquidity Needs.’’

(2) These equity commitments represent contractual commitments entered into by KKR’s privateequity funds to fund a portion of the purchase price of unconsummated portfolio companyinvestments. KKR’s funds pay amounts due with respect to these commitments using capitalcontributed by fund investors and capital provided by the firm and, in the case of KKR’s largertransactions, with amounts funded by third-party co-investors. Capital that has been committed tofund these investments amounted to $14.8 billion consisting of $13.4 billion from fund investors,$469.8 million from the general partners of KKR’s traditional private equity funds and$957.9 million from the KPE Investment Partnership. Under the terms of certain financearrangements at KKR’s consolidated funds, the KKR’s Funds may be required to use a portion ofthese capital commitments to provide additional collateral up to the amount borrowed, plusaccrued interest, upon the occurrence of certain events, including an event based on the value ofthe collateral and events of default. As a result of a decline in collateral value, certain fundsprovided additional collateral in the amount of $16.7 million as of March 31, 2009.

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(3) These interest obligations on debt include interest to be paid over the maturity of the related debtobligation, which has been calculated assuming no prepayments are made and the related debt isheld until its final maturity date. Future interest rates have been calculated using rates in effect asof March 31, 2009, including both variable and fixed rates provided for by the relevant debtagreements. The amounts presented above include interest on outstanding indebtedness of:(i) $139.0 million under revolving credit facilities at KKR’s management companies and capitalmarkets business, (ii) $40.2 million entered into under short-term lines of credit,(iii) $926.2 million under a revolving credit facility at the KPE Investment Partnership,(iv) $964.9 million of indebtedness to leverage specific investments at KKR’s traditional privateequity funds and (v) $350.0 million of indebtedness to leverage specific investments at the KPEInvestment Partnership. Debt incurred to leverage a fund’s investments is entered into with theobjective of enhancing returns and is not a direct obligation of the general partners of KKR’sprivate equity funds or KKR’s management companies. Such debt relates principally to investmentsin Sun Microsystems, Yageo Corporation, Harman International Industries, Incorporated and LeggMason, Inc. The outstanding indebtedness of the KPE Investment Partnership will be acquired byKKR in connection the Combination Transaction.

(4) The contractual obligations table does not give effect to the potential obligations described under‘‘—Contractual Obligations, Commitments and Contingencies.’’

In the normal course of business, KKR also enters into contractual arrangements that contain avariety of representations and warranties and that include general indemnification obligations. Theamended and restated purchase and sale agreement that KKR has entered into with KPE includesadditional representations and warranties as well as certain indemnification obligations as describedunder ‘‘Combination Transaction.’’ KKR’s maximum exposure under the foregoing arrangements isunknown due to the fact that the exposure would relate to claims that may be made against KKR inthe future. Accordingly, no amounts have been included in KKR’s combined financial statements as ofMarch 31, 2009 relating to indemnification obligations.

The partnership documents governing KKR’s traditional private equity funds generally include a‘‘clawback’’ or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to acontingent obligation that may require the general partner to return or contribute amounts to the fundfor distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the term of the fundexceed the amount to which the general partner was ultimately entitled. Under a ‘‘net loss sharingprovision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to thefund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharingprovisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of theirinvestment losses to KKR relative to the amounts contributed by KKR to those vehicles. In thesevehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles inthe event of a liquidation of the fund regardless of whether any carried interest had previously beendistributed. For a summary of the March 31, 2009 contingent obligation amounts under the ‘‘clawback’’and ‘‘net loss sharing provisions’’ of KKR’s traditional private equity funds see ‘‘Index to FinancialStatements—Condensed Combined Financial Statements March 31, 2009 and 2008—Notes toCondensed Combined Financial Statements—March 31, 2009 and 2008.’’

KKR principals will remain responsible for any clawback obligations relating to carry distributionsreceived prior to the Transactions up to the aggregate contingent repayment obligation as of June 30,2009 ($224 million) as well as any clawback obligations relating to any carry distributions that theyreceive after the Transactions pursuant to any carried interest allocated directly to them as carry poolparticipants. KKR will be responsible for any other clawback obligations and any amounts due under

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net loss sharing arrangements and will indemnify its principals for any personal guarantees that theyhave provided with respect to such amounts.

Off Balance Sheet Arrangements

Other than contractual commitments and other legal contingencies incurred in the normal courseof its business, KKR does not have any off-balance sheet financings or liabilities.

Critical Accounting Policies

The preparation of KKR’s financial statements in accordance with GAAP requires KKR’smanagement to make estimates and judgments that affect the reported amounts of assets and liabilities,disclosure of contingent assets and liabilities, and reported amounts of revenues, income and expense.KKR’s management bases these estimates and judgments on available information, historical experienceand other assumptions that KKR believes are reasonable under the circumstances. These estimates,judgments and assumptions, however, are often subjective and may be impacted negatively based onchanging circumstances or changes in KKR’s analyses. If actual amounts are ultimately different fromthose estimated, judged or assumed, revisions are included in KKR’s combined financial statements forthe period in which the actual amounts become known. KKR believes the following critical accountingpolicies could potentially produce materially different results if KKR were to change underlyingestimates, judgments or assumptions. Please see the notes to the predecessor combined financialstatements included elsewhere in this consent solicitation statement for further detail regarding KKR’scritical accounting policies.

Principles of Consolidation

KKR’s policy is to consolidate those entities in which KKR, through its senior principals, hascontrol, as well as those entities in which KKR is the primary beneficiary of a variable interest entity,or a VIE. VIEs are defined as entities in which equity investors do not have the characteristics of acontrolling financial interest or do not have sufficient equity at risk for the entity to finance itsactivities without additional financial support from other parties. A VIE must be consolidated only byits primary beneficiary, which is defined as the party who, along with its affiliates and agents, willabsorb a majority of the VIE’s expected losses or receive a majority of the expected residual returns asa result of holding variable interests. KKR refers to all entities that are included in the accompanyingcombined financial statements are referred to as consolidated entities.

The majority of the consolidated entities are under the common control of KKR’s senior principalsand are comprised of: (i) those entities in which KKR, directly or through its senior principals, havemajority ownership and control over significant operating, financial and investing decisions; and(ii) KKR’s consolidated funds, which are those entities in which KKR, through its senior principals,hold substantive, controlling general partner or managing member interests. With respect to itsconsolidated funds, KKR generally have operational discretion and control, and fund investors have nosubstantive rights to impact ongoing governance and operating activities of the funds.

KKR’s consolidated funds do not consolidate their majority-owned and controlled investments inportfolio companies. Rather, those investments are accounted for as investments and carried at fairvalue as described below.

Noncontrolling interests represent the ownership interests held by entities or persons other thanthe Senior Principals. Income or loss attributable to noncontrolling interests in consolidated KKRFunds is based on the respective funds’ governing documents. Noncontrolling interests have asubstantial ownership position in KKR’s combined total assets (approximately 88% as of March 31,2009).

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Fair Value of Investments

KKR’s consolidated funds are treated as investment companies under the AICPA Audit andAccounting Guide, ‘‘Investment Companies,’’ for the purposes of GAAP and, as a result, reflect theirinvestments on KKR’s predecessor combined statement of financial condition at fair value, withunrealized gains or losses resulting from changes in fair value reflected as a component of investmentincome in KKR’s predecessor combined statements of operations. KKR has retained the specializedaccounting of the consolidated funds pursuant to EITF Issue No. 85-12, Retention of SpecializedAccounting for Investments in Consolidation.

The Company accounts for its investments in accordance with FASB Statement 157 ‘‘Fair ValueMeasurements’’ (‘‘SFAS 157’’). SFAS 157 establishes a hierarchal disclosure framework which prioritizesand ranks the level of market price observability used in measuring investments at fair value. Marketprice observability is affected by a number of factors, including the type of investment and thecharacteristics specific to the investment. Investments with readily available active quoted prices or forwhich fair value can be measured from actively quoted prices generally will have a higher degree ofmarket price observability and a lesser degree of judgment used in measuring fair value.

The adoption of SFAS 157 requires KKR to classify and disclose investments measured andreported at Fair Value in one of the following categories:

Level I—Quoted prices are available in active markets for identical investments as of the reportingdate. The type of investments included in Level I include publicly-listed equities and publicly-listedderivatives. In addition, securities sold, but not yet purchased and options written by the KKR PrivateEquity Investors Master Fund are included in Level I. As required by SFAS 157, KKR does not adjustthe quoted price for these investments, even in situations where KKR holds a large position and a salecould reasonably affect the quoted price. KKR classified 9.1% of total investments measured andreported at fair value as Level I at March 31, 2009. Private equity investments measured and reportedat fair value as Leve1 I at March 31, 2009 represented 8.3% of total investments.

Level II—Pricing inputs are other than quoted prices in active markets, which are either directly orindirectly observable as of the reporting date, and fair value is determined through the use of modelsor other valuation methodologies. Investments which are generally included in this category includecorporate bonds and loans, convertible debt indexed to publicly listed securities and certainover-the-counter derivatives. KKR classified 12.1% of total investments measured and reported at fairvalue as Level II at March 31, 2009. Private equity investments measured and reported at fair value asLevel II at March 31, 2009 represented 10.5% of total investments.

Level III—Pricing inputs are unobservable for the investment and includes situations where thereis little, if any, market activity for the investment. The inputs into the determination of fair valuerequire significant management judgment or estimation. Investments that are included in this categorygenerally include private portfolio companies held through its private equity funds and KPE. KKRclassified 78.8% of total investments measured and reported at fair value as Level III at March 31,2009. Private equity investments measured and reported at fair value as Level III at March 31, 2009represented 78.0% of total investments. The valuation of its Level III investments at March 31, 2009represents management’s best estimate of the amounts that KKR would anticipate realizing on the saleof these investments at such date.

In certain cases, the inputs used to measure fair value may fall into different levels of the fairvalue hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on thelowest level of input that is significant to the fair value measurement. KKR’s assessment of thesignificance of a particular input to the fair value measurement in its entirety requires judgment, andKKR considers factors specific to the investment.

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When determining fair values of investments, KKR uses the last reported market price as of thestatement of financial condition date for investments that have readily observable market prices. If nosales occurred on such day, KKR uses the ‘‘bid’’ price at the close of business on that date and, if soldshort, the ‘‘asked’’ price at the close of business on that date day. Forward contracts are valued basedon market rates or prices obtained from recognized financial data service providers.

The majority of KKR’s private equity investments are valued utilizing unobservable pricing inputs.Management’s determination of fair value is based upon the best information available for a givencircumstance and may incorporate assumptions that are management’s best estimates afterconsideration of a variety of internal and external factors. KKR generally employs two valuationmethodologies when determining the fair value of a private equity investment. The first methodology isa market multiples approach that considers a specified financial measure (such as EBITDA) and recentpublic market and private transactions and other available measures for valuing comparable companies.Other factors such as the applicability of a control premium or illiquidity discount, the presence ofsignificant unconsolidated assets and liabilities and any favorable or unfavorable tax attributes are alsoconsidered in arriving at a market multiples valuation. The second methodology utilized is a discountedcash flow approach. In this approach, KKR will incorporate significant assumptions and judgments indetermining the most likely buyer, or market participant for a hypothetical sale, which might include aninitial public offering, private equity investor, strategic buyer or a transaction consummated through acombination of any of the above. Estimates of assumed growth rates, terminal values, discount rates,capital structure and other factors are employed in this approach. The ultimate fair value recorded fora particular investment will generally be within the range suggested by the two methodologies, adjustedfor issues related to achieving liquidity including size, registration process, corporate governancestructure, timing, an initial public offering discount and other factors, if applicable. As discussed above,KKR utilizes several unobservable pricing inputs and assumptions in determining the fair value ofKKR’s private equity investments. These unobservable pricing inputs and assumptions may differ byinvestment and in the application of KKR’s valuation methodologies. KKR’s reported fair valueestimates could vary materially if KKR had chosen to incorporate different unobservable pricing inputsand other assumptions.

Approximately 9.1%, or $1.8 billion, and 10%, or $2.1 billion, of the value of the investments inKKR’s consolidated private equity funds were valued using quoted market prices, which have not beenadjusted, as of March 31, 2009 and December 31, 2008, respectively.

Approximately 90.9%, or $18.3 billion, and 90%, or $18.7 billion, of the value of the investments inKKR’s consolidated private equity funds were valued in the absence of readily observable market pricesas of March 31, 2009 and December 31, 2008, respectively. The majority of these investments werevalued using internal models with significant unobservable market parameters and KKR’sdeterminations of the fair values of these investments may differ materially from the values that wouldhave resulted if readily observable market prices had existed. Additional external factors may causethose values, and the values of investments for which readily observable market prices exist, to increaseor decrease over time, which may create volatility in KKR’s earnings and the amounts of assets andpartners’ capital that KKR report from time to time.

KKR’s calculations of the fair values of private equity investments were reviewed by Duff &Phelps, LLC, an independent valuation firm, who provided third-party valuation assistance to KKR,which consisted of certain limited procedures that KKR identified and requested it to perform. Uponcompletion of such limited procedures, Duff & Phelps, LLC concluded that the fair value, asdetermined by KKR, of those investments subjected to their limited procedures did not appear to beunreasonable. The limited procedures did not involve an audit, review, compilation or any other formof examination or attestation under generally accepted auditing standards. The general partners ofKKR’s funds are responsible for determining the fair value of investments in good faith, and thelimited procedures performed by Duff & Phelps, LLC are supplementary to the inquiries and

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procedures that the general partner of each fund is required to undertake to determine the fair valueof the investments. See ‘‘Private Equity Valuations and Related Data’’ for a further discussion of KKR’sprivate equity investment valuations.

Changes in the fair value of the investments of KKR’s consolidated private equity funds mayimpact KKR’s results of operations as follows:

• The management fees that KKR is paid by KPE are based on the approximate NAV of thefund, which in turn is impacted by the fair values of its investments. Historically, a change in thefair values of the funds’ investments during a reporting period would have affected the amountof management fees that were payable following the completion of the reporting period, butwould not have had an immediate impact on KKR’s results. In connection with the Transactions,the KPE Investment Partnership will become a wholly-owned subsidiary of KKR’s and KKR willno longer generate fee income. The management fees paid by KKR’s traditional private equityfunds are calculated based on the amount of capital committed to, or invested by, the funds andare not directly affected by changes in the fair value of the funds’ investments.

• The net gains from investment activities of KKR’s private equity funds are directly affected bychanges in the fair values of the funds investments as described under ‘‘—Key FinancialMeasures—Investment Income—Net Gains from Investment Activities.’’ Based on theinvestments of KKR’s private equity funds as of March 31, 2009, KKR estimate that animmediate 10% decrease in the fair value of the funds’ investments generally would result in a10% immediate change in net gains from the funds’ investment activities (including carriedinterest when applicable), regardless of whether the investment was valued using observablemarket prices or internal models with significant unobservable market parameters. However,KKR estimates the impact that the consequential decrease in investment income would have onKKR’s reported amounts of income before taxes and net income would be significantly less thanthe amount presented above, given that a majority of the change in fair value would beattributable to noncontrolling interests in the funds.

Substantially all of the value of the investments in KKR’s consolidated fixed income funds werevalued using observable market parameters, which may include quoted market prices, as of March 31,2009 and December 31, 2008. Quoted market prices, when used, are not adjusted.

The management fees that are paid by the KKR Strategic Capital Funds are based on theirrespective NAVs. Accordingly, a 10% decrease in the fair value of the funds’ investments as ofMarch 31, 2009 would have resulted in a reduction in management fees for the three months endedMarch 31, 2009 of $0.03 million. KFN’s base management and incentive fees are indirectly impacted bychanges in the fair value of assets, and a decline in the fair value of assets that results in a 10%decrease in the shareholder’s equity of KFN would have resulted in a reduction in management feesfor the three months ended March 31, 2009 of $0.4 million. There were no incentive fees earned at thecertain fixed income fund managed by KKR for the three months ended March 31, 2009.

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Revenue Recognition

Fee income consists primarily of advisory fees that KKR receives from its portfolio companies andthe management and other fees that it receives directly from its unconsolidated funds, including boththe base management fees and the incentive fees that are paid by its unconsolidated fixed incomefunds. These fees are based upon the contractual terms of the management and other agreements thatKKR enters into with the applicable funds and portfolio companies. KKR recognizes fee income in theperiod during which the related services are performed and the amounts have been contractuallyearned in accordance with the relevant management or other agreements. Incentive fees are accruedeither annually or quarterly, after all contingencies have been removed, based on performance to dateversus the performance benchmark stated in the management agreement.

Recognition of Investment Income

Investment income consists primarily of the unrealized and realized gains on investments, dividendand interest income received from investments and foreign currency gains as reduced by unrealized andrealized losses on investments, interest expense incurred in connection with investment activities andforeign currency losses on investments. Unrealized gains or losses result from changes in the fair valueof KKR’s funds’ investments during a period. Upon disposition of an investment, previously recognizedunrealized gains or losses are reversed and a corresponding realized gain or loss is recognized in thecurrent period. While this reversal generally does not impact the net amounts of gains that KKRrecognizes from investment activities, it affects the manner in which KKR classify its gains and lossesfor reporting purposes.

KKR recognizes investment income with respect to its carried interests in investments of its privateequity funds, the capital invested by or on behalf of the general partners of its private equity funds andthe noncontrolling interests that third-party fund investors hold in its consolidated funds. A carriedinterest entitles KKR to a greater allocable share of the fund’s earnings from investments relative tothe capital contributed by the general partner and correspondingly reduces noncontrolling interests’attributable share of those earnings. Amounts earned pursuant to carried interests in Traditional PrivateEquity Funds are included as investment income in Net Gains (Losses) from Investment Activities andare earned by KKR to the extent that investment returns are positive. If these investment returnsdecrease or turn negative in subsequent periods, recognized carried interest will be reduced andreflected as investment losses. Carried interest is recognized based on the contractual formula set forthin the partnership agreement governing the fund as if the fund was terminated at the reporting datewith the then estimated fair values of the investments realized. Due to the extended durations of theTraditional Private Equity Funds, KKR believes that this approach results in income recognition thatbest reflects the periodic performance of its management of those funds.

The partnership documents governing KKR’s traditional private equity funds generally include a‘‘clawback’’ or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to acontingent obligation that may require the general partner to return or contribute amounts to the fundfor distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the term of the fundexceed the amount to which the general partner was ultimately entitled. Under a ‘‘net loss sharingprovision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to thefund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharingprovisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of theirinvestment losses to KKR relative to the amounts contributed by KKR to those vehicles. In thesevehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles inthe event of a liquidation of the fund regardless of whether any carried interest had previously beendistributed. For a summary of the March 31, 2009 contingent obligation amounts under the ‘‘clawback’’

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and ‘‘net loss sharing provisions’’ of KKR’s traditional private equity funds see ‘‘Index to FinancialStatements—Condensed Combined Financial Statements March 31, 2009 and 2008—Notes toCondensed Combined Financial Statements—March 31, 2009 and 2008.’’

KKR principals will remain responsible for any clawback obligations relating to carry distributionsreceived prior to the Transactions up to the aggregate contingent repayment obligations as of June 30,2009 ($224 million) as well as any clawback obligations relating to any carry distributions that theyreceive after the Transactions pursuant to any carried interest allocated directly to them as carry poolparticipants. KKR will be responsible for any other clawback obligations and any amounts due undernet loss sharing arrangements and will indemnify its principals for any personal guarantees that theyhave provided with respect to such amounts.

Because carried interests allocate to KKR a disproportionate share of its private equity funds’earnings relative to its capital contributions, those interests reduce the amount of its funds’ earningsthat are allocated to fund investors’ noncontrolling interests in consolidated funds. KKR recognizesinvestment income attributable to a carried interest in a fund to the extent that the fund’s investmentreturns are positive. If these investment returns decrease or turn negative in subsequent periods,recognized carried interest will be reduced and reflected as investment losses. When a carried interestis subject to a clawback provision, KKR recognizes the related investment income based on the termsof the fund’s governing documents assuming that the fund was terminated on that date and that thefair value of the fund’s investments were then realized in full. Given the long durations during whichKKR’s private equity funds hold investments, management believes that this approach results in incomerecognition that best reflects KKR’s performance in any given period as the manager of its privateequity funds.

Due to the consolidation of the majority of KKR’s funds, the share of KKR’s funds’ investmentincome that is allocable to KKR’s carried interests and capital investments is not shown in KKR’scombined financial statements. Instead, the investment income that KKR retains in its net income, afterallocating amounts to noncontrolling interests, represents the portion of its investment income that isallocable to KKR. Because the substantial majority of KKR’s funds are consolidated and because KKRholds only a minority economic interest in its funds’ investments, its share of the investment incomegenerated by its investment activities is significantly less than the total amount of investment incomepresented in its predecessor combined financial statements.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (‘‘SFASNo. 141(R)’’). SFAS No. 141(R) requires the acquiring entity in a business combination to recognizethe full fair value of assets, liabilities, contractual contingencies and contingent consideration obtainedin the transaction (whether for a full or partial acquisition); establishes the acquisition date fair valueas the measurement objective for all assets acquired and liabilities assumed; requires expensing of mosttransaction and restructuring costs; and requires the acquirer to disclose to investors and other users allof the information needed to evaluate and understand the nature and financial effect of the businesscombination. SFAS No. 141(R) applies to all transactions or other events in which the Companyobtains control of one or more businesses, including those sometimes referred to as ‘‘true mergers’’ or‘‘mergers of equals’’ and combinations achieved without the transfer of consideration, for example, bycontract alone or through the lapse of minority veto rights. SFAS No. 141(R) applies prospectively tobusiness combinations for which the acquisition date is on or after January 1, 2009. The Company hadno such transactions for the three months ended March 31, 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in ConsolidatedFinancial Statements—an amendment of Accounting Research Bulletin No. 51 (‘‘SFAS No. 160’’). SFASNo. 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposedto as a liability or mezzanine equity) and provides guidance on the accounting for transactions between

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an entity and noncontrolling interests. SFAS No. 160 applies prospectively as of January 1, 2009, exceptfor the presentation and disclosure requirements applied retrospectively for all periods presented. KKRadopted SFAS No. 160 effective January 1, 2009 and as a result, (1) with respect to the combinedstatements of financial condition, noncontrolling interests have been reclassified as a component ofEquity, (2) with respect to the combined statements of operations, Net Income (Loss) is now presentedbefore noncontrolling interests and the combined statements of operations now net to Net Income(Loss) Attributable to KKR Group, (3) with respect to the combined statement of changes in equity, arollforward column has been included for noncontrolling interests.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments andHedging Activities (‘‘SFAS No. 161’’). SFAS No. 161 is intended to improve financial reporting aboutderivative instruments and hedging activities by requiring enhanced disclosures to enable investors tobetter understand how those instruments and activities are accounted for; how and why they are used;and their effects on an entity’s financial position, financial performance, and cash flows. SFAS No. 161is effective for financial statements issued for fiscal years and interim periods beginning afterNovember 15, 2008, with early application encouraged. The adoption of SFAS No. 161 did not have amaterial impact on KKR’s combined financial statements.

In March 2008, the EITF reached a consensus on Issue No. 07-4, Application of the Two-ClassMethod under FASB Statement No. 128, ‘‘Earnings Per Share, to Master Limited Partnerships(‘‘EITF 07-4’’). EITF 07-4 applies to master limited partnerships that make incentive equitydistributions. EITF 07-4 is to be applied retrospectively beginning with financial statements issued inthe interim periods of fiscal years beginning after December 15, 2008. The adoption of EITF 07-4 didnot have a material impact on KKR’s combined financial statements.

In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life ofIntangible Assets (‘‘FSP No. 142-3’’). FSP No. 142-3 amends the factors an entity should consider indeveloping renewal or extension assumptions used in determining the useful life of recognizedintangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. FSP No. 142-3 affectsentities with recognized intangible assets and is effective for financial statements issued for fiscal yearsbeginning after December 15, 2008, and interim periods within those fiscal years. Early adoption isprohibited. The new guidance applies prospectively to (1) intangible assets that are acquiredindividually or with a group of other assets and (2) both intangible assets acquired in businesscombinations and asset acquisitions. The adoption of FSP No. 142-3 did not have a material impact onKKR’s combined financial statements.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Levelof Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are NotOrderly (‘‘FSP FAS 157-4’’), to help constituents estimate fair value when the volume and level ofactivity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance onidentifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective forinterim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively.Early adoption is permitted for periods ending after March 15, 2009. KKR is currently evaluating theimpact that the adoption of FSP FAS 157-4 may have on its combined financial statements.

In April 2009, the FASB issued Staff Position No. 115-2 and 124-2, Recognition and Presentation ofOther-Than-Temporary Impairments (‘‘FSP FAS 115-2’’) which provides new guidance on the recognitionof other-than-temporary impairments of investments in debt securities and provides new presentationand disclosure requirements for other-than-temporary impairments of investments in debt and equitysecurities. FSP FAS 115-2 is effective for financial statements issued for interim or annual periodsending after June 15, 2009. KKR is currently evaluating the impact of FSP FAS 157-4 on its combinedfinancial statements.

In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, Interim Disclosures aboutFair Value of Financial Statements (‘‘FSP FAS 107-1’’). FSP FAS 107-1 amends SFAS No. 107,

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Disclosures about Fair Value of Financial Instruments to require disclosures about fair value of financialinstruments in interim reporting periods. Such disclosures were previously required only in annualfinancial statements. FSP FAS 107-1 is effective for financial statements issued for interim or annualperiods ending after June 15, 2009. As FSP FAS 107-1 applies only to financial statement disclosures,the impact of adoption will be limited to financial statement disclosure.

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, SubsequentEvents (‘‘SFAS 165’’). SFAS 165 is intended to establish general accounting and disclosure standards forevents that occur after the balance sheet date but before financial statements are issued or areavailable to be issued. SFAS 165 requires disclosure of the date through which an entity has evaluatedsubsequent events and the basis for that date. SFAS 165 is effective for interim and annual periodsending after June 15, 2009. The Company is currently evaluating the impact that the adoption ofSFAS 165 may have on the Company’s combined financial statements.

Qualitative and Quantitative Disclosures About Market Risk

KKR’s exposure to market risks primarily relates to its role as general partner or manager ofKKR’s funds and sensitivities to movements in the fair value of their investments, including the effectthat those movements have on the management fees and carried interests that KKR receives. Followingthe completion of the Transactions, KKR will have increased exposure to market risks as a result of theassets acquired from KPE. The fair value investments may fluctuate in response to changes in the valueof securities, foreign currency exchange rates and interest rates.

Although KKR’s funds share many common themes, KKR generally maintains separate investmentand risk management processes for monitoring and managing market risks. In particular:

• The investment process for private equity involves a detailed analysis of potential acquisitionsand industry-specific investment teams are assigned to oversee the operations, strategicdevelopment, financing and capital deployment decisions of KKR’s funds’ portfolio companies.Investment decisions are subject to approval by KKR’s equity investment committee, whichconsists of a group of KKR’s senior principals, and portfolio company investments are monitoredby its portfolio management committee, which consists of a group of KKR’s senior principalsand senior advisors.

• KKR’s approach to making fixed income investments focuses on creating investment portfoliosthat generate attractive risk-adjusted returns on invested capital, allocating capital acrossmultiple asset classes, selecting high-quality investments that may be made at attractive prices,applying rigorous standards of due diligence when making investment decisions, subjectinginvestments to regular monitoring and oversight and making buy and sell decisions based onprice targets and relative value parameters. KKR employs both ‘‘top-down’’ and ‘‘bottom-up’’analyses when making fixed income investments. KKR’s top-down analysis involves a macroanalysis of relative asset valuations, long-term industry trends, business cycles, interest rateexpectations, credit fundamentals and technical factors to target specific industry sectors andasset classes in which to invest. KKR’s bottom-up analysis includes a rigorous analysis of thecredit fundamentals and capital structure of each credit considered for investment and athorough review of the impact of credit and industry trends and dynamics and dislocationsevents on such potential investment.

Market Risk

KKR’s consolidated funds hold investments that are reported at fair value. Net changes in the fairvalue of investments impact the net gains from investments in KKR’s combined statements ofoperations. Based on the investments of KKR’s funds as of March 31, 2009, KKR estimates that a 10%decrease in the fair value of its funds’ investments would result in a corresponding reduction ininvestment income. However, KKR estimates the impact that the consequential decrease in investment

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income would have on its reported amounts income attributable to KKR Group would be significantlyless than the amount presented above, given that a substantial majority of the change in fair valuewould be allocated to noncontrolling interests. As a result of its acquisition of noncontrolling interestsin the KPE Investment Partnership, the extent of such allocation to noncontrolling interests will be lessin future periods.

KKR’s base management fees in its private equity funds are calculated based on the amount ofcapital committed or invested by a fund or the NAV of a fund’s investments, as described under‘‘Business—Private Markets—Traditional Private Equity Funds.’’ In the case of KKR’s fixed incomefunds, KKR’s incentive fees are calculated based on the performance of a fund’s investments, which inthe case of one of KKR’s fixed income funds is calculated based on the appreciation in the NAV of thefund’s investments. To the extent that base management or other amounts are calculated based on theNAV of the fund’s investments, the amount of fees that KKR may charge will be increased ordecreased in direct proportion to the effect of changes in the fair value of the fund’s investments. Theproportion of KKR’s management and other amounts that are based on NAV depends on the numberand type of funds in existence. For a discussion of the impact of market risks on KKR’s fair value ofinvestments, see ‘‘—Critical Accounting Policies—Fair Value of Investments.’’

Securities Market Risk

KKR’s private equity funds make certain investments in portfolio companies whose securities arepublicly traded. The market prices of public equities may be volatile and are likely to fluctuate due to anumber of factors beyond KKR’s control. These factors include actual or anticipated fluctuations in thequarterly and annual results of such companies or of other companies in the industries in which theyoperate, market perceptions concerning the availability of additional securities for sale, generaleconomic, social or political developments, industry conditions, changes in government regulation,shortfalls in operating results from levels forecasted by securities analysts, the general state of thesecurities markets and other material events, such as significant management changes, re-financings,acquisitions and dispositions. In addition, although KKR’s private equity funds primarily holdinvestments in portfolio companies whose securities are not publicly traded, the value of theseinvestments may also fluctuate due to similar factors beyond KKR’s control.

Financial Instruments

Global financial markets experienced significant stress during 2008 and through the first quarter of2009. Uncertainty regarding the magnitude of risk inherent in certain investments spread from theresidential real estate market to financial markets generally. KKR’s private equity and fixed incomefunds included in the combined financial statements have no exposure to residential real estate,residential mortgage-backed securities or residential sub-prime mortgages. However, KFN has exposureto residential mortgage-backed securities and losses incurred in connection with such securities couldadversely impact the amount of management and incentive fees recognized by KKR.

Exchange Rate Risk

KKR’s private equity funds make investments from time to time in currencies other than those inwhich their capital commitments are denominated. Those investments expose KKR and its fundinvestors to the risk that the value of the investments will be affected by changes in exchange ratesbetween the currency in which the capital commitments are denominated and the currency in which theinvestments are made. KKR’s policy is to minimize these risks by employing hedging techniques,including using foreign exchange contracts to reduce exposure to future changes in exchange rates whenKKR’s funds have invested a meaningful amount of capital in currencies other than the currencies inwhich their capital commitments are denominated.

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Because most of the capital commitments to KKR’s funds are denominated in U.S. dollars, KKR’sprimary exposure to exchange rate risk relates to movements in the value of exchange rates betweenthe U.S. dollar and other currencies in which KKR’s investments are denominated (primarily euro,British pound and Australian dollars). KKR estimates that a simultaneous parallel movement by 10% inthe exchange rates between the U.S. dollar and all of the foreign currencies in which KKR’s funds’investments were denominated as of March 31, 2009 would result in net gains or losses frominvestment activities of KKR’s funds of $94.0 million. However, KKR estimate that the effect on itsincome before taxes and its net income from such a change would be significantly less than the amountpresented above, because a substantial majority of the gain or loss would be attributable tononcontrolling interests in KKR’s funds.

Interest Rate Risk

Interest rate risk is defined as the sensitivity of KKR’s current and future earnings to interest ratevolatility, variability of spread relationships, and the effect that interest rates may have on KKR’s cashflows. KKR’s fixed income funds and the KPE Investment Partnership have outstanding indebtednessthat accrues interest at variable rates. As a result, changes in interest rates affect the amount of interestpayments that those funds are required to make, which may impact the earnings and cash flows ofthose funds. However, KKR estimates the effect on its income before taxes and its net income fromsuch an increase would be substantially attributable to noncontrolling interests in the funds. As a resultof KKR’s acquisition of noncontrolling interests in the KPE Investment Partnership, the extent of suchallocation to noncontrolling interests will be less in future periods.

In addition, KKR’s fixed income funds and the KPE Investment Partnership make investments infloating rate investments that are primarily financed with variable rate borrowings. Interest rates onKKR’s floating rate investments and KKR’s variable rate borrowings do not reset on the same day orwith the same frequency and, as a result, KKR is exposed to basis risk with respect to index resetfrequency. KKR’s floating rate investments may reprice on indices that are different than the indicesthat are used to price KKR’s variable rate borrowings and, as a result, KKR is exposed to basis riskwith respect to repricing indices.

KKR manages interest rate risk and make interest rate decisions by evaluating KKR’s projectedearnings under selected interest rate scenarios. During periods of increasing interest rates KKR tendsto purchase floating rate investments. KKR manage its interest rate risk using various techniquesranging from the purchase of floating rate investments to the use of interest rate derivatives. KKRgenerally funds its floating rate investments with variable rate borrowings with similar interest rate resetfrequencies. KKR also may use interest rate derivatives to hedge the variability of cash flows associatedwith existing or forecasted variable rate borrowings. KKR did not use any material interest ratederivatives during any of the periods presented.

Credit Risk

Kohlberg Kravis Roberts & Co. L.P. is party to agreements providing for various financial servicesand transactions that contain an element of risk in the event that the counterparties are unable to meetthe terms of such agreements. In these agreements, Kohlberg Kravis Roberts & Co. L.P. depends onthese counterparties to make payment or otherwise perform. Kohlberg Kravis Roberts & Co. L.P.generally endeavors to minimize its risk of exposure by limiting the counterparties with which it entersinto financial transactions to reputable financial institutions. In addition, availability of financing fromfinancial institutions may be uncertain due to market events, and Kohlberg Kravis Roberts & Co. L.P.may not be able to access these financing markets.

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KKR’S BUSINESS

Overview

Led by Henry Kravis and George Roberts, KKR is a global alternative asset manager with$50.8 billion in AUM as of June 30, 2009 and a 33-year history of leadership, innovation andinvestment excellence. When KKR’s founders started the firm in 1976, they established the principlesthat guide KKR’s business approach today, including a patient and disciplined investment process; thealignment of KKR’s interests with those of its investors, portfolio companies and other stakeholders;and a focus on attracting world-class talent.

KKR’s franchise is founded on providing a broad range of asset management services to public andprivate market investors and developing and implementing capital markets solutions for the firm, itsportfolio companies and clients. Throughout its history, KKR has consistently been a leader in theprivate equity industry, having completed more than 165 private equity investments with a totaltransaction value in excess of $425 billion. In recent years, KKR has grown its business by expanding itsgeographical presence, building businesses in new areas, such as credit and infrastructure, thatcomplement its private equity expertise and strengthening its capital raising and distribution activities.Today, with over 575 employees across the globe, KKR believes it has a preeminent global platform forsourcing and making investments in multiple asset classes and throughout a company’s capital structure.

KKR conducts its business through offices in New York, Menlo Park, San Francisco, Houston,Washington, D.C., London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney, whichprovide a global platform for sourcing transactions, raising capital and carrying out capital marketsactivities. KKR has grown its AUM significantly, from $15.1 billion as of December 31, 2004 to$50.8 billion as of June 30, 2009, representing a compounded annual growth rate of 30.9%. KKR’sgrowth has been driven by value that it has created through its operationally focused investmentapproach, expansion into new lines of business, innovation in the products that it offers investors, anincreased focus on providing tailored solutions to its clients, and the integration of capital marketsdistribution activities. KKR’s relationships with investors have provided the firm with a stable source ofcapital for investments, and KKR anticipates that they will continue to do so.

As a global alternative asset manager, KKR earns ongoing management, advisory and incentivefees for providing investment management, advisory and other services to its funds, co-investmentvehicles, managed accounts and portfolio companies, and it generates transaction-specific advisoryincome from capital markets transactions. It earns additional investment income from investing its owncapital alongside its investors and from the carried interest it receive from funds and co-investmentvehicles. A carried interest entitles the sponsor of a fund to a disproportionate share of the investmentgains that are generated on third-party capital that is invested. Following the completion of theTransactions, KKR’s net income will also reflect returns on assets acquired from KPE.

KKR seeks to consistently generate attractive investment returns by employing world-class people,following a patient and disciplined investment approach and driving growth and value creation in itsportfolio. KKR’s investment teams have deep industry knowledge and are supported by a substantialand diversified capital base, an integrated global investment platform, the expertise of operatingconsultants and senior advisors and a worldwide network of business relationships that provide asignificant source of investment opportunities, specialized knowledge during due diligence andsubstantial resources for creating and realizing value for stakeholders. KKR believes that these aspectsof KKR’s business will help it continue to expand and grow its business and deliver strong investmentperformance in a variety of economic and financial conditions.

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Strengths

Over its 33-year history, KKR has developed a business approach that centers around three keyprinciples: adhere to a patient and disciplined investment process; align the firm’s interests with thoseof KKR’s investors and other stakeholders; and attract world-class talent for the firm and portfoliocompanies. Based on these principles, KKR has developed a number of strengths that differentiate it asan alternative asset manager and provide additional competitive advantages that can be leveraged togrow KKR’s business and create value. These include:

Firm Culture and Values

When KKR’s founders started the firm in 1976, leveraged buyouts were a novel form of corporatefinance. With no financial services firm to model itself on and with little interest in copying an existingformula, they sought to build a firm based on principles and values that would provide a properinstitutional foundation for years to come. KKR believes that its success and industry leadership hasbeen largely attributable to the unique culture within its firm and the values that it lives by. Thesevalues and KKR’s ‘‘one firm’’ culture will not change as a result of the Transactions.

Leading Brand Name

The ‘‘KKR’’ name is associated with: the successful execution of many of the largest and mostcomplex private equity transactions worldwide; a focus on operational value creation; a strong investorbase; a global network of leading business relationships; a reputation for integrity and fair dealing;creativity and innovation; and superior investment performance. The strength of this brand helps KKRattract world-class talent, raise capital, obtain access to investment opportunities and win deals. It hasalso provided the firm with a foundation to expand and diversify into new business lines. KKR intendsto leverage the strength of its brand as it continues to grow its businesses.

Sourcing Advantage

KKR believes that it has a competitive advantage for sourcing new investment opportunities as aresult of its internal deal generation strategies, industry expertise and global network. Across itsbusinesses, KKR’s investment professionals are organized into industry groups and work closely withKKR’s operational consultants and senior advisors to identify businesses that the firm can grow andimprove. These teams conduct their own primary research, develop a list of industry themes and trends,identify companies and assets in need of operational improvement and seek out businesses and assetsthat will benefit from KKR’s involvement.

KKR also maintains relationships with leading executives from major companies, commercial andinvestment banks and other investment and advisory institutions, including by its own estimate, chiefexecutives and directors of two-thirds of the companies in the S&P 500 and the Global S&P 100.Through its industry focus and global network, KKR often is able to obtain exclusive or limited accessto investments that it identifies. KKR’s reputation as a patient and long-term investor also makes it anattractive source of capital for public companies and, through its relationships with major financialinstitutions, KKR generates additional deal flow.

Global Scale and Infrastructure

KKR is a global firm. With offices in 13 major cities on four continents, KKR has created anintegrated global platform for sourcing and making investments in multiple asset classes and throughoutthe capital structure. Its global and diversified operations are supported by a sizeable capital base andextensive local market knowledge, which allows KKR to raise and deploy capital across a number of

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geographical markets and make investments in a broad range of companies, industry sectors and assetclasses globally. As of March 31, 2009, approximately 38.7% of the unrealized value of its private equityportfolio consisted of investments made outside the United States.

Although its operations span multiple continents and business lines, KKR has maintained acommon culture and is focused on sharing knowledge, resources and best practices throughout itsoffices and across asset classes. Its investment processes are overseen by three committees that operateglobally. These consist of a private equity investment committee, which reviews all investments made byits private equity funds, its fixed income investment committee, which reviews all investments made byits fixed income funds, and its portfolio management committee, which monitors the performance of itsprivate equity investments. KKR believes that operating as a global and diversified firm that is centrallymanaged from the United States enhances the growth and stability of its business and helps optimizethe decisions it makes across asset classes and geographies.

Distinguished Track Record Across Economic Cycles

During its 33-year history, KKR has successfully employed its patient and disciplined investmentprocess through all types of economic and financial conditions, developing a track record thatdistinguishes the firm. From its inception through March 31, 2009, KKR’s traditional private equityfunds generated a cumulative gross IRR of 25.6%, compared to the 10.5% gross IRR achieved by theS&P 500 Index over the same period. The consistency of returns is among the reasons that KKR hasbeen successful in generating strong investor relationships and raising significant amounts of capitalthrough multiple fundraising cycles.

Sizeable Long-Term Capital Base

As of June 30, 2009, KKR had $50.8 billion of AUM, making KKR one of the largest independentalternative asset managers in the world. Its traditional private equity funds and certain of itsco-investment vehicles receive capital commitments from investors that may be called for during aninvestment period that typically lasts for six years and may remain invested for up to approximately12 years. Its fixed income funds, structured finance vehicles and managed account platform includecapital that is either not subject to optional redemption, has a maturity of at least 10 years or otherwiseis subject to withdrawal only after a lock-up period. As of June 30, 2009, approximately 93%, or$47.4 billion, of KKR’s AUM had a contractual life at inception of at least 10 years, providing a stablesource of long-term capital for its business.

Long-Standing Investor Relationships

Over its 33-year history, KKR has established strong relationships with investors that have allowedit to raise significant amounts of capital for investment across a broad range of asset classes. Itsinvestors consist of a diversified group of investors, including some of the largest public and privatepension plans, global financial institutions, university endowments and other institutional and publicmarket investors. Many of these investors have invested with KKR for decades across multiple fundsthat it has sponsored. KKR continues to develop relationships with new significant investors worldwide,providing an additional source of capital. KKR believes that the strength, breadth, duration anddiversity of its investor relationships provides KKR with a significant advantage for raising capital fromexisting and new sources and will help it continue to grow its AUM.

Strong Relationships with Financial Leaders

KKR actively cultivates relationships with major investment banking firms and other financialintermediaries and is among those firms’ most significant clients. Its investment professionals meet

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regularly with major investment banking firms concerning potential investment opportunities, and thefirm often works with the same group of financial institutions when seeking financing arrangements fortransactions. KKR believes that, as a result of its repeated and consistent dealings with the majorfinancial services firms over a long period of time and its completion of a significant number of largetransactions, it is frequently one of the first parties considered for a potential transaction. KKR alsobelieves that its relationships with financial institutions and the credibility that it has establishedthrough past successes help it obtain financing for transactions at attractive prices and with favorableterms.

Alignment of Interests

Since its inception, one of KKR’s fundamental philosophies has been to align the interests of thefirm and its people with the interests of its investors, portfolio companies and other stakeholders. KKRachieves this by putting its own capital behind its ideas. Since KKR was founded, its people haveinvested or committed to invest more than $1.9 billion of their personal capital in its portfoliocompanies and funds, and the firm and its people have been compensated substantially based on theperformance of those investments. Through the Combination Transactions, KKR and its people willhold interests in KKR’s business, resulting in an even greater alignment of interests. To ensure thefirm’s interests remain aligned over the long-term, KKR’s existing owners will not receive any proceedsfrom the Combination Transaction and their interests in the firm will be subject to significant vestingand transfer restrictions.

Creativity and Innovation

KKR pioneered the development of the leveraged buyout and has worked throughout its historyon creating new and innovative structures for both raising capital and making investments. KKR’shistory of innovation includes establishing permanent capital vehicles for its public markets and privatemarkets segments and developing new capital markets and distribution capabilities in the United States,Europe and Asia. KKR’s list of buyouts includes completing the first leveraged buyout in excess of$1 billion, the first buyout of a public company by tender offer and many of the largest buyouts evercompleted. More recently, KKR’s acquisition of Energy Future Holdings (previously known as TXU) in2007 is the largest leveraged buyout ever completed and a pioneering example of how a private equityinvestment can be a collaborative effort with environmentalists and labor organizations.

KKR as a Firm

Global Operations

With offices in New York, Menlo Park, San Francisco, Houston, Washington, D.C., London, Paris,Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney, KKR has established itself as a leading globalalternative asset manager. KKR’s expansion outside of the United States began in 1995 when it madeits first investment in Canada. Since that time, it has taken a long-term strategic approach to investingglobally and has established a presence in Europe, Asia, the Middle East and Australia withmultilingual and multicultural investment teams that have local market knowledge and significantbusiness, investment and operational experience in the countries in which KKR invests. KKR believesthat its global capabilities have assisted KKR in raising capital and capturing a greater number ofinvestment opportunities, while enabling it to diversify its operations.

While its operations span multiple continents and asset classes, its investment professionals aresupported by an integrated infrastructure and operate under a common set of principles and businesspractices that are monitored by global committees. The firm operates with a single culture that rewardsinvestment discipline, creativity, determination and patience and the sharing of information, resources,

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expertise and best practices across offices and asset classes. When appropriate, KKR staffs transactionsacross multiple offices and businesses in order to take advantage of the industry-specific expertise of itsinvestment professionals, and it holds regular meetings in which investment professionals throughout itsoffices share their knowledge and experiences. KKR believes that the ability to draw on the localcultural fluency of its investment professionals while maintaining a centralized and integrated globalinfrastructure distinguishes it from other alternative asset managers and has been a substantialcontributing factor to its ability to raise funds, invest internationally and expand its businesses.

Executives

Private and Public Markets Investment Professionals

KKR currently employs more than 175 professionals who carry out the firm’s investment activities.These individuals come from diverse backgrounds in private equity, fixed income and infrastructureinvestment and include executives with operations, strategic consulting, risk management, liabilitymanagement and finance experience. KKR has historically focused its senior-level private marketsrecruiting efforts on executives with significant operating experience, including former chief executiveofficers and chief financial officers of companies operating in a wide range of industry sectors. KKR’spublic markets professionals have significant experience investing and trading in leveraged bank loans,second lien loans, high-yield bonds, subordinated bonds, mezzanine bonds, preferred stock, credit andinterest rate derivative instruments, structured products, real-estate investments and other forms ofsecurities. As a group, these professionals provide KKR with a powerful global team for identifyingattractive investment opportunities, creating value and generating superior returns.

Senior Advisors

To complement the expertise of its investment professionals, KKR has retained a team of over 20senior advisors to provide KKR with additional operational and strategic insights. The responsibilitiesof senior advisors include serving on the boards of its portfolio companies, helping KKR evaluateindividual investment opportunities and assisting portfolio companies with operational matters. Theseindividuals include former chief executive officers, chief financial officers and chairmen of Fortune 500companies, as well as other individuals who have held leading positions in major corporations andpublic agencies worldwide. Four of the senior advisors also participate on its portfolio managementcommittee, which monitors the performance of its private equity investments.

KKR Capstone

KKR has developed an institutionalized process for creating value in investments. As part of itseffort, KKR utilizes a team of more than 40 operational professionals that operate under the nameKKR Capstone and work exclusively with its investment professionals and portfolio companymanagement teams. With executives in New York, Menlo Park, London and Hong Kong, KKRCapstone provides additional expertise for assessing investment opportunities and assisting managers ofportfolio companies in defining strategic priorities and implementing operational changes. During theinitial phases of an investment, KKR Capstone’s work seeks to implement its thesis for value creation.Its professionals may assist portfolio companies in addressing top-line growth, cost optimization andefficient capital allocation and in developing operating and financial metrics. Over time, this work shiftsto identifying challenges and taking advantage of business opportunities that arise during the life of aninvestment.

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Global Committees

KKR’s investment processes are overseen by investment and portfolio management committeesthat operate globally. KKR’s investment committees are responsible for reviewing and approving allinvestments made by their business segments; monitoring due diligence practices; and providing advicein connection with the structuring, negotiation, execution and pricing of investments. KKR’s portfoliomanagement committee is responsible for working with its investment professionals from the date onwhich a private equity or fixed income investment is made until the time the investment is exited inorder to ensure that strategic and operational objectives are accomplished and that the performance ofthe investment is closely monitored.

Private Markets

Through its private markets segment, KKR manages and sponsors a group of investment funds andco-investment vehicles that invest capital for long-term appreciation, either through controllingownership of a company or strategic minority positions, in global private equity and infrastructureassets. These investment funds and vehicles are managed by Kohlberg Kravis Roberts & Co. L.P., aregistered investment adviser, and currently consist of a number of private equity funds that have afinite life and investment period, which are referred to as traditional private equity funds, variousco-investment vehicles and KPE. As of June 30, 2009, the segment had $37.5 billion of AUM and itsactively investing funds included geographically differentiated investment funds and co-investmentvehicles with over $15.1 billion of unused capital commitments, providing a significant source of capitalthat may be deployed globally.

Private Equity

KKR is a world leader in private equity, having raised 14 traditional private equity funds withapproximately $59.3 billion of capital commitments through March 31, 2009. KKR focuses on thelargest end of the private equity market, which allows it to invest in industry-leading franchises withglobal operations, attract world-class management teams, deploy large amounts of capital in individualtransactions and optimize amounts of income that it earns on a per transaction basis. KKR’s investmentapproach leverages its capital base, sourcing advantage, skill set, global network and infrastructure,industry knowledge, operating expertise, and unique access to operating consultants and senior advisors,which it believe sets KKR apart from other private equity firms.

The following charts present information concerning the amount of capital invested in the 1996Fund and subsequent traditional private equity funds by geography and industry from the time of the

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23JUL200902005522 23JUL200902005757

1996 Fund’s first investment through March 31, 2009. KKR believe that this data illustrates the benefitsof its business approach and ability to source and invest in deals in multiple industries and geographies.

Dollars Invested by Geography Dollars Invested by Industry(1996 Fund and Subsequent Funds as of (1996 Fund and Subsequent Funds as of

March 31, 2009) March 31, 2009)

Amount Invested By Country

America52.0%

Australia1.8%

Austria1.0%

Canada3.1%

China0.7%

Denmark1.5%

England9.9%

France5.4%

Germany10.0%

India1.6%

Italy0.7%

Luxembourg1.5%

Netherlands5.0%

Singapore2.7%

Switzerland1.1%

Taiwan0.4%

Turkey1.6%

Amount Invested By Industry

Chemicals1.8%

ConsumerProducts

3.2%

Education1.4%

Energy7.0%

FinancialServices14.2%

Health Care14.7%

Hotels/Leisure2.1% Manufacturing

12.8%Media11.9%

Recycling0.9%

Retail12.2%

Technology10.9%

Telecom5.3%

Transportation1.6%

Although the general partners of the 1996 Fund and prior funds will not be contributed to theCombined Business of KKR and KPE in connection with the Combination Transaction, the 1996 Fundwas significant to KKR’s operations during the periods for which historical information has beenpresented in this consent solicitation statement and, accordingly, the 1996 Fund has been consolidatedin the KKR Group’s historical financial presentation. If the 1996 Fund had not been included in the‘‘Dollars Invested by Geography’’ chart above, the share of dollars invested would have been 49.5% inNorth America, 41.8% in Europe and 8.7% in Asia. If the 1996 Fund had not been included in the‘‘Dollars Invested by Industry’’ chart above, the share of dollars invested in the following industrieschanged by at least 1.0%: Consumer Products, Health Care, Hotels/Leisure, Technology and Telecom.

KKR’s current private equity portfolio, which is held among a number of private equity funds andco-investment vehicles, consists of approximately 50 companies with more than $200 billion of annualrevenues and more than 875,000 employees worldwide. These companies are headquartered in morethan 17 countries and operate in 14 general industries which take advantage of its broad and deepindustry and operating expertise. Many of these companies are leading franchises with globaloperations, strong management teams, defensible market positions and attractive growth prospects,which KKR believes will provide benefits through a broad range of business conditions, including thecurrent economic cycle.

The following table presents information concerning the portfolio companies in KKR’s currentprivate equity portfolio as of March 31, 2009.

Year ofCompany Name Investment Industry Region

Ma Anshan Modern Farming . . . . . . . . . . . . . . . . 2008 Consumer Products Asia/ChinaUnisteel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 Technology SingaporeKKR Debt Investors S.a r.l. . . . . . . . . . . . . . . . . 2008 Financial Services VariousBharti Infratel Limited . . . . . . . . . . . . . . . . . . . . 2008 Telecommunication IndiaLegg Mason, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 2008 Financial Services United States

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Year ofCompany Name Investment Industry Region

Northgate Information Solutions Limited . . . . . . . 2008 Technology United KingdomAlliance Boots GmbH . . . . . . . . . . . . . . . . . . . . . 2007 Health Care United KingdomBiomet, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 Health Care United StatesDollar General Corporation . . . . . . . . . . . . . . . . . 2007 Retail United StatesEnergy Future Holdings Corp. . . . . . . . . . . . . . . 2007 Energy United StatesFirst Data Corporation . . . . . . . . . . . . . . . . . . . . 2007 Financial Services United StatesHarman International Industries, Incorporated . . . 2007 Consumer United StatesLaureate Education, Inc. . . . . . . . . . . . . . . . . . . 2007 Education United StatesMMI Holdings Limited . . . . . . . . . . . . . . . . . . . . 2007 Technology SingaporeProSiebenSat.1 Media AG . . . . . . . . . . . . . . . . . . 2007 Media GermanyTarkett S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 Manufacturing FranceTianrui Group Cement Co., Ltd. . . . . . . . . . . . . . 2007 Manufacturing ChinaU.N. Ro-Ro Isletmeleri A.S. . . . . . . . . . . . . . . . . 2007 Transportation TurkeyU.S. Foodservice, Inc. . . . . . . . . . . . . . . . . . . . . . 2007 Retail United StatesYageo Corporation . . . . . . . . . . . . . . . . . . . . . . . 2007 Technology TaiwanAricent Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 Technology IndiaAVR Bedrijven N.V. . . . . . . . . . . . . . . . . . . . . . . 2006 Recycling The NetherlandsBIS Industries Limited . . . . . . . . . . . . . . . . . . . . 2006 Industrial AustraliaCapmark Financial Group Inc. . . . . . . . . . . . . . . 2006 Financial Services United StatesHCA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 Health Care United StatesKION Group GmbH . . . . . . . . . . . . . . . . . . . . . . 2006 Manufacturing GermanyThe Nielsen Company B.V. . . . . . . . . . . . . . . . . . 2006 Media United StatesNXP B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 Technology The NetherlandsPagesJaunes Groupe S.A. . . . . . . . . . . . . . . . . . . 2006 Media FranceSeven Media Group . . . . . . . . . . . . . . . . . . . . . . 2006 Media AustraliaTDC A/S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 Telecommunication DenmarkAccellent Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 Health Care United StatesAvago Technologies Limited . . . . . . . . . . . . . . . . 2005 Technology SingaporeDuales System Deutschland AG . . . . . . . . . . . . . . 2005 Recycling GermanySunGard Data Systems, Inc. . . . . . . . . . . . . . . . . 2005 Technology United StatesToys ‘R’ Us, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 2005 Retail United StatesA.T.U. Auto-Teile-Unger Holding GmbH . . . . . . . 2004 Retail GermanyJazz Pharmaceuticals, Inc. . . . . . . . . . . . . . . . . . . 2004 Health Care United StatesMaxeda B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2004 Retail The NetherlandsSealy Corporation . . . . . . . . . . . . . . . . . . . . . . . . 2004 Consumer United StatesVisant Corporation . . . . . . . . . . . . . . . . . . . . . . . 2004 Media United StatesKSL Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 Hotel/Leisure United StatesLegrand Holdings S.A. . . . . . . . . . . . . . . . . . . . . 2002 Manufacturing FranceNuVox, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2000 Telecommunication United StatesRockwood Holdings, Inc. . . . . . . . . . . . . . . . . . . 2000 Chemicals United StatesZhone Technologies, Inc. . . . . . . . . . . . . . . . . . . 1999 Telecommunication United StatesMedCath Corporation . . . . . . . . . . . . . . . . . . . . . 1998 Health Care United StatesPRIMEDIA Inc. . . . . . . . . . . . . . . . . . . . . . . . . 1989 Media United States

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22JUL20090852402522JUL200908523850

KKR takes a long-term approach to private equity investments and measures the success of itsinvestments over a period of years rather than months. Given the duration of its private equityinvestments, the firm focuses on generating large multiples of invested capital and attractive IRRs whendeploying capital in private equity transactions. Since its inception, KKR has completed more than 165private equity investments involving an aggregate transaction value of more than $425 billion. KKR hasnearly doubled the value of capital that it has invested in private equity, turning $44.4 billion of capitalinto $77.1 billion of value. Excluding its less mature funds, KKR has more than doubled the value ofcapital invested, turning $31.2 billion of capital into $67.8 billion of value. Mature funds consist offunds that were formed more than 36 months prior to the valuation date.

Amount Invested and Total Value Amount Invested and Total ValueAll Investments Mature Funds

As of March 31, 2009 As of March 31, 2009

Amount Invested and Total Value—Excludes KPE Amount Invested and Total Value—Excludes KPE

$31.2

RealizedValue $60.1

UnrealizedValue $7.7

Amount Invested Total Value

$67.8

0

10

20

30

40

50

60

70

80

90

($ in

bill

ions

)

RealizedValue $60.1

$44.4

UnrealizedValue $17.0

Amount Invested Total Value

$77.1

0

10

20

30

40

50

60

70

80

90

($ in

bill

ions

)

From its inception in 1976 through March 31, 2009, KKR’s traditional private equity fundsgenerated a cumulative gross IRR of 25.6%, compared to the 10.5% gross IRR achieved by theS&P 500 Index over the same period, despite the cyclical and sometimes challenging environments inwhich it has operated. The S&P 500 Index is an unmanaged index and its returns assume reinvestmentof distributions and do not reflect any fees or expenses.

The table below presents information as of March 31, 2009 relating to the historical performanceof each of KKR’s traditional private equity funds since inception, which it believes illustrates thebenefits of its private equity approach. This data does not reflect additional capital raised sinceMarch 31, 2009 or acquisitions or disposals of investments, changes in investment values ordistributions occurring after that date. You are encouraged to review the cautionary note below for adescription of reasons why the future results of KKR’s private equity funds may differ from thehistorical results of its private equity funds.

Multiple ofAmount Fair Value of Investments Gross Net InvestedPrivate Equity Fund(1)(2) CommittedInvested Realized Unrealized Total IRR* IRR* Capital**

($ in millions)Legacy Funds1976 Fund . . . . . . . . . . . . . . . . . . . $ 31 $ 31 $ 537 $ — $ 537 39.5% 35.5% 17.11980 Fund . . . . . . . . . . . . . . . . . . . $ 357 $ 357 $ 1,828 — $ 1,828 29.0% 25.8% 5.11982 Fund . . . . . . . . . . . . . . . . . . . $ 328 $ 328 $ 1,291 — $ 1,291 48.1% 39.2% 3.91984 Fund . . . . . . . . . . . . . . . . . . . $ 1,000 $ 1,000 $ 5,963 — $ 5,963 34.5% 28.9% 6.01986 Fund . . . . . . . . . . . . . . . . . . . $ 672 $ 672 $ 9,081 — $ 9,081 34.4% 30.7% 13.51987 Fund . . . . . . . . . . . . . . . . . . . $ 6,130 $ 6,130 $14,783 $ 44 $14,827 12.1% 8.9% 2.41993 Fund . . . . . . . . . . . . . . . . . . . $ 1,946 $ 1,946 $ 4,129 $ 5 $ 4,134 23.6% 16.7% 2.11996 Fund . . . . . . . . . . . . . . . . . . . $ 6,012 $ 6,012 $11,310 $ 429 $11,739 17.6% 12.8% 2.0

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Multiple ofAmount Fair Value of Investments Gross Net InvestedPrivate Equity Fund(1)(2) CommittedInvested Realized Unrealized Total IRR* IRR* Capital**

($ in millions)Funds Included in Combination(3)European Fund (1999)(4) . . . . . . . . . $ 3,085 $ 3,085 $ 5,593 $ 1,431 $ 7,024 25.6% 18.6% 2.3Millennium Fund (2002) . . . . . . . . . . $ 6,000 $ 5,900 $ 5,024 $ 3,464 $ 8,488 20.1% 13.4% 1.4European Fund II (2005)(4) . . . . . . . $ 5,751 $ 5,751 $ 563 $ 2,340 $ 2,903 (31.5)% (31.7)% 0.52006 Fund (2006) . . . . . . . . . . . . . . $17,642 $12,073 — $ 8,473 $ 8,473 * * 0.7Asian Fund (2007) . . . . . . . . . . . . . . $ 3,979 $ 925 — $ 718 $ 718 * * 0.8European Fund III (2008)(4) . . . . . . . $ 6,396 $ 194 — $ 109 $ 109 * * 0.6

All Funds . . . . . . . . . . . . . . . . . . . . $59,329 $44,404 $60,102 $17,013 $77,115 25.9% 19.4% 2.2

(1) See ‘‘Organizational Structure’’ and ‘‘Preliminary Unaudited Pro Forma Segment Information.’’

(2) The last investment for each of the 1976 Fund, 1980 Fund, the 1982 Fund, the 1984 Fund and the 1986 Fundwas liquidated on May 14, 2003, July 11, 2003, December 11, 1997, July 17, 1998 and December 29, 2004,respectively. The 1987 Fund and the 1993 Fund currently each have one investment, and it is not known whenthose investments will be liquidated. In the case of the 1976 Fund and the 1980 Fund, the last distributionsmade to fund investors occurred on May 17, 2002 and December 14, 1999, respectively.

(3) The capital commitments of the European Fund, the European Fund II and the European Fund III includeeuro-denominated commitments of A196.5 million, A2,597.2 million and A2,934.0 million, respectively. Suchamounts have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchasefor each investment and (ii) the exchange rate prevailing on March 31, 2009 in the case of unfundedcommitments.

(4) The gross IRR, net IRR and multiple of invested capital are calculated based on KKR’s first eleventraditional private equity funds, which represent all of its private equity funds that have invested for at least36 months prior to March 31, 2009. The 2006 Fund, the Asian Fund and the European Fund III had notinvested for at least 36 months as of March 31, 2009. KKR therefore has not calculated gross IRRs, net IRRsand multiples of invested capital with respect to those funds as of March 31, 2009.

* IRRs measure the aggregate annual compounded returns generated by a fund’s investments over a holdingperiod. Net IRRs are calculated after giving effect to the allocation of realized and unrealized returns on afund’s investments to the fund’s general partner pursuant to a carried interest and the payment of anyapplicable management fees. Gross IRRs are calculated before giving effect to the allocation of realized andunrealized returns on a fund’s investments to the fund’s general partner or manager pursuant to a carriedinterest and the payment of any applicable management fees.

** The multiples of invested capital measure the aggregate returns generated by a fund’s investments in absoluteterms. Each multiple of invested capital is invested by adding together the total realized and unrealized valuesof a fund’s investments and dividing by the total amount of capital invested by the fund. Such amounts do notgive effect to the allocation of any realized and unrealized returns on a fund’s investments to the fund’sgeneral partner pursuant to a carried interest or the payment of any applicable management fees.

Investment Approach

KKR’s approach to making private equity investments focuses on achieving large multiples ofinvested capital and attractive risk-adjusted IRRs by selecting high-quality investments that may bemade at attractive prices, applying rigorous standards of due diligence when making investmentdecisions, implementing strategic and operational changes that drive value creation in acquiredbusinesses, carefully monitoring investments and making informed decisions when developinginvestment exit strategies.

KKR believes that it has achieved a leading position in the private equity industry by applying adisciplined investment approach and by building strong partnerships with highly motivated managementteams who put their own capital at risk. When making private equity investments, KKR seeks out large

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capitalization companies with strong business franchises, attractive growth prospects, defensible marketpositions and the ability to generate attractive returns. KKR does not participate in ‘‘hostile’’transactions that are not supported by a target company’s board of directors.

Sourcing and Selecting Investments

KKR has access to significant opportunities for making private equity investments as a result of itssizeable capital base, global infrastructure and relationships with leading executives from majorcompanies, commercial and investment banks and other investment and advisory institutions, includingby its own estimate chief executives and directors of two-thirds of the companies in the S&P 500 andthe Global S&P 100. Members of KKR’s global network frequently contact KKR with new investmentopportunities, including a substantial number of exclusive investment opportunities and opportunitiesthat are made available to only a very limited number of other firms, which has generated substantialdeal flow for KKR. KKR also proactively pursues business development strategies that are designed togenerate deals internally based on the depth of its industry knowledge and KKR’s reputation as aleading financial sponsor.

To enhance its ability to identify and consummate private equity investments, KKR has organizedits investment professionals in industry-specific teams that focus on the nine industry sectors in whichKKR is most active: chemicals; consumer products; energy and natural resources; financial services;health care; industrial; media and communications; retail and technology. KKR’s industry teams workclosely with KKR’s operational consultants and senior advisors to identify businesses that it can growand improve. These teams conduct their own primary research, develop a list of industry themes andtrends, identify companies and assets in need of operational improvement and seek out businesses andassets that will benefit from KKR’s involvement. They possess a detailed understanding of the economicdrivers, opportunities for value creation and strategies that can be designed and implemented toimprove companies across the industries in which the firm invests.

KKR believes that its industry-specific expertise provides it with important proprietary investmentopportunities and creates a significant advantage when investing in more complex and regulatedindustries, such as banking, insurance and power generation and transmission. Utilizing its insights andindustry contacts to access new markets or target strategic acquisitions also helps KKR when it workswith management teams to develop value-creating strategies and, in some instances, can lead toadditional revenue opportunities for portfolio companies.

Due Diligence and the Investment Decision

When an investment team determines that an investment proposal is worth consideration, theproposal is formally presented to the investment committee and the due diligence process commences.The objective of the due diligence process is to identify attractive investment opportunities based onthe facts and circumstances surrounding an investment and to prepare a framework that may be usedfrom the date of an acquisition to drive operational improvement and value creation. When conductingdue diligence, investment teams evaluate a number of important business, financial, tax, accounting,environmental and legal issues in order to determine whether an investment is suitable. In connectionwith the due diligence process, investment professionals spend significant amounts of time meeting witha company’s management and operating personnel, visiting plants and facilities and speaking withcustomers and suppliers in order to understand the opportunities and risks associated with theproposed investment. KKR’s investment professionals also use the services of outside accountants,consultants, lawyers, investment banks and industry experts as appropriate to assist them in this process.The investment committee monitors all due diligence practices and must approve an investment beforeit may be made.

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Building Successful and Competitive Businesses

When investing in a portfolio company, KKR partners with world-class management teams toexecute on its investment thesis, and it rigorously tracks performance through regular reporting anddetailed operational and financial metrics. KKR has developed a global network of experiencedmanagers and operating executives who assist the portfolio companies in making operationalimprovements and achieving growth. KKR augments these resources with operational guidance from itsoperating consultants, senior advisors and investment teams and with ‘‘100-Day Plans’’ that focus thefirm’s efforts and drive its strategies. KKR emphasizes efficient capital management, top-line growth,R&D spending, geographical expansion, cost optimization and investment for the long-term.

Realizing Investments

KKR has developed substantial expertise for realizing private equity investments. From itsinception through March 31, 2009, the firm has generated approximately $60.1 billion of cash proceedsfrom the sale of KKR’s portfolio companies in initial public offerings, secondary offerings,recapitalization, and sales to strategic buyers. When exiting investments, KKR’s objective is to structurethe exit in a manner that optimizes returns for investors and, in the case of publicly traded companies,minimizes the impact that the exit has on the trading price of the company’s securities. KKR believesthat its ability to successfully realize investments is attributable in part to the strength and discipline ofits portfolio management committee and the firm’s longstanding relationships with corporate buyersand members of the investment banking and investing communities.

Traditional Private Equity Funds

Overview

Most of the private equity funds that KKR sponsors and manages have finite lives and investmentperiods. Each fund is organized as a single partnership or a combination of separate domestic andoverseas partnerships and each partnership is controlled by a general partner. Fund investors arelimited partners who agree to contribute a specified amount of capital to the fund from time to timefor use in qualifying investments during the investment period, which generally lasts up to six yearsdepending on how quickly capital is deployed. Each fund’s general partner is generally entitled to acarried interest that allocates to it 20% of the net profits realized from the fund’s investments.

The partnership documents governing KKR’s traditional private equity funds generally include a‘‘clawback’’ or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to acontingent obligation that may require the general partner to return or contribute amounts to the fundfor distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the term of the fundexceed the amount to which the general partner was ultimately entitled. Under a ‘‘net loss sharingprovision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to thefund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharingprovisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of theirinvestment losses to KKR relative to the amounts contributed by KKR to those vehicles. In thesevehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles inthe event of a liquidation of the fund regardless of whether any carried interest had previously beendistributed. See ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results ofOperations—Liquidity and Capital Resources.’’

KKR principals will remain responsible for any clawback obligations relating to carry distributionsreceived prior to the Transactions up to the aggregate contingent repayment obligation as of June 30,

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2009 ($224 million) as well as any clawback obligations relating to any carry distributions that theyreceive after the Transactions pursuant to any carried interest allocated directly to them as carry poolparticipants. KKR will be responsible for any other clawback obligations and any amounts due undernet loss sharing arrangements and will indemnify its principals for any personal guarantees that theyhave provided with respect to such amounts.

KKR enters into management agreements with its traditional private equity funds pursuant towhich it receives management fees in exchange for providing the funds with management and otherservices. These management fees are calculated based on the amount of capital committed to a fundduring the investment period and thereafter on the cost basis of the fund’s investments, which causesthe fees to be reduced over time as investments are liquidated. These management fees are paid byfund investors, who generally contribute capital to the fund in order to allow the fund to pay the feesto KKR. KKR funds generally allocate management fees across individual investments and, as andwhen an investment generates returns, 20% of the allocated management fee is required to be returnedto investors before a carried interest may be paid.

KKR also enters into monitoring agreements with its portfolio companies pursuant to which itreceives periodic monitoring fees in exchange for providing them with management, consulting andother services, and it typically receives transaction fees from portfolio companies for providing themwith financial advisory and other services in connection with specific transactions. In some cases, KKRmay be entitled to other potential fees that are paid by an investment target when a potentialinvestment is not consummated. KKR’s traditional private equity fund agreements typically require it toshare 80% of any advisory and other potential fees that are allocable to a fund, after reduction forexpenses incurred allocable to a fund from unconsummated transactions, with fund investors in theform of a management fee reduction. These agreements typically require management fee reductionsequal to 80% of the amount of the monitoring, transaction and other potential fees that are reasonablyallocable to a fund.

In addition, the agreements governing KKR’s traditional private equity funds enable investors inthose funds to reduce their capital commitments available for further investments, on aninvestor-by-investor basis, in the event certain ‘‘key persons’’ (for example, both of Messrs. Kravis andRoberts) in KKR’s investment funds generally cease to actively manage the fund. While theseprovisions do not allow investors to withdraw capital that has been invested or cause a fund toterminate, the occurrence of a ‘‘key man’’ event could cause disruption in KKR’s business, reduce theamount of capital that it has available for future investments and make it more challenging to raiseadditional capital in the future.

To the extent investors in KKR’s private equity funds suffer losses resulting from fraud, grossnegligence, willful misconduct or other similar misconduct, investors may have remedies against KKR,its private equity funds, its principals or its affiliates under the federal securities laws and state laws.While the general partners and investment advisers to KKR’s private equity funds, including theirdirectors, officers, other employees and affiliates, are generally indemnified by the private equity fundsto the fullest extent permitted by law with respect to their conduct in connection with the managementof the business and affairs of KKR’s private equity funds, such indemnity does not extend to actionsdetermined to have involved fraud, gross negligence, willful misconduct or other similar misconduct.

Because fund investors typically are unwilling to invest their capital in a fund unless the fund’smanager also invests its own capital in the fund’s investments, KKR’s private equity fund documentsgenerally require the general partners of the funds to make minimum capital commitments to thefunds. The amounts of these commitments, which are negotiated by fund investors, generally rangefrom 2% to 4% of a fund’s total capital commitments at final closing. When investments are made, thegeneral partner contributes capital to the fund based on its fund commitment percentage and acquiresa capital interest in the investment that is not subject to a carried interest. Historically, these capital

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contributions have been funded with cash from operations that otherwise would be distributed toKKR’s existing owners.

In addition, qualifying KKR personnel typically invest their own capital in side-by-side investmentswith the firm’s traditional private equity funds. Side-by-side investments are investments made on thesame terms and conditions as those available to the applicable fund, except that these side-by-sideinvestments are not subject to management fees or a carried interest. KKR believes that theseinvestments, which require its people to put their own capital at risk, are an important means of KKR’saligning the interests of the firm with those of its investors.

In connection with the Combination Transactions, the Combined Business will not be allocated anyof the capital contributions made by the general partners of KKR’s funds prior to the completion ofthe Combination Transaction or any returns generated on those contributions. It will, however, berequired to fund the general partners’ obligations with respect to future investments and will recordinvestment income to the extent that those investments generate profits. In addition, the CombinedBusiness will not acquire any interest in any side-by-side investments that have been made by KKRpersonnel.

The table below presents information as of March 31, 2009 relating to general partner interests inKKR’s traditional private equity funds that will be contributed to the Combined Business. This datadoes not reflect acquisitions or disposals of investments, changes in investment values or distributionsoccurring after March 31, 2009.

As of March 31, 2009Outstanding

Investment Period Amount Investments% Fair Value

Committed AllocablePrivate Equity Commencement End Amount by General Invested Remaining Fair to GeneralFund Date(1) Date(1) Committed(2) Partner by Fund Realized Cost Value Partner(3)

($ in millions)European Fund III

(2008) . . . . . . . 3/2008 3/2014 $ 6,396.4 4.6% $ 193.7 — $ 193.7 $ 109.2 $ 4.9Asian Fund (2007) . 7/2007 7/2013 $ 4,000.0 2.5% $ 925.0 — $ 925.0 $ 718.0 $ 18.02006 Fund . . . . . . 9/2006 9/2012 $17,642.1 2.1% $12,073.3 — $12,073.3 $ 8,473.2 $(133.8)European Fund II

(2005) . . . . . . . 10/2008 11/2011 $ 5,750.8 2.1% $ 5,750.8 $ 563.1 $ 5,534.4 $ 2,339.6 $ (7.6)Millennium Fund

(2002) . . . . . . . 12/2002 12/2008 $ 6,000.0 2.5% $ 5,900.4 $ 5,024.4 $ 4,908.2 $ 3,463.9 $(170.8)European Fund

(1999) . . . . . . . 12/1999 12/2005 $ 3,085.4 3.2% $ 3,085.5 $ 5,592.5 $ 1,130.1 $ 1,431.2 $ 121.0

$27,928.7 $11,180.0 $24,764.7 $16,535.1 $(168.3)

(1) The commencement date represents the date on which the general partner of the applicable fund commenced investmentof the fund’s capital. The end date represents the earlier of the date on which the general partner of the applicable fundwas or will be required by the fund’s governing agreement to cease making investments on behalf of the fund, unlessextended by a vote of the fund investors, or the date on which the last investment was made.

(2) The amount committed represents the aggregate capital commitments to the fund, including capital commitments by third-party fund investors and the general partner. Foreign currency commitments have been converted into U.S. dollars basedon (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate that prevailed onMarch 31, 2009, in the case of unfunded commitments.

(3) Fair value allocable to general partner represents that portion of a fund’s fair value that is allocable to its general partneras a result of (i) the general partner’s capital commitment to the fund and (ii) the general partner’s right to carried interestand net loss sharing.

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Global Private Equity Funds

KKR’s global private equity funds make private equity investments worldwide, but focus most oftheir investment activities in North America. These funds historically have participated in allinvestments that the firm sources for its European and Asian private equity funds based on allocationcriteria set forth in the partnership agreements governing the funds. Commencing March 2009, thelimited partnership agreement for the 2006 Fund was amended to make investing with the Europeanand Asian private equity funds optional. In connection with the Combination Transaction, KKR willcontribute to the Combined Business interests in the general partners of its two most recent globalprivate equity funds: the Millennium Fund and the 2006 Fund. The 2006 Fund is one of the largestprivate equity funds ever raised.

The Millennium Fund received $6.0 billion of capital commitments as of its final closing, of which$5.9 billion had been invested as of March 31, 2009. The 2006 Fund received $17.6 billion of capitalcommitments as of its final closing, of which $12.1 billion had been invested as of March 31, 2009 and$5.5 billion remained available for future investments. Collectively, these funds had outstandinginvestments in 46 portfolio companies operating in 14 different industry sectors. These investments hada fair value of $11.9 billion and a remaining cost of $17.0 billion as of March 31, 2009.

European Private Equity Funds

KKR’s European private equity funds make private equity investments that the firm sources inEurope, although they are permitted to make investments in other jurisdictions (but generally not theUnited States and Canada). In connection with the Combination Transaction, KKR will contribute tothe Combined Business interests in the general partners of each of KKR’s European private equityfunds: the European Fund, the European Fund II and the European Fund III.

The European Fund and the European Fund II received $3.1 billion and $5.8 billion, respectively,of capital commitments as of their respective final closings. All of the capital commitments made to theEuropean Fund and to the European Fund II have been invested. The European Fund III received anaggregate of $6.4 billion of capital commitments as of its final closing, of which $0.2 billion had beeninvested and $6.2 billion remained available for future investments as of March 31, 2009. Collectively,these funds had outstanding investments in 18 portfolio companies operating in 9 different industrysectors as of March 31, 2009. These investments had a fair value of $3.9 billion and a remaining cost of$6.9 billion as of such date.

Asian Private Equity Fund

KKR’s Asian Fund is KKR’s first private equity fund that is dedicated to making investments inthe Asia-Pacific region, and KKR will contribute interests in its general partner to the CombinedBusiness in connection with the Combination Transaction. The fund received $4.0 billion of capitalcommitments as of its final closing, of which $0.9 billion had been invested and $3.1 billion remainedavailable for future investments as of March 31, 2009. The fund had outstanding investments in sixportfolio companies operating in four different industry sectors as of March 31, 2009. Theseinvestments had a fair value of $0.7 billion and a remaining cost of $0.9 billion as of such date.

Annex Fund

In April 2009, KKR approached investors in the European Fund II and the Millennium Fund witha proposal for a new fund to make additional investments in portfolio companies of the EuropeanFund II. The new fund, which has not yet had a closing, has several features that distinguish it fromKKR’s other traditional private equity funds, including: (i) it will not pay a management fee to KKR;(ii) its general partner will only be entitled to a carried interest after netting costs and expenses relatingto European Fund II investments from the profits of its investments; and (iii) KKR has agreed not to

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charge transaction or incremental monitoring fees in connection with its investments. In addition,eligible investors may transfer a portion of their European Fund III commitments to the new fund,which is expected to reduce the commitments available to the European Fund III and the overallamount of management fees payable by the European Fund III to KKR.

Legacy Private Equity Funds

The investment period for each of the 1987 Fund, the 1993 Fund and the 1996 Fund has ended.Because the general partners of these funds are not expected to receive meaningful proceeds fromfurther realizations, interests in the general partners will not be contributed to the Combined Businessin connection with the Combination Transaction. KKR will, however, continue to provide the legacyfunds with management and other services until their liquidation. While KKR does not expect toreceive meaningful fees for providing these services, it does not believe that the ongoing administrationof the funds will interfere with the firm’s operations or generate any material costs for the firm.

Other Private Equity Products

The proportion of equity used to finance leveraged buyouts has increased significantly in recentyears, creating significant opportunities to offer co-investment opportunities to both fund investors andother third parties. KKR has capitalized on this opportunity by building out its capital markets anddistribution capabilities and creating new investment structures and products that allow it to syndicate aportion of the equity needed to finance acquisitions. These structures include co-investment vehiclesand a principal protected private equity product, many of which entitle the firm to receive managementfees and/or carry. As of March 31, 2009, KKR had $1,656.6 million of AUM in fee and/or carry-yieldingproducts of this type. In connection with the Combination Transaction, KKR will contribute to theCombined Business all of the interests that entitle it to receive those economics.

Infrastructure

KKR recognizes the important role that infrastructure plays in the growth of both developed anddeveloping economies, and believes that the global infrastructure market provides an opportunity forthe firm’s unique combination of private investment, operational improvement and regulatory andinfrastructure-related and stakeholder management skills. While KKR has made significant investmentsin infrastructure assets through its private equity funds such as ITC Holdings and DPL Inc., the firmbegan building out its infrastructure operations as a distinct and complementary business in 2008 inorder to capitalize on the growing demand for global infrastructure investment and provide investorswith an opportunity to invest in infrastructure assets as a distinct asset class.

KKR’s infrastructure initiative is a natural extension of its private equity business and builds on thesignificant expertise that the firm has established by managing investments in large, complex andregulated businesses and its record of driving operational improvements in a wide range of industries.KKR has built out an investment team of professionals who focus on global infrastructureopportunities. These professionals have investment experience and backgrounds that span the sectors inwhich KKR expects to invest and have expertise in the regulatory affairs, public policy, public affairs,operations, finance and legal matters that arise in connection with infrastructure investments. Byextending its platform to include a dedicated infrastructure team and applying the skill set that it hasdeveloped over its 33-year history, KKR believes that it is well-positioned to generate attractive returnsand create significant value in connection with infrastructure investments.

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KKR’s approach to infrastructure investing, which has contributed in part to its private equity trackrecord, involves the same active management style and operational focus that it applies to privateequity. The firm intends to make selective investments in infrastructure businesses and assets on aglobal basis where it can apply KKR’s operational and public affairs expertise to generate additionalvalue. Investments are expected to focus on energy, waste and wastewater, transportation andtelecommunications assets but may also include social infrastructure and infrastructure-related assets.KKR anticipates investing through concession agreements or by outright purchase principally inbrownfield assets and may undertake greenfield projects in a minority of circumstances. The firm willgenerally seek to acquire majority ownership in assets or companies to insure strategic influence overthe investment. The predominant emphasis will be on infrastructure investments in OECD economies;however, certain BRIC countries, such as India and China, may also be considered.

Public Markets

Through its public markets segment, KKR manages and sponsors a group of private and publiclytraded fixed income funds, structured finance vehicles and managed accounts that focus on corporatedebt investments. These funds, vehicles and accounts are managed by Kohlberg Kravis Roberts & Co.(Fixed Income) LLC, a registered investment adviser, and leverage KKR’s global investment platform,experienced investment professionals and ability to adapt its investment strategies to different marketconditions to capitalize on investment opportunities that may arise at every level of the capitalstructure. As of June 30, 2009, the segment had $13.3 billion of AUM, including $1.4 billion of AUM inprivate and publicly traded fixed income funds, $9.0 billion of AUM in structured finance vehicles and$2.9 billion of AUM in separately managed accounts.

The following chart presents the growth in the AUM of KKR’s public markets segment from thecommencement of operations through June 30, 2009.

2004 2005 2006 2007 2008 June 30 2009

0.8

3.75.1

11.013.2 13.3

0

5

10

15

($ in

bill

ions

)

Experience

KKR launched its public markets business in August 2004. In connection with the formation of thisbusiness, the firm hired additional investment professionals with significant experience evaluating andmanaging debt investments, including investments in corporate loans and debt securities, structuredproducts and other fixed income instruments, and built out an investment platform for identifying,assessing, executing, monitoring and realizing investments.

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Investment Approach

KKR’s approach to making debt investments focuses on creating investment portfolios thatgenerate attractive risk-adjusted returns on invested capital by allocating capital across multiple assetclasses, selecting high-quality investments that may be made at attractive prices, applying rigorousstandards of due diligence when making investment decisions, subjecting investments to regularmonitoring and oversight and making buy and sell decisions based on price targets and relative valueparameters. The firm employs both ‘‘top-down’’ and ‘‘bottom-up’’ analyses when making these types ofinvestments. Its top-down analysis involves a macro analysis of relative asset valuations, long-termindustry trends, business cycles, interest rate expectations, credit fundamentals and technical factors totarget specific industry sectors and asset classes in which to invest. Its bottom-up analysis includes arigorous analysis of the credit fundamentals and capital structure of each credit considered forinvestment and a thorough review of the impact of credit and industry trends and dynamics anddislocation events on such potential investment.

Sourcing and Selecting Investments

KKR sources debt investment opportunities through a variety of channels, including internal dealgeneration strategies and the firm’s global network of contacts at major companies and corporateexecutives, commercial and investment banks, financial intermediaries, other private equity sponsorsand other investment and advisory institutions. Its fixed income funds, structured finance vehicles andmanaged accounts are also regularly provided with opportunities to invest in debt that KKR’s portfoliocompanies incur in connection with KKR’s private equity investments. These opportunities may besignificant. As of March 31, 2009, these vehicles and accounts held investments with a face value of$5.3 billion in senior and subordinated corporate loans, bridge loans and debt securities of KKRportfolio companies.

Due Diligence and the Investment Decision

Once a potential investment has been identified, KKR’s investment professionals screen theopportunity and make a preliminary determination concerning whether KKR should proceed with adue diligence investigation. When evaluating the suitability of a debt investment, KKR employs arelative value framework and subjects the investment to a rigorous credit analysis. This reviewconsiders, among other things, pricing terms, expected returns, credit structure, credit ratings, historicaland projected financial data, the issuer’s competitive position, the quality and track record of theissuer’s management team, margin stability and industry and company trends. Investment professionalsuse the services of outside advisors and industry experts as appropriate to assist them in the duediligence process and, when relevant and permitted, leverage the knowledge and experience of KKR’sprivate equity professionals. A dedicated investment committee monitors all due diligence practices andmust approve an investment before it may be made.

Monitoring Investments

KKR monitors its portfolios of debt investments using daily, quarterly and annual analyses. Dailyanalyses include morning market meetings, industry and company pricing runs, industry and companyreports and discussions with the firm’s private equity investment professionals on an as-needed basis.Quarterly analyses include the preparation of quarterly operating results, reconciliations of actualresults to projections, updates to financial models (baseline and stress cases) and reviews of portfoliosof debt by the investment committee. Annual analyses involve preparing annual credit memoranda,conducting internal audits and testing compliance with monitoring and documentation requirements.

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KFN

Overview

KFN is a New York Stock Exchange-listed specialty finance company that commenced operationsin July 2004 to invest in a broad range of debt investments. KKR serves as the external manager ofKFN under a management agreement and is entitled to receive a quarterly base management fee equalto 1.75% of KFN’s equity as defined in the agreement and a quarterly incentive fee that is generallyequal to the amount by which KFN’s net income (before incentive fees and stock-based compensationexpenses) per weighted average share of common stock for the quarter exceeds a specified yield.During the period from January 1, 2009 through November 30, 2009, KKR elected to defer payment ofone-half of its base management fees from KFN. The aggregate amount of fees otherwise payableduring the deferral period will be payable to KKR upon the earlier of (x) December 15, 2009 and(y) the date of any termination of the management agreement. The management agreement may beterminated only in limited circumstances and, except for a termination arising from certain events ofcause, upon the payment of a termination fee to KKR.

Investment Activities

As of March 31, 2009, KFN’s investment portfolio included multiple asset classes and industries.The following table presents information concerning the amortized cost and fair value of theseinvestments by asset class as of the date indicated.

As of March 31, 2009Amortized

Investment Type Cost Basis Fair Value($ in millions)

Corporate loans and debt securities . . . . . . . . . . . . . . . . . . . . $8,815.3 $5,647.6Marketable equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 3.1Non-marketable equity securities . . . . . . . . . . . . . . . . . . . . . . 22.8 27.0Residential mortgage-backed securities(1) . . . . . . . . . . . . . . . . 340.3 246.3Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,180.9 $5,924.0

(1) Amount reflects KFN’s ownership of residential mortgage-backed securities and excludesthe consolidation of certain residential mortgage securitization vehicles that areconsolidated by KFN as KFN is deemed the primary beneficiary of these entities. Theconsolidation of these residential mortgage securitization vehicles has no impact on KFN’snet assets or results of operations.

KFN reported a net loss of $13.0 million, or $0.09 per diluted common share outstanding, for thethree months ended March 31, 2009, as compared to net income of $14.0 million, or $0.12 per dilutedcommon share outstanding, for the three months ended March 31, 2008, respectively. KFN reported anet loss for the year ended December 31, 2008 of $1.1 billion, or a loss of $7.68 per diluted commonshare outstanding, as compared to a net loss of $100.2 million, or $1.11 per diluted common shareoutstanding, and net income of $135.3 million, or $1.68 per diluted common share outstanding, for theyears ended December 31, 2007 and 2006, respectively. As of March 31, 2009, KFN had shareholders’equity of $0.7 billion and total investments with an estimated fair value of $5.9 billion.

Separately Managed Accounts

Beginning in 2008, KKR created a managed account platform that enables the firm to tailor aninvestment program to meet the specific risk, return and investment objectives of individual investors.To date, KKR has received $3.0 billion of commitments for this platform, and it is actively seeking to

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raise additional capital from both new and existing investors, including investors in its private equityfunds and fixed income funds. For managing these accounts, KKR is entitled to receive a fee thatvaries based on the nature of the investment program.

Structured Finance Vehicles

Beginning in 2005, KKR began managing structured finance vehicles in the form of collateralizedloan obligation transactions (‘‘CLOs’’). CLOs are typically structured as bankruptcy-remote, specialpurpose investment vehicles which acquire, monitor and, to varying degrees, manage a pool of fixed-income assets. KFN, and the private fixed income funds (see description below), use the CLOs as longterm financing for their fixed income investments and as a way to minimize refinancing risk, minimizematurity risk and secure a fixed cost of funds over an underlying market interest rate. As of June 30,2009, KKR had $9.0 billion of AUM in structured finance vehicles.

Private Fixed Income Funds

KKR also manages certain fixed income funds that make investments primarily in corporate debtand marketable and non-marketable equity securities. The amount of fees earned in connection withthe management of these funds is not material to its operations.

Mezzanine

KKR believes that mezzanine financing, a hybrid of debt and equity financing, has become anincreasingly attractive form of investment in recent years, and interest in mezzanine products has grownconsiderably given the favorable position of mezzanine in the capital structure and the historicallyattractive risk-reward characteristics of mezzanine investments. Given the debt- and equity-likecharacteristics of mezzanine financing, the returns that it generates and KKR’s presence in theleveraged loan market, KKR believes that expanding into mezzanine products will allow it to takeadvantage of synergies with its existing fixed income and private equity businesses.

Capital Markets and Principal Activities

KKR’s capital markets and principal activities segment will combine the capital markets activitiesof KKR with the assets acquired from KPE. Historically, KKR’s capital markets activities have beencarried out within its private markets and public markets segments and have not been accounted for asa separate segment for financial reporting purposes. Following the completion of the CombinationTransaction and the combination of these activities with the assets acquired from KPE, KKR expectsthat the results of the combined segment will be material to its operations and reported separately inits financial statements.

KKR’s capital markets business supports the firm, its portfolio companies and clients by providingtailored capital markets advice and developing and implementing both traditional and non-traditionalcapital solutions for investments and companies seeking financing. Its activities consist primarily ofcapital markets advisory services, arranging debt and equity financing for transactions, placing andunderwriting securities offerings and structuring new investment products. These activities capitalize onKKR’s natural sourcing advantage and global network and allow the firm to take greater control overboth the capital formation process and the manner in which it exits investments.

Since it launched its capital markets initiative in 2007, KKR has built a global capital marketsplatform that includes institutional placement capabilities, meaningful underwriting capacity and a teamof experienced capital markets and structuring professionals with long-standing investor relationshipsand industry experience. To allow it to carry out these activities, the firm has obtained broker-dealerlicenses in the United States, Canada, the United Kingdom, Dubai, Australia, and Japan and hasreceived passporting authority to act as a broker-dealer broadly in the European Economic Area.

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Today, KKR’s capital markets activities are focused on the firm, its portfolio companies and itsclients. These activities primarily supplement its existing capital-raising capabilities and the underwritingand advisory services that the firm’s funds and portfolio companies currently receive from largeinvestment banks. KKR’s capital markets professionals also focus on developing new products that itbelieves will allow KKR to attract new investors to the various asset classes in which it invests.Following the completion of the Combination Transaction, the firm’s capital markets professionals willact as additional resources for the assets acquired from KPE. Over time, KKR may expand its capitalmarkets business and grow its capabilities in a manner that further complements the firm’s otherbusiness activities.

Competition

KKR competes with other alternative asset managers for both investors and investmentopportunities. The firm’s competitors consist primarily of sponsors of public and private investmentfunds, business development companies, investment banks, commercial finance companies andoperating companies acting as strategic buyers. KKR believes that competition for investors is basedprimarily on investment performance; business reputation; the duration of relationships with investors;the quality of services provided to investors; pricing; and the relative attractiveness of the types ofinvestments that have been or are to be made. KKR believes that competition for investmentopportunities is based primarily on the pricing, terms and structure of a proposed investment andcertainty of execution.

Some of the entities that KKR competes with as an alternative asset manager have greaterfinancial, technical, marketing and other resources and more personnel than KKR and, in the case ofsome asset classes, longer operating histories, more established relationships or greater experience.Several of KKR’s competitors also have recently raised, or are expected to raise, significant amounts ofcapital and have investment objectives that are similar to the investment objectives of KKR’s funds,which may create additional competition for investment opportunities. Some of these competitors mayalso have lower costs of capital and access to funding sources that are not available to KKR, which maycreate competitive advantages for them. In addition, some of these competitors may have higher risktolerances, different risk assessments or lower return thresholds, which could allow them to consider awider range of investments and to bid more aggressively than KKR for investments. Strategic buyersmay also be able to achieve synergistic cost savings or revenue enhancements with respect to a targetedportfolio company, which may provide them with a competitive advantage in bidding for suchinvestments.

KKR expects to compete as a capital markets business primarily with investment banks andindependent broker-dealers in the United States, Europe, Asia, Australia and the Middle East andintends to focus its capital markets activities initially on the firm, its portfolio companies and clients.While KKR generally targets customers with whom it has existing relationships, those customers alsohave similar relationships with the firm’s competitors, many or all of whom will have access tocompeting securities transactions, greater financial, technical or marketing resources or moreestablished reputations than KKR. The limited operating history as a capital markets business couldmake it difficult for KKR to compete with established broker-dealers, participate in capital marketstransactions of issuers or successfully grow the firm’s capital markets business over time.

Employees

As of June 30, 2009, KKR employed approximately 575 people worldwide. The following tablepresents information concerning the most senior executives of KKR and KKR Capstone and their

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committee memberships as of March 31, 2009. These individuals are referred to elsewhere in thisconsent solicitation statement as KKR’s ‘‘senior principals.’’

Location Committee Membership

Henry R. Kravis . . . . . . . . . . . . . . . . . . . . . . New York Management CommitteePrivate Equity Investment CommitteePortfolio Management Committee

George R. Roberts . . . . . . . . . . . . . . . . . . . . Menlo Park Management CommitteePrivate Equity Investment CommitteePortfolio Management Committee

Paul E. Raether . . . . . . . . . . . . . . . . . . . . . . . New York Management CommitteePrivate Equity Investment CommitteePortfolio Management Committee

Michael W. Michelson . . . . . . . . . . . . . . . . . . Menlo Park Management CommitteePrivate Equity Investment Committee

James H. Greene, Jr. . . . . . . . . . . . . . . . . . . Menlo Park —Perry Golkin . . . . . . . . . . . . . . . . . . . . . . . . . New York —Johannes P. Huth . . . . . . . . . . . . . . . . . . . . . . London Management Committee

Private Equity Investment CommitteeTodd A. Fisher . . . . . . . . . . . . . . . . . . . . . . . London Management Committee

Private Equity Investment CommitteeAlexander Navab . . . . . . . . . . . . . . . . . . . . . . New York Management Committee

Private Equity Investment CommitteeJacques Garaıalde . . . . . . . . . . . . . . . . . . . . . London —Marc S. Lipschultz . . . . . . . . . . . . . . . . . . . . . New York —Reinhard Gorenflos . . . . . . . . . . . . . . . . . . . . London Portfolio Management CommitteeMichael M. Calbert . . . . . . . . . . . . . . . . . . . . Menlo Park —Scott C. Nuttall . . . . . . . . . . . . . . . . . . . . . . . New York Management CommitteeJoseph Y. Bae . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong Management CommitteeBrian F. Carroll . . . . . . . . . . . . . . . . . . . . . . . New York —Adam H. Clammer . . . . . . . . . . . . . . . . . . . . Menlo Park —Frederick M. Goltz . . . . . . . . . . . . . . . . . . . . San Francisco Fixed Income Investment CommitteeOliver Haarmann . . . . . . . . . . . . . . . . . . . . . . London —Dominic P. Murphy . . . . . . . . . . . . . . . . . . . . London —John L. Pfeffer . . . . . . . . . . . . . . . . . . . . . . . London —John K. Saer, Jr. . . . . . . . . . . . . . . . . . . . . . . New York —David H. Liu . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong —Ming Lu . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong —Kenneth W. Freeman . . . . . . . . . . . . . . . . . . . New York Portfolio Management CommitteeDavid J. Sorkin . . . . . . . . . . . . . . . . . . . . . . . New York Management CommitteeCraig J. Farr . . . . . . . . . . . . . . . . . . . . . . . . . New York —Simon E. Brown . . . . . . . . . . . . . . . . . . . . . . New York —William J. Janetschek . . . . . . . . . . . . . . . . . . . New York —Deryck C. Maughan . . . . . . . . . . . . . . . . . . . . New York —James C. Momtazee . . . . . . . . . . . . . . . . . . . . Menlo Park —Dean Nelson . . . . . . . . . . . . . . . . . . . . . . . . . New York Portfolio Management CommitteeJustin C. Reizes . . . . . . . . . . . . . . . . . . . . . . . Sydney —William C. Sonneborn . . . . . . . . . . . . . . . . . . San Francisco Fixed Income Investment Committee

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Regulation

Our operations are subject to regulation and supervision in a number of jurisdictions. The level ofregulation and supervision to which KKR is subject varies from jurisdiction to jurisdiction and is basedon the type of business activity involved. KKR, in conjunction with its outside advisers and counsel,seeks to manage its business and operations in compliance with such regulation and supervision. Theregulatory and legal requirements that apply to KKR’s activities are subject to change from time totime and may become more restrictive, which may make compliance with applicable requirements moredifficult or expensive or otherwise restrict KKR’s ability to conduct its business activities in the mannerin which they are now conducted. Changes in applicable regulatory and legal requirements, includingchanges in their enforcement, could materially and adversely affect KKR’s business and its financialcondition and results of operations. As a matter of public policy, the regulatory bodies that regulateKKR’s business activities are responsible for safeguarding the integrity of the securities and financialmarkets and protecting investors who participate in those markets rather than protecting the interestsof KKR’s unitholders.

United States

Regulation as an Investment Adviser

As an investment adviser, KKR is subject to the anti-fraud provisions of the Investment AdvisersAct and to fiduciary duties derived from these provisions which apply to KKR’s relationships with itsadvisory clients, including funds that KKR manages. These provisions and duties impose restrictionsand obligations on KKR with respect to its dealings with its clients, including for example restrictionson agency cross and principal transactions with its clients. KKR has not registered as an investmentadvisor, although Kohlberg Kravis Roberts & Co. L.P. and its wholly owned subsidiary Kohlberg KravisRoberts & Co. (Fixed Income) LLC are registered as investment advisors under the InvestmentAdvisers Act. As registered investment advisors, they are subject to periodic SEC examinations andother requirements under the Investment Advisers Act and related regulations primarily intended tobenefit advisory clients. These additional requirements relate, among other things, to maintaining aneffective and comprehensive compliance program, recordkeeping and reporting requirements anddisclosure requirements. The Investment Advisers Act generally grants the SEC broad administrativepowers, including the power to limit or restrict an investment adviser from conducting advisoryactivities in the event it fails to comply with federal securities laws. Additional sanctions that may beimposed for failure to comply with applicable requirements include the prohibition of individuals fromassociating with an investment adviser, the revocation of registrations and other censures and fines.

Regulation as a Broker-Dealer

KKR Capital Markets LLC, one of KKR’s subsidiaries, is registered as a broker-dealer with theSEC under the Exchange Act and with the New York Securities Commission under New York statesecurities laws, and is a member of the Financial Industry Regulatory Authority, or FINRA. A broker-dealer is subject to legal requirements covering all aspects of its securities business, including sales andtrading practices, public and private securities offerings, use and safekeeping of customers’ funds andsecurities, capital structure, record-keeping and retention and the conduct and qualifications ofdirectors, officers, employees and other associated persons. These requirements include the SEC’s‘‘uniform net capital rule,’’ which specifies the minimum level of net capital that a broker-dealer mustmaintain, requires a significant part of the broker-dealer’s assets to be kept in relatively liquid form,imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributingor withdrawing its capital and subjects any distributions or withdrawals of capital by a broker-dealer tonotice requirements. These and other requirements also include rules that limit a broker-dealer’s ratioof subordinated debt to equity in its regulatory capital composition, constrain a broker-dealer’s abilityto expand its business under certain circumstances and impose additional requirements when the

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broker-dealer participates in securities offerings of affiliated entities. Violations of these requirementsmay result in censures, fines, the issuance of cease-and-desist orders, revocation of licenses orregistrations, the suspension or expulsion from the securities industry of the broker-dealer or its officersor employees or other similar consequences by regulatory bodies.

United Kingdom

KKR Capital Markets Limited, one of KKR’s subsidiaries, is authorized in the United Kingdomunder the Financial Services and Markets Act 2000, or FSMA, and has permission to engage in anumber of activities regulated under FSMA, including dealing as principal or agent and arranging dealsin relation to certain types of specified investments and arranging the safeguarding and administrationof assets. Kohlberg Kravis Roberts & Co. Limited, another one of KKR’s subsidiaries, is authorized inthe United Kingdom under FSMA and has permission to engage in a number of regulated activitiesincluding advising on and arranging deals relating to corporate finance business in relation to certaintypes of specified investments. FSMA and related rules govern most aspects of investment business,including sales, research and trading practices, provision of investment advice, corporate finance, useand safekeeping of client funds and securities, regulatory capital, record keeping, margin practices andprocedures, approval standards for individuals, anti-money laundering, periodic reporting andsettlement procedures. The Financial Services Authority is responsible for administering theserequirements and KKR’s compliance with them. Violations of these requirements may result incensures, fines, imposition of additional requirements, injunctions, restitution orders, revocation ormodification of permissions or registrations, the suspension or expulsion from certain ‘‘controlledfunctions’’ within the financial services industry of officers or employees performing such functions orother similar consequences.

Other Jurisdictions

KPE is authorized to do business in Guernsey and is subject to the ongoing supervision of theGuernsey Financial Services Commission and the Authority for the Financial Markets in theNetherlands. KKR PEI SICAR, S.a r.l., a subsidiary of the KPE Investment Partnership, is a societed’investissement en capital a risque, regulated by the Luxembourg Commission de Surveillance duSecteur Financier.

KKR Capital Markets LLC is registered as an international dealer under the Securities Act(Ontario). This registration permits KKR to trade in non-Canadian equity and debt securities withcertain types of investors located in Ontario, Canada. KKR Capital Markets Japan Limited, a joint-stock corporation, is a certified Class 2 broker-dealer registered under the Japanese FinancialInstruments and Exchange Law of 2007.

One of KKR’s fixed income funds is currently regulated as a mutual fund by the Cayman IslandsMonetary Authority. As a regulated mutual fund, the fund is required to comply with certainregistration, filing, information delivery and notice requirements and is subject to the ongoingsupervision of the Cayman Islands Monetary Authority. The Cayman Islands Monetary Authority maysubject a regulated mutual fund to special audits and require the fund to provide access to informationor records from time to time. Failure to comply with requests by the Cayman Islands MonetaryAuthority may result in substantial fines or may result in the Cayman Islands Monetary Authorityapplying to a court to have the fund terminated.

KKR MENA Limited, a Dubai International Financial Centre company, is licensed to arrangecredit or deals in investments, advise on financial products or credit, and manage assets, and isregulated by the Dubai Financial Services Authority.

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KKR Australia Pty Limited is Australian financial services licensed and is authorized to provideadvice on and deal in financial products for wholesale clients, and is regulated by the AustralianSecurities and Investments Commission.

KKR Holdings Mauritius, Ltd. is an unrestricted investment adviser authorized to manageportfolios of securities and give advice on securities transactions, and is regulated by the FinancialServices Commission, Mauritius.

Legal Proceedings

From time to time, KKR is involved in various legal proceedings, lawsuits and claims incidental tothe conduct of KKR’s business. KKR believes that the ultimate liability arising from such proceedings,lawsuits and claims, if any, will not have a material effect on KKR’s financial condition, results ofoperations, or cash flows.

In August 2008, KFN, its directors and executive officers, including certain of KKR’s current andformer personnel, were named as defendants in a purported class action complaint by KFNshareholders under federal securities laws (the ‘‘Class Action’’). The suit alleges that the registrationstatement utilized by KFN to effectuate its restructuring plan in May 2007 was false and misleading inthat it misrepresented and/or omitted material facts, including carrying value and allowance for loanlosses, relating to the portfolio of mortgage loans held at such time by its REIT subsidiary, KKRFinancial Corp. An amended complaint was filed in March 2009 whereby KFN’s directors were nolonger named as defendants. On April 27, 2009, KFN and the remaining individual defendants in theClass Action moved to dismiss with prejudice all of the claims in the amended complaint. The motionis currently pending. Also in August 2008, a shareholder derivative action (the ‘‘CA Derivative Action’’)was filed in California Superior Court purportedly on behalf of KFN against its directors and executiveofficers, including certain of KKR’s current and former personnel, as well as against KFN as nominaldefendant. The suit alleges breaches of fiduciary duty, waste of corporate assets and unjust enrichmentby such individuals in connection with the conduct at issue in the Class Action discussed above. ByOrder dated January 8, 2009, the California Superior Court approved the parties’ stipulation to stay theproceedings in the CA Derivative Action until the Class Action is dismissed on the pleadings or KFNfiles an answer to the Class Action. In addition, in March 2009, a shareholder derivative action (the‘‘NY Derivative Action’’) was filed in United States District Court for the Southern District of NewYork purportedly on behalf of KFN against its directors and executive officers, including certain ofKKR’s current and former personnel, as well as against KFN as nominal defendant. The suit allegesbreaches of fiduciary duty, waste of corporate assets and unjust enrichment by such individuals inconnection with the conduct at issue in the Class Action discussed above. By order dated June 18,2009, the United States District Court for the Southern District of New York approved the parties’stipulation to stay the proceedings in the NY Derivative Action until the Class Action is dismissed onthe pleadings or KFN files an answer to the Class Action.

In December 2007, KKR, along with 15 other private equity firms and investment banks, werenamed as defendants in a purported class action complaint by shareholders in certain public companiesrecently acquired by private equity firms. In August 2008, KKR, along with 16 other private equityfirms and investment banks, were named as defendants in a purported amended class action complaint.The suits allege that the defendant firms engaged in certain cooperative behavior during the biddingprocess in certain going-private transactions in violation of U.S. antitrust laws and that this purportedbehavior suppressed the price paid by the private equity firms for the plaintiffs’ shares in the acquiredcompanies below that which would otherwise have been paid in the absence of such behavior.

In 2005, KKR and certain of KKR’s investment professionals were named as defendants innow-consolidated shareholder derivative actions relating to one of KKR’s portfolio companies. Theseactions claim that the board of directors of the portfolio company breached its fiduciary duty of loyalty

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in connection with the redemption of certain shares of preferred stock in 2004 and 2005. The plaintiffsfurther allege that KKR benefited from these redemptions of preferred stock at the expense of theportfolio company and that KKR usurped a corporate opportunity of the portfolio company in 2002 bypurchasing shares of its preferred stock at a discount on the open market while causing the portfoliocompany to refrain from doing the same. In February 2008, the special litigation committee formed bythe board of directors of the portfolio company, following a review of plaintiffs’ claims, filed a motionto dismiss the actions, which is still pending.

In August 1999, KKR was named as a defendant in an action alleging breach of fiduciary duty andconspiracy in connection with the acquisition of one of KKR’s portfolio companies in 1995. In April2000, the complaint in this action was amended to further allege that KKR and others violated statelaw by fraudulently misrepresenting the financial condition of this portfolio company.

KKR believes that each of these actions is without merit and intends to defend them vigorously.

In addition, in September 2006 and March 2009, KKR received requests for certain documents andother information from the Antitrust Division of the U.S. Department of Justice (‘‘DOJ’’) inconnection with the DOJ’s investigation of private equity firms to determine whether they haveengaged in conduct prohibited by United States antitrust laws. KKR is fully cooperating with the DOJ’sinvestigation.

Moreover, in the ordinary course of business, KKR is and can be both the defendant and theplaintiff in numerous actions with respect to bankruptcy, insolvency and other types of proceedings.Such lawsuits may involve claims that adversely affect the value of certain investments owned by theKKR funds.

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GOVERNANCE

KPE’s General Partner

Upon completion of the Combination Transaction, KPE unitholders will continue to hold interestsin KPE and be governed by KPE’s limited partnership agreement. KPE’s limited partnership agreementprovides for the management of its business and affairs by its general partner, a Guernsey limitedliability company that is owned by individuals who are affiliated with KKR, and which has a majority-independent board of directors. KPE unitholders may not take part in the management or control ofthe business and affairs of KPE and do not have any right or authority to act for or to bind KPE or totake part or interfere in the conduct or management of KPE. KPE unitholders are not entitled to voteon matters relating to KPE, although they are entitled to certain consent rights.

Board of Directors of KPE’s General Partner

KPE’s general partner’s board of directors consists of five members, three of whom areindependent of KKR and its affiliates, as determined by the full board of directors using the standardsfor independence established by the New York Stock Exchange. Each member of KPE’s generalpartner’s board of directors is elected annually at a general meeting of shareholders of KPE’s generalpartner and holds office until the next annual general meeting of shareholders of KPE’s generalpartner or, if earlier, his or her death, resignation or removal from office. KPE unitholders are notentitled to elect the directors of KPE’s general partner. When action is to be taken at a meeting of theboard of directors, subject to any requirements relating to the special approval by independentdirectors, the affirmative vote of two-thirds of the directors then holding office is required for anyaction to be taken other than with respect to matters requiring the vote of a majority of directors thenholding office.

Audit Committee of the Board of Directors of KPE’s General Partner

The audit committee of KPE’s general partner’s board of directors operates pursuant to a writtencharter. The audit committee is required to consist solely of independent directors and at least onemember who is financially literate. The audit committee is responsible for assisting and advising KPE’sgeneral partner’s board of directors with matters relating to, among other things, KPE’s accounting andfinancial reporting processes; the integrity and audits of its financial statements; KPE’s compliance withlegal and regulatory requirements; the qualifications, performance and independence of KPE’sindependent accountants; and the qualifications, performance and independence of any third party thatprovides valuations for KPE’s investments. Following the consummation of the CombinationTransaction, the audit committee of KPE’s general partner’s board of directors will have a similar rolewith respect to the financial statements of Group Holdings.

Nominating and Corporate Governance Committee of the Board of Directors of KPE’s General Partner

The nominating and corporate governance committee of KPE’s general partner’s board ofdirectors operates pursuant to a written charter. The nominating and corporate governance committeeis required to consist of a majority of directors who are not independent directors and is responsiblefor approving the appointment by the sitting directors of a person to the office of director and forrecommending a slate of nominees for election as directors at the annual general meeting of KPE’sgeneral partner’s shareholders. The nominating and corporate governance committee is also responsiblefor assisting and advising KPE’s general partner’s board of directors with respect to, among otherthings, matters relating to corporate governance, the corporate governance of KPE’s general partnerand the performance of its board of directors.

The KKR Managing Partner

As is commonly the case with limited partnerships, the limited partnership agreement of theControlling Partnership provides for the management of KKR’s business and affairs by a general

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partner rather than a board of directors. The KKR Managing Partner serves as the sole general partnerof the Controlling Partnership and the ultimate general partner of the KKR Group Partnerships. TheKKR Managing Partner has a board of directors that is co-chaired by KKR’s founders Henry Kravisand George Roberts, who also serve as KKR’s Co-Chief Executive Officers and, in such positions, areauthorized to appoint other officers of the Controlling Partnership. The KKR Managing Partner willnot have any economic interest in the Controlling Partnership other than a single ControllingPartnership unit.

Directors and Executive Officers

The following table presents certain information concerning the board of directors and executiveofficers of the KKR Managing Partner.

Name Age Position with Managing Partner

Henry R. Kravis . . . . . . . . . . . . . . . . . . . . . . . 65 Co-Chief Executive Officer and Co-ChairmanGeorge R. Roberts . . . . . . . . . . . . . . . . . . . . . 65 Co-Chief Executive Officer and Co-ChairmanWilliam J. Janetschek . . . . . . . . . . . . . . . . . . . 46 Chief Financial OfficerDavid J. Sorkin . . . . . . . . . . . . . . . . . . . . . . . 50 General Counsel

Henry R. Kravis co-founded KKR in 1976 and serves as Co-Chairman and Co-Chief ExecutiveOfficer of the KKR Managing Partner. Currently, he participates in all the investment activities ofKKR’s business and serves on the Management, Private Equity Investment and Portfolio ManagementCommittees. He is also a member of the board of directors of KPE’s general partner. Prior to foundingKKR, Mr. Kravis was a Partner in the Corporate Finance Department of Bear Stearns & Company,where he pioneered the use of leverage in acquisitions. He earned a B.A. from Claremont McKennaCollege, and an M.B.A. from Columbia Graduate School of Business.

George R. Roberts co-founded KKR in 1976 and serves as Co-Chairman and Co-Chief ExecutiveOfficer of the KKR Managing Partner. Currently, he participates in all the investment activities ofKKR’s business and serves on the Management, Private Equity Investment and Portfolio ManagementCommittees. He is also a member of the board of directors of KPE’s general partner, U.S. NaturalResources, Inc. and Accel-KKR Company. Prior to founding KKR, Mr. Roberts was a Partner in theCorporate Finance Department of Bear Stearns & Company, where he pioneered the use of leveragein acquisitions. He earned a B.A. from Claremont McKenna College, and a J.D. from the University ofCalifornia (Hastings) Law School.

William J. Janetschek joined the firm in 1997 and serves as Chief Financial Officer of the KKRManaging Partner. Prior to joining us, he was a Tax Partner with the New York office of Deloitte &Touche LLP. Mr. Janetschek was with Deloitte & Touche for 13 years. He holds a B.S. from St. John’sUniversity and an M.S., Taxation, from Pace University, and is a Certified Public Accountant.

David J. Sorkin joined the firm in 2007 and serves as General Counsel of the KKR ManagingPartner. Prior to joining us, he was a partner with Simpson Thacher & Bartlett LLP, where he was amember of that law firm’s executive committee. Mr. Sorkin was with Simpson Thacher & Bartlett LLPfor 22 years. He holds a B.A. from Williams College and a J.D. from Harvard University.

The KKR Managing Partner Board Structure and Practices

Matters relating to the structure and practices of the KKR Managing Partner’s board of directorsare governed by provisions of the KKR Managing Partner’s limited liability company agreement andthe Delaware Limited Liability Company Act. The following description is a summary of thoseprovisions and does not contain all of the information that you may find useful.

Composition of the Board of Directors

Upon the completion of the Transactions, KKR expects the KKR Managing Partner’s board ofdirectors will consist of directors who are affiliated with KKR. Upon a U.S. listing, a majority of the

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KKR Managing Partner’s board of directors will be ‘‘independent’’ as that term is defined in the listingmanual of the New York Stock Exchange or The NASDAQ Stock Market, whichever is applicable.

Election and Removal of Directors

The directors of the KKR Managing Partner may be elected and removed from office only by thevote of a majority of the Class A shares of the KKR Managing Partner that are then outstanding. Eachperson elected as a director will hold office until a successor has been duly elected and qualified oruntil his or her death, resignation or removal from office, if earlier. Class A shareholders are notrequired to hold meetings for the election of directors with any regular frequency and may removedirectors, with or without cause, at any time.

All of the KKR Managing Partner’s outstanding Class A shares are held by KKR’s seniorprincipals. Under the KKR Managing Partner’s limited liability company agreement, each Class A shareis non-transferable without the consent of the holders of a majority of the Class A shares that are thenoutstanding and each Class A share will automatically be redeemed and cancelled upon the holder’sdeath, disability or withdrawal as a member of the KKR Managing Partner. Upon the completion ofthe Transactions, Henry Kravis and George Roberts, the KKR Managing Partner’s Co-Chairmen andCo-Chief Executive Officers, will collectively hold Class A shares representing a majority of the totalvoting power of the outstanding Class A shares. In addition, notwithstanding the number of Class Ashares held by Messrs. Kravis and Roberts, under the KKR Managing Partner’s limited liabilitycompany agreement, Messrs. Kravis and Roberts are deemed to represent a majority of the Class Ashares then outstanding for purposes of voting on matters upon which holders of Class A shares areentitled to vote. Messrs. Kravis and Roberts may, in their discretion, designate one or more holders ofClass A shares to hold such voting power and exercise all of the rights and duties of Messrs. Kravis andRoberts under the KKR Managing Partner’s limited liability company agreement. While neither ofthem acting alone will be able to direct the election or removal of directors, they will be able to controlthe composition of the board if they act together. While Messrs. Kravis and Roberts historically haveacted with unanimity when managing KKR’s business, they have not entered into any agreementrelating to the voting of their Class A shares following the completion of the Transactions.

Limited Matters Requiring a Class B Shareholder Vote

Through its subsidiaries, KKR will hold voting interests in the general partners of a number offunds that were formed outside of the United States. Under the KKR Managing Partner’s limitedliability company agreement, the KKR Managing Partner’s board of directors will be required to informthe holders of the KKR Managing Partner’s Class B shares of any matter that is submitted to a vote ofthe holders of such voting interests and to cause any voting interests that KKR holds throughsubsidiaries to be voted in accordance with directions received from the holders of a majority of theClass B shares providing such instructions notwithstanding any other provision in the agreement to thecontrary. Holders of Class B shares will have no right to participate in the management of the KKRManaging Partner or the Controlling Partnership and will not have any other rights under the KKRManaging Partner’s limited liability company agreement other than as described above. KKR’sprincipals, including Messrs. Kravis and Roberts, collectively hold 100% of the KKR ManagingPartner’s outstanding Class B shares.

Action by the Board of Directors

The KKR Managing Partner’s board of directors may take action in a duly convened meeting inwhich a quorum is present or by a written resolution signed by all directors then holding office. Whenaction is to be taken at a meeting of the board of directors, the affirmative vote of a majority of thedirectors present at any meeting is required for any action to be taken. Upon a listing of the interestsin the Combined Business, when action is to be taken at a meeting of the board of directors, theaffirmative vote of a majority of the directors then holding office is required for any action to be taken

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Certain specified actions approved by the KKR Managing Partner’s board of directors require theadditional approval of a majority of the Class A shares of the KKR Managing Partner. These actionsconsist of the following:

• the entry into a debt financing arrangement by KKR in an amount in excess of 10% of KKR’sexisting long-term indebtedness (other than the entry into certain intercompany debt financingarrangements);

• the issuance by the Controlling Partnership or KKR’s subsidiaries of any securities that would(i) represent, after such issuance, or upon conversion, exchange or exercise, as the case may be,at least 5% on a fully diluted, as converted, exchanged or exercised basis, of any class of KKR’sor their equity securities or (ii) have designations, preferences, rights, priorities or powers thatare more favorable than those of KKR Group Partnership Units;

• the adoption by KKR of a shareholder rights plan;

• the amendment of the limited partnership agreement of the Controlling Partnership or thelimited partnership agreements of the KKR Group Partnerships;

• the exchange or disposition of all or substantially all of KKR’s assets or the assets of any GroupPartnership;

• the merger, sale or other combination of the Controlling Partnership or any Group Partnershipwith or into any other person;

• the transfer, mortgage, pledge, hypothecation or grant of a security interest in all or substantiallyall of the assets of the KKR Group Partnerships;

• the appointment or removal of a Chief Executive Officer or a Co-Chief Executive Officer of theKKR Managing Partner or the Controlling Partnership;

• the termination of the employment of any officer of the Controlling Partnership or any of KKR’ssubsidiaries or the termination of the association of a partner with any of KKR’s subsidiaries, ineach case, without cause;

• the liquidation or dissolution of the Controlling Partnership, the KKR Managing Partner or anyGroup Partnership; and

• the withdrawal, removal or substitution of the KKR Managing Partner as the general partner orany person as the general partner of a KKR Group Partnership, or the transfer of beneficialownership of all or any part of a general partner interest in the Controlling Partnership or aKKR Group Partnership to any person other than one of KKR’s wholly-owned subsidiaries.

Conflicts

Prior to a U.S. listing, the independent directors of KPE’s general partner’s board of directors,acting by a majority vote, will have the right to review specific matters that the KKR ManagingPartner’s board of directors believes may involve a conflict of interest or would have a materiallydisproportional impact on KPE and to enforce the rights under certain specified agreements of KPEand its unitholders against KKR Holdings and certain of its subsidiaries or designees, or a person whoholds a partnership or equity interest in the foregoing entities. In addition, prior to a U.S. listing, theindependent directors of KPE’s general partner’s board of directors, acting by a majority vote, will havethe right to review and approve certain related party transactions that involve an aggregate amount inexcess of $20 million or would reduce the percentage of KKR’s direct or indirect equity interest in theKKR Group Partnerships. See ‘‘Conflicts of Interest and Fiduciary Responsibilities.’’

Upon a U.S. listing, KKR Managing Partner’s board of directors will establish a conflictscommittee that will be responsible for reviewing specific matters that the KKR Managing Partner’sboard of directors believes may involve a conflict of interest and for enforcing the rights under certainspecified agreements of KKR and its unitholders against KKR Holdings and certain of its subsidiaries

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and designees, a general partner or limited partner of KKR Holdings, or a person who holds apartnership or equity interest in the foregoing entities. The conflicts committee will also be authorizedto take any action pursuant to any authority or rights granted to such committee under any suchagreement or with respect to any amendment, supplement, modification or waiver to any suchagreement that would purport to modify such authority or rights. The conflicts committee willdetermine if the resolution of any conflict of interest submitted to it is fair and reasonable to KPE andits unitholders.

2009 Equity Incentive Plan

The board of directors of the KKR Managing Partner intends to adopt the KKR 2009 EquityIncentive Plan, which is referred to as the 2009 Equity Incentive Plan.

The 2009 Equity Incentive Plan will be a source of new equity-based awards permitting each KKRGroup Partnership to grant to its employees, officers, directors, consultants and other service providersand those of its respective affiliates non-qualified unit options, unit appreciation rights, restrictedpartnership units, deferred restricted partnership units, phantom units, phantom restricted partnershipunits and other awards based on the KKR Group Partnership Units.

Administration

The board of directors of the KKR Managing Partner will administer the 2009 Equity IncentivePlan. However, the board of directors of the KKR Managing Partner may delegate such authority,including to a committee or subcommittee of the board of directors. Under the terms of the 2009Equity Incentive Plan, the board of directors of the KKR Managing Partner, or the committee orsubcommittee thereof to whom authority to administer the 2009 Equity Incentive Plan has beendelegated, as the case may be, is referred to as the Administrator. The Administrator will determinewho will receive awards under the 2009 Equity Incentive Plan, as well as the form of the awards, thenumber of units underlying the awards and the terms and conditions of the awards, consistent with theterms of the 2009 Equity Incentive Plan. The Administrator will have full authority to interpret andadminister the 2009 Equity Incentive Plan and its determinations will be final and binding on all partiesconcerned.

KKR Group Partnership Units Subject to the 2009 Equity Incentive Plan

The total number of KKR Group Partnership Units which may be issued under the 2009 EquityIncentive Plan as of the effective date of the plan is equivalent to 15% of the number of fully dilutedKKR Group Partnership Units outstanding; provided that beginning with the first fiscal year after the2009 Equity Incentive Plan becomes effective and continuing with each subsequent fiscal year occurringthereafter, the aggregate number of KKR Group Partnership Units covered by the plan will beincreased, on the first day of each fiscal year of the plan sponsor occurring during the term of the plan,by a number of KKR Group Partnership Units equal to the positive difference, if any, of (x) 15% ofthe aggregate number of KKR Group Partnership Units outstanding on the last day of the immediatelypreceding fiscal year of the plan sponsor minus (y) the aggregate number of KKR Group PartnershipUnits available for issuance under the plan as of the last day of such year, unless the Administratorshould decide to increase the number of KKR Group Partnership Units covered by the plan by a lesseramount on any such date.

On or after the date on which Controlling Partnership units become listed and traded on the NewYork Stock Exchange or The NASDAQ Stock Market, each KKR Group Partnership Unit grantedunder the 2009 Equity Incentive Plan shall be exchangeable for the number of Controlling Partnershipunits that the KKR Group Partnership Units could receive in a base exchange of one KKR GroupPartnership Unit.

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Options and Unit Appreciation Rights

The Administrator may award non-qualified unit options and unit appreciation rights under the2009 Equity Incentive Plan. Options and unit appreciation rights granted under the 2009 EquityIncentive Plan will become vested and exercisable at such times and upon such terms and conditions asmay be determined by the Administrator at the time of grant, but no option or unit appreciation rightwill be exercisable for a period of more than 10 years after it is granted. The exercise price per KKRGroup Partnership Unit will be determined by the Administrator, provided that options and unitappreciation rights granted to participants who are U.S. taxpayers (i) will not be granted with anexercise price less than 100% of the fair market value per underlying KKR Group Partnership Unit onthe date of grant and (ii) will not be granted unless the KKR Group Partnership Unit on which it isgranted constitutes equity of the participant’s ‘‘service recipient’’ within the meaning of Section 409A ofthe Internal Revenue Code of 1986, as amended. To the extent permitted by the Administrator, theexercise price of an option may be paid in cash or its equivalent, in KKR Group Partnership Unitshaving a fair market value equal to the aggregate exercise price and satisfying such other requirementsas may be imposed by the Administrator, partly in cash and partly in KKR Group Partnership Units orthrough net settlement in KKR Group Partnership Units. As determined by the Administrator, unitappreciation rights may be settled in KKR Group Partnership Units, cash or any combination thereof.

Other Equity-Based Awards

The Administrator, in its sole discretion, may grant or sell KKR Group Partnership Units,restricted KKR Group Partnership Units, deferred restricted KKR Group Partnership Units, phantomrestricted KKR Group Partnership Units, and any other awards that are valued in whole or in part byreference to, or are otherwise based on the fair market value of, the KKR Group Partnership Units.Any of these other equity-based awards may be in such form, and dependent on such conditions, as theAdministrator determines, including without limitation the right to receive, or vest with respect to, oneor more KKR Group Partnership Units (or the equivalent cash value of such units) upon thecompletion of a specified period of service, the occurrence of an event and/or the attainment ofperformance objectives. The Administrator may, in its discretion, determine whether other equity-basedawards will be payable in cash, KKR Group Partnership Units or other assets or a combination of cash,KKR Group Partnership Units and other assets.

Grants of Awards to KKR Senior Principals

Pursuant to the Investment Agreement, awards under the 2009 Equity Incentive Plan shall not bemade to any person who was a KKR senior principal as of the date of the execution of the amendedand restated purchase and sale agreement until the earlier of (i) the completion of a U.S. listing and(ii) the first anniversary of the effective time of the Combination Transaction (or 15 months followingthe effective time of the Combination Transaction, if either party has filed notice that it has elected toexercise its listing right and the U.S. listing has not been completed).

Confidentiality and Restrictive Covenant Agreements

In connection with the Transactions, KKR or KKR Holdings may enter into confidentiality andrestrictive covenant agreements with its principals that, among other things, will include prohibitions onthe principals competing with KKR or soliciting certain clients or senior level employees of KKRduring a restricted period following their departure from the firm. These agreements will also requirepersonnel to protect and use the firm’s confidential information only in accordance with confidentialityrestrictions set forth in the agreement. Messrs. Kravis, Roberts, Janetschek and Sorkin will each be aparty to such an agreement. See ‘‘Certain Related Party Transactions—Confidentiality and RestrictiveCovenant Agreements.’’

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Reorganization Transactions

Prior to the completion of the Combination Transaction, KKR will undertake the ReorganizationTransactions pursuant to which KKR Holdings will contribute to the KKR Group Partnerships theinterests in the entities described under ‘‘Organizational Structure—Components of KKR’s BusinessOwned by the KKR Group Partnerships’’ in exchange for KKR Group Partnership Units. The amountof KKR Group Partnership Units that KKR’s existing owners will receive for these interests willrepresent 70% of the KKR Group Partnership Units that will be outstanding upon the completion ofthe Transactions.

Prior to the completion of the Combination Transaction, the KKR Group is expected to make oneor more cash and in-kind distributions to certain of its existing owners. Such distributions are expectedto consist of substantially all available cash-on-hand, certain accrued receivables of its managementcompanies and capital markets subsidiaries and certain personal property (consisting of non-operatingassets) of the management company for its private equity funds. These amounts will not include,however, any accrued monitoring or transaction fees that must be credited against any managementfees that are payable in respect of future periods, the after-tax amount of any management fees thatmay be required to be returned to investors before a carried interest may be paid and any otheramounts that are necessary to provide the Combined Business with sufficient working capital toconduct its business in the ordinary course as of the completion of the Transactions. The actual amountof such distributions will depend on the amounts of available cash-on-hand and accrued receivables ofthe management companies and the book value of such personal property at the time the CombinationTransaction is completed.

The Combination Transaction

On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR & Co. L.P. and certain of its affiliates providing for the combination of the asset managementbusiness of KKR with the assets and liabilities of KPE. Upon completion of the CombinationTransaction, KPE would beneficially hold a 30% interest in the Combined Business and KKR’s existingowners would beneficially hold a 70% interest in the Combined Business. KKR’s existing owners arenot selling any equity interests in the Transactions. The Combination Transaction will be consummatedsubsequent to the completion of the Reorganization Transactions described in this consent solicitationstatement. See ‘‘The Combination Transaction—The Amended and Restated Purchase and SaleAgreement.’’

KPE may enter into and consummate a transaction with KKR provided that the terms of theCombination Transaction are permitted by and approved in accordance with the provisions of thememorandum and articles of association of the managing general partner of KPE, which KKR refers toas the KPE general partner. The memorandum and articles of association of the KPE general partnerprovide that any transaction between KPE and KKR or KKR’s affiliates (other than certainpre-approved transactions) requires the special approval of a majority of the KPE Board’s directorswho are independent of KPE, KKR and their affiliates under the standards of the NYSE in order forany action to be taken with respect thereto. Messrs. Kravis and Roberts are directors of the KPEgeneral partner but are not independent for these purposes.

On July 19, 2009, the amended and restated purchase and sale agreement was unanimouslyapproved by the KPE Board, acting upon the unanimous recommendation of the KPE IndependentDirectors. Completion of the Combination Transaction is subject to approval by KPE unitholdersrepresenting at least a majority of the outstanding KPE units for which a properly submitted consentform is submitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates),the Reorganization Transactions having been completed and other customary closing conditions.

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Exchange Agreement

In connection with the Combination Transaction, KPE will enter into an exchange agreement withGroup Holdings and KKR Holdings, the entity through which KKR’s existing owners, includingMessrs. Kravis, Roberts, Janetschek, and Sorkin, will hold their KKR Group Partnership Units,pursuant to which KKR Holdings or certain transferees of its KKR Group Partnership Units may, upto four times each year (subject to the terms of the exchange agreement), exchange KKR GroupPartnership Units held by them for KPE units on a one-for-one basis, subject to customary conversionrate adjustments for splits, unit distributions and reclassifications. At the election of the KKR GroupPartnerships, the KKR Group Partnerships may settle exchanges of KKR Group Partnership Units withcash in an amount equal to the fair market value of KPE units that would otherwise be deliverable insuch exchanges. To the extent that KKR Group Partnership Units held by KKR Holdings or itstransferees are exchanged for KPE units, KKR’s interests in the KKR Group Partnerships will becorrespondingly increased. Any KPE units received upon such exchange will be subject to anyrestrictions that were applicable to the exchanged KKR Group Partnership Units, including anyapplicable transfer restrictions. Upon a U.S. listing, the Controlling Partnership and KKR Holdings willenter into an exchange agreement with substantially similar terms.

Interests in KKR Holdings that are held by KKR principals will be subject to significant transferrestrictions and vesting requirements that, unless waived, modified or amended will limit the ability ofKKR’s principals to cause KKR Group Partnership Units to be exchanged under the exchangeagreement so long as applicable vesting and transfer restrictions apply. See ‘‘Organizational Structure—KKR Holdings.’’ The general partner of KKR Holdings, which will initially be controlled by KKR’sfounders, will have sole authority for waiving any applicable vesting or transfer restrictions.

Tax Receivable Agreement

KPE’s intermediate holding company, a taxable corporation for U.S. federal income tax purposes,may be required to acquire KKR Group Partnership Units from time to time pursuant to its exchangeagreement with KKR Holdings. KKR Management Holdings L.P. intends to make an election underSection 754 of the Internal Revenue Code in effect for each taxable year in which an exchange of KKRGroup Partnership Units for KPE units occurs, which may result in an increase in KKR’s intermediateholding company’s share of the tax basis of the assets of the KKR Group Partnerships at the time of anexchange of KKR Group Partnership Units. To the extent these exchanges are structured as taxableexchanges, these exchanges are expected to result in an increase in KPE’s intermediate holdingcompany’s share of the tax basis of the tangible and intangible assets of the KKR Group Partnerships,primarily attributable to a portion of the goodwill inherent in KKR’s business that would not otherwisehave been available. This increase in tax basis may increase (for tax purposes) depreciation andamortization deductions and therefore reduce the amount of income tax KPE’s intermediate holdingcompany would otherwise be required to pay in the future. This increase in tax basis may also decreasegain (or increase loss) on future dispositions of certain capital assets to the extent tax basis is allocatedto those capital assets. In certain circumstances, however, holders of KKR Group Partnership Units willbe permitted to exchange their units in a tax-free manner, which will not result in any increase in taxbasis.

KPE will enter into a tax receivable agreement with KKR Holdings requiring KPE’s intermediateholding company to pay to KKR Holdings or transferees of its KKR Group Partnership Units 85% ofthe amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediateholding company actually realizes (or is deemed to realize, in the case of an early termination paymentby the intermediate holding company or a change of control) as a result of this increase in tax basis, aswell as 85% of the amount of any such savings the intermediate holding company actually realizes (oris deemed to realize) as a result of increases in tax basis that arise due to future payments under theagreement. This payment obligation is an obligation of KPE’s intermediate holding company and not ofeither Group Partnership. KKR expects its intermediate holding company to benefit from the

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remaining 15% of cash savings, if any, in income tax that it realizes. In the event that other of KPE’scurrent or future subsidiaries become taxable as corporations and acquire KKR Group PartnershipUnits in the future, or if KPE becomes taxable as a corporation for U.S. federal income tax purposes,each will become subject to a tax receivable agreement with substantially similar terms.

For purposes of the tax receivable agreement, cash savings in income tax will be computed bycomparing the actual income tax liability of the intermediate holding company to the amount of suchtaxes that the intermediate holding company would have been required to pay had there been noincrease to the tax basis of the tangible and intangible assets of the KKR Group Partnerships as aresult of the exchanges of KKR Group Partnership Units and had the intermediate holding companynot entered into the tax receivable agreement. The term of the tax receivable agreement will commenceupon the completion of the Transactions and will continue until all such tax benefits have been utilizedor expired, unless the intermediate holding company exercises its right to terminate the tax receivableagreement for an amount based on the agreed payments remaining to be made under the agreement.

Estimating the amount of payments that may be made under the tax receivable agreement is by itsnature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. Theactual increase in tax basis, as well as the amount and timing of any payments under the tax receivableagreement, will vary depending upon a number of factors, including:

• the timing of exchanges—for instance, the increase in any tax deductions will vary depending onthe fair market value, which may fluctuate over time, of the KKR Group Partnership Units,which will depend on the fair market value of the depreciable or amortizable assets of the KKRGroup Partnerships at the time of the transaction;

• the price of KKR Group Partnership Units at the time of the exchange—the increase in any taxdeductions, as well as the tax basis increase in other assets, of the KKR Group Partnerships, isdirectly proportional to the price of KKR Group Partnership Units at the time of the exchange;

• the extent to which such exchanges are taxable—if an exchange is not taxable for any reason (forinstance, in the case of a charitable contribution or an exchange by a person who is not aresident of the United States for tax purposes), increased deductions will not be available; and

• the amount of tax, if any, the intermediate holding company is required to pay aside from anytax benefit from the exchanges, and the timing of any such payment. If the intermediate holdingcompany does not have taxable income aside from any tax benefit from the exchanges, it will notbe required to make payments under the tax receivable agreement for that taxable year becauseno tax savings will have been actually realized.

KKR expects that as a result of the amount of the increases in the tax basis of the tangible andintangible assets of the KKR Group Partnerships, assuming no material changes in the relevant tax lawand that the intermediate holding company earns sufficient taxable income to realize the full taxbenefit of the increased amortization of its assets, future payments under the tax receivable agreementwill be substantial. The payments under the tax receivable agreement are not conditioned upon KKR’sexisting owners’ continued ownership of KKR.

The intermediate holding company may terminate the tax receivable agreement at any time bymaking an early termination payment to KKR Holdings or its transferees, based upon the net presentvalue (based upon certain assumptions in the tax receivable agreement) of all tax benefits that wouldbe required to be paid by the intermediate holding company to KKR Holdings or its transferees. Inaddition, the tax receivable agreement provides that upon certain mergers, asset sales, other forms ofbusiness combinations or other changes of control, the minimum obligations of the intermediateholding company or its successor with respect to exchanged or acquired KKR Group Partnership Units(whether exchanged or acquired before or after such transaction) would be based on certainassumptions, including that the intermediate holding company would have sufficient taxable income tofully utilize the increased tax deductions and increased tax basis and other benefits related to entering

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into the tax receivable agreement. In these situations, the intermediate holding company’s obligationsunder the tax receivable agreement could have a substantial negative impact on its liquidity. Theintermediate holding company will also have the ability to terminate the tax receivable agreementwithout receiving an early termination payment upon certain changes in tax law.

Decisions made by KKR’s senior principals in the course of running KKR’s business, such as withrespect to mergers, asset sales, other forms of business combinations or other changes of control, mayinfluence the timing and amount of payments that are received by an exchanging or selling holder ofpartner interests in the KKR Group Partnerships under the tax receivable agreement. For example, theearlier disposition of assets following an exchange or acquisition transaction will generally acceleratepayments under the tax receivable agreement and increase the present value of such payments, and thedisposition of assets before an exchange or acquisition transaction will increase an existing owner’s taxliability without giving rise to any rights of an existing owner to receive payments under the taxreceivable agreement.

Payments under the tax receivable agreement will be based upon the tax reporting positions thatthe KKR Managing Partner will determine. KKR is not aware of any issue that would cause the IRS tochallenge a tax basis increase. However, neither KKR Holdings nor its transferees will reimburse theintermediate holding company for any payments previously made under the tax receivable agreement ifsuch tax basis increase, or the tax benefits the intermediate holding company claims arising from suchincrease, is successfully challenged by the IRS. As a result, in certain circumstances payments to KKRHoldings or its transferees under the tax receivable agreement could be in excess of the intermediateholding company’s cash tax savings. The intermediate holding company’s ability to achieve benefitsfrom any tax basis increase, and the payments to be made under this agreement, will depend upon anumber of factors, as discussed above, including the timing and amount of the intermediate holdingcompany’s future income.

Group Partnership Agreements

As a result of the Reorganization Transactions, the KKR Managing Partner will be the ultimatecontrolling general partner of KKR Fund Holdings L.P. and KKR Management Holdings L.P. All of thebusiness and affairs of the KKR Group Partnerships will be operated and controlled by the KKRManaging Partner, and, through the KKR Group Partnerships and their subsidiaries, the KKRManaging Partner will conduct KKR’s business. Group Holdings will have unilateral control over all ofthe affairs and decision making of the KKR Group Partnerships. Furthermore, the direct generalpartner KKR Fund Holdings L.P. and KKR Management Holdings L.P. cannot be removed. Becausethe KKR Managing Partner will operate and control Group Holdings, the KKR Managing Partner’sboard of directors and KKR’s officers will be responsible for all operational and administrativedecisions of the KKR Group Partnerships and the day-to-day management of the KKR GroupPartnerships’ businesses.

Pursuant to the partnership agreements of the KKR Group Partnerships, Group Holdings, as thecontrolling general partner of KKR Fund Holdings L.P. and KKR Management Holdings L.P., will havethe right to determine when distributions will be made to the holders of KKR Group Partnership Unitsand the amount of any such distributions. See ‘‘Distribution Policy.’’

The partnership agreements of the KKR Group Partnerships will provide for tax distributions tothe holders of KKR Group Partnership Units if the general partners of the KKR Group Partnershipsdetermine that distributions from the KKR Group Partnerships would otherwise be insufficient to coverthe tax liabilities of a holder of a KKR Group Partnership Unit. Generally, these tax distributions willbe computed based on KKR’s estimate of the net taxable income of the relevant partnership allocableto a holder of a KKR Group Partnership Unit multiplied by an assumed tax rate equal to the highesteffective marginal combined U.S. federal, state and local income tax rate prescribed for an individual

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or corporate resident in New York, New York (taking into account the nondeductibility of certainexpenses and the character of KKR’s income).

The partnership agreements of the KKR Group Partnerships authorize the general partners of theKKR Group Partnerships to issue an unlimited number of additional securities of the KKR GroupPartnerships with such designations, preferences, rights, powers and duties that are different from, andmay be senior to, those applicable to the KKR Group Partnerships units, and which may beexchangeable for KKR Group Partnership Units.

Firm Use of Private Aircraft

Certain of KKR’s senior principals, including Messrs. Kravis and Roberts, own aircraft that KKRuses for business purposes in the ordinary course of its operations. They paid for the purchase of theseaircraft with their personal funds and bear all operating, personnel and maintenance costs associatedwith their operation. The hourly rates that KKR pays for the use of these aircraft are based on currentmarket rates for chartering private aircraft of the same type. KKR paid $7.9 million for the use ofthese aircraft during the year ended December 31, 2008, of which $6.0 million was paid to entitiescollectively controlled by Messrs. Kravis and Roberts.

Side-By-Side and Other Investments

As described under ‘‘KKR’s Business,’’ because fund investors typically are unwilling to invest theircapital in a fund unless the fund’s manager also invests its own capital in the fund’s investments, KKR’sprivate equity fund documents generally require the general partners of KKR’s traditional privateequity funds to make minimum capital commitments to the funds. The amounts of these commitments,which are negotiated by fund investors, generally range from 2% to 4% of a fund’s total capitalcommitments at final closing. When investments are made, the general partner contributes capital tothe fund based on its fund commitment percentage and acquires a capital interest in the investmentthat is not subject to a carried interest. Historically, these capital contributions have been funded withcash from operations that otherwise would be distributed to KKR’s principals and by KKR’s principals.

In connection with the Reorganization Transactions, KKR will not acquire capital interests ininvestments that were funded by KKR’s principals or others involved in KKR’s business prior to theTransactions. Rather, those capital interests will be allocated to KKR’s principals or others involved inKKR’s business and will be reflected in its financial statements as a noncontrolling interest to theextent that KKR holds the general partner interest in the fund. Following the completion of theTransactions, any capital contributions that KKR’s private equity fund general partners are required tomake to a fund will be funded by KKR and it will be entitled to receive its allocable share of the gainthereon.

In addition, KKR’s principals and certain other qualifying employees are permitted to invest andhave invested their own capital in side-by-side investments with KKR’s private equity funds.Side-by-side investments are investments made on the same terms and conditions as those available tothe applicable fund, except that these side-by-side investments are not subject to management fees or acarried interest. The cash invested by KKR’s executive officers and their investment vehicles aggregatedto $25.1 million for the year ended December 31, 2008. These investments are not included in theaccompanying combined financial statements. Certain of these individuals also own equity interests inKFN, the KKR Strategic Capital Funds and KPE, which they hold in a personal capacity on the sameterms that have been extended to unrelated third-party investors.

KKR Financial Holdings LLC Standby Agreement

On November 10, 2008, the KKR Financial Holdings LLC and its subsidiaries entered into anagreement for a two-year $100.0 million standby unsecured revolving credit agreement (the ‘‘StandbyAgreement’’) with KKR Financial Advisors LLC and Kohlberg Kravis Roberts & Co. (Fixed

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Income) LLC, the parent of KKR Financial Advisors LLC. The borrowing facility matures inDecember 2010 and bears interest at a rate equal to LIBOR for an interest period of 1, 2 or 3 months(at KKR’s option) plus 15.00% per annum. Under the terms of the agreement, KKR FinancialHoldings LLC can elect to capitalize a portion of accrued interest on any loan under the agreement byadding up to 80% of the interest due and payable at a particular time in respect of such loan to theoutstanding principal amount of the loan. KKR Financial Holdings LLC and its subsidiaries have theright to prepay loans under the Standby Agreement in whole or in part at any time. The StandbyAgreement includes covenants, representations, warranties, indemnities and events of default that arecustomary for facilities of this type.

Guarantee of Contingent Obligations to Fund Partners; Indemnification

The partnership documents governing KKR’s traditional private equity funds generally include a‘‘clawback’’ or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to acontingent obligation that may require the general partner to return or contribute amounts to the fundfor distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the term of the fundexceed the amount to which the general partner was ultimately entitled. As of June 30, 2009, theamount of carried interest KKR has received, excluding carried interest received by the generalpartners of the 1996 Fund, that is subject to this contingent repayment obligation was approximately$768 million, assuming that all applicable private equity funds were liquidated at no value. Had theinvestments in such funds been liquidated at their June 30, 2009 fair values, the contingent repaymentobligation would have been approximately $224 million. Under a ‘‘net loss sharing provision,’’ upon theliquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% ofthe net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’straditional private equity vehicles allocate a greater share of their investment losses to KKR relative tothe amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required tobe paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fundregardless of whether any carried interest had previously been distributed. Based on the fair marketvalues as of June 30, 2009, KKR’s obligation under the net loss sharing provisions would have beenapproximately $258 million. If the vehicles were liquidated at zero value, the obligation under the netloss sharing provisions would have been approximately $1,091 million as of June 30, 2009.

KKR principals will remain responsible for any clawback obligations relating to carry distributionsreceived prior to the Transactions up to the aggregate contingent repayment obligation as of June 30,2009 ($224 million) as well as any clawback obligations relating to any carry distributions that theyreceive after the Transactions pursuant to any carried interest allocated directly to them as carry poolparticipants. KKR will be responsible for any other clawback obligations and any amounts due undernet loss sharing arrangements and will indemnify its principals for any personal guarantees that theyhave provided with respect to such amounts.

Facilities

Certain of KKR’s senior principals are partners in a real-estate based partnership that maintains anownership interest in KKR’s Menlo Park location. Payments made from KKR to this partnershipaggregated $2.4 million for the year ended December 31, 2008.

Confidentiality and Restrictive Covenant Agreements

In connection with the Transactions, KKR, KKR Holdings or an affiliate of either entity may enterinto confidentiality and restrictive covenant agreements with its principals that, among other things, willinclude prohibitions on the principals competing with KKR or soliciting certain clients or senior-level

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employees of KKR and specified subsidiaries and affiliates during a restricted period following theirdeparture from the firm. These agreements will also require personnel to protect and use the firm’sconfidential information only in accordance with confidentiality restrictions set forth in the agreement.Messrs. Kravis, Roberts, Janetschek and Sorkin will each be a party to such an agreement. Therestricted periods for KKR’s founders expire on the later of (i) 4 years from the closing of theTransactions and (ii) 2 years from departure from the firm. The restricted periods for KKR’s othersenior principals expire on the later of (i) 2 years from the closing of the Transactions and(ii) 18 months from departure from the firm. These restricted periods vary based on position with thefirm and are subject to reduction for any ‘‘garden leave’’ or ‘‘notice period’’ that an employee servesprior to termination of employment and are also reduced if employment is terminated without cause.Other principals that are subject to confidentiality and restrictive covenant agreements have restrictedperiods ranging from 3 months to 1 year. Depending on which entity is a party to these agreements,KKR may not be able to enforce them, and these agreements might be waived, modified or amendedat any time without KKR’s consent.

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CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITIES

Conflicts of Interest

Conflicts of interest exist and may arise in the future as a result of the relationships between theKKR Managing Partner and its affiliates, including each party’s respective owners, on the one hand,and KPE on the other hand. Whenever a potential conflict arises between the KKR Managing Partneror its affiliates, on the one hand, and KPE and its unitholders, on the other hand, subject to the rightsof the independent directors of the board of directors of KPE’s general partner described below priorto the U.S. listing, the KKR Managing Partner will resolve that conflict. The partnership agreement ofGroup Holdings contains provisions that reduce and eliminate the KKR Managing Partner’s duties,including fiduciary duties, to KPE and its unitholders. The partnership agreement of Group Holdingsalso restricts the remedies available to KPE and its unitholders for actions taken that without thoselimitations might constitute breaches of duty, including fiduciary duties. The limited liability companyagreement of the KKR Managing Partner also contains similar provisions.

Under the partnership agreement of Group Holdings, the KKR Managing Partner will not be inbreach of its obligations under the partnership agreement or its duties to KPE and its unitholders if theresolution of the conflict is:

• approved by the KKR Managing Partner conflicts committee (or, prior to the U.S. listing, theindependent directors of KPE’s general partner), although the KKR Managing Partner is notobligated to seek such approval;

• approved by KPE, although the KKR Managing Partner is not obligated to seek such approval;

• on terms which are, in the aggregate, no less favorable to KKR than those generally beingprovided to or available from unrelated third parties; or

• fair and reasonable to KKR, taking into account the totality of the relationships among theparties involved, including other transactions that may be particularly favorable or advantageousto KKR.

The KKR Managing Partner may, but, except as required under the terms of the InvestmentAgreement described above under ‘‘The Combination Transaction—The Investment Agreement’’, is notrequired to, seek the approval of such resolution from the KKR Managing Partner conflicts committee(or, prior to the U.S. listing, the independent directors of KPE’s general partner). If the KKRManaging Partner does not seek approval from the KKR Managing Partner conflicts committee (or,prior to the U.S. listing, the independent directors of KPE’s general partner) and its board of directorsdetermines that the resolution or course of action taken with respect to the conflict of interest satisfieseither of the standards set forth in the third and fourth bullet points above, then it will be presumedthat in making its decision the board of directors acted in good faith, and in any proceeding brought byor on behalf of any limited partner or KKR or any other person bound by the Group Holdingspartnership agreement, the person bringing or prosecuting such proceeding will have the burden ofovercoming such presumption. Unless the resolution of a conflict is specifically provided for in theGroup Holdings partnership agreement, the KKR Managing Partner or the KKR Managing Partnerconflicts committee may consider any factors it determines in its sole discretion to consider whenresolving a conflict. The Group Holdings partnership agreement provides that the KKR ManagingPartner will be conclusively presumed to be acting in good faith if the KKR Managing Partnersubjectively believes that the determination made or not made is in the best interests of GroupHoldings.

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Covered Agreements

Prior to a U.S. listing, the independent directors of KPE’s general partner (and following a U.S.listing, the KKR Managing Partner conflicts committee) will be responsible for enforcing the rights ofKPE and its unitholders under any of the exchange agreement, the tax receivable agreement, thelimited partnership agreement of any KKR Group Partnership, a lock-up agreement, the KPEpartnership agreement, the Controlling Partnership limited partnership agreement or limitedpartnership agreement of Group Holdings, which are referred collectively to as the covered agreements,against KKR Holdings and certain of its subsidiaries and designees, a general partner or limitedpartner of KKR Holdings, or a person who holds a partnership or equity interest in the foregoingentities. Following a U.S. listing, the KKR Managing Partner conflicts committee will also beauthorized to take any action pursuant to any authority or rights granted to such committee under anycovered agreement or with respect to any amendment, supplement, modification or waiver to any suchagreement that would purport to modify such authority or rights. In addition, following a U.S. listing,the KKR Managing Partner conflicts committee will be required to approve any amendment to any ofthe covered agreements that in the reasonable judgment of the KKR Managing Partner’s board ofdirectors is or will result in a conflict of interest.

Consent Rights under the Investment Agreement

In addition to the rights afforded to the independent directors of KPE’s general partner describedabove, under the terms of the investment agreement to be entered into between the ControllingPartnership and KPE, prior to a U.S. listing the consent of a majority of the independent directors ofKPE’s general partner will be required to approve certain related party transactions that involve anaggregate amount in excess of $20 million or would reduce the percentage of KPE’s direct or indirectequity interest in the KKR Group Partnerships. In addition, KKR expects to allocate approximately40% of the carry it receives from its funds and co-investment vehicles to its carry pool, although thispercentage may fluctuate over time. Prior to a U.S. listing, allocations to the carry pool may not exceed40% and, following such a listing, allocations to the carry pool may exceed 40% only with the approvalof a majority of the independent directors of the KKR Managing Partner.

Fiduciary Duties

The KKR Managing Partner is accountable to the Controlling Partnership, Group Holdings andthe KKR Group Partnerships as a fiduciary. Fiduciary duties by the KKR Managing Partner areprescribed by law and the Group Holdings partnership agreement.

The Group Holdings partnership agreement contains various provisions modifying, restricting andeliminating the duties, including fiduciary duties, that might otherwise be owed by the KKR ManagingPartner. Group Holdings has adopted these restrictions to allow the KKR Managing Partner or itsaffiliates to engage in transactions with KKR that would otherwise be prohibited by state-law fiduciaryduty standards and to take into account the interests of other parties in addition to Group Holdings’interests when resolving conflicts of interest. Without these modifications, the KKR Managing Partner’sability to make decisions involving conflicts of interest would be restricted. These modifications aredetrimental to holders of Group Holdings units because they restrict the remedies available to holdersof Group Holdings units for actions that without those limitations might constitute breaches of duty,including a fiduciary duty, as described below, and they permit the KKR Managing Partner to take intoaccount the interests of third parties in addition to Group Holdings’ interests when resolving conflictsof interest.

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DESCRIPTION OF KKR GROUP HOLDINGS L.P. LIMITED PARTNERSHIP AGREEMENT

The following is a description of the expected material terms of the amended and restated KKR GroupHoldings L.P. limited partnership agreement upon the completion of the Combination Transaction and isqualified in its entirety by reference to all of the provisions of the amended and restated Group Holdingslimited partnership agreement. Because this description is only a summary of the expected terms of theamended and restated Group Holdings limited partnership agreement, it does not contain all of theinformation that you may find important.

The General Partner

KKR Group Limited, a Cayman Islands exempted limited company, serves as the general partnerand manages all of the operations and activities of Group Holdings. The general partner is authorizedin general to perform all acts that it determines to be necessary or appropriate to carry out GroupHoldings’ purposes and to conduct the business of Group Holdings.

Purpose

Under the partnership agreement, Group Holdings would be permitted to engage, directly orindirectly, in any business activity that is approved by the general partner and that lawfully may beconducted by a limited partnership organized under Cayman Islands law.

Capital Contributions

Group Holdings limited partners would not be obligated to make additional capital contributions,except as described below under ‘‘—Limited Liability.’’ The general partner will not be obligated tomake any capital contributions.

Limited Liability

Assuming that a limited partner does not participate in the control of Group Holdings’ businessand that he otherwise acts in conformity with the provisions of the partnership agreement, his liabilityunder the Exempted Limited Partnership Law (2007 Revision) of the Cayman Islands would be limited,subject to possible exceptions, to the amount of capital he is obligated to contribute to Group Holdingsfor his common units plus his share of any undistributed profits and assets. If it were determinedhowever that the right, or exercise of the right, by the limited partners as a group:

• to approve some amendments to the partnership agreement; or

• to take other action under the partnership agreement,

constituted ‘‘participation in the control’’ of Group Holdings’ business for the purposes of theExempted Limited Partnership Law (2007 Revision) of the Cayman Islands, then Group Holdings’limited partners could be held personally liable for Group Holdings’ obligations under the laws of theCayman Islands to the same extent as the general partner. This liability would extend to persons whotransact business with Group Holdings who reasonably believe that the limited partner is a generalpartner. Neither the partnership agreement nor the Exempted Limited Partnership Law (2007 Revision)of the Cayman Islands specifically will provide for legal recourse against the general partner if a limitedpartner were to lose limited liability through any fault of the general partner. While this does not meanthat a limited partner could not seek legal recourse, KKR knows of no precedent for this type of aclaim in Cayman Islands case law.

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Distributions

Distributions will be made to the partners pro rata according to the percentages of their respectivepartner interests. See ‘‘Distribution Policy.’’

Amendment of the Partnership Agreement

General

Amendments to the partnership agreement may be proposed only by the general partner. To adopta proposed amendment, other than the amendments that do not require limited partner approvaldiscussed below, the general partner must seek approval of the holders of a majority of the outstandingvoting units (as defined below) in order to approve the amendment or call a meeting of the limitedpartners to consider and vote upon the proposed amendment.

Prohibited Amendments

No amendment may be made that would:

(1) enlarge the obligations of any limited partner without its consent, except that anyamendment that would have a material adverse effect on the rights or preferences of any class ofpartner interests in relation to other classes of partner interests may be approved by the holders ofat least a majority of the type or class of partner interests so affected; or

(2) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in anyway the amounts distributable, reimbursable or otherwise payable by Group Holdings to thegeneral partner or any of its affiliates without the consent of the general partner, which may begiven or withheld in its sole discretion.

The provision of the partnership agreement preventing the amendments having the effectsdescribed in clauses (1) or (2) above can be amended upon the approval of the holders of at least 90%of the outstanding voting units.

No Limited Partner Approval

The general partner may generally make amendments to the partnership agreement or certificateof limited partnership without the approval of any limited partner to reflect:

(1) a change in the name of the partnership, the location of the partnership’s principal placeof business, the partnership’s registered agent or its registered office;

(2) the admission, substitution, withdrawal or removal of partners in accordance with thepartnership agreement;

(3) a change that the general partner determines is necessary or appropriate for thepartnership to qualify or to continue its qualification as a limited partnership or a partnership inwhich the limited partners have limited liability under the laws of any state or other jurisdiction orto ensure that the partnership will not be treated as an association taxable as a corporation orotherwise taxed as an entity for U.S. federal income tax purposes, or permit Group Holdings to beclassified as a partnership for U.S. federal income tax purposes;

(4) an amendment that the general partner determines to be necessary or appropriate toaddress certain changes in U.S. federal, state and local income tax regulations, legislation orinterpretation, or permit Group Holdings to be classified as a partnership for U.S. federal incometax purposes;

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(5) an amendment that is necessary, in the opinion of Group Holdings’ counsel, to preventthe partnership or the general partner or its directors, officers, employees, agents or trustees, fromhaving a material risk of being in any manner subjected to the provisions of the InvestmentCompany Act, the Investment Advisers Act or ‘‘plan asset’’ regulations adopted under ERISA,whether or not substantially similar to ‘‘plan asset’’ regulations currently applied or proposed bythe U.S. Department of Labor;

(6) a change in Group Holdings’ fiscal year or taxable year and related changes;

(7) an amendment that the general partner determines in its sole discretion to be necessaryor appropriate for the creation, authorization or issuance of any class or series of partnershipsecurities or options, rights, warrants or appreciation rights relating to partnership securities;

(8) any amendment expressly permitted in the partnership agreement to be made by thegeneral partner acting alone;

(9) an amendment effected, necessitated or contemplated by an agreement of merger,consolidation or other business combination agreement that has been approved under the terms ofthe partnership agreement;

(10) an amendment effected, necessitated or contemplated by an amendment to anypartnership agreement of the KKR Group Partnerships that requires unitholders of anypartnership of the KKR Group Partnerships to provide a statement, certification or other proof ofevidence regarding whether such unitholder is subject to U.S. federal income taxation on theincome generated by the partnership of the KKR Group Partnerships;

(11) any amendment that in the sole discretion of the general partner is necessary orappropriate to reflect and account for the formation by the partnership of, or its investment in, anycorporation, partnership, joint venture, limited liability company or other entity, as otherwisepermitted by the partnership agreement;

(12) a merger, conversion or conveyance to another limited liability entity that is newly formedand has no assets, liabilities or operations at the time of the merger, conversion or conveyanceother than those it receives by way of the merger, conversion or conveyance;

(13) any amendment that the general partner determines to be necessary or appropriate tocure any ambiguity, omission, mistake, defect or inconsistency;

(14) any other amendments substantially similar to any of the matters described in (1) through(13) above.

In addition, the general partner could make amendments to the partnership agreement without theapproval of any limited partner if those amendments, in the discretion of the general partner:

(1) do not adversely affect the limited partners considered as a whole (or adversely affect anyparticular class of partner interests as compared to another class of partner interests) in anymaterial respect;

(2) are necessary or appropriate to satisfy any requirements, conditions or guidelinescontained in any opinion, directive, order, ruling or regulation of any federal, state, local ornon-U.S. agency or judicial authority or contained in any federal, state, local or non-U.S. statute(including the Exempted Limited Partnership Law (2007 Revision) of the Cayman Islands);

(3) are necessary or appropriate to facilitate the trading of limited partner interests or tocomply with any rule, regulation, guideline or requirement of any securities exchange on which thelimited partner interests are or will be listed for trading;

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(4) are necessary or appropriate for any action taken by the general partner relating to splitsor combinations of units under the provisions of the partnership agreement; or

(5) are required to effect the intent expressed in the amended and restated purchase and saleagreement or the intent of the provisions of the partnership agreement or are otherwisecontemplated by the partnership agreement.

Opinion of Counsel and Limited Partner Approval

The general partner will not be required to obtain an opinion of counsel that an amendment willnot result in a loss of limited liability to the limited partners if one of the amendments described aboveunder ‘‘—No Limited Partner Approval’’ should occur. No other amendments to the partnershipagreement (other than an amendment pursuant to a merger, sale or other disposition of assets effectedin accordance with the provisions described under ‘‘—Merger, Sale or Other Disposition of Assets’’)will become effective without the approval of holders of at least 90% of the outstanding voting units,unless Group Holdings obtains an opinion of counsel to the effect that the amendment will not affectthe limited liability of any of the limited partners under the Exempted Limited Partnership Law (2007Revision) of the Cayman Islands.

In addition, any amendment that reduces the voting percentage required to take any action mustbe approved by the affirmative vote of limited partners whose aggregate outstanding voting unitsconstitute not less than the voting requirement sought to be reduced.

Merger, Sale or Other Disposition of Assets

The partnership agreement would provide that the general partner may, with the approval of theholders of at least a majority of the outstanding voting units, sell, exchange or otherwise dispose of allor substantially all of Group Holdings’ assets in a single transaction or a series of related transactions,including by way of merger, consolidation or other combination, or approve the sale, exchange or otherdisposition of all or substantially all of the assets of Group Holdings’ subsidiaries. The general partnerin its sole discretion may mortgage, pledge, hypothecate or grant a security interest in all orsubstantially all of Group Holdings’ assets (including for the benefit of persons other than GroupHoldings or its subsidiaries) without the prior approval of the holders of Group Holdings’ outstandingvoting units. The general partner could also sell all or substantially all of Group Holdings’ assets underany forced sale pursuant to the foreclosure or other realization upon those encumbrances without theprior approval of the holders of Group Holdings’ outstanding voting units.

If conditions specified in the partnership agreement are satisfied, the general partner may in itssole discretion convert or merge Group Holdings or any of its subsidiaries into, or convey some or allof Group Holdings’ assets to, a newly formed entity if the sole purpose of that merger or conveyance isto effect a mere change in its legal form into another limited liability entity. The unitholders will not beentitled to dissenters’ rights of appraisal under the partnership agreement or the Exempted LimitedPartnership Law (2007 Revision) of the Cayman Islands in the event of a merger or consolidation, asale of substantially all of Group Holdings’ assets or any other similar transaction or event.

Election to be Treated as a Corporation

If the general partner, in its sole discretion, determines that it is no longer in KKR’s interests tocontinue as a partnership for U.S. federal income tax purposes, the general partner may elect to treatKKR as a corporation for U.S. federal (and applicable state) income tax purposes or may chose toeffect such change by merger, conversion or otherwise.

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Dissolution

The partnership will dissolve upon:

(1) the withdrawal of the general partner or any other event that results in its ceasing to bethe general partner other than by reason of a transfer of general partner interests, withdrawal ofthe general partner following approval and admission of a successor, or the death or thecommencement of a proceeding or order of bankruptcy against the general partner after which thepartners unanimously elect to continue the partnership and appoint a successor general partner, ineach case in accordance with the partnership agreement.

(2) an event specified in Section 15(5) of the Exempted Limited Partnership Law (2007Revision) of the Cayman Islands relative to the General Partner;

(3) the election of the general partner to dissolve Group Holdings, if approved by the holdersof a majority of the outstanding voting units;

(4) the entry of a decree of judicial dissolution of Group Holdings pursuant to the ExemptedLimited Partnership Law (2007 Revision) of the Cayman Islands; or

(5) there being no limited partners, unless Group Holdings is continued without dissolutionin accordance with the Exempted Limited Partnership Law (2007 Revision) of the Cayman Islands.

Liquidation and Distribution of Proceeds

Upon the Group Holdings’ dissolution, the general partner shall act, or select one or more personsto act, as liquidator. Unless Group Holdings is continued as a limited partnership, the liquidatorauthorized to wind up Group Holdings’ affairs will, acting with all of the powers of the general partnerthat the liquidator deems necessary or appropriate in its judgment, liquidate Group Holdings’ assetsand apply the proceeds of the liquidation first, to discharge Group Holdings’ liabilities as provided inthe partnership agreement and by law and thereafter to the limited partners pro rata according to thepercentages of their respective partner interests as of a record date selected by the liquidator. Theliquidator may defer liquidation of Group Holdings’ assets for a reasonable period of time or distributeassets to partners in kind if it determines that an immediate sale or distribution of all or some ofGroup Holdings’ assets would be impractical or would cause undue loss to the partners.

Sinking Fund; Preemptive Rights

Group Holdings will not establish a sinking fund and it will not grant any preemptive rights withrespect to the partnership’s limited partner interests.

Indemnification

Under the partnership agreement, in most circumstances Group Holdings would indemnify thefollowing persons, to the fullest extent permitted by law, from and against all losses, claims, damages,liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties,interest, settlements or other amounts:

• the general partner;

• the KKR Managing Partner;

• the Controlling Partnership;

• any departing general partner;

• any person who is or was an affiliate of a general partner or any departing general partner;

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• any person who is or was a member, partner, tax matters partner, officer, director, employee,agent, fiduciary or trustee of the partnership or its subsidiaries;

• any person who is or was serving at the request of a general partner or any departing generalpartner or any affiliate of the KKR Managing Partner as an officer, director, employee, member,partner, agent, fiduciary or trustee of another person; or

• any person designated by the general partner.

Group Holdings would agree to provide this indemnification unless there has been a final andnon-appealable judgment by a court of competent jurisdiction determining that these persons acted inbad faith or engaged in fraud or willful misconduct. Group Holdings will also agree to provide thisindemnification for criminal proceedings. Any indemnification under these provisions will only be outof the partnership’s assets. Unless it otherwise agrees, the general partner will not be personally liablefor, or have any obligation to contribute or loan funds or assets to the partnership to enable thepartnership to effectuate indemnification. Group Holdings may purchase insurance against liabilitiesasserted against and expenses incurred by persons for Group Holdings’ activities, regardless of whetherthe partnership would have the power to indemnify the person against liabilities under the partnershipagreement.

Right to Inspect Group Holdings’ Books and Records

The partnership agreement will provide that a limited partner can, for a purpose reasonablyrelated to his interest as a limited partner, upon reasonable written demand and at his own expense,have furnished to him:

• promptly after becoming available, a copy of Group Holdings’ U.S. federal, state and localincome tax returns; and

• copies of the partnership agreement, the certificate of limited partnership of the partnership,related amendments and powers of attorney under which they have been executed.

The general partner may, and intends to, keep confidential from the limited partners trade secretsor other information the disclosure of which the general partner believes is not in the partnership’s bestinterests or which the partnership is required by law or by agreements with third parties to keepconfidential.

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U.S. LISTING

U.S Listing

Following the consummation of the Combination Transaction, KPE and KKR Holdings will havethe right to require that the other use its reasonable best efforts to cause interests in the CombinedBusiness to be listed and traded on the New York Stock Exchange or The NASDAQ Stock Market.KKR Holdings may exercise this right following the 6-month anniversary of the date the conditionsprecedent to the Combination Transaction are satisfied or waived and KPE, at the discretion of theindependent directors of its general partner, may exercise this right following the 12-month anniversaryof the date the conditions precedent to the Combination Transaction are satisfied or waived. Inconnection with the listing, KKR will be entitled, in its sole discretion, to take any and all actions thatit deems necessary or appropriate to effect the listing, including selecting the New York StockExchange or The NASDAQ Stock Market on which to list the interests and determining whether toappoint one or more dealer managers or information agents and whether to pursue a separate primaryoffering of the interests (on an underwritten basis or otherwise).

To effect such a listing, following the Combination Transaction, KPE would contribute its interestsin Group Holdings to the Controlling Partnership in exchange for Controlling Partnership units. KKRor KPE, as the case may be, would seek a listing of the Controlling Partnership units, which wouldrepresent equity interests in the Combined Business. In connection with the listing, the ControllingPartnership would prepare and file a registration statement in order to register Controlling Partnershipunits under U.S. securities laws, which units would be issued to, and distributed by, KPE to KPEunitholders. Each of the Controlling Partnership and KPE would use its reasonable best efforts to havethe registration statement declared effective by the U.S. Securities and Exchange Commission, or SEC,as promptly as practicable. As promptly as practicable following the date on which the registrationstatement is declared effective by the SEC, KPE shall disseminate the KPE partnership agreement andthe registration statement (or prospectus contained therein) to the KPE unitholders. If such listingoccurs, KPE would make an in-kind distribution of such interests to KPE unitholders, subject toapplicable laws, rules and regulations, KPE units would cease to trade on Euronext Amsterdam andKPE would subsequently be dissolved and delisted from Euronext Amsterdam.

Controlling Partnership Units

Prior to listing, the Controlling Partnership would amend and restate its limited partnershipagreement, which is described below under ‘‘—Description of the Amended and Restated LimitedPartnership Agreement of the Controlling Partnership.’’ Holders of Controlling Partnership units wouldbe entitled to participate in KKR distributions and exercise the rights or privileges available to limitedpartners under an amended and restated limited partnership agreement of the Controlling Partnership.The amended and restated limited partnership agreement would be governed under the DelawareLimited Partnership Act. KKR would be dependent upon the KKR Group Partnerships to fund anydistributions KKR may make to the Controlling Partnership unitholders.

Unless the KKR Managing Partner determines otherwise, the Controlling Partnership would issueall its common units in uncertificated form. The Controlling Partnership limited partnership agreementauthorizes the issuance an unlimited number of additional partnership securities and options, rights,warrants and appreciation rights relating to partnership securities for the consideration and on theterms and conditions established by the KKR Managing Partner in its sole discretion without theapproval of Controlling Partnership unitholders. In accordance with the Delaware Limited PartnershipAct and the provisions of the Controlling Partnership limited partnership agreement, KKR may alsoissue additional partner interests that have designations, preferences, rights, powers and duties that aredifferent from, and may be senior to, those applicable to the Controlling Partnership units.

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By acceptance of the transfer of the Controlling Partnership units in accordance with theControlling Partnership limited partnership agreement, each transferee of the Controlling Partnershipunits will be admitted as a unitholder with respect to the Controlling Partnership units transferredwhen such transfer and admission is reflected in the books and records. Additionally, each transferee ofControlling Partnership units:

• will represent that the transferee has the capacity, power and authority to enter into theControlling Partnership limited partnership agreement;

• will become bound by the terms of, and will be deemed to have agreed to be bound by, theControlling Partnership limited partnership agreement; and

• will give the consents, approvals, acknowledgements and waivers set forth in the ControllingPartnership limited partnership agreement.

A transferee will become a substituted limited partner for the transferred Controlling Partnershipunits automatically upon the recording of the transfer on KKR’s books and records. The KKRManaging Partner will cause any transfers to be recorded on KKR’s books and records no lessfrequently than quarterly.

Controlling Partnership units are securities and are transferable according to the laws governingtransfers of securities. In addition to other rights acquired upon transfer, the transferor gives thetransferee the right to become a substituted limited partner for the transferred common units.

Until a Controlling Partnership unit has been transferred on the books, the Controlling Partnershipand the transfer agent, notwithstanding any notice to the contrary, may treat the record holder of theControlling Partnership unit as the absolute owner for all purposes, except as otherwise required by lawor stock exchange regulations. A beneficial holder’s rights are limited solely to those that it has againstthe record holder as a result of any agreement between the beneficial owner and the record holder.

Description of the Amended and Restated Limited Partnership Agreement of the ControllingPartnership

The following is a description of the expected material terms of the amended and restated limitedpartnership agreement of the Controlling Partnership in the event of a U.S. listing and is qualified in itsentirety by reference to all of the provisions of the amended and restated limited partnership agreement ofthe Controlling Partnership. Because this description is only a summary of the expected terms of theamended and restated limited partnership agreement of the Controlling Partnership, it does not contain allof the information that you may find important. For additional information, you should read ‘‘—ControllingPartnership Units’’ above, ‘‘Risk Factors—Risks Related to the Potential Future Listing of the CombinedBusiness in the United States’’ and ‘‘Material U.S. Federal Tax Considerations.’’

The KKR Managing Partner

The KKR Managing Partner would manage all of the operations and activities of the ControllingPartnership. The KKR Managing Partner would be authorized in general to perform all acts that itdetermines to be necessary or appropriate to carry out the Controlling Partnership’s purposes and toconduct the business of the Controlling Partnership. The KKR Managing Partner would be wholly-owned by KKR principals and certain of KKR’s former personnel and controlled by its founders.Common unitholders would have only limited voting rights relating to certain matters and, therefore,will have limited ability to influence management’s decisions regarding the Controlling Partnership’sbusiness.

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Purpose

Under the Controlling Partnership limited partnership agreement the Controlling Partnershipwould be permitted to engage, directly or indirectly, in any business activity that is approved by theKKR Managing Partner and that lawfully may be conducted by a limited partnership organized underDelaware law.

Power of Attorney

Each limited partner, and each person who acquires a limited partner interest in accordance withthe amended partnership agreement, grants to the KKR Managing Partner and, if appointed, aliquidator, a power of attorney to, among other things, execute and file documents required for theControlling Partnership’s qualification, continuance, dissolution or termination. The power of attorneywill also grant the KKR Managing Partner the authority to amend, and to make consents and waiversunder, the partnership agreement and certificate of limited partnership, in each case in accordance withthe partnership agreement.

Capital Contributions

Controlling Partnership unitholders would not be obligated to make additional capitalcontributions, except as described below under ‘‘—Limited Liability.’’ The KKR Managing Partnerwould not be obliged to make any capital contributions.

Limited Liability

Assuming that a limited partner does not participate in the control of the Controlling Partnership’sbusiness within the meaning of the Delaware Limited Partnership Act and that he otherwise acts inconformity with the provisions of the partnership agreement, his liability under the Delaware LimitedPartnership Act would be limited, subject to possible exceptions, to the amount of capital he isobligated to contribute to the Controlling Partnership for his common units plus his share of anyundistributed profits and assets. If it were determined however that the right, or exercise of the right,by the limited partners as a group:

• to approve some amendments to the partnership agreement; or

• to take other action under the partnership agreement,

constituted ‘‘participation in the control’’ of the Controlling Partnership’s business for the purposes ofthe Delaware Limited Partnership Act, then the Controlling Partnership’s limited partners could beheld personally liable for the Controlling Partnership’s obligations under the laws of Delaware to thesame extent as the KKR Managing Partner. This liability would extend to persons who transact businesswith the Controlling Partnership who reasonably believe that the limited partner is a general partner.Neither the partnership agreement nor the Delaware Limited Partnership Act specifically will providefor legal recourse against the KKR Managing Partner if a limited partner were to lose limited liabilitythrough any fault of the KKR Managing Partner. While this does not mean that a limited partner couldnot seek legal recourse, the Controlling Partnership knows of no precedent for this type of a claim inDelaware case law.

Under the Delaware Limited Partnership Act, a limited partnership may not make a distribution toa partner if, after the distribution, all liabilities of the limited partnership, other than liabilities topartners on account of their partner interests and liabilities for which the recourse of creditors islimited to specific property of the partnership, would exceed the fair value of the assets of the limitedpartnership. For the purpose of determining the fair value of the assets of a limited partnership, theDelaware Limited Partnership Act provides that the fair value of property subject to liability for whichrecourse of creditors is limited will be included in the assets of the limited partnership only to the

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extent that the fair value of that property exceeds the non-recourse liability. The Delaware LimitedPartnership Act provides that a limited partner who receives a distribution and knew at the time of thedistribution that the distribution was in violation of the Delaware Limited Partnership Act would beliable to the limited partnership for the amount of the distribution for three years. Under the DelawareLimited Partnership Act, a substituted limited partner of a limited partnership is liable for theobligations of his assignor to make contributions to the partnership, except that such person is notobligated for liabilities unknown to him at the time he became a limited partner and that could not beascertained from the partnership agreement.

Moreover, if it were determined that the Controlling Partnership were conducting business in anystate without compliance with the applicable limited partnership statute, or that the right or exercise ofthe right by the limited partners as a group to approve some amendments to the partnership agreementor to take other action under the partnership agreement constituted ‘‘participation in the control’’ ofthe Controlling Partnership’s business for purposes of the statutes of any relevant jurisdiction, then thelimited partners could be held personally liable for the Controlling Partnership’s obligations under thelaw of that jurisdiction to the same extent as the KKR Managing Partner. The Controlling Partnershipintends to operate in a manner that the KKR Managing Partner considers reasonable and necessary orappropriate to preserve the limited liability of the limited partners.

Issuance of Additional Securities

The partnership agreement would authorize the Controlling Partnership to issue an unlimitednumber of additional partnership securities and options, rights, warrants and appreciation rightsrelating to partnership securities for the consideration and on the terms and conditions established bythe KKR Managing Partner in its sole discretion without the approval of any limited partners.

In accordance with the Delaware Limited Partnership Act and the provisions of the partnershipagreement, the Controlling Partnership could also issue additional partner interests that havedesignations, preferences, rights, powers and duties that are different from, and may be senior to, thoseapplicable to common units.

Distributions

Distributions will be made to the partners pro rata according to the percentages of their respectivepartner interests. See ‘‘Distribution Policy.’’

Amendment of the Partnership Agreement

General

Amendments to the partnership agreement may be proposed only by the KKR Managing Partner.To adopt a proposed amendment, other than the amendments that do not require limited partnerapproval discussed below, the KKR Managing Partner must seek approval of the holders of a majorityof the outstanding voting units (as defined below) in order to approve the amendment or call ameeting of the limited partners to consider and vote upon the proposed amendment. On any matterthat may be submitted for a vote of unitholders of the Combined Business, the holders of KKR GroupPartnership Units will hold special voting units in the partnership that provide them with a number ofvotes that is equal to the aggregate number of KKR Group Partnership Units that they then hold andentitle them to participate in the vote on the same basis as unitholders of the Combined Business. See‘‘—Meetings; Voting.’’ The KKR Group Partnership Units, other than the KKR Group PartnershipUnits held by the Controlling Partnership, will initially be owned by KKR Holdings, which is owned byKKR’s principals and certain of KKR’s former personnel and controlled by KKR’s founders.

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Prohibited Amendments

No amendment may be made that would:

(1) enlarge the obligations of any limited partner without its consent, except that anyamendment that would have a material adverse effect on the rights or preferences of any class ofpartner interests in relation to other classes of partner interests may be approved by the holders ofat least a majority of the type or class of partner interests so affected; or

(2) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in anyway the amounts distributable, reimbursable or otherwise payable by the Controlling Partnership tothe KKR Managing Partner or any of its affiliates without the consent of the KKR ManagingPartner, which may be given or withheld in its sole discretion.

The provision of the partnership agreement preventing the amendments having the effectsdescribed in clauses (1) or (2) above can be amended upon the approval of the holders of at least 90%of the outstanding voting units.

No Limited Partner Approval

The KKR Managing Partner may generally make amendments to the partnership agreement orcertificate of limited partnership without the approval of any limited partner to reflect:

(1) a change in the name of the partnership, the location of the partnership’s principal placeof business, the partnership’s registered agent or its registered office;

(2) the admission, substitution, withdrawal or removal of partners in accordance with thepartnership agreement;

(3) a change that the KKR Managing Partner determines is necessary or appropriate for thepartnership to qualify or to continue the Controlling Partnership’s qualification as a limitedpartnership or a partnership in which the limited partners have limited liability under the laws ofany state or other jurisdiction or to ensure that the partnership will not be treated as anassociation taxable as a corporation or otherwise taxed as an entity for U.S. federal income taxpurposes;

(4) an amendment that the KKR Managing Partner determines to be necessary orappropriate to address certain changes in U.S. federal, state and local income tax regulations,legislation or interpretation;

(5) an amendment that is necessary, in the opinion of the Controlling Partnership’s counsel,to prevent the partnership or the KKR Managing Partner or its directors, officers, employees,agents or trustees, from having a material risk of being in any manner subjected to the provisionsof the Investment Company Act, the Investment Advisers Act or ‘‘plan asset’’ regulations adoptedunder ERISA, whether or not substantially similar to plan asset regulations currently applied orproposed by the U.S. Department of Labor;

(6) a change in the Controlling Partnership’s fiscal year or taxable year and related changes;

(7) an amendment that the KKR Managing Partner determines in its sole discretion to benecessary or appropriate for the creation, authorization or issuance of any class or series ofpartnership securities or options, rights, warrants or appreciation rights relating to partnershipsecurities;

(8) any amendment expressly permitted in the partnership agreement to be made by theKKR Managing Partner acting alone;

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(9) an amendment effected, necessitated or contemplated by an agreement of merger,consolidation or other business combination agreement that has been approved under the terms ofthe partnership agreement;

(10) an amendment effected, necessitated or contemplated by an amendment to anypartnership agreement of the KKR Group Partnerships that requires unitholders of anypartnership of the KKR Group Partnerships to provide a statement, certification or other proof ofevidence regarding whether such unitholder is subject to U.S. federal income taxation on theincome generated by the partnership of the KKR Group Partnerships;

(11) any amendment that in the sole discretion of the KKR Managing Partner is necessary orappropriate to reflect and account for the formation by the partnership of, or its investment in, anycorporation, partnership, joint venture, limited liability company or other entity, as otherwisepermitted by the partnership agreement;

(12) a merger, conversion or conveyance to another limited liability entity that is newly formedand has no assets, liabilities or operations at the time of the merger, conversion or conveyanceother than those it receives by way of the merger, conversion or conveyance;

(13) any amendment that the KKR Managing Partner determines to be necessary orappropriate to cure any ambiguity, omission, mistake, defect or inconsistency; or

(14) any other amendments substantially similar to any of the matters described in (1) through(13) above.

In addition, the KKR Managing Partner could make amendments to the partnership agreementwithout the approval of any limited partner if those amendments, in the discretion of the KKRManaging Partner:

(1) do not adversely affect the Controlling Partnership’s limited partners considered as awhole (or adversely affect any particular class of partner interests as compared to another class ofpartner interests) in any material respect;

(2) are necessary or appropriate to satisfy any requirements, conditions or guidelinescontained in any opinion, directive, order, ruling or regulation of any federal, state, local ornon-U.S. agency or judicial authority or contained in any federal, state, local or non-U.S. statute(including the Delaware Limited Partnership Act);

(3) are necessary or appropriate to facilitate the trading of limited partner interests or tocomply with any rule, regulation, guideline or requirement of any securities exchange on which thelimited partner interests are or will be listed for trading;

(4) are necessary or appropriate for any action taken by the KKR Managing Partner relatingto splits or combinations of units under the provisions of the partnership agreement; or

(5) are required to effect the intent expressed in the registration statement filed inconnection with the U.S. listing or the intent of the provisions of the partnership agreement or areotherwise contemplated by the partnership agreement.

Opinion of Counsel and Limited Partner Approval

The KKR Managing Partner will not be required to obtain an opinion of counsel that anamendment will not result in a loss of limited liability to the limited partners if one of the amendmentsdescribed above under ‘‘—No Limited Partner Approval’’ should occur. No other amendments to thepartnership agreement (other than an amendment pursuant to a merger, sale or other disposition ofassets effected in accordance with the provisions described under ‘‘—Merger, Sale or Other Dispositionof Assets’’) will become effective without the approval of holders of at least 90% of the outstanding

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voting units, unless the Controlling Partnership obtains an opinion of counsel to the effect that theamendment will not affect the limited liability under the Delaware Limited Partnership Act of any ofthe limited partners.

In addition to the above restrictions, any amendment that would have a material adverse effect onthe rights or preferences of any type or class of partner interests in relation to other classes of partnerinterests will also require the approval of the holders of at least a majority of the outstanding partnerinterests of the class so affected.

In addition, any amendment that reduces the voting percentage required to take any action mustbe approved by the affirmative vote of limited partners whose aggregate outstanding voting unitsconstitute not less than the voting requirement sought to be reduced.

Merger, Sale or Other Disposition of Assets

The partnership agreement would provide that the KKR Managing Partner may, with the approvalof the holders of at least a majority of the outstanding voting units, sell, exchange or otherwise disposeof all or substantially all of the Controlling Partnership’s assets in a single transaction or a series ofrelated transactions, including by way of merger, consolidation or other combination, or approve thesale, exchange or other disposition of all or substantially all of the assets of the ControllingPartnership’s subsidiaries. The KKR Managing Partner in its sole discretion may mortgage, pledge,hypothecate or grant a security interest in all or substantially all of the Controlling Partnership’s assets(including for the benefit of persons other than the Controlling Partnership or its subsidiaries) withoutthe prior approval of the holders of the Controlling Partnership’s outstanding voting units. The KKRManaging Partner could also sell all or substantially all of the Controlling Partnership’s assets underany forced sale of any or all of the Controlling Partnership’s assets pursuant to the foreclosure or otherrealization upon those encumbrances without the prior approval of the holders of the ControllingPartnership’s outstanding voting units.

If conditions specified in the partnership agreement are satisfied, the KKR Managing Partner mayin its sole discretion convert or merge the Controlling Partnership or any of its subsidiaries into, orconvey some or all of its assets to, a newly formed entity if the sole purpose of that merger orconveyance is to effect a mere change in its legal form into another limited liability entity. Theunitholders will not be entitled to dissenters’ rights of appraisal under the partnership agreement or theDelaware Limited Partnership Act in the event of a merger or consolidation, a sale of substantially allof the Controlling Partnership’s assets or any other similar transaction or event.

Election to be Treated as a Corporation

If the KKR Managing Partner, in its sole discretion, determines that it is no longer in theControlling Partnership’s interests to continue as a partnership for U.S. federal income tax purposes,the KKR Managing Partner may elect to treat the Controlling Partnership as an association or as apublicly traded partnership taxable as a corporation for U.S. federal (and applicable state) income taxpurposes or may chose to effect such change by merger, conversion or otherwise.

Dissolution

The partnership will dissolve upon:

(1) the election of the KKR Managing Partner to dissolve the Controlling Partnership, ifapproved by the holders of a majority of the voting power of the partnership’s outstanding votingunits;

(2) there being no limited partners, unless the Controlling Partnership is continued withoutdissolution in accordance with the Delaware Limited Partnership Act;

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(3) the entry of a decree of judicial dissolution of the Controlling Partnership pursuant to theDelaware Limited Partnership Act; or

(4) the withdrawal of the KKR Managing Partner or any other event that results in itsceasing to be the KKR Managing Partner other than by reason of a transfer of general partnerinterests or withdrawal of the KKR Managing Partner following approval and admission of asuccessor, in each case in accordance with the partnership agreement.

Upon a dissolution under clause (4), the holders of a majority of the voting power of theControlling Partnership’s outstanding voting units could also elect, within specific time limitations, tocontinue the partnership’s business without dissolution on the same terms and conditions described inthe partnership agreement by appointing as a successor Managing Partner an individual or entityapproved by the holders of a majority of the voting power of the outstanding voting units, subject tothe partnership’s receipt of an opinion of counsel to the effect that (i) the action would not result inthe loss of limited liability of any limited partner and (ii) neither the Controlling Partnership nor any ofits subsidiaries (excluding those formed or existing as corporations) would be treated as an associationtaxable as a corporation or otherwise be taxable as an entity for U.S. federal income tax purposes uponthe exercise of that right to continue.

Liquidation and Distribution of Proceeds

Upon the Controlling Partnership’s dissolution, the KKR Managing Partner shall act, or select oneor more persons to act, as liquidator. Unless the Controlling Partnership is continued as a limitedpartnership, the liquidator authorized to wind up the Controlling Partnership’s affairs will, acting withall of the powers of the KKR Managing Partner that the liquidator deems necessary or appropriate inits judgment, liquidate the Controlling Partnership’s assets and apply the proceeds of the liquidationfirst, to discharge the Controlling Partnership’s liabilities as provided in the partnership agreement andby law and thereafter to the limited partners pro rata according to the percentages of their respectivepartner interests as of a record date selected by the liquidator. The liquidator may defer liquidation ofthe Controlling Partnership’s assets for a reasonable period of time or distribute assets to partners inkind if it determines that an immediate sale or distribution of all or some of the ControllingPartnership’s assets would be impractical or would cause undue loss to the partners.

Withdrawal of the KKR Managing Partner

Except as described below, the KKR Managing Partner will agree not to withdraw voluntarily asthe KKR Managing Partner prior to December 31, 2019 without obtaining the approval of the holdersof at least a majority of the outstanding voting units, excluding voting units held by the KKR ManagingPartner and its affiliates, and furnishing an opinion of counsel regarding tax and limited liabilitymatters. On or after December 31, 2019, the KKR Managing Partner may withdraw as ManagingPartner without first obtaining approval of any common unitholder by giving 90 days’ advance notice,and that withdrawal will not constitute a violation of the partnership agreement. Notwithstanding theforegoing, the KKR Managing Partner could withdraw at any time without unitholder approval upon90 days’ advance notice to the limited partners if at least 50% of the outstanding common units arebeneficially owned, owned of record or otherwise controlled by one person and its affiliates other thanthe KKR Managing Partner and its affiliates.

Upon the withdrawal of the KKR Managing Partner under any circumstances, the holders of amajority of the voting power of the partnership’s outstanding voting units may elect a successor to thatwithdrawing Managing Partner. If a successor is not elected, or is elected but an opinion of counselregarding limited liability and tax matters cannot be obtained, the partnership will be dissolved, woundup and liquidated, unless within specific time limitations after that withdrawal, the holders of a majority

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of the voting power of the partnership’s outstanding voting units agree in writing to continue KKR’sbusiness and to appoint a successor Managing Partner. See ‘‘—Dissolution’’ above.

The KKR Managing Partner may not be removed or expelled, with or without cause, byunitholders.

In the event of withdrawal of a Managing Partner, the departing Managing Partner will have theoption to require the successor Managing Partner to purchase the general partner interest of thedeparting Managing Partner for a cash payment equal to its fair market value. This fair market valuewill be determined by agreement between the departing Managing Partner and the successor ManagingPartner. If no agreement is reached within 30 days of the KKR Managing Partner’s departure, anindependent investment banking firm or other independent expert, which, in turn, may rely on otherexperts, selected by the departing Managing Partner and the successor Managing Partner will determinethe fair market value. If the departing Managing Partner and the successor Managing Partner cannotagree upon an expert within 45 days of the KKR Managing Partner’s departure, then an expert chosenby agreement of the experts selected by each of them will determine the fair market value.

If the option described above is not exercised by either the departing Managing Partner or thesuccessor Managing Partner, the departing Managing Partner’s general partner interest willautomatically convert into common units pursuant to a valuation of those interests as determined by aninvestment banking firm or other independent expert selected in the manner described in the precedingparagraph.

In addition, the Controlling Partnership will be required to reimburse the departing ManagingPartner for all amounts due the departing Managing Partner, including without limitation all employee-related liabilities, including severance liabilities, incurred for the termination of any employeesemployed by the departing Managing Partner or its affiliates for the partnership’s benefit.

Transfer of General Partner Interests

Except for transfer by the KKR Managing Partner of all, but not less than all, of its generalpartner interests in the partnership to an affiliate of the KKR Managing Partner, or to another entityas part of the merger or consolidation of the KKR Managing Partner with or into another entity or thetransfer by the KKR Managing Partner of all or substantially all of its assets to another entity, theKKR Managing Partner may not transfer all or any part of its general partner interest in thepartnership to another person prior to December 31, 2019 without the approval of the holders of atleast a majority of the voting power of the partnership’s outstanding voting units, excluding voting unitsheld by the KKR Managing Partner and its affiliates. On or after December 31, 2019, the KKRManaging Partner may transfer all or any part of its general partner interest without first obtainingapproval of any unitholder. As a condition of this transfer, the transferee must assume the rights andduties of the KKR Managing Partner to whose interest that transferee has succeeded, agree to bebound by the provisions of the partnership agreement and furnish an opinion of counsel regardinglimited liability matters. At any time, the members of the KKR Managing Partner may sell or transferall or part of their limited liability company interests in the KKR Managing Partner without theapproval of the unitholders.

Limited Call Right

If at any time:

(i) less than 10% of the then issued and outstanding limited partner interests of any class(other than special voting units), including the Controlling Partnership’s limited partnership units,are held by persons other than the KKR Managing Partner and its affiliates; or

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(ii) the partnership is subjected to registration under the provisions of the InvestmentCompany Act, the KKR Managing Partner will have the right, which it may assign in whole or inpart to any of its affiliates or to the Controlling Partnership, to acquire all, but not less than all, ofthe remaining limited partner interests of the class held by unaffiliated persons as of a record dateto be selected by the KKR Managing Partner, on at least ten but not more than 60 days notice.The purchase price in the event of this purchase is the greater of:

(1) the current market price as of the date three days before the date the notice ismailed; and

(2) the highest cash price paid by the KKR Managing Partner or any of its affiliatesacting in concert with the Controlling Partnership for any limited partner interests of the classpurchased within the 90 days preceding the date on which the KKR Managing Partner firstmails notice of its election to purchase those limited partner interests.

As a result of the KKR Managing Partner’s right to purchase outstanding limited partner interests,a holder of limited partner interests may have his limited partner interests purchased at an undesirabletime or price. The tax consequences to a unitholder of the exercise of this call right are the same as asale by that unitholder of his limited partnership units in the market. See ‘‘Material U.S. Federal TaxConsiderations—Consequences to U.S. Holders of the Combination Transaction.’’

Sinking Fund; Preemptive Rights

The Controlling Partnership will not establish a sinking fund and its will not grant any preemptiverights with respect to the partnership’s limited partner interests.

Meetings; Voting

Except as described below regarding a person or group owning 20% or more of the ControllingPartnership’s limited partnership units then outstanding, record holders of limited partnership units orof the special voting units to be issued to holders of KKR Group Partnership Units on the record datewill be entitled to notice of, and to vote at, meetings of KKR’s limited partners and to act uponmatters as to which holders of limited partner interests have the right to vote or to act.

Except as described below regarding a person or group owning 20% or more of the ControllingPartnership’s limited partnership units then outstanding, each record holder of a ControllingPartnership unit will be entitled to a number of votes equal to the number of limited partnership unitsheld. In addition, the Controlling Partnership will issue special voting units to each holder of KKRGroup Partnership Units that provide them with a number of votes that is equal to the aggregatenumber of KKR Group Partnership Units that they then hold and entitle them to participate in thevote on the same basis as unitholders. The Controlling Partnership refers to its Controlling Partnershipunits and special voting units as ‘‘voting units.’’ If the ratio at which KKR Group Partnership Units areexchangeable for Controlling Partnership units changes from one-for-one, the number of votes to whichthe holders of the special voting units are entitled will be adjusted accordingly. Additional limitedpartner interests having special voting rights could also be issued. See ‘‘—Issuance of AdditionalSecurities’’ above.

In the case of Controlling Partnership units held by the KKR Managing Partner on behalf ofnon-citizen assignees, the KKR Managing Partner will distribute the votes on those units in the sameratios as the votes of partners in respect of other limited partner interests are cast. The KKR ManagingPartner does not anticipate that any meeting of unitholders will be called in the foreseeable future. Anyaction that is required or permitted to be taken by the limited partners may be taken either at ameeting of the limited partners or without a meeting, without a vote and without prior notice ifconsents in writing describing the action so taken are signed by limited partners owning not less than

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the minimum percentage of the voting power of the outstanding limited partner interests that would benecessary to authorize or take that action at a meeting. Meetings of the limited partners may be calledby the KKR Managing Partner or by limited partners owning at least 50% or more of the voting powerof the outstanding limited partner interests of the class for which a meeting is proposed. Unitholdersmay vote either in person or by proxy at meetings. The holders of a majority of the voting power of theoutstanding limited partner interests of the class for which a meeting has been called, represented inperson or by proxy, will constitute a quorum unless any action by the limited partners requires approvalby holders of a greater percentage of such limited partner interests, in which case the quorum will bethe greater percentage.

However, if at any time any person or group (other than the KKR Managing Partner and itsaffiliates, or a direct or subsequently approved transferee of the KKR Managing Partner or itsaffiliates) acquires, in the aggregate, beneficial ownership of 20% or more of any class of theControlling Partnership units then outstanding, that person or group will lose voting rights on all of itsunits and the units may not be voted on any matter and will not be considered to be outstanding whensending notices of a meeting of unitholders, calculating required votes, determining the presence of aquorum or for other similar purposes. Controlling Partnership units held in nominee or street nameaccount will be voted by the broker or other nominee in accordance with the instruction of thebeneficial owner unless the arrangement between the beneficial owner and his nominee providesotherwise.

Status as Limited Partner

By transfer of Controlling Partnership units in accordance with the partnership agreement, eachtransferee of units will be admitted as a limited partner with respect to the units transferred when suchtransfer and admission is reflected in the partnership’s books and records. Except as described under‘‘—Limited Liability’’ above, in the partnership agreement or pursuant to Section 17-804 of theDelaware Limited Partnership Act (which relates to the liability of a limited partner who receives adistribution of assets upon the winding up of a limited partnership and who knew at the time of suchdistribution that it was in violation of this provision) the units will be fully paid and non-assessable.

Non-Citizen Assignees; Redemption

If the partnership is or becomes subject to federal, state or local laws or regulations that in thedetermination of the KKR Managing Partner create a substantial risk of cancellation or forfeiture ofany property in which the partnership has an interest because of the nationality, citizenship or otherrelated status of any limited partner, the Controlling Partnership may redeem the common units heldby that limited partner at their current market price. To avoid any cancellation or forfeiture, the KKRManaging Partner may require each limited partner to furnish information about his nationality,citizenship or related status. If a limited partner fails to furnish information about his nationality,citizenship or other related status within 30 days after a request for the information or the KKRManaging Partner determines, with the advice of counsel, after receipt of the information that thelimited partner is not an eligible citizen, the limited partner may be treated as a non-citizen assignee. Anon-citizen assignee does not have the right to direct the voting of his limited partnership units andmay not receive distributions in kind upon the Controlling Partnership’s liquidation.

Indemnification

Under the partnership agreement, in most circumstances the Controlling Partnership wouldindemnify the following persons, to the fullest extent permitted by law, from and against all losses,

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claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments,fines, penalties, interest, settlements or other amounts:

• the KKR Managing Partner;

• any departing Managing Partner;

• any person who is or was an affiliate of a Managing Partner or any departing Managing Partner;

• any person who is or was a member, partner, tax matters partner, officer, director, employee,agent, fiduciary or trustee of partnership or its subsidiaries, the KKR Managing Partner or anydeparting Managing Partner or any affiliate of partnership or its subsidiaries, the KKRManaging Partner or any departing Managing Partner;

• any person who is or was serving at the request of a Managing Partner or any departingManaging Partner or any affiliate of a Managing Partner or any departing Managing Partner asan officer, director, employee, member, partner, agent, fiduciary or trustee of another person; or

• any person designated by the KKR Managing Partner.

The Controlling Partnership would agree to provide this indemnification unless there has been afinal and non-appealable judgment by a court of competent jurisdiction determining that these personsacted in bad faith or engaged in fraud or willful misconduct. The Controlling Partnership will alsoagree to provide this indemnification for criminal proceedings. Any indemnification under theseprovisions will only be out of the partnership’s assets. Unless it otherwise agrees, the KKR ManagingPartner will not be personally liable for, or have any obligation to contribute or loan funds or assets tothe partnership to enable the partnership to effectuate indemnification. The Controlling Partnershipmay purchase insurance against liabilities asserted against and expenses incurred by persons for theControlling Partnership’s activities, regardless of whether the partnership would have the power toindemnify the person against liabilities under the partnership agreement.

Books and Reports

The KKR Managing Partner is required to keep appropriate books of the partnership’s business atits principal offices or any other place designated by the KKR Managing Partner. The books would bemaintained for both tax and financial reporting purposes on an accrual basis. For tax and financialreporting purposes, the Controlling Partnership’s year ends on December 31.

As soon as reasonably practicable after the end of each fiscal year, the Controlling Partnership willfurnish to each partner tax information (including a Schedule K-1), which describes on a U.S. dollarbasis such partner’s share of the Controlling Partnership’s income, gain, loss and deduction for thepreceding taxable year. It will require longer than 90 days after the end of the fiscal year to obtain therequisite information from all lower-tier entities so that Schedule K-1s may be prepared for theControlling Partnership. Consequently, holders of common units who are U.S. taxpayers shouldanticipate the need to file annually with the IRS (and certain states) a request for an extension pastApril 15 or the otherwise applicable due date of their income tax return for the taxable year. Inaddition, each partner will be required to report for all tax purposes consistently with the informationprovided by the Controlling Partnership.

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Right to Inspect KKR’s Books and Records

The partnership agreement will provide that a limited partner can, for a purpose reasonablyrelated to his interest as a limited partner, upon reasonable written demand and at his own expense,have furnished to him:

• promptly after becoming available, a copy of the Controlling Partnership’s U.S. federal, state andlocal income tax returns; and

• copies of the partnership agreement, the certificate of limited partnership of the partnership,related amendments and powers of attorney under which they have been executed.

The KKR Managing Partner may, and intends to, keep confidential from the limited partners tradesecrets or other information the disclosure of which the KKR Managing Partner believes is not in thepartnership’s best interests or which the partnership is required by law or by agreements with thirdparties to keep confidential.

Controlling Partnership Equity Incentive Plan

In connection with a U.S. listing, the board of directors of the KKR Managing Partner intends toadopt the KKR & Co. L.P. Equity Incentive Plan, which is referred to as the Controlling PartnershipEquity Incentive Plan. The Controlling Partnership Equity Incentive Plan will be substantially similar tothe 2009 Equity Incentive Plan except that (i) the total number of Controlling Partnership commonunits which may be issued under the Controlling Partnership Equity Incentive Plan as of the effectivedate of the plan will be equivalent to 15% of the number of fully diluted Controlling Partnershipcommon units outstanding as of such date (the ‘‘Initial Plan Amount’’), provided that such number willbe subject to an annual increase at the beginning of each fiscal year of KKR that begins after theeffective date of the plan in an amount equal to the positive difference of 15% of the aggregateControlling Partnership common units that are outstanding on the last day of the immediatelypreceding fiscal year of KKR, minus the Initial Plan Amount, and (ii) the issuance of KKR GroupPartnership Units in consideration of the settlement, cancellation or termination of any awards madepursuant to the 2009 Equity Incentive Plan will reduce the total number of Controlling Partnershipcommon units covered by and available for issuance under the Controlling Partnership Equity IncentivePlan by a number of Controlling Partnership common units equal to the number of KKR GroupPartnership Units so issued multiplied by the Exchange Rate (as defined in the relevant employeeexchange agreement). See ‘‘Governance—2009 Equity Incentive Plan.’’

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE IRS, YOU AREINFORMED THAT ANY TAX ADVICE CONTAINED IN THIS CONSENT SOLICITATION WASWRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THETRANSACTIONS OR MATTERS ADDRESSED HEREIN AND WAS NOT INTENDED OR WRITTENTO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAX-RELATEDPENALTIES UNDER FEDERAL, STATE OR LOCAL TAX LAW. EACH TAXPAYER SHOULD SEEKADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM ANINDEPENDENT TAX ADVISOR.

This summary discusses the material U.S. federal income tax considerations related to theCombination Transaction as of the date hereof. This summary does not purport to address all materialU.S. federal income tax considerations related to owning KPE units prior to or following theCombination Transaction. This summary is based on provisions of the Internal Revenue Code, on theregulations promulgated thereunder and on published administrative rulings and judicial decisions, allof which are subject to change at any time, possibly with retroactive effect. This discussion is necessarilygeneral and may not apply to all categories of investors, some of which, such as banks, thrifts,insurance companies, persons liable for the alternative minimum tax, dealers, tax exempt organizations,regulated investment companies, investors who are deemed to own 10% or more of any foreigncorporation owned by KPE (taking into account the investor’s interest in such foreign corporation as aresult of their ownership interest in KPE or otherwise) and other investors that do not own their KPEunits as capital assets, may be subject to special rules. The actual tax consequences of the CombinationTransaction will vary depending on your circumstances.

For purposes of this discussion, a ‘‘U.S. Holder’’ is for U.S. federal income tax purposes: (1) anindividual citizen or resident of the United States; (2) a corporation (or other entity treated as acorporation for U.S. federal income tax purposes) created or organized in or under the laws of theUnited States, any state thereof or the District of Columbia; (3) an estate the income of which issubject to U.S. federal income taxation regardless of its source; or (4) a trust which either (A) issubject to the primary supervision of a court within the United States and one or more United Statespersons have the authority to control all substantial decisions of the trust or (B) has a valid election ineffect under applicable Treasury regulations to be treated as a U.S. person. A ‘‘non-U.S. Holder’’ is aholder that is not a U.S. Holder.

If a partnership holds KPE units the tax treatment of a partner in the partnership will generallydepend upon the status of the partner and the activities of the partnership. If you are a partner of apartnership holding KPE units, you should consult your tax advisors. This discussion does not constitutetax advice and is not intended to be a substitute for tax planning.

Holders of KPE units should consult their own tax advisors concerning the U.S. federal, state andlocal income tax and estate tax consequences in their particular situations of the CombinationTransaction, as well as any consequences under the laws of any other taxing jurisdiction.

Consequences to U.S. Holders of the Combination Transaction

KPE’s transfer of its assets and liabilities to Group Holdings will be disregarded for U.S. federalincome tax purposes because Group Holdings is intended to be treated as a disregarded entity for U.S.federal income tax purposes. When Group Holdings subsequently transfers such assets and liabilities toKKR Management Holdings Corp. (‘‘Management Corp.’’), the intermediate holding company formedby KPE to hold KPE’s interest in KKR Management Holdings L.P., and to KKR Fund Holdings L.P.,however, those transfers will be deemed to be made by KPE for U.S. federal income tax purposes.Therefore, in the Combination Transaction, KPE will be deemed to transfer its assets and liabilities toManagement Corp. and to KKR Fund Holdings L.P. for U.S. federal income tax purposes. Subject to

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the exceptions discussed below, no gain or loss should be recognized by KPE (and, consequently, nogain or loss should be recognized by you) on the contribution of the assets and liabilities of KPE toManagement Corp. and the KKR Group Partnerships pursuant to the Combination Transaction.

• Section 351 of the Internal Revenue Code provides that generally no gain or loss is recognizedon the transfer of property to a corporation, such as Management Corp., if the transferor is incontrol of the corporation immediately after the transfer, except to the extent (i) the transferorreceives property or money, other than stock of the corporation, pursuant to the transaction, or(ii) the total liabilities assumed by the transferee exceed the adjusted basis of all the propertytransferred. It is expected that under this rule, KPE (and consequently you) should notrecognize gain or loss on the contribution of a portion of KPE’s assets and liabilities toManagement Corp. pursuant to the Combination Transaction.

• Section 721 of the Internal Revenue Code provides that generally no gain or loss is recognizedby a partnership or its partners upon the contribution of property to the partnership in exchangefor interests in that partnership. Therefore, KPE (and consequently you) should not recognizegain or loss on the contribution of a portion of its assets and liabilities to KKR FundHoldings L.P. in exchange for interests in KKR Fund Holdings L.P. Similarly, Management Corp.should not recognize gain or loss on its contribution of the assets and liabilities that it receivesfrom KPE to KKR Management Holdings L.P. in exchange for units in KKR ManagementHoldings L.P. pursuant to the Combination Transaction.

• Regardless of whether you are otherwise required to recognize any gain or loss on thecontributions described above, to the extent your indirect interest in a passive foreign investmentcompany, or PFIC, owned by KPE is reduced as a result of the direct or indirect contribution ofthe PFIC to a KKR Group Partnership pursuant to the Combination Transaction, this reductionin your interest may be deemed to be a disposal of a portion of your indirect interest in thePFIC. You would be required to recognize gain, if any, on this deemed disposal. This gain wouldbe taxable as an ‘‘excess distribution’’ for purposes of the PFIC rules and taxable at ordinaryincome rates. You may also be subject to an interest charge for any deferred tax. If, however,you have in effect an election, referred to as a ‘‘QEF election,’’ to treat your interest in thePFIC as a ‘‘qualified electing fund,’’ or QEF, and you made the election in the later of (i) thefirst year in which KPE held shares in such entity or (ii) the first year in which you held KPEunits, then generally you will not be required to recognize any gain on the contribution of yourindirect interest in the PFIC to the KKR Group Partnerships pursuant to the CombinationTransaction.

KPE’s Basis in Management Corp., Unitholders’ Basis in KPE Units

The basis of assets contributed to Management Corp. pursuant to the Combination Transactionmay have been reduced under Section 743(b) of the Internal Revenue Code or may be required uponthe contribution to be reduced under Section 362(e) of the Internal Revenue Code. Pursuant toSection 362(e), the basis of any asset contributed to Management Corp. whose adjusted tax basisexceeds its fair market value (‘‘built-in loss property’’) generally must be reduced to fair market value.To the extent the basis of assets contributed to Management Corp. are reduced under Section 743(b) orSection 362(e), Management Corp. will have greater gain (and less loss) and, thus, more U.S. federalincome tax, on a future disposal of these assets than it would have had if no basis adjustments hadbeen made.

Section 362(e) of the Internal Revenue Code also provides for an election that would allow KPEto reduce its basis in the shares of Management Corp. that it receives in exchange for a portion of thecontributed built-in loss property rather than reduce the basis of such portion of the contributedbuilt-in loss property. However, unless the independent directors of KPE consent, such an election will

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not be made. If the independent directors of KPE consent and this election is made, U.S. Holderswould be required to reduce their basis in their KPE units. As a result, such holders would havegreater gain (or less loss) on a subsequent disposal of their KPE units.

Taxation of KPE, Group Holdings and the KKR Group Partnerships

An entity, such as KPE and each of the KKR Group Partnerships, that is treated as a partnershipfor U.S. federal income tax purposes is not a taxable entity and incurs no U.S. federal income taxliabilities. Similarly, Group Holdings, is intended to be treated as a disregarded entity for U.S. federalincome tax purposes, will not incur any U.S. federal income tax liabilities. Each partner of apartnership is required to take into account its allocable share of items of income, gain, loss anddeduction of the partnership in computing its U.S. federal income tax liability, regardless of the extentto which, or whether, it receives cash distributions from the partnership, and thus may incur income taxliabilities unrelated to (and in excess of) any distributions from the partnership. Moreover, thepartnership may make certain investments that could cause the partnership, and consequently itspartners, to recognize taxable income without receiving any cash. Distributions of cash by a partnershipto a partner are generally not taxable unless the amount of cash distributed to a partner is in excess ofthe partner’s adjusted basis in its partnership interest.

An entity, such as KPE, that would otherwise be classified as a partnership for U.S. federal incometax purposes may nonetheless be taxable as a corporation if it is a ‘‘publicly traded partnership,’’ unlessan exception applies. An entity that would otherwise be classified as a partnership is a publicly tradedpartnership if (i) interests in the partnership are traded on an established securities market or(ii) interests in the partnership are readily tradable on a secondary market or the substantial equivalentthereof. Following the Combination Transaction, KPE will continue to be publicly traded. However, anexception to taxation as a corporation, referred to as the ‘‘Qualifying Income Exception,’’ exists if atleast 90% of such partnership’s gross income for every taxable year consists of ‘‘qualifying income’’ andthe partnership is not required to register under the Investment Company Act. Qualifying incomeincludes certain interest income, dividends, real property rents, gains from the sale or other dispositionof real property, and any gain from the sale or disposition of a capital asset or other property held forthe production of income that otherwise constitutes qualifying income.

Pursuant to the Combination Transaction, KPE and Group Holdings will comply with investmentpolicies and procedures that govern the types of investments that KPE or Group Holdings can make(and income it can earn), including structuring certain investments through entities, such asManagement Corp., classified as corporations for U.S. federal income tax purposes (as discussedfurther below), to ensure that KPE will meet the Qualifying Income Exception in each taxable year. IfKPE failed to meet the Qualifying Income Exception, other than a failure that is determined by theIRS to be inadvertent and that is cured within a reasonable time after discovery, or if KPE wererequired to register under the Investment Company Act, KPE would be treated as if it had transferredall of its assets, subject to liabilities, to a newly formed corporation, on the first day of the year inwhich KPE fails to meet the Qualifying Income Exception, in return for stock in that corporation, andthen distributed the stock to the holders of KPE units in liquidation of their interests in KPE.Thereafter, KPE would be treated as a corporation for U.S. federal income tax purposes and, ifSection 7874 of the Internal Revenue Code were to apply, KPE could be treated as a U.S. rather thana foreign corporation for U.S. federal income tax purposes. Depending on whether KPE were treatedas a U.S. or foreign corporation, the deemed contribution and liquidation may be taxable to U.S.Holders. If KPE were treated as a corporation in any given taxable year, either as a result of a failureto meet the Qualifying Income Exception or otherwise, KPE’s items of income, gain, loss anddeduction would be reflected only on KPE’s tax return rather than being passed through to you.

If KPE were treated as a foreign corporation, the deemed contribution and liquidation transactiondescribed above would be taxable to U.S. Holders. Going forward, income that KPE received with

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respect to certain investments would be subject to a higher rate of U.S. withholding tax. Distributionsmade to U.S. Holders would be treated as either taxable dividend income, which would not be eligiblefor reduced rates of taxation, to the extent of KPE’s current or accumulated earnings and profits, or inthe absence of earnings and profits, a nontaxable return of capital, to the extent of such holder’s taxbasis in their KPE units, or taxable capital gain, after the holder’s basis is reduced to zero. In addition,KPE could be classified as a PFIC for U.S. federal income tax purposes, and you would be subject tothe rules applicable to PFICs discussed below. See below ‘‘—Passive Foreign Investment Companies.’’Furthermore, KPE would be subject to U.S. corporate income tax and branch profits tax with respectto its income, if any, that is effectively connected with a United States trade or business. Accordingly,treatment as a foreign corporation could materially reduce your after-tax return and, thus, could resultin a substantial reduction of the value of the KPE units.

Alternatively, if KPE were to be treated as a U.S. corporation, the deemed contribution andliquidation transaction described above generally would be tax-free to holders so long as KPE does nothave liabilities in excess of the tax basis of its assets. Going forward, KPE would be subject to U.S.corporate income tax on all of its taxable income. In addition, distributions made to U.S. Holderswould be treated as either taxable dividend income, which may be eligible for reduced rates of taxation,to the extent of KPE’s current or accumulated earnings and profits, or in the absence of earnings andprofits, a nontaxable return of capital, to the extent of such holder’s tax basis in their KPE units, ortaxable capital gain, after the holder’s basis was reduced to zero. Dividends paid to non-U.S. Holderswould be subject to U.S. withholding tax. Accordingly, treatment as a U.S. corporation could materiallyreduce your after-tax return and, thus, could result in a substantial reduction of the value of the KPEunits.

If at the end of any taxable year KPE failed to meet the Qualifying Income Exception, KPE maystill qualify as a partnership if KPE is entitled to relief under the Internal Revenue Code for aninadvertent termination of partnership status. This relief would be available if: (i) the failure is curedwithin a reasonable time after discovery; (ii) the failure is determined by the IRS to be inadvertent;and (iii) KPE agrees to make such adjustments (including adjustments with respect to its partners) orto pay such amounts as are required by the IRS. It is not possible to state whether KPE would beentitled to this relief in any or all circumstances. If this relief provision is inapplicable to a particularset of circumstances involving KPE, KPE will not qualify as a partnership for U.S. federal income taxpurposes. Even if this relief provision applies and KPE retains its partnership status, KPE or itsunitholders (during the failure period) will be required to pay such amounts as are determined by theIRS.

Proposed Legislation

Legislation has been introduced in the U.S. Congress that would, if enacted, preclude KPEfollowing the Combination Transaction from qualifying for treatment as a partnership for U.S. federalincome tax purposes under the publicly traded partnership rules. In June 2007, a bill was introduced inthe U.S. Senate that would treat income received by a partner with respect to an investment servicespartnership interest as ordinary income received for the performance of services, which would precludeKPE from meeting the Qualifying Income Exception described above. In addition, the U.S. Congresshas recently considered other bills relating to the taxation of investment partnerships. In April 2009legislation was introduced in the U.S. Congress that was substantially similar to a bill passed by theU.S. House of Representatives in 2008 that would generally (i) treat carried interest as non-qualifyingincome under the tax rules applicable to publicly traded partnerships, which would require KPE to holdinterests in entities earning such income through taxable subsidiary corporations (as discussed belowunder ‘‘—Investment Structure’’), and (ii) tax carried interest as ordinary income for U.S. federalincome tax purposes, rather than in accordance with the character of income derived by the underlyingfund, which is in many cases capital gain. In June 2009, legislation was introduced in the U.S. House of

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Representatives that would tax as corporations publicly traded partnerships that directly or indirectlyderive any income from investment advisor or asset management services. In addition, the Obamaadministration proposed in its published revenue proposals for 2010 that the current law regarding thetreatment of carried interest be changed to treat such income as income received in connection withthe performance of services and subject to ordinary income tax. If the changes suggested by theadministration or any of the proposed legislation was adopted, income attributable to carried interestmay not meet the Qualifying Income Exception requirements and, therefore, KPE may be required tohold the interests in entities earning such income through a U.S. corporation or KPE may otherwisenot be permitted to qualify as a partnership for U.S. federal income purposes following theCombination Transaction.

The remainder of this discussion assumes that KPE and the KKR Group Partnerships will betreated as partnerships for U.S. federal income tax purposes.

Taxation of Management Corp.

Following the Combination Transaction, KPE will own an interest in KKR’s fund managementservices business. The income derived by KPE from such fund management services likely will not bequalifying income for purposes of the Qualifying Income Exception. Therefore, in order to meet theQualifying Income Exception, KPE will hold its interests in the KKR Group Partnership that holdssuch fund management companies through an entity, Management Corp., that is treated as acorporation for U.S. federal income tax purposes.

As the holder of Management Corp. common stock, KPE will not be taxed directly on the earningsof Management Corp. or the earnings of entities held through Management Corp. Rather, as a partnerof KKR Management Holdings L.P., Management Corp. will incur U.S. federal income taxes on itsproportionate share of any net taxable income of KKR Management Holdings L.P. ManagementCorp.’s liability for U.S. federal income taxes and applicable state, local and other taxes could beincreased if the IRS were to successfully reallocate income or deductions of the related entitiesconducting KKR’s business.

Distributions of cash or other property that KPE receives from Management Corp. will constitutedividends for U.S. federal income tax purposes to the extent paid from Management Corp.’s current oraccumulated earnings and profits (as determined under U.S. federal income tax principles). If theamount of a distribution by Management Corp. exceeds its current and accumulated earnings andprofits, such excess will be treated as a tax-free return of capital to the extent of KPE’s tax basis in theManagement Corp. common stock, and thereafter will be treated as a capital gain. Such dividends andcapital gains will be qualifying income for purposes of the Qualifying Income Exception. Dividendsreceived by KPE from Management Corp. will be subject to U.S. withholding tax at a rate of 30%. Youmay, however, be able to seek a refund of this withholding tax.

If KPE forms, for other purposes, a U.S. corporation or other entity treated as a U.S. corporationfor U.S. federal income tax purposes, that corporation also would be subject to U.S. federal income taxon its income, and dividends paid by such corporation to KPE could be subject to withholding tax inthe same manner as described above.

Personal Holding Companies

Management Corp. could be subject to additional U.S. federal income tax on a portion of itsincome if it is determined to be a personal holding company, or ‘‘PHC,’’ for U.S. federal income taxpurposes. A U.S. corporation generally will be classified as a PHC for U.S. federal income tax purposesin a given taxable year if (i) at any time during the last half of such taxable year, five or fewerindividuals (without regard to their citizenship or residency and including as individuals for this purposecertain entities such as certain tax-exempt organizations and pension funds) own or are deemed to own

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(pursuant to certain constructive ownership rules) more than 50% of the stock of the corporation byvalue and (ii) at least 60% of the corporation’s adjusted ordinary gross income, as determined for U.S.federal income tax purposes, for such taxable year consists of PHC income (which includes, amongother things, dividends, interest, royalties, annuities and, under certain circumstances, rents).

Due to applicable attribution rules, it is likely that five or fewer individuals or tax-exemptorganizations will be treated as owning actually or constructively more than 50% of the value ofManagement Corp. common stock. Consequently, Management Corp. could be or become a PHC,depending on whether it fails the PHC gross income test. If, as a factual matter, the income ofManagement Corp. fails the PHC gross income test, it will be a PHC. Certain aspects of the grossincome test cannot be predicted with certainty. Thus, no assurance can be given that ManagementCorp. will not become a PHC following the Combination Transaction or become one in the future.

If Management Corp. is or were to become a PHC in a given taxable year, it would be subject toan additional 15% PHC tax on its undistributed PHC income, which generally includes the company’staxable income, subject to certain adjustments. For taxable years beginning after December 31, 2010,the PHC tax rate on undistributed PHC income will be equal to the highest marginal rate on ordinaryincome applicable to individuals (currently 35%). If Management Corp. were to become a PHC andhad significant amounts of undistributed PHC income, the amount of PHC tax could be material.However, distributions of such income reduce the PHC income subject to tax.

Certain State, Local and Non-U.S. Tax Matters

KPE, its subsidiaries and entities in which KPE owns an interest following the CombinationTransaction may be subject to state, local or non-U.S. taxation in various jurisdictions, including thosein which KPE, its subsidiaries or such other entities transact business, own property or reside and maybe required to file tax returns in some or all of those jurisdictions. For example, they may be subject toNew York City unincorporated business tax. The state, local or non-U.S. tax treatment of KPE andKPE unitholders may not conform to the U.S. federal income tax treatment discussed herein. KPE maypay non-U.S. taxes, and dispositions of foreign property or operations involving, or investments in,foreign property may give rise to non-U.S. income or other tax liability in amounts that could besubstantial. Any non-U.S. taxes incurred by KPE may not pass through to KPE unitholders as a creditagainst their U.S. federal income tax liability.

Consequences to U.S. Holders of Indirect Interests in Management Holdings Corp. and the KKRGroup Partnerships

The following is a summary of the material U.S. federal income tax consequences that will apply toyou as a U.S. Holder of indirect interests in Management Holdings Corp. and the KKR GroupPartnerships following the Combination Transaction.

As discussed above under the heading ‘‘Taxation of KPE, Group Holdings and the KKR GroupPartnerships,’’ KPE and the Group Partnership intend to be treated as partnerships for U.S. federalincome tax purposes. Group Holdings is intended to be treated as a disregarded entity for federalincome tax purposes. As a result, your allocable share for U.S. federal income tax purposes of KPE’sitems of income, gain, loss, deduction or credit will be governed by the limited partnership agreementfor KPE if such allocations have ‘‘substantial economic effect’’ or are determined to be in accordancewith your interests in KPE. Similarly, KPE’s allocable share for U.S. federal income tax purposes of theKKR Fund Holdings L.P.’s items of income, gain, loss, deduction or credit will be governed by thelimited partnership agreement for KKR Fund Holdings L.P. if such allocations have substantialeconomic effect or are determined to be in accordance with KPE’s interest in KKR Fund Holdings L.P.Likewise, Management Holdings Corp.’s allocable share for U.S. federal income tax purposes of theKKR Management Holdings L.P.’s items of income, gain, loss, deduction or credit will be governed by

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the limited partnership agreement for KKR Management Holdings L.P. if such allocations havesubstantial economic effect or are determined to be in accordance with Management Holdings Corp.’sinterest in KKR Management Holdings L.P. KPE believes that for U.S. federal income tax purposes,the allocations in the KPE limited partnership agreement will have substantial economic effect or be inaccordance with your interest in KPE, and KPE’s Managing Partner intends to prepare tax returnsbased on such allocations. Similarly, KPE believes the allocations contained in the limited partnershipagreements of the KKR Group Partnerships will have substantial economic effect or be in accordancewith KPE’s interest in KKR Fund Holdings L.P. and Management Corp.’s interest in KKRManagement Holdings L.P. The Managing Partner of the KKR Group Partnerships intends to preparetax returns based on such allocations. If the IRS successfully challenges the allocations made pursuantto the KPE limited partnership agreement or the limited partnership agreements of the KKR GroupPartnerships, the resulting allocations for U.S. federal income tax purposes might be less favorable thanthe allocations set forth in the limited partnership agreements.

The characterization of an item of KPE’s income, gain, loss, deduction or credit generally will bedetermined at KPE’s (rather than at your) level. Similarly, the characterization of an item of KKRFund Holdings L.P.’s income, gain, loss, deduction or credit generally will be determined at KKR FundHolding’s (rather than KPE’s) level. Distributions KPE receives from Management Corp. will betaxable as dividend income to the extent paid out of Management Corp.’s current or accumulatedearnings and profits. Dividends paid by Management Corp. to KPE will be subject to U.S. withholdingtax at a rate of 30%. With respect to dividends that are allocable to your indirect interest inManagement Corp., you may, however, be able to seek a refund of this withholding tax. In addition,individual U.S. holders of KPE units will be eligible for a reduced rate of income tax of 15% through2010 with respect to any dividends paid by Management Corp. to KPE that are allocated to them,provided that certain holding period requirements are satisfied. Also, U.S. holders of KPE that arecorporations, subject to limitations, will be entitled to a dividends received deduction with respect totheir share of dividends paid to KPE by Management Corp.

As is currently the case, KPE may derive taxable income from an investment that is not matchedby a corresponding distribution of cash. In addition, special provisions of the Internal Revenue Codemay be applicable to certain of KPE’s investments, and may affect the timing of KPE’s income,requiring KPE to recognize taxable income before KPE (and, consequently, you) receives cashattributable to such income. Accordingly, it is possible that your U.S. federal income tax liability withrespect to your allocable share of KPE’s income for a particular taxable year could exceed any cashdistribution you receive for the year, thus giving rise to an out-of-pocket tax liability for you.

Section 754 Election

KPE currently has in place an election pursuant to Section 754 of the Internal Revenue Code. Theelection is irrevocable without the consent of the IRS, and generally requires KPE to adjust the taxbasis in its assets, or ‘‘inside basis,’’ attributable to a transferee of common units under Section 743(b)of the Internal Revenue Code to reflect the purchase price of the common units paid by the transferee.In addition, KKR Management Holdings L.P. will make a Section 754 election. Therefore, similaradjustments will be made upon the transfer of interests in KKR Management Holdings L.P.

Even though KPE will have a Section 754 election in effect, because a Section 754 election will notbe made for KKR Fund Holdings L.P., it is unlikely that KPE’s existing Section 754 election willprovide any substantial benefit or detriment to a transferee of common units.

The calculations involved in the Section 754 election are complex. KPE will make them on thebasis of assumptions as to the value of KPE’s assets and other matters.

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Passive Foreign Investment Companies

KKR Fund Holdings L.P. may own directly or indirectly interests in foreign entities that are treatedas corporations for U.S. federal income tax purposes. You may be subject to special rules as a result ofyour indirect investments in such foreign corporations, including the rules applicable to an investmentin a PFIC. Management Corp. will be subject to similar rules as those described below with respect toany PFICs owned directly or indirectly by it.

A PFIC is defined as any foreign corporation with respect to which either (1) 75% or more of thegross income for a taxable year is ‘‘passive income’’ or (2) 50% or more of its assets in any taxable year(generally based on the quarterly average of the value of its assets) produce ‘‘passive income.’’ Thereare no minimum stock ownership requirements for shareholders in PFICs. Once a corporation qualifiesas a PFIC it is, subject to certain exceptions, always treated as a PFIC, regardless of whether it satisfieseither of the qualification tests in subsequent years. Any gain on disposition of stock of a PFIC, as wellas income realized on certain ‘‘excess distributions’’ by the PFIC, is treated as though realized ratablyover the shorter of your holding period in your KPE units or KPE’s holding period in the PFIC. Suchgain or income is taxable as ordinary income and dividends paid by a PFIC to an individual will not beeligible for the reduced rates of taxation that are available for certain qualifying dividends. In addition,an interest charge would be imposed on you based on the tax deferred from prior years.

You may be able to mitigate some of the adverse consequences of owning a PFIC by electing totreat your indirect investments in PFICs as ‘‘qualified electing funds’’ under Section 1295 of theInternal Revenue Code. Because KPE is a foreign partnership, you, and not KPE, are responsible formaking such QEF elections. A QEF election is effective for the taxable year for which the election ismade and all subsequent taxable years and may not be revoked without the consent of the IRS. If youmake a QEF election under the Internal Revenue Code with respect to your indirect interest in aPFIC, in lieu of the foregoing treatment, you would be required to include in income each year aportion of the ordinary earnings and net capital gains of the QEF called ‘‘QEF Inclusions,’’ even if notdistributed to you. Thus, you may be required to report taxable income as a result of QEF Inclusionswithout corresponding receipts of cash. However, you may elect to defer, until the occurrence ofcertain events, payment of the U.S. federal income tax attributable to QEF Inclusions for which nocurrent distributions are received, but will be required to pay interest on the deferred tax computed byusing the statutory rate of interest applicable to an extension of time for payment of tax. KPE’s taxbasis in the shares of such non-U.S. entities, and your basis in your KPE units, will be increased toreflect QEF Inclusions. No portion of the QEF Inclusion attributable to ordinary income will beeligible for reduced rates of taxation. Amounts included as QEF Inclusions with respect to direct andindirect investments generally will not be taxed again when actually distributed. You should consultyour tax advisors as to the manner in which QEF Inclusions affect your allocable share of KPE’sincome and your basis in your KPE units.

Alternatively, in the case of a PFIC that is a publicly traded foreign portfolio company, an electionmay be made to ‘‘mark to market’’ the stock of such foreign portfolio company on an annual basis.Pursuant to such an election, you would include in each year as ordinary income the excess, if any, ofthe fair market value of such stock over its adjusted basis at the end of the taxable year. You may treatas ordinary loss any excess of the adjusted basis of the stock over its fair market value at the end of theyear, but only to the extent of the net amount previously included in income as a result of the electionin prior years.

KKR Fund Holdings L.P. may directly or indirectly make certain investments, including forinstance investments in specialized investment funds or investments in funds of funds through non-U.S.corporate subsidiaries or through other non-U.S. corporations. Such an entity may be a PFIC for U.S.federal income tax purposes. In addition, certain of KKR Fund Holdings L.P.’s direct or indirectinvestments could be in PFICs. Thus, there can be no assurance that some of the KKR Fund

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Holdings L.P.’s direct or indirect investments will not be treated as held through a PFIC or as interestsin PFICs or that such PFICs will be eligible for the ‘‘mark to market’’ election, or that as to any suchPFIC you will be able to make a QEF election.

If you do not make a QEF election with respect to a PFIC, Section 1291 of the Internal RevenueCode will treat all gain on a disposition by KKR Fund Holdings L.P. of shares of such entity, gain onthe disposition of KPE units by you (to the extent allocable to gain on such PFIC) at a time when KPEindirectly owns shares of such entity, as well as certain other defined ‘‘excess distributions,’’ as if thegain or excess distribution were ordinary income earned ratably over the shorter of the period duringwhich you held your KPE common units or the period during which KPE indirectly held its shares insuch entity. For gain and excess distributions allocated to prior years, (i) the tax rate will be the highestin effect for that taxable year and (ii) the tax will be payable generally without regard to offsets fromdeductions, losses and expenses. You will also be subject to an interest charge for any deferred tax. Noportion of this ordinary income will be eligible for the favorable tax rate applicable to ‘‘qualifieddividend income’’ for individual U.S. persons.

Investment Structure

As is currently the case, following the Combination Transaction, to manage KPE’s affairs so as tomeet the Qualifying Income Exception for the publicly traded partnership rules (discussed above) andcomply with certain requirements in KPE’s limited partnership agreement, KPE may need to structurecertain investments through an entity classified as a corporation for U.S. federal income tax purposes.Because KPE unitholders are located in numerous taxing jurisdictions, no assurances can be given thatany such investment structures will not result in additional tax burdens on some of KPE’s unitholders.In addition, as discussed below, if the entity were a non-U.S. corporation it may be considered a PFIC.If the entity were a U.S. corporation, it would be subject to U.S. federal income tax on its operatingincome, including any gain recognized on its disposal of its investments. In addition, if the investmentinvolves U.S. real estate, gain recognized on disposition would generally be subject to U.S. federalincome tax, whether the corporation is a U.S. or a non-U.S. corporation.

Taxes in Other State, Local, and Non-U.S. Jurisdictions

In addition to U.S. federal income tax consequences, you may be subject to potential U.S. stateand local taxes because of an investment by the KKR Group Partnerships in the U.S. state or localityin which you are a resident for tax purposes or in which the KKR Group Partnerships have investmentsor activities. You may also be subject to tax return filing obligations and income, franchise or othertaxes, including withholding taxes, in state, local or non-U.S. jurisdictions in which KKR Fund HoldingsL.P. directly or indirectly invests, or in which entities in which KKR Fund Holdings L.P. directly orindirectly own interests conduct activities or derive income. Income or gains from investments held bythe KKR Group Partnerships may be subject to withholding or other taxes in jurisdictions outside theUnited States, subject to the possibility of reduction under applicable income tax treaties. If you wish toclaim the benefit of an applicable income tax treaty, you may be required to submit information to taxauthorities in such jurisdictions. You should consult your own tax advisors regarding the U.S. state,local and non-U.S. tax consequences of the Combination Transaction to you.

Consequences to Non-U.S. Holders of Indirect Interests in the KKR Group Partnerships Units

KPE may be, or may become, engaged in a U.S. trade or business for U.S. federal income taxpurposes, including by reason of KKR Fund Holdings L.P.’s direct or indirect investments in U.S. realproperty holding corporations, in which case some portion of KPE’s income would be treated aseffectively connected income with respect to non-U.S. holders, or ‘‘ECI.’’ If a non-U.S. Holder weretreated as being engaged in a U.S. trade or business in any year because of an investment by KKRFund Holdings L.P. in such year, such non-U.S. Holder generally would be: (1) subject to withholding

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by KPE on such non-U.S. Holder’s allocable share of such income whether or not distributed;(2) required to file a U.S. federal income tax return for such year reporting its allocable share, if any,of income or loss effectively connected with such trade or business, including certain income from U.S.sources not related to KPE; and (3) required to pay U.S. federal income tax at regular U.S. federalincome tax rates on any such income. Moreover, a corporate non-U.S. Holder might be subject to aU.S. branch profits tax on its allocable share of its ECI. Any amount so withheld would be creditableagainst such non-U.S. Holder’s U.S. federal income tax liability, and such non-U.S. Holder could claima refund to the extent that the amount withheld exceeded such non-U.S. Holder’s U.S. federal incometax liability for the taxable year. Finally, if KPE were treated as being engaged in a U.S. trade orbusiness, a portion of any gain recognized by a KPE unitholder who is a non-U.S. Holder on the saleor exchange of its KPE units, could be treated for U.S. federal income tax purposes as ECI, and hencesuch non-U.S. Holder could be subject to U.S. federal income tax on the sale or exchange.

Although each non-U.S. Holder of KPE has been required to provide an IRS Form W-8, KPE maynot be able to provide complete information related to the tax status of its investors to KKR FundHoldings L.P. for purposes of obtaining reduced rates of withholding on behalf of KPE’s investors.Therefore, notwithstanding whether such information is provided, to the extent KPE receives dividendsfrom a U.S. corporation through KKR Fund Holdings L.P. and its investment vehicles or fromManagement Corp., such dividend income will be subject to U.S. withholding tax at a rate of 30%.Distributions to you may also be subject to withholding to the extent they are attributable to the sale ofa U.S. real property interest or if the distribution is otherwise considered fixed or determinable annualor periodic income under the Internal Revenue Code. You may need to take additional steps to receivea credit or refund of any excess withholding tax paid on your account (taking into account any reducedrate of withholding tax you may be entitled to under an applicable tax treaty). This may include thefiling of a non-resident U.S. income tax return with the IRS. Among other limitations, if you reside ina treaty jurisdiction which does not treat KPE as a pass-through entity, you may not be eligible toreceive a refund or credit of excess U.S. withholding taxes paid on your account. You should consultyour tax advisors regarding the treatment of U.S. withholding taxes.

Special rules may apply in the case of a non-U.S. Holder that: (1) has an office or fixed place ofbusiness in the United States; (2) is present in the United States for 183 days or more in a taxableyear; or (3) is a former citizen of the United States, a foreign insurance company that is treated asholding an interest in KPE in connection with its U.S. business, a PFIC or a corporation thataccumulates earnings to avoid U.S. federal income tax. You should consult your tax advisors regardingthe application of these special rules.

U.S. Federal Estate Tax Consequences of KPE Units

U.S. Holder

If KPE units are included in the gross estate of a U.S. citizen or resident for U.S. federal estatetax purposes, then a U.S. federal estate tax might be payable in connection with the death of suchperson. U.S. Holders should consult their own tax advisors concerning the potential U.S. federal estatetax consequences of owning KPE units.

Non-U.S. Holder

The U.S. federal estate tax treatment of the KPE units with regards to the estate of a non-citizenwho is not a resident of the United States is not entirely clear. If the KPE units are includable in theU.S. gross estate of such person, then a U.S. federal estate tax might be payable in connection with thedeath of such person. Non-U.S. Holders who are non-citizens and not residents of the United Statesshould consult their own tax advisors concerning the potential U.S. federal estate tax consequences ofowning KPE units.

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Consequences to Listing in the United States

The following discussion regarding the Listing Transaction (defined below) is based on current lawand facts. In addition, the discussion below assumes that the Controlling Partnership adopts andcomplies with investment guidelines and procedures similar to those adopted by Group Holdings asdiscussed above. See above ‘‘—Taxation of KPE, Group Holdings and the Group Partnerships.’’ If thelaw and/or facts were to change prior to the Listing Transaction or if the Controlling Partnership werenot to adopt or comply with the investment guidelines and procedures, the tax consequences to you ofthe Listing Transaction could be materially different than those described below. The remainder of thisdiscussion assumes that there are no changes in applicable law and facts prior to the ListingTransaction and that the Controlling Partnership adopts and complies with the investment guidelinesand procedures.

Pursuant to the terms of the Investment Agreement, during the period starting six monthsfollowing the date the conditions precedent to the Combination Transaction are satisfied, the partieswill have the option to require reasonable efforts be used to cause Controlling Partnership units to belisted on the New York Stock Exchange or The NASDAQ Stock Market and, in connection therewith,require KPE to contribute its assets to the Controlling Partnership in exchange for ControllingPartnership units and make an in-kind distribution of such units to the KPE unitholders (the ‘‘ListingTransaction’’), subject to applicable laws, rules and regulations. If either party was to exercise thisoption, generally you should not be required to recognize gain or loss on the contribution by KPE ofits interest in the Management Corp. and KKR Fund Holdings, L.P. to the Controlling Partnership inexchange for Controlling Partnership units pursuant to transaction. In addition, the receipt ofControlling Partnership units by you generally would not result in gain or loss to U.S holders and theirholding period in any Controlling Partnership units they receive in exchange for their KPE units shouldgenerally include their holding period in their KPE units.

Following the Listing Transaction, you would own an interest in the Controlling Partnership, a U.S.partnership. It expected that the Controlling Partnership will be treated as a continuation of KPE forU.S. federal income tax purposes. As a continuation of KPE, certain tax elections made by KPE,including, for instance, the Section 754 election discussed above, will continue to apply to theControlling Partnership. The U.S. federal income tax consequences of owning an interest in theControlling Partnership, except as discussed below, would generally be the same as the U.S. federalincome tax consequences of owning an interest in KPE.

Consequences to U.S. Holders of Indirect Interests in the KKR Group Partnerships following ListingTransaction

Passive Foreign Investment Companies. As discussed above under, ‘‘—Passive Foreign InvestmentCompanies,’’ it is possible that the KKR Group Partnerships will make investments through or inentities that are PFICs for U.S. federal income tax purposes. As is currently the case, this could resultin adverse tax consequences to you. However, as discussed above, the consequences of owning aninterest in a PFIC potentially can be mitigated if a QEF election or ‘‘mark-to-market’’ election is madewith respect to an interest in a PFIC. Following the Listing Transaction, the Controlling Partnership,rather than you, will be responsible for making any such election. Although it may not always bepossible, it is expected that the Controlling Partnership would make a QEF election where possiblewith respect to each entity treated as a PFIC to treat such non-U.S. entity as a QEF in the first year inwhich the Controlling Partnership holds shares in such entity. The consequences of this electiongenerally would be the same as if you had made the election yourself, as described above under‘‘—Passive Foreign Investment Companies.’’

Controlled Foreign Corporation. Following the Listing Transaction, it is possible that theControlling Partnership will be considered a ‘‘U.S. Shareholder’’ (defined below) with respect to certain

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foreign corporations that it owns. You may be subject to certain tax consequences as a result of yourindirect investment in such foreign corporations.

A non-U.S. entity will be treated as a controlled foreign corporation, or CFC, if it is treated as acorporation for U.S. federal income tax purposes and if more than 50% of (i) the total combinedvoting power of all classes of stock of the non-U.S. entity entitled to vote or (ii) the total value of thestock of the non-U.S. entity is owned by U.S. Shareholders on any day during the taxable year of suchnon-U.S. entity. For purposes of this discussion, a ‘‘U.S. Shareholder’’ with respect to a non-U.S. entitymeans a U.S. person that owns 10% or more of the total combined voting power of all classes of stockof the non-U.S. entity entitled to vote.

If the Controlling Partnership is a U.S. Shareholder in a non-U.S. entity that is treated as a CFC,then you may be required to include in income your allocable share of the CFC’s ‘‘Subpart F’’ incomereported by the Controlling Partnership. Subpart F income generally includes dividends, interest, netgain from the sale or disposition of securities, non-actively managed rents and certain other generallypassive types of income. The aggregate Subpart F income inclusions in any taxable year relating to aparticular CFC are limited to such entity’s current earnings and profits. These inclusions are treated asordinary income (whether or not such inclusions are attributable to net capital gains). Thus, you maybe required to report as ordinary income your allocable share of the CFC’s Subpart F income reportedby the Controlling Partnership without corresponding receipts of cash and may not benefit from capitalgain treatment with respect to the portion of the Controlling Partnership’s earnings (if any) attributableto net capital gains of the CFC.

The Controlling Partnership’s tax basis in its stock in such non-U.S. entity, and your tax basis inyour Controlling Partnership units, will be increased to reflect any required Subpart F incomeinclusions. Such income will be treated as income from sources within the United States, for certainforeign tax credit purposes, to the extent derived by the CFC from U.S. sources. Such income will notbe eligible for the reduced rate of tax applicable to ‘‘qualified dividend income’’ for individual U.S.persons. Amounts included as such income with respect to direct and indirect investments generally willnot be taxable again when actually distributed.

Regardless of whether any CFC has Subpart F income, any gain allocated to you as a result of thedirect or indirect disposition of stock in a CFC by KKR Fund Holdings L.P. will be treated as ordinaryincome to the extent of your allocable share of the current or accumulated earnings and profits of theCFC. In this regard, earnings would not include any amounts previously taxed pursuant to the CFCrules. However, net losses (if any) of a non-U.S. entity owned by the Controlling Partnership that istreated as a CFC will not pass through to you. Moreover, a portion of your gain from the sale orexchange of your Controlling Partnership units may be treated as ordinary income. Any portion of anygain from the sale or exchange of a common unit that is attributable to a CFC may be treated as an‘‘unrealized receivable’’ and would be characterized as ordinary income rather than capital gain.

If a non-U.S. entity held by the Controlling Partnership is classified as both a CFC and a PFICduring the time the Controlling Partnership is a U.S. Shareholder of such non-U.S. entity, you will berequired to include amounts in income with respect to such non-U.S. entity pursuant to thissubheading, and the consequences described under the subheading ‘‘—Passive Foreign InvestmentCompanies’’ above will not apply. If the Controlling Partnership’s ownership percentage in a non-U.S.entity changes such that it is not a U.S. Shareholder with respect to such non-U.S. entity, then you maybe subject to the PFIC rules. The interaction of these rules is complex, and you are urged to consulttheir tax advisors in this regard.

New Legislation or Administrative or Judicial Action

The rules dealing with U.S. federal income taxation are constantly under review by personsinvolved in the legislative process, the IRS and the U.S. Treasury Department, frequently resulting in

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revised interpretations of established concepts, statutory changes, revisions to regulations and othermodifications and interpretations. No assurance can be given as to whether, or in what form, anyproposals affecting KPE or KPE unitholders will be enacted. The present U.S. federal income taxtreatment of owning KPE common units following the Combination Transaction may be modified byadministrative, legislative or judicial interpretation at any time, and any such action may affectinvestments and commitments previously made. Changes to the U.S. federal income tax laws andinterpretations thereof could make it more difficult or impossible to be treated as a partnership that isnot taxable as a corporation for U.S. federal income tax purposes, affect or cause KKR to change theinvestments and commitments of the KKR Group Partnerships, affect the tax considerations of owningKPE units, change the character or treatment of portions of the KKR Group Partnerships’ income(including, for instance, the treatment of carried interest as ordinary income rather than capital gain)and adversely affect an investment in KPE units. KPE and its unitholders could be adversely affectedby any such change in, or any new, tax law, regulation or interpretation. The organizational documentsof the KKR Group Partnerships and agreements permit the board of directors to modify the amendedand restated operating agreement from time to time, without the consent of the unitholders, in order toaddress certain changes in U.S. federal income tax regulations, legislation or interpretation. In somecircumstances, such revisions could have a material adverse impact on some or all KPE holders.

THE FOREGOING DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAXPLANNING. THE TAX MATTERS RELATING TO KPE AND KPE UNITHOLDERS ARE COMPLEXAND ARE SUBJECT TO VARYING INTERPRETATIONS. MOREOVER, THE MEANING ANDIMPACT OF TAX LAWS AND OF PROPOSED CHANGES WILL VARY WITH THE PARTICULARCIRCUMSTANCES OF EACH KPE UNITHOLDER. KPE UNITHOLDERS SHOULD CONSULTTHEIR TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND OTHER TAXCONSEQUENCES OF THE TRANSACTIONS.

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INDEPENDENT AUDITORS

The combined financial statements of KKR Group as of December 31, 2008 and 2007, and foreach of the three years in the period ended December 31, 2008, included in this consent solicitationstatement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reportappearing herein (which report expresses an unqualified opinion and includes explanatoryparagraphs relating to investments without a readily determinable fair market value and the adoptionof the presentation and disclosure requirements of FASB Statement No. 160, Noncontrolling Interests inConsolidated Financial Statements—an Amended of Accounting Research Bulletin No. 51).

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INDEX TO FINANCIAL STATEMENTS

Page

KKR Group*:Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2Combined Financial Statements—December 31, 2008, 2007 and 2006

Combined Statements of Financial Condition as of December 31, 2008 and 2007 . . . . . . . . . . F-3Combined Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006 . F-4Combined Statements of Changes in Equity for the Years Ended December 31, 2008, 2007

and 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5Combined Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006 . F-6Notes to Combined Financial Statements—December 31, 2008, 2007 and 2006 . . . . . . . . . . . . F-8

Condensed Combined Financial Statements—March 31, 2009 and 2008Condensed Combined Statements of Financial Condition (unaudited) as of March 31, 2009

and December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-53Condensed Combined Statements of Operations (unaudited) for the Three Months Ended

March 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-54Condensed Combined Statements of Changes in Equity (unaudited) for the Three Months

Ended March 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-55Condensed Combined Statements of Cash Flows (unaudited) for the Three Months Ended

March 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-56Notes to Condensed Combined Financial Statements (unaudited)—March 31, 2009 and 2008 . F-58

* The combined financial statements reflect the historical results of operations and financial positionof the KKR Group for all periods presented. Accordingly, the historical financial statements donot reflect what the results of operations and financial position of the KKR Group would havebeen had the KKR Group been a stand-alone, company for the periods presented.

The KKR Group has operated in the U.S. through various limited liability companies andpartnerships. As a result, the KKR Group’s income has generally not been subject to U.S. federalincome taxes. Taxes related to income earned by partnerships represent obligations of theindividual partners. Income taxes shown on the KKR Group’s historical combined statements ofincome are attributable to taxes incurred in non-U.S. entities and to New York Cityunincorporated business tax attributable to the KKR Group’s operations apportioned to New YorkCity. Unaudited pro forma taxes based on the Reorganization Transactions are provided within theUnaudited Pro Forma Financial Information section of this consent solicitation statement.

The KKR Group’s business is presently conducted through a large number of entities which areunder the common control of KKR’s senior principals and the common ownership of its existingowners, and for which there is no single holding entity. Accordingly, the KKR Group has notpresented historical earnings per unit of the combined entities.

F-1

Independent Auditors’ Report

To the Partners of the KKR Group

We have audited the accompanying combined statements of financial condition of the KKR Group(the ‘‘Company’’) as of December 31, 2008 and 2007, and the related combined statements ofoperations, changes in equity and cash flows for each of the three years in the period endedDecember 31, 2008. These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards as establishedby the Auditing Standards Board (United States) and the standards of the Public Company AccountingOversight Board (United States). Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement. TheCompany is not required to have, nor were we engaged to perform, an audit of its internal control overfinancial reporting. Our audits included consideration of internal control over financial reporting as abasis for designing audit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such combined financial statements present fairly, in all material respects, thecombined financial position of the KKR Group as of December 31, 2008 and 2007, and the combinedresults of their operations and their cash flows for each of the three years in the period endedDecember 31, 2008, in conformity with accounting principles generally accepted in the United States ofAmerica.

As discussed in Note 4 to the combined financial statements, the financial statements includeinvestments valued at $16.3 billion (approximately 73% of total assets) and $24.4 billion (approximately74% of total assets) as of December 31, 2008 and 2007, respectively, whose fair values have beenestimated by management in the absence of readily determinable fair values. Management’s estimatesare based on the factors described in Note 2.

As discussed in Note 2 to the combined financial statements, the Company adopted thepresentation and disclosure requirements of FASB Statement No. 160, Noncontrolling Interests inConsolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51, for allperiods presented.

/s/ Deloitte & Touche LLP

New York, New YorkJuly 17, 2009(July 19, 2009, as to Note 12)

F-2

KKR GROUP

Combined Statements of Financial Condition

As of December 31, 2008 and 2007

(Dollars in Thousands)

2008 2007

AssetsCash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 198,646 $ 272,045Cash and Cash Equivalents Held at Consolidated Entities . . . . . . . . . . . 965,319 413,747Restricted Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 50,389 45,918Investments, at Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,883,519 31,818,332Due from Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,889 43,969Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313,268 248,785

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,441,030 $32,842,796

Liabilities and EquityDebt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,405,125 $ 2,020,328Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . 185,548 555,308

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,590,673 2,575,636Commitments and ContingenciesEquity

KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,634 1,507,694Accumulated Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . 1,245 9,652

Total KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 151,879 1,517,346Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,698,478 28,749,814

Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,850,357 30,267,160Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,441,030 $32,842,796

See notes to combined financial statements.

F-3

KKR GROUP

Combined Statements of Operations

For the Years ended December 31, 2008, 2007 and 2006

(Dollars in Thousands)

2008 2007 2006

RevenuesFee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 235,181 $ 862,265 $ 410,329

ExpensesEmployee Compensation and Benefits . . . . . . . . . . . . . . . . 149,182 212,766 131,667Occupancy and Related Charges . . . . . . . . . . . . . . . . . . . . 30,430 20,068 19,295General, Administrative and Other . . . . . . . . . . . . . . . . . . . 179,673 128,036 78,154Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,103 80,040 38,350

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418,388 440,910 267,466Investment (Loss) Income

Net (Losses) Gains from Investment Activities . . . . . . . . . . (12,944,720) 1,111,572 3,105,523Dividend Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,441 747,544 714,069Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,601 218,920 210,872Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (125,561) (86,253) (29,542)

Total Investment (Loss) Income . . . . . . . . . . . . . . . . . . . (12,865,239) 1,991,783 4,000,922(Loss) Income Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (13,048,446) 2,413,138 4,143,785Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,786 12,064 4,163Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,055,232) 2,401,074 4,139,622Less: Net (Loss) Income Attributable to Noncontrolling

Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,850,761) 1,598,310 3,039,677Net (Loss) Income Attributable to KKR Group . . . . . . . . . . $ (1,204,471) $ 802,764 $1,099,945

See notes to combined financial statements.

F-4

KKR GROUP

Combined Statements of Changes in Equity

For the Years ended December 31, 2008, 2007 and 2006

(Dollars in Thousands)

KKR GroupAccumulated

KKR Group Other TotalPartners’ Comprehensive Noncontrolling ComprehensiveCapital Income (Loss) Interests Income (Loss) Total Equity

Balance at January 1, 2006 . . . . . . . . . $ 1,426,487 $ 6,134 $ 11,518,013 $ 12,950,634Comprehensive Income:

Net Income . . . . . . . . . . . . . . . . . 1,099,945 3,039,677 $ 4,139,622 4,139,622Other Comprehensive Income—

Currency Translation Adjustment . 1,489 15,809 17,298 17,298Net Change in Unrealized Gain on

Securities Available for Sale . . . . 3 3 3Total Comprehensive Income . . . . . . 4,156,923 4,156,923Capital Contributions . . . . . . . . . . . . 267,117 11,430,568 11,697,685Capital Distributions . . . . . . . . . . . . (1,108,755) (5,685,627) (6,794,382)

Balance at December 31, 2006 . . . . . . . 1,684,794 7,626 20,318,440 22,010,860

Comprehensive Income:Net Income . . . . . . . . . . . . . . . . . 802,764 1,598,310 2,401,074 2,401,074Other Comprehensive Income—

Currency Translation Adjustment . 2,026 10,306 12,332 12,332Total Comprehensive Income . . . . . . 2,413,406 2,413,406Deconsolidation of Noncontrolling

Interests . . . . . . . . . . . . . . . . . . . (303,888) (303,888)Capital Contributions . . . . . . . . . . . . 308,201 12,604,558 12,912,759Capital Distributions . . . . . . . . . . . . (1,288,065) (5,477,912) (6,765,977)

Balance at December 31, 2007 . . . . . . . 1,507,694 9,652 28,749,814 30,267,160

Comprehensive Income (Loss):Net Loss . . . . . . . . . . . . . . . . . . . (1,204,471) (11,850,761) (13,055,232) (13,055,232)Other Comprehensive Income—

Currency Translation Adjustment . (8,407) (18) (8,425) (8,425)Total Comprehensive Income (Loss) . . $(13,063,657) (13,063,657)

Purchase of Noncontrolling Interestsby KKR Group . . . . . . . . . . . . . . (6,285) (6,285)

Capital Contributions . . . . . . . . . . . . 103,368 3,942,547 4,045,915Capital Distributions . . . . . . . . . . . . (255,957) (1,136,819) (1,392,776)

Balance at December 31, 2008 . . . . . . . $ 150,634 $ 1,245 $ 19,698,478 $ 19,850,357

See notes to combined financial statements.

F-5

KKR GROUP

Combined Statements of Cash Flows

For the Years ended December 31, 2008, 2007 and 2006

(Dollars in Thousands)

2008 2007 2006

Cash Flows from Operating ActivitiesNet (Loss) Income Attributable to KKR Group . . . . . . . $ (1,204,471) $ 802,764 $ 1,099,945Adjustments to Reconcile Net (Loss) Income

Attributable to KKR Group to Net Cash Used inOperating Activities:Net (Loss) Income Attributable to Noncontrolling

Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,850,761) 1,598,310 3,039,677Net Realized Gains on Investments . . . . . . . . . . . . . . (253,410) (1,557,101) (3,244,931)Change in Unrealized Losses (Gains) on Investments

Attributable to KKR Group . . . . . . . . . . . . . . . . . . 1,521,645 65,249 (3,835)Change in Unrealized Losses on Investments

Attributable to Noncontrolling Interests . . . . . . . . . . 11,676,485 380,280 143,243Other Non-Cash Amounts . . . . . . . . . . . . . . . . . . . . . 2,387 (10,886) (16,063)

Cash Flows Due to Changes in Operating Assets andLiabilitiesChange in Cash and Cash Equivalents Held at

Consolidated Entities . . . . . . . . . . . . . . . . . . . . . . . (565,604) 1,895,148 (2,105,942)Change in Due from Affiliates . . . . . . . . . . . . . . . . . . 14,080 70,728 (65,474)Change in Other Assets . . . . . . . . . . . . . . . . . . . . . . . 87,338 (108,712) (68,718)Change in Accounts Payable, Accrued Expenses and

Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,724 99,260 60,189Investments Purchased . . . . . . . . . . . . . . . . . . . . . . . . (3,438,323) (17,847,606) (9,555,635)Cash Proceeds from Sale of Investments . . . . . . . . . . . 1,535,754 6,090,065 5,186,400

Net Cash Used In Operating Activities . . . . . . . . . . (2,446,156) (8,522,501) (5,531,144)

Cash Flows from Investing ActivitiesChange in Restricted Cash and Cash Equivalents . . . . . . (4,471) (95,406) (108,295)Purchase of Furniture, Equipment and Leasehold

Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,104) (17,063) (21,815)Purchase of Noncontrolling Interests . . . . . . . . . . . . . . . (44,171) — —

Net Cash Used in Investing Activities . . . . . . . . . . . . . (61,746) (112,469) (130,110)

Cash Flows from Financing ActivitiesDistributions to Noncontrolling Interests . . . . . . . . . . . . (1,136,819) (5,467,241) (5,675,567)Contributions from Noncontrolling Interests . . . . . . . . . . 3,942,547 12,589,477 11,430,568Distributions to KKR Group Partners . . . . . . . . . . . . . . (250,358) (1,170,568) (1,063,530)Contributions from KKR Group Partners . . . . . . . . . . . . 103,368 308,201 267,117Proceeds from Debt Obligations . . . . . . . . . . . . . . . . . . 813,809 2,602,360 3,722,379Repayment of Debt Obligations . . . . . . . . . . . . . . . . . . . (1,018,389) (43,800) (3,023,015)Deferred Financing Costs Incurred . . . . . . . . . . . . . . . . (19,655) (4,405) —

Net Cash Provided By Financing Activities . . . . . . . . . 2,434,503 8,814,024 5,657,952

Net Change in Cash and Cash Equivalents . . . . . . . . . . . . (73,399) 179,054 (3,302)Cash and Cash Equivalents, Beginning of Year . . . . . . . . 272,045 92,991 96,293Cash and Cash Equivalents, End of Year . . . . . . . . . . . . $ 198,646 $ 272,045 $ 92,991

F-6

KKR GROUP

Combined Statements of Cash Flows (Continued)

For the Years ended December 31, 2008, 2007 and 2006

(Dollars in Thousands)

2008 2007 2006

Supplemental Disclosures of Cash Flow InformationPayments for Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,952 $ 21,112 $16,962Payments for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,539 $ 14,255 $ 5,939

Supplemental Disclosure of Non-Cash Activities

Non-Cash Distributions to Noncontrolling Interests . . . . . . . . . . . . — $ 10,671 $10,060

Non-Cash Contributions from Noncontrolling Interests . . . . . . . . . — $ 15,081 —Non-Cash Distributions to KKR Group Partners . . . . . . . . . . . . . . $ 5,599 $ 117,497 $45,225Restricted Stock Grant from Affiliate . . . . . . . . . . . . . . . . . . . . . . $ 15,939 — —Non-Cash Debt Financing / Purchase of Investments . . . . . . . . . . . $625,000 $ 521,428 —Change in Foreign Exchange on Debt Obligations . . . . . . . . . . . . . $ (35,624) $ 2,974 —Change in Foreign Exchange on Cash and Cash Equivalents Held

at Consolidated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (14,032)

Deconsolidation of Subsidiary of KKR Financial LLC:Investments, at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $2,162,402 —Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,011,453

Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ 303,888 —

Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ 157,783 —

Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . — $ 40,605 —

Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ 24,952 —

Accumulated Other Comprehensive Income Attributable toNoncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ 10,306 —

See notes to combined financial statements.

F-7

KKR GROUP

Notes to Combined Financial Statements

(All Dollars are in Thousands Except Where Otherwise Noted)

1. ORGANIZATION AND BASIS OF PRESENTATION

The KKR Group (the ‘‘Company’’) is a global alternative asset manager with principal executiveoffices in New York and Menlo Park, California. The Company’s alternative asset management businessinvolves sponsoring and managing investment funds that make investments worldwide in private equityand debt transactions on behalf of third-party investors and the Company’s owners (‘‘Principals’’),including its founders. In connection with these activities, the Company also manages investments inpublic equity and is engaged in capital markets activities. With respect to certain funds that it sponsors,the Company commits to contribute a specified amount of equity as the general partner of the fund(ranging from approximately 2% to 4% of the funds’ total capital commitments) to fund a portion ofthe acquisition price for the fund’s investments.

The accompanying combined financial statements of the Company include the results of eight ofthe Company’s private equity funds and two of the Company’s fixed income funds (the ‘‘KKR Funds’’)and the general partners and management companies of those funds. The Company operates as asingle professional services firm and carries out its investment activities under the ‘‘KKR’’ brand name.The entities comprising the Company are under the common control of its senior Principals (the‘‘Senior Principals’’). The Senior Principals are actively involved in the Company’s operations andmanagement.

The accompanying combined financial statements include the accounts of the managementcompanies, specifically Kohlberg Kravis Roberts & Co. L.P., KKR Financial Advisors LLC, KKRStrategic Capital Management, L.L.C., and KKR FI Advisors LLC, as well as the general partners ofthe private equity funds (collectively the ‘‘Common Control Entities’’) and their respective consolidatedfunds: KKR 1996 Fund, KKR European Fund, KKR Millennium Fund, KKR European Fund II, KKR2006 Fund, KKR Asian Fund, KKR European Fund III, KKR Private Equity Investors (‘‘KPE’’) andcertain of the KKR Strategic Capital Funds. KPE consists of an upper-tier limited partnership, which isreferred to as the feeder fund, which makes all of its investments through a lower-tier limitedpartnership which is referred to as the master fund, of which the feeder fund is the sole limitedpartner. The accompanying combined financial statements include the general partner of the KKRPrivate Equity Investors master fund as well as the master fund. The general partner of the feeder fundand the feeder fund itself are not included in the accompanying combined financial statements. Inaddition, the general partner of an unconsolidated fund, KKR IFI GP L.P. (‘‘IFI’’), has been includedin the accompanying combined financial statements. IFI is the general partner of a partnership thatoffers a principal protected product for private equity investments.

KKR Financial Holdings LLC (‘‘KFN’’) is a publicly traded fixed income fund whose limitedliability company interests are listed on the New York Stock Exchange under the symbol ‘‘KFN.’’ KFNis managed by the Company but is not under the common control of the Senior Principals or otherwiseconsolidated by the Company as control is maintained by third-party investors. KFN was organized inAugust 2004 and completed its initial public offering on June 24, 2005. As of December 31, 2008 and2007, KFN had consolidated assets of $12.5 billion and $19.0 billion, respectively, and shareholders’equity of $0.7 billion and $1.6 billion, respectively. Shares of KFN held by the Company are accountedfor as trading securities (see Note 2, ‘‘Summary of Significant Accounting Policies—Management feesreceived from consolidated and unconsolidated funds’’) and represented approximately 0.7% and 0.6%of KFN’s outstanding shares as of December 31, 2008 and 2007, respectively. If the Company were toexercise all of its outstanding vested and unvested options, the Company’s ownership interest in KFN

F-8

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)

would be approximately 1.2% and 1.1% of KFN’s outstanding shares as of December 31, 2008 and2007, respectively.

For management reporting purposes, the Company operates through two reportable businesssegments:

• Private Markets—The Company’s Private Markets segment involves sponsoring and managing agroup of funds and co-investment vehicles that make primarily control-oriented investments inconnection with leveraged buyouts and other similar investment opportunities. These funds aremanaged by Kohlberg Kravis Roberts & Co. L.P. and currently consist of a number of privateequity funds that have a finite life and investment period (‘‘Traditional Private Equity Funds’’)and KPE.

• Public Markets—The Company’s Public Markets segment involves sponsoring and managing agroup of private and publicly traded investment funds that invest primarily in corporate debt(‘‘Fixed Income Funds’’) and managing six structured finance vehicles which were established tocomplete secured financing transactions. Additionally, beginning in July 2008, the Company’sPublic Markets segment began serving as investment manager for accounts held by largeinstitutional investors (‘‘Separately Managed Accounts’’). The Fixed Income Funds andSeparately Managed Accounts are managed by subsidiaries of Kohlberg Kravis Roberts & Co.(Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic CapitalManagement, L.L.C., and KKR FI Advisors LLC. The Fixed Income Funds currently consist ofKFN and the KKR Strategic Capital Funds (‘‘SCF’’), which are comprised of three side-by-sideprivate fixed income funds. Two of the three side-by-side funds in SCF have been consolidatedin the accompanying combined financial statements of the Company. The third side-by-side fundis not consolidated by the KKR Group, because this fund is owned and controlled by third-partyinvestors and the KKR Group holds no economic or voting interests. As of December 31, 2008,all six of the structured finance vehicles were not consolidated by the KKR Group as KFN holdsthe majority of the economic and voting interests. Accordingly, these structured finance vehiclesare consolidated by KFN. The KKR Group holds no economic or voting interests in thesestructured finance vehicles.

The KKR Group receives management fees for all assets managed in the Public Markets segmentand incentive fees for assets managed at KFN and SCF. See Note 2, ‘‘Summary of SignificantAccounting Policies,’’ to the combined financial statements for the Company’s accounting policyregarding Fee Income.

During May 2007, one of the structured finance vehicles managed by the Company and itsunderlying net assets were redeemed at fair value and transferred to a special-purpose entity. KFN isthe primary beneficiary of this special-purpose entity and, accordingly, consolidates its assets andliabilities. These assets and liabilities were previously consolidated by the Company and thecorresponding results of operations were included in the statement of operations for the year endedDecember 31, 2007 through the date of redemption and transfer of interest.

The instruments governing the Traditional Private Equity Funds provide that the funds willcontinue in existence for a varying term (generally up to 18 years from the date of initial funding),unless the funds are terminated by the Principals or through an event of dissolution, as defined in the

F-9

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)

applicable governing instruments. The instruments governing KPE and the Fixed Income Fundsgenerally provide that those funds will continue in existence indefinitely, unless the funds areterminated earlier as provided in the applicable governing instruments.

The Company has three primary sources of income: (i) fee income (consisting primarily ofmanagement, advisory and incentive fees); (ii) amounts received from the Company’s funds in the formof a carried interest or other distributions that entitle the Company to a disproportionate share of thegains generated by the funds; and (iii) investment income generated through the investment of theCompany’s own capital in its funds and other proprietary investments.

The KKR Funds are consolidated by the Company pursuant to accounting principles generallyaccepted in the United States of America (‘‘GAAP’’) as described in Note 2 ‘‘Summary of SignificantAccounting Policies,’’ notwithstanding the fact that the Company has only a minority economic interestin those funds. Specifically, the general partners of the KKR Funds consolidate their respective fundsand certain of their respective entities in accordance with either Emerging Issues Task Force (‘‘EITF’’)No. 04-5, ‘‘Determining Whether a General Partner, or the General Partners as a Group, Controls aLimited Partnership or Similar Entity When the Limited Partners Have Certain Rights’’ or FinancialAccounting Standards Board (‘‘FASB’’) Interpretation No. 46 (revised December 2003) ‘‘Consolidationof Variable Interest Entities—an Interpretation of ARB 51 (‘‘FIN 46R’’)’’ Consequently, the Company’scombined financial statements reflect the assets, liabilities, revenues, expenses, investment income andcash flows of the consolidated KKR Funds on a gross basis, and the majority of the economic interestsin those funds, which are held by third-party investors, are reflected as noncontrolling interests in theaccompanying combined financial statements. Substantially all of the management fees and certainother amounts earned by the Company from those funds are eliminated in combination. However,because the eliminated amounts are earned from, and funded by, noncontrolling interests, theCompany’s allocable share of the net income from those funds is increased by the amounts eliminated.Accordingly, the elimination in combination of such amounts has no net effect on income attributableto KKR Group or KKR Group’s partners’ capital. See Note 2, ‘‘Summary of Significant AccountingPolicies.’’

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Basis of Accounting—The accompanying combined financial statements are prepared inaccordance with GAAP.

Principles of Consolidation—The Company’s policy is to consolidate those entities in which it,through the Senior Principals, has control, as well as those entities in which it is the primary beneficiaryof a variable interest entity (‘‘VIE’’). Hereinafter, all entities that are included in the accompanyingcombined financial statements are referred to as consolidated entities.

The majority of the consolidated entities are under the common control of the Senior Principalsand are comprised of: (i) those entities in which the Company, directly or through the SeniorPrincipals, has majority ownership and has control over significant operating, financial and investingdecisions; and (ii) the consolidated KKR Funds, which are those entities in which the Company,through the Senior Principals, holds substantive, controlling general partner or managing member

F-10

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

interests. With respect to the consolidated KKR Funds, the Company generally has operationaldiscretion and control, and fund investors have no substantive rights to impact ongoing governance andoperating activities of the fund.

The KKR Funds do not consolidate their majority-owned and controlled investments in portfoliocompanies (‘‘Portfolio Companies’’). Rather, those investments are accounted for as investments andcarried at fair value as described below.

FASB Staff Position (‘‘FSP’’) Financial Accounting Standard (‘‘FAS’’) No. 140-4 and FIN 46R-8provides disclosure requirements for, among other things, involvements with VIEs. Those involvementsinclude when the Company (i) consolidates an entity because it is the primary beneficiary, (ii) has asignificant variable interest in the entity, or (iii) is the sponsor of the entity.

The nature of these VIEs includes investments related to the Private Markets segment(‘‘Investment Vehicles’’). The disclosures under FSP FAS No. 140-4 and FIN 46R-8 are presented on afully aggregated basis. The Company’s investment strategies differ by Investment Vehicle; however, thefundamental risks have similar characteristics, including loss of invested capital and loss of incentiveand management fees. Accordingly, disaggregation of the Company’s involvement with VIEs would notprovide more useful information. In the Company’s role as general partner or investment advisor, itgenerally considers itself the sponsor of the applicable Investment Vehicle. For certain of theseInvestment Vehicles, the Company is determined to be the primary beneficiary and hence consolidatessuch Investment Vehicle within the combined financial statements.

FIN 46R requires an analysis to (i) determine whether an entity in which the Company holds avariable interest is a variable interest entity, and (ii) whether the Company’s involvement, throughholding interests directly or indirectly in the entity or contractually through other variable interests(e.g., incentive and management fees), would be expected to absorb a majority of the variability of theentity. Performance of that analysis requires the exercise of judgment. The Company determineswhether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interestentity and reconsiders that conclusion based on certain events. In evaluating whether the Company isthe primary beneficiary, the Company evaluates its economic interests in the fund held either directlyby the Company or indirectly through its related parties. The consolidation analysis under FIN 46R cangenerally be performed qualitatively. However, if it is not readily apparent that the Company is not theprimary beneficiary, a quantitative expected losses and expected residual returns calculation will beperformed. Investments and redemptions (either by the Company, affiliates of the Company or thirdparties) or amendments to the governing documents of the respective Investment Vehicle could affectan entity’s status as a VIE or the determination of the primary beneficiary.

For those VIEs in which the Company is the sponsor, the Company may have an obligation asgeneral partner to provide commitments to such funds. During 2008, the Company did not provide anysupport other than its obligated amount.

At December 31, 2008, the Company was the primary beneficiary of VIEs whose gross assets were$4,001,724, which is the carrying amount of such financial assets in the combined financial statements.The Company is also a significant variable interest holder in a VIE which is not consolidated, as theCompany is not the primary beneficiary. At December 31, 2008, assets recognized in the Company’scombined statements of financial condition related to our variable interest in this unconsolidated entity

F-11

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

totaled $372 of receivables. In addition, in an instance where this entity is not in compliance withcertain defined liquidity requirements in its governing documents and has no remaining liquid portfolioinvestments, the Company has an obligation to purchase up to $18.4 million of illiquid portfolioinvestments of the entity at 95% of their current fair market value. As of December 31, 2008, the entitywas in compliance with the defined liquidity requirements. See Note 11 ‘‘Commitments andContingencies.’’ Therefore, the Company’s aggregate maximum exposure to loss was $372 as ofDecember 31, 2008.

Intercompany transactions and balances have been eliminated.

Noncontrolling Interests—Noncontrolling interests represent the ownership interests inconsolidated entities held by entities or persons other than our Principals. Noncontrolling interestholders in the Company have a substantial ownership position in the Company’s combined total assets(approximately 88% as of December 31, 2008). Income or loss attributable to noncontrolling interestsin consolidated KKR Funds is based on the respective funds’ governing instruments.

In the case of the Traditional Private Equity Funds, profits on capital invested on behalf of limitedpartners are generally allocated to the limited partners in an amount equal to 80% of the ratio of theircapital contributions to the total capital contributed by all partners with respect to each investment.The general partners of the funds receive the remaining portion of the profits in the form of a carriedinterest. Losses on a fund’s investments are generally first applied to the excess of any prior incomeover such losses. For the majority of the Traditional Private Equity Funds, any remaining fund lossesare applied to the equity accounts of the partners in proportion to their capital contributed with respectto each individual investment, until the partners’ equity accounts have been reduced to zero. Forcertain other Traditional Private Equity Funds, remaining fund losses are allocated to the limitedpartners and general partners in a manner consistent with profits as described above. For all TraditionalPrivate Equity Funds, any remaining fund losses are allocated to the fund’s general partner.

In the case of KPE, one of the fund’s general partners holds an economic interest in the fund thatwill entitle it to a disproportionate share of the gains generated by the fund’s direct investments oncethe fund’s capitalization costs (the ‘‘Creditable Amount’’) have been recouped as described below. Thiseconomic interest consists of:

• a carried interest that generally will allocate to the general partner 20% of the gain that isrealized on private equity investments that are made with fund investors’ capital after anyrealized losses on other direct private equity investments have been recovered; and

• a distribution right that generally will allocate to the general partner 20% of the annual increasein the net asset value of all other direct investments that are made with fund investors’ capitalabove the highest net asset value at which an incentive amount was previously made.

The general partner is not entitled to a carried interest or incentive distribution right with respectto the fund’s indirect investments, which consist of investments made through other funds that theCompany sponsors. However, if the KPE fund acquires a partner interest in one of the Company’sother funds from a third party, the amount of distributions that the general partner receives pursuantto its distribution right may be adjusted to reflect realized gains or losses relating to the value of theacquired partner interest. As noted above, the general partner of KPE has agreed to forego receiving a

F-12

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

carried interest or distribution until the profits on investments with respect to which it would beentitled to receive a carried interest or distribution equal the Creditable Amount. As of December 31,2008, the Creditable Amount had a remaining balance of $142,478.

On May 30, 2008, the Company acquired all of the outstanding noncontrolling interests in themanagement companies of its Public Markets segment (‘‘KFI Transaction’’) in order to further integrateits operations, enhance existing collaboration among all of the Company’s investment professionals andto accelerate the growth of the Company’s Public Markets business. Immediately prior to the KFITransaction, the Company owned 65% of the equity of such management companies. The KFITransaction has been accounted for as an acquisition of noncontrolling interests using the purchasemethod of accounting in accordance with FASB Statement of Financial Accounting Standard (‘‘SFAS’’)No. 141 (‘‘SFAS 141’’) ‘‘Business Combinations.’’ The total consideration of the KFI Transaction was$44,171. The Company recorded the excess of the total consideration over the carrying value of thenoncontrolling interests acquired (which approximates the fair value of the net assets acquired andwhich are already included in the combined statements of financial condition) to finite-lived identifiableintangible assets consisting of management, advisory, and incentive fee contracts. The Company hasrecorded intangible assets of $37,887 which are being amortized over an estimated useful life of tenyears, based on contractual provisions that enable renewal of the contracts without substantial cost andour prior history of such renewals. Subsequent to the KFI Transaction, 100% of the results ofoperations of the management companies of the Company’s Public Markets segment were included innet income.

Use of Estimates—The preparation of the combined financial statements in conformity with GAAPrequires management to make estimates and assumptions that affect the reported amounts of assetsand liabilities, the disclosure of contingent assets and liabilities at the date of the combined financialstatements and the reported amounts of revenues, expenses and investment income during thereporting periods. Such estimates include but are not limited to the valuation of Portfolio Companiesowned by the KKR Funds, financial instruments owned and other matters that affect reported amountsof assets and liabilities. Actual results could differ from those estimates and such differences could bematerial to the combined financial statements.

Fair Value Measurements—The Company adopted FASB Statement 157 ‘‘Fair ValueMeasurements’’ (‘‘SFAS 157’’) as of January 1, 2008, which among other things requires enhanceddisclosures about investments that are measured and reported at fair value. SFAS 157 establishes ahierarchal disclosure framework which prioritizes and ranks the level of market price observability usedin measuring investments at fair value. Market price observability is affected by a number of factors,including the type of investment and the characteristics specific to the investment. Investments withreadily available active quoted prices or for which fair value can be measured from actively quotedprices generally will have a higher degree of market price observability and a lesser degree of judgmentused in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of thefollowing categories:

Level I—Quoted prices are available in active markets for identical investments as of thereporting date. The type of investments included in Level I include publicly-listed equities and

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

publicly listed derivatives. In addition, securities sold, but not yet purchased and options written bythe KKR Private Equity Investors Master Fund are included in Level I. As required by SFAS 157,the Company does not adjust the quoted price for these investments, even in situations where theCompany holds a large position and a sale could reasonably affect the quoted price.

Level II—Pricing inputs are other than quoted prices in active markets, which are eitherdirectly or indirectly observable as of the reporting date, and fair value is determined through theuse of models or other valuation methodologies. Investments which are generally included in thiscategory include corporate bonds and loans, convertible debt securities indexed to publicly listedsecurities and certain over-the-counter derivatives.

Level III—Pricing inputs are unobservable for the investment and includes situations wherethere is little, if any, market activity for the investment. The inputs into the determination of fairvalue require significant management judgment or estimation. Investments that are included in thiscategory generally include private portfolio companies held through our private equity funds andKPE.

In certain cases, the inputs used to measure fair value may fall into different levels of the fairvalue hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on thelowest level of input that is significant to the fair value measurement. The Company’s assessment of thesignificance of a particular input to the fair value measurement in its entirety requires judgment, and itconsiders factors specific to the investment.

Statement of Operations Measurements

Fee Income—Fee income is comprised of: (i) transaction and monitoring fees received fromPortfolio Companies and transaction fees from Capital Markets activities (collectively ‘‘Advisory Fees’’);(ii) management fees received from unconsolidated funds; and (iii) incentive fees received fromunconsolidated funds. Such fees are based upon the contractual terms of fund management and relatedagreements and are recognized in the period during which the related services are performed and theamounts have been contractually earned.

For the years ended December 31, 2008, 2007 and 2006, fee income consisted of the following:

2008 2007 2006

Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . $176,541 $776,585 $340,007Management Fees Received from Unconsolidated

Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,640 63,568 55,756Incentive Fees Received from Unconsolidated

Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 22,112 14,566Total Fee Income . . . . . . . . . . . . . . . . . . . . . . . $235,181 $862,265 $410,329

Management fees received from consolidated and unconsolidated funds—For the Traditional PrivateEquity Funds, gross management fees generally range from 1% to 1.5% of committed capital duringthe fund’s investment period and approximately 0.75% of invested capital after the expiration of the

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

fund’s investment period. Typically, an investment period is defined as a period of up to six years. Theactual length of the period may be shorter based on the timing and use of committed capital.

Management fees received from consolidated KKR Funds are eliminated in consolidation.However, because these amounts are funded by, and earned from, noncontrolling interests, theCompany’s allocated share of the net income from consolidated KKR Funds is increased by the amountof fees that are eliminated. Accordingly, the elimination of the fees does not have an effect on the netincome attributable to the Company or KKR Group’s partners’ capital.

For KPE, management fees are determined quarterly based on 25% of the sum of (i) that fund’sequity up to and including $3 billion multiplied by 1.25% plus (ii) that fund’s equity in excess of$3 billion multiplied by 1%. For purposes of calculating the management fee, equity is an amountdefined in the management agreement. Until the Creditable Amount is reached, the Company hasgenerally agreed to reduce the amount of management fees payable by the fund in any period by anycarried interest or incentive distributions that the Company or its affiliates receive during the periodpursuant to a carried interest in a private equity fund in which KPE invests.

In advance of the management service period, the Company has elected to waive the right to earncertain management fees that it would be entitled to from its Traditional Private Equity Funds. Thecash that would have been payable is collected from the funds’ investors and is initially included as acomponent of Cash and Cash Equivalents Held at Consolidated Entities. In lieu of making direct cashcapital contributions, these cash collections are used to satisfy a portion of the capital commitments towhich the Company would otherwise be subject as the general partner of the fund. As a result of theelection to waive the fees, the Company is not entitled to any portion of these fees until the fund hasachieved positive investment results. Because the ability to earn the waived fees is contingent upon theachievement of positive investment returns by the fund, the recognition of income only occurs when thecontingency is satisfied.

Our Traditional Private Equity Funds require the management company to refund up to 20% ofany cash management fees earned from limited partners in the event that the funds recognize a carriedinterest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% ofthe management fees earned a portion thereof, a liability to the fund’s limited partners is recorded andrevenue is reduced for the amount of the carried interest recognized, not to exceed 20% of themanagement fees earned. As of December 31, 2008, the amount subject to refund for which no liabilityhas been recorded totaled $104.1 million as a result of certain funds not yet recognizing sufficientcarried interests. The refunds to the limited partners are paid, and the liabilities relieved, at such timethat the underlying investments are sold and the associated carried interests are realized. In the eventthat a fund’s carried interest is not sufficient to cover all or a portion of the amount that represents20% of the earned management fees, these fees will not be refunded to the funds’ limited partners, inaccordance with the respective agreements.

The Company’s management agreement with KFN provides, among other things, that KFN isresponsible for paying to the Company certain fees and reimbursements, consisting of a basemanagement fee, an incentive fee and reimbursement for out-of-pocket and certain other costs andexpenses incurred by the Company on behalf of KFN. The Company earns a management fee,computed and payable monthly in arrears, based on an annual rate of 1.75% of adjusted equity. For

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

purposes of calculating the base management fee, adjusted equity is an amount defined in themanagement agreement.

Effective January 1, 2009, the Company has elected to defer receipt of 50% of the monthly basemanagement fee that would otherwise be payable by KFN until December 2009.

The Company’s management agreement with KFN will automatically be renewed for successiveone-year terms following December 31, 2008 unless the agreement is terminated in accordance with itsterms. The management agreement provides that the fund may terminate the agreement only if:

• the termination is approved at least 180 days prior to the expiration date by at least two-thirdsof the fund’s independent directors or by the holders of a majority of the outstanding shares ofthe fund’s common stock and the termination is based upon (i) a determination that theCompany’s performance has been unsatisfactory and materially detrimental to the fund or (ii) adetermination that the management and incentive fees payable to the Company are not fair(subject to the Company’s right to prevent a termination by reaching an agreement to reducethe Company’s management and incentive fees), in which case a termination fee is payable tothe Company; or

• the Company’s subsidiary that manages the fund experiences a ‘‘change of control’’ or theCompany materially breaches the provisions of the agreement, engages in certain acts of willfulmisconduct or gross negligence, becomes bankrupt or insolvent or is dissolved, in which case atermination fee is not payable to the Company.

None of the aforementioned events have occurred as of December 31, 2008 and the managementagreement was renewed on January 1, 2009.

The Company has received restricted common stock and common stock options from KFN as acomponent of compensation for management services to that fund. The restricted common stock andstock options vest ratably over applicable vesting periods and are initially recorded as deferred revenueat their estimated fair values at the date of grant. Subsequently, the Company re-measures therestricted common stock and stock options to the extent that they are unvested, with a correspondingadjustment to deferred revenue. Income from restricted common stock and common stock options isrecognized ratably over the vesting period as a component of fee income and amounted to $2,688,$15,011 and $24,667 for the years ended December 31, 2008, 2007 and 2006, respectively.

Vested stock options received as a component of compensation for management services meet thecharacteristics of derivative investments. Vested stock options are recorded at estimated fair value withchanges in fair value recognized in Net (Losses) Gains from Investment Activities. Both vested andunvested common stock options are valued using a Black-Scholes pricing model as of the end of eachperiod.

Vested common stock that is received as a component of compensation for management servicesare carried as trading securities, because the Company generally intends to distribute the common stocksubsequent to vesting. Vested common stock is recorded at estimated fair value with changes in fairvalue recognized in Net (Losses) Gains from Investment Activities.

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company has entered into management agreements with the side-by-side funds comprising theKKR Strategic Capital Funds pursuant to which it has agreed to provide them with management andother services. Under the management agreement and, in some cases, other documents governing theindividual funds, through October 31, 2008 the Company was entitled to receive:

• with respect to investors who have agreed to a 25 month lock-up period, a monthly managementfee that is equal to 0.1667% (or 2.0% annualized) of the net asset value of the individual fundthat is allocable to those investors; and

• with respect to investors who have agreed to a 60 month lock-up period, a monthly managementfee that is equal to 0.1250% (or 1.5% annualized) of the net asset value of the primary fundthat is allocable to those investors.

The Company elected to reduce the management fee it earns under the management agreementswith the side-by-side funds comprising the KKR Strategic Capital Funds. Effective November 1, 2008,the Company is entitled to receive a monthly management fee from all investors that is equal to0.0208% (or 0.25% annualized) of the net asset value of the investments allocable to each investor.

On December 11, 2008, the boards of directors of two of the KKR Strategic Capital Funds and thegeneral partner of the other KKR Strategic Capital Fund elected to suspend redemptions.

On December 15, 2008, a special redemption right, as described in the governing documents of theKKR Strategic Capital Funds, was triggered whereby all investors became eligible to submit redemptionrequests, in full, without regard to class or lock-up period. Subsequent to December 15, 2008 allinvestors submitted such redemption requests. The redemptions would be payable after the board ofdirectors (or general partner, as applicable) of the KKR Strategic Capital Funds rescinds thesuspension of redemptions.

The Company’s management agreement for its Separately Managed Accounts provides formanagement fees determined quarterly based on an annual rate of 0.5% of the fund’s equity. Forpurposes of calculating the management fee, equity is an amount defined in the managementagreement.

The Company’s management agreement for its principal protected product for private equityinvestments provides for management fees determined quarterly based on an annual rate of 1.25% ofthe fund’s equity. For purposes of calculating the management fee, equity is an amount defined in themanagement agreement.

Incentive fees received from KFN—The Company’s management agreement with KFN provides thatKFN is responsible for paying a quarterly incentive fee when the return on assets under managementexceeds certain benchmark returns or other performance targets. This incentive fee is accruedquarterly, after all contingencies have been removed, based on performance to date versus theperformance benchmark stated in the management agreement. Once earned, there are no clawbacks ofincentive fees received from KFN.

Incentive fees received from KKR Strategic Capital Funds—As part of the Company’s managementagreements with the side-by-side funds comprising the KKR Strategic Capital Funds, certain of which

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

are consolidated, through October 31, 2008 the Company was entitled to receive incentive fees asfollows:

• with respect to investors who have agreed to a 25 month lock-up period, an annual incentive feeequal to 20% of the increase in the net asset value of the individual fund that is allocable tothose investors above the highest net asset value at which an incentive fee has previously beenreceived; and

• with respect to investors who have agreed to a 60 month lock-up period, an annual incentive feeequal to 15% of the increase in the net asset value of the individual fund that is allocable tothose investors above the highest net asset value at which an incentive fee has previously beenreceived.

The Company elected to reduce the incentive fee it earns under the management agreements withthe side-by-side funds comprising the KKR Strategic Capital Funds. Effective November 1, 2008, theCompany is entitled to an annual incentive fee from all investors equal to 15% of the increase in thenet asset value of the individual fund above the highest net asset value at which an incentive fee haspreviously been received, and subject to an 8% preferred return that is retroactive to the date oforiginal investment.

These incentive fees are accrued annually, after all contingencies have been removed, based onperformance to date versus the performance benchmark stated in the management agreement. Sinceperformance can fluctuate during interim periods, no incentive fees are recognized on a quarterly basis.Once earned, there are no provisions for clawbacks of incentive fees received from the side-by-sidefunds comprising the KKR Strategic Capital Funds. Incentive fees received from consolidated KKRStrategic Capital Funds have been eliminated. However, because these amounts are funded by, andearned from, noncontrolling interests, the Company’s allocated share of the net income fromconsolidated KKR Funds is increased by the amount of fees that are eliminated. Accordingly, theelimination of the fees does not have an effect on the Company’s net income or partners’ capital.

Incentive fees received from Principal Protected Product for Private Equity Investments—TheCompany’s management agreement for its principal protected product for private equity investmentsprovides for an annual incentive fee to be paid to the Company when the return on assets undermanagement exceeds certain benchmark returns or other performance targets. This incentive fee isaccrued annually, after all contingencies have been removed, based on performance to date versus theperformance benchmark stated in the management agreement. Once earned, there are no clawbacks ofincentive fees received under this agreement.

Transaction fees received from Portfolio Companies—Transaction fees are earned by the Companyprimarily in connection with successful acquisitions of Portfolio Companies by private equity funds andwith respect to certain other negotiated investments. Transaction fees are recorded in advisory feeincome upon closing of the transaction. Fees are typically paid by Portfolio Companies on or aroundthe closing date and generally approximate 1% of the total transaction value to which the Company isentitled to its proportionate share. Transaction fees received from portfolio companies amounted to$23,096, $683,100, and $258,033 for the years ended December 31, 2008, 2007 and 2006, respectively.Transaction-related expenses associated with successful Portfolio Company investments are deferred and

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

recorded in Other Assets until the transaction is consummated. See description under‘‘—Reimbursement of Transaction-Related Expenses’’ below. Transaction-related expenses associatedwith investigating Portfolio Company investments that are not consummated are recorded in fundexpenses when facts and circumstances indicate that the transactions are unlikely to be consummated.

Monitoring fees received from Portfolio Companies—Monitoring fees are earned by the Company forservices provided to Portfolio Companies and are recognized in advisory fee income as services arerendered. These fees are paid based on a fixed periodic schedule by the Portfolio Companies either inadvance or in arrears and are separately negotiated for each Portfolio Company. Monitoring feesamounted to $112,258, $68,754 and $67,175 for the years ended December 31, 2008, 2007 and 2006,respectively.

Transaction fees from Capital Market Activities—Transaction fees are earned by the Company forservices provided by its Capital Markets business and are recognized in fee income upon closing of thetransaction. Fees are typically paid on or around the closing date and vary based on the nature of thetransaction. Transaction fees received from Capital Market activities totaled $18,211 for the year endedDecember 31, 2008.

Reimbursement of Transaction-Related Expenses—In connection with pursuing successful PortfolioCompany investments, the Company receives reimbursement for certain transaction-related expenses.Transaction-related expenses, which are reimbursed by third parties, are deferred until the transaction isconsummated and are recorded in other assets on the date the expense is incurred. The costs ofsuccessfully completed transactions are borne by the KKR Funds and included as a component of theinvestment’s cost basis. Subsequent to closing, investments are recorded at fair value each reportingperiod as described in the section below titled Investments, at Fair Value. Upon reimbursement from athird party, the cash receipt is recorded and the deferred amounts are relieved. No fee income orexpense is recorded for these reimbursements.

Reimbursement of Monitoring Costs—In connection with the monitoring of Portfolio Companies,KFN and the KKR Strategic Capital Funds, the Company receives reimbursement for certain expensesincurred on behalf of these entities. Billable monitoring expenses are recognized as revenue inaccordance with EITF 01-14, ‘‘Income Statement Characterization of Reimbursement Received for Outof Pocket Expenses Incurred.’’ Monitoring costs are classified as fund expenses or general,administrative and other expenses and reimbursements of such costs are classified as monitoring feeincome. These reimbursements amounted to $22,976, $24,731 and $14,799 for the years endedDecember 31, 2008, 2007 and 2006, respectively.

Investment Income—Investment income consists primarily of unrealized and realized gains andlosses on private equity investments as well as dividends and interest received primarily from thePortfolio Companies, after giving effect to interest expense incurred primarily by the Company’s FixedIncome Funds and foreign exchange gains and losses relating to mark-to-market activity on foreignexchange forward contracts, foreign currency options and interest rate swaps. The amount ofinvestment income retained in net income attributable to the Company, after allocation to net incomeattributable to noncontrolling interests, represents investment income allocable to the Companyresulting from earnings on its investments and its carried interest and similar distribution rights.

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Carried interests and similar distribution rights generally entitle the Company to a percentage of theprofits generated by a fund as described below. Unrealized gains or losses result from changes in fairvalue of investments during the period, and are included in Net (Losses) Gains from InvestmentActivities. Upon disposition of an investment, previously recognized unrealized gains or losses arereversed and a realized gain or loss is recognized. Net (Losses) Gains from Investment Activitiesearned by the consolidated KKR Funds amounted to $(12,925,515), $1,098,173 and $3,041,318 for theyears ended December 31, 2008, 2007 and 2006, respectively.

Carried interests entitle the general partner of a fund to a greater allocable share of the fund’searnings from investments relative to the capital contributed by the general partner andcorrespondingly reduce noncontrolling interests’ allocable share of those earnings. Amounts earnedpursuant to carried interests in Traditional Private Equity Funds are included as investment income inNet (Losses) Gains from Investment Activities and are earned by the general partner of those funds tothe extent that investment returns are positive. If these investment returns decrease or turn negative insubsequent periods, recognized carried interest will be reduced and reflected as investment losses.Carried interest is recognized based on the contractual formula set forth in the instruments governingthe fund as if the fund was terminated at the reporting date with the then estimated fair values of theinvestments realized. Due to the extended durations of the Traditional Private Equity Funds,management believes that this approach results in income recognition that best reflects the periodicperformance of the Company in the management of those funds. Carried interest recognized amountedto approximately $(1,197) million, $306 million and $719 million for the years ended December 31,2008, 2007 and 2006, respectively.

The instruments governing KKR’s Traditional Private Equity Funds generally include a ‘‘clawback’’or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to a contingentobligation that may require the general partner to return or contribute amounts to the fund fordistribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the terms of the fundexceed the amount to which the general partner was ultimately entitled. As of December 31, 2008, theamount of carried interest KKR has received that is subject to this contingent repayment obligation was$945.7 million, assuming that all applicable private equity funds were liquidated at no value. Had theinvestments in such funds been liquidated at their December 31, 2008 fair values, the contingentrepayment obligation would have been $380.4 million. Under a ‘‘net loss sharing provision,’’ upon theliquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% ofthe net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’straditional private equity vehicles allocate a greater share of their investment losses to KKR relative tothe amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required tobe paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fundregardless of whether any carried interest had previously been distributed. Based on the fair marketvalues as of December 31, 2008, KKR’s contingent repayment obligation would have beenapproximately $288.0 million. If the vehicles were liquidated at zero value, the contingent repaymentobligation would have been approximately $1,090.3 million as of December 31, 2008.

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In Traditional Private Equity Funds where the allocation of cumulative net losses is proportional tothe capital contributed by the partners in the fund, the Company will not earn any carried interest inthat fund until all such losses have been recovered. As losses are recovered, income is allocated inproportion to the capital contributed until the fund has reached a net positive investment return, atwhich time carried interest is recognized and income is allocated as described above. The performanceof each fund is independent from all other funds and the losses to be recovered vary from fund to fundbased on the size and performance of the underlying investments in each fund.

Dividend income is recognized by the Company on the ex-dividend date, or in the absence of aformal declaration, on the date it is received. For the years ended December 31, 2008 and 2007,dividends earned by the consolidated KKR Funds amounted to $74,613 and $746,798, respectively. Forthe year ended December 31, 2006, all dividends were earned by consolidated KKR Funds.

Interest income is recognized as earned. Interest income earned by the consolidated KKR Fundsamounted to $119,562, $201,970 and $198,632 for the years ended December 31, 2008, 2007, and 2006,respectively.

Profit Sharing—The Company has various profit sharing arrangements which provide for a sharingof the income earned on its investments and carried interests in the KKR Funds. Amounts payableunder such arrangements are charged to compensation expense or professional fees expense whenpayment is probable and amounts owed are reasonably estimable.

Statement of Financial Condition Measurements

Cash and Cash Equivalents—The Company considers all highly liquid short-term investments withoriginal maturities of 90 days or less when purchased to be cash equivalents.

Cash and Cash Equivalents Held at Consolidated Entities—Cash and cash equivalents held atconsolidated entities represents cash that, although not legally restricted, is not available to fundgeneral liquidity needs of the Company as the use of such funds is generally limited to the investmentactivities of the KKR Funds.

Restricted Cash and Cash Equivalents—Restricted cash and cash equivalents represent amountsthat are held by third parties under certain of the Company’s financing and derivative transactions.

Investments, at Fair Value—The Company’s investments consist primarily of private equityinvestments, debt investments and other investments. See Note 3, ‘‘Investments,’’ for informationrelating to the Company’s investments.

Private Equity Investments—Private equity investments consist of investments in PortfolioCompanies of consolidated KKR Funds that are, for GAAP purposes, investment companies under theAICPA Audit and Accounting Guide—‘‘Investment Companies.’’ The KKR Funds reflect investments attheir estimated fair values, with unrealized gains or losses resulting from changes in fair value reflectedas a component of Net (Losses) Gains from Investment Activities in the combined statement ofoperations. Fair value is the amount at which the investments could be exchanged in a currenttransaction between willing parties, other than in a forced or liquidation sale. The Company has

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

retained the specialized accounting of these investments pursuant to EITF No. 85-12, ‘‘Retention ofSpecialized Accounting for Investments in Consolidation.’’

Private equity investments that have readily observable market prices (such as those traded on asecurities exchange) are stated at the last reported sales price on the statement of financial conditiondate.

As of December 31, 2008, approximately 80% of the fair value of the Company’s private equityinvestments has been valued by the Company in the absence of readily observable market prices. Thedetermination of fair value may differ materially from the values that would have resulted if a readymarket had existed. For these investments, the Company generally uses a market approach and anincome (discounted cash flow) approach when determining fair value. Management considers variousinternal and external factors when applying these approaches, including the price at which theinvestment was acquired, the nature of the investment, current market conditions, recent public marketand private transactions for comparable securities, and financing transactions subsequent to theacquisition of the investment. The fair value recorded for a particular investment will generally bewithin the range suggested by the two approaches.

Investments denominated in currencies other than the U.S. dollar are valued based on the spotrate of the respective currency at the end of the respective reporting period with changes related toexchange rate movements reflected as a component of Net (Losses) Gains from Investment Activities.

Corporate Securities—Corporate securities consist of fixed income securities and are carried asavailable-for-sale as the Company may sell them prior to maturity and does not hold them principallyfor the purpose of selling them in the near term. These investments are carried at estimated fair value,with unrealized gains and losses reported in accumulated other comprehensive income.

Estimated fair values are based on quoted market prices, when available, or on estimates providedby independent pricing sources or dealers who make markets in such securities. Upon the sale of asecurity, the realized net gain or loss is computed on a specific identification basis. Substantially allunrealized gains and losses associated with available-for-sale securities are reflected in noncontrollinginterests in the accompanying combined statement of financial condition.

The Company monitors its available-for-sale securities portfolio for impairments. A loss isrecognized when it is determined that a decline in the estimated fair value of a security below itsamortized cost is other-than-temporary. The Company considers many factors in determining whetherthe impairment of a security is deemed to be other-than-temporary, including but not limited to, thelength of time the security has had a decline in estimated fair value below its amortized cost, theamount of the unrealized loss, the intent and ability of the Company to hold the security for a periodof time sufficient for a recovery in value, recent events specific to the issuer or industry, and externalcredit ratings and changes therein.

Fixed Income Securities—Fixed income securities that are listed on a securities exchange areclassified as trading securities and are valued at their last quoted sales price. Securities that are notlisted on an exchange and traded over the counter are valued at the mean of bid and ask quotations.Investments in corporate debt, including syndicated bank loans, high-yield securities and other fixedincome securities, are valued at the mean of the ‘‘bid’’ and ‘‘asked’’ prices obtained from third-party

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KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

pricing services. In the event that third-party pricing service quotations are unavailable, values areobtained from dealers or market makers. Investments where third-party values are not available arevalued by the Company and the Company may engage a third-party valuation firm to assist in suchvaluations.

Derivatives—The Company invests in derivative financial instruments, including total rate of returnswaps and credit default swaps. In a total rate of return swap, the Company receives the sum of allinterest, fees and any positive economic change in fair value amounts from a reference asset with aspecified notional amount and pays interest on the referenced notional amount plus any negativechange in fair value amounts from such asset. Credit default swaps, when purchasing protection, involvethe payment of a fixed rate premium for protection against the loss in value of an underlying debtinstrument in the event of a defined credit event, such as payment default or bankruptcy. Under acredit default swap, one party acts as a guarantor by receiving the fixed periodic payment in exchangefor the commitment to purchase the underlying security at par if a credit event occurs. Derivativecontracts, including total rate of return swap contracts and credit default swap contracts, are recordedat estimated fair value with changes in fair value recorded as unrealized gains or losses in Net (Losses)Gains from Investment Activities in the accompanying combined statement of operations.

Opportunistic Investments in Publicly Traded Securities—The Company’s opportunistic investments inpublicly traded securities represent equity securities, which are classified as trading securities andcarried at fair market value. Changes in the fair market value of trading securities are reported withinNet (Losses) Gains from Investment Activities in the accompanying combined statement of operations.These investments represent investments by KPE other than debt, investments in governmental bondsand other similar investments.

Securities Sold, Not Yet Purchased—Whether part of a hedging transaction or a transaction in itsown right, securities sold, not yet purchased, or securities sold short, represent obligations of theCompany to deliver the specified security at the contracted price, and thereby create a liability torepurchase the security in the market at then prevailing prices. Short selling allows the investor toprofit from declines in market prices. The liability for such securities sold short is marked to marketbased on the current value of the underlying security at the date of valuation with changes in fair valuerecorded as unrealized gains or losses in Net (Losses) Gains from Investment Activities in theaccompanying combined statement of operations. These transactions may involve a market risk inexcess of the amount currently reflected in the Company’s combined statement of financial condition.

Due from and Due to Affiliates—For purposes of classifying amounts, the Company considers itsPrincipals, employees, non-consolidated funds and the Portfolio Companies of its funds to be affiliates.Receivables from and payables to affiliates are recorded at their current settlement amount.

Foreign Exchange Derivatives and Hedging Activities—The Company enters into derivativefinancial instruments primarily to manage foreign exchange risk and interest rate risk arising fromcertain assets and liabilities. All derivatives are recognized as either assets or liabilities in the combinedstatements of financial condition and measured at fair value with changes in fair value recorded in Net(Losses) Gains from Investment Activities in the accompanying combined statement of operations. TheCompany does not apply ‘‘hedge accounting’’ under SFAS No. 133, ‘‘Accounting for Derivative

F-23

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Instruments and Hedging Activities’’ (‘‘SFAS 133’’). The Company’s derivative financial instrumentscontain credit risk to the extent that its bank counterparties may be unable to meet the terms of theagreements. The Company minimizes this risk by limiting its counterparties to major financialinstitutions with strong credit ratings.

Fixed Assets, Depreciation and Amortization—Fixed assets consist primarily of leaseholdimprovements, furniture, fixtures and equipment, and computer hardware and software. Such amountsare recorded at cost less accumulated depreciation and amortization. Depreciation and amortization arecalculated using the straight-line method over the assets’ estimated useful lives, which are the life of therelated lease for leasehold improvements, and three to seven years for other fixed assets.

Securities Sold Under Agreements to Repurchase—Transactions involving sales of securities underagreements to repurchase are accounted for as collateralized financings. The Company recognizesinterest expense on all borrowings on an accrual basis.

Capital Distributions—Capital distributions to Principals are generally in proportion to their equityinterests and take the form of cash distributions and, in certain cases, non-cash distributions. Non-cashdistributions consist primarily of shares in Portfolio Companies which have been exited as well asvested common stock and common stock options of KFN. Payment for services rendered by thePrincipals historically has been accounted for as distributions from partner’s capital rather than ascompensation and benefits expense. As a result, the Company’s net income historically has notreflected payments for services rendered by its Principals.

Comprehensive Income—Comprehensive income is defined as the change in equity of a businessenterprise during a period from transactions and other events and circumstances, excluding thoseresulting from contributions and distributions to owners. For the Company’s purposes, comprehensiveincome represents Net Income, as presented in the accompanying combined statements of operationsand net foreign currency translation adjustments.

Foreign Currency—Foreign currency denominated assets, liabilities and operations are primarilyheld through the KKR Funds. Assets and liabilities relating to foreign investments are translated usingthe exchange rates prevailing at the end of each reporting period. Results of foreign operations aretranslated at the weighted average exchange rate for each reporting period. Translation adjustments areincluded in current income to the extent that unrealized gains and losses on the related investment areincluded in income, otherwise they are included as a component of accumulated other comprehensiveincome until realized. Foreign currency gains or losses resulting from transactions outside of thefunctional currency of a consolidated entity are recorded in income as incurred and were not materialduring the years ended December 31, 2008, 2007 and 2006.

Income Taxes—No federal income taxes have been provided for by the Company in theaccompanying combined financial statements as each existing partner is individually responsible forpaying federal income taxes on their respective share of the reported income or loss of an entity’sincome and expenses as reported for income tax purposes. However, certain consolidated entities of theCompany are subject to either New York City unincorporated business tax on their trade and businessactivities conducted in New York City or other foreign, state or local income taxes. Current income taxexpense is recorded as income is earned, and interest and penalties levied by relevant taxing

F-24

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

jurisdictions, if any, are recorded as incurred as a component of Income Taxes in the Company’scombined statements of operations. Deferred taxes are provided for the tax effects of differencesbetween the financial reporting and tax bases of the Company’s assets and liabilities at the enacted taxrates in effect for the years in which the differences are expected to reverse. The Company evaluatesthe recoverability of the deferred tax assets and establishes a valuation allowance when it is more likelythan not that some portion or all of the deferred tax assets will not be realized.

Recent Accounting Pronouncements—In December 2007, the FASB issued SFAS No. 141(R),Business Combinations (‘‘SFAS No. 141(R)’’). SFAS No. 141(R) requires the acquiring entity in abusiness combination to recognize the full fair value of assets, liabilities, contractual contingencies andcontingent consideration obtained in the transaction (whether for a full or partial acquisition);establishes the acquisition date fair value as the measurement objective for all assets acquired andliabilities assumed; requires expensing of most transaction and restructuring costs; and requires theacquirer to disclose to investors and other users all of the information needed to evaluate andunderstand the nature and financial effect of the business combination. SFAS No. 141(R) applies to alltransactions or other events in which the Company obtains control of one or more businesses, includingthose sometimes referred to as ‘‘true mergers’’ or ‘‘mergers of equals’’ and combinations achievedwithout the transfer of consideration, for example, by contract alone or through the lapse of minorityveto rights. The adoption of SFAS No. 141(R) on January 1, 2009 did not have a material impact onthe combined financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in ConsolidatedFinancial Statements—an amendment of Accounting Research Bulletin No. 51 (‘‘SFAS No. 160’’). SFASNo. 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposedto as a liability or mezzanine equity) and provides guidance on the accounting for transactions betweenan entity and noncontrolling interests. SFAS No. 160 applies prospectively as of January 1, 2009, exceptfor the presentation and disclosure requirements which will be applied retrospectively for all periodspresented. The adoption of SFAS No. 160 on January 1, 2009 did not have a material impact on thecombined financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments andHedging Activities (‘‘SFAS No. 161’’). SFAS No. 161 is intended to improve financial reporting aboutderivative instruments and hedging activities by requiring enhanced disclosures to enable investors tobetter understand how those instruments and activities are accounted for; how and why they are used;and their effects on an entity’s financial position, financial performance, and cash flows. SFAS No. 161is effective for financial statements issued for fiscal years and interim periods beginning afterNovember 15, 2008, with early application encouraged. As SFAS No. 161 only affects financialstatement disclosure, the impact of adoption will be limited to financial statement disclosure.

In March 2008, the EITF reached a consensus on Issue No. 07-4, Application of the Two-ClassMethod under FASB Statement No. 128, ‘‘Earnings Per Share, to Master Limited Partnerships(‘‘EITF 07-4’’). EITF 07-4 applies to master limited partnerships that make incentive equitydistributions. EITF 07-4 is to be applied retrospectively beginning with financial statements issued inthe interim periods of fiscal years beginning after December 15, 2008. The adoption of EITF 07-4 onJanuary 1, 2009 did not have a material impact on the combined financial statements.

F-25

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life ofIntangible Assets (‘‘FSP No. 142-3’’). FSP No. 142-3 amends the factors an entity should consider indeveloping renewal or extension assumptions used in determining the useful life of recognizedintangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. FSP No. 142-3 affectsentities with recognized intangible assets and is effective for financial statements issued for fiscal yearsbeginning after December 15, 2008, and interim periods within those fiscal years. Early adoption isprohibited. The new guidance applies prospectively to (1) intangible assets that are acquiredindividually or with a group of other assets and (2) both intangible assets acquired in businesscombinations and asset acquisitions. The adoption of FSP No. 142-3 on January 1, 2008 did not have amaterial impact on the combined financial statements.

In June 2008, the FASB issued Staff Position EITF No. 03-6-1, Determining Whether InstrumentsGranted in Share-Based Payment Transactions Are Participating Securities (‘‘FSP EITF No. 03-6-1’’). FSPEITF No. 03-6-1 addresses whether instruments granted in share-based payment transactions areparticipating securities prior to vesting and therefore need to be included in the earnings allocation incalculating earnings per share under the two-class method described in SFAS No. 128, Earnings perShare. FSP EITF No. 03-6-1 requires entities to treat unvested share-based payment awards that havenon-forfeitable rights to dividend or dividend equivalents as a separate class of securities in calculatingearnings per share. This FSP is effective for fiscal years beginning after December 15, 2008; earlierapplication is not permitted. The adoption of FSP EITF No. 03-6-1 on January 1, 2009 did not have amaterial impact on the combined financial statements.

In September 2008, the FASB issued FSP FAS No. 133-1 and FIN 45-4, Disclosures about CreditDerivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB InterpretationNo. 45; and Clarification of the Effective Date of FASB Statement No. 161 (‘‘FSP FAS No. 133-1 andFIN 45-4’’). FSP FAS No. 133-1 and FIN 45-4 requires enhanced disclosures about credit derivativesand guarantees. The FSP is effective for financial statements issued for reporting periods ending afterNovember 15, 2008. The adoption of FSP FAS No. 133-1 and FIN 45-4 on January 1, 2009 did nothave a material impact on the Company’s combined financial statements.

In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial AssetWhen the Market for That Asset Is Not Active (‘‘FSP FAS 157-3’’), to help constituents measure fairvalue in markets that are not active. FSP FAS 157-3 is consistent with the joint press release the FASBissued with the Securities and Exchange Commission (‘‘SEC’’) on September 30, 2008, which providesgeneral clarification guidance on determining fair value under SFAS No. 157 when markets are inactive.FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements hadnot been issued. The adoption of FSP 157-3 on January 1, 2009 did not have a material impact on theCompany’s combined financial statements.

In November 2008, the EITF reached a consensus on Issue No. 08-6, Equity Method InvestmentAccounting Considerations (‘‘EITF 08-6’’). EITF 08-6 clarifies the accounting for certain transactionsand impairment considerations involving equity method investments. An entity is required to recognizeits share of other-than-temporary impairments of equity method investments rather than test theinvestee’s underlying assets for impairment. Additionally, a share issuance by an equity method investeeshould be accounted for as if the investor sold a proportionate share of its investment, with anyassociated gain or loss recognized in earnings. EITF 08-6 is effective in fiscal years and interim periods

F-26

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

beginning on or after December 15, 2008. The Company is currently evaluating the impact that theadoption of EITF 08-6 may have on its combined financial statements.

In December 2008, the FASB issued FSP FAS No. 140-4 and FIN 46R-8 Disclosures by PublicEntities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (‘‘FSPFAS 140-4 and FIN 46R-8’’). FSP FAS 140-4 and FIN 46R-8 require additional disclosures abouttransfers of financial assets and involvement with variable interest entities. The requirements apply totransferors, sponsors, servicers, primary beneficiaries and holders of significant variable interests in avariable interest entity or qualifying special purpose entity. FSP FAS 140-4 and FIN 46R-8 is effectivefor financial statements issued for reporting periods ending after December 15, 2008. FSP FAS 140-4and FIN 46R-8 affect only disclosures and therefore did not have a material impact on the Company’scombined financial statements.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Levelof Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are NotOrderly (‘‘FSP FAS 157-4’’), to help constituents estimate fair value when the volume and level ofactivity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance onidentifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective forinterimand annual reporting periods ending after June 15, 2009, and shall be applied prospectively.Early adoption is permitted for periods ending after March 15, 2009. The Company is currentlyevaluating the impact that the adoption of FSP FAS 157-4 may have on its combined financialstatements.

In April 2009, the FASB issued Staff Position No. 115-2 and 124-2, Recognition and Presentation ofOther-Than-Temporary Impairments (‘‘FSP FAS 115-2’’) which provides new guidance on the recognitionof other-than-temporary impairments of investments in debt securities and provides new presentationand disclosure requirements for other-than-temporary impairments of investments in debt and equitysecurities. FSP FAS 115-2 is effective for financial statements issued for interim or annual periodsending after June 15, 2009. The Company is currently evaluating the impact of FSP FAS 115-2 on itscombined financial statements.

In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, Interim Disclosures aboutFair Value of Financial Statements (‘‘FSP FAS 107-1’’). FSP FAS 107-1 amends SFAS No. 107,Disclosures about Fair Value of Financial Instruments to require disclosures about fair value of financialinstruments in interim reporting periods. Such disclosures were previously required only in annualfinancial statements. FSP FAS 107-1 is effective for financial statements issued for interim or annualperiods ending after June 15, 2009. As FSP FAS 107-1 applies only to financial statement disclosures,the impact of adoption will be limited to financial statement disclosure.

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, SubsequentEvents (‘‘SFAS 165’’). SFAS 165 is intended to establish general accounting and disclosure standards forevents that occur after the balance sheet date but before financial statements are issued or areavailable to be issued. SFAS 165 requires disclosure of the date through which an entity has evaluatedsubsequent events and the basis for that date. SFAS 165 is effective for interim and annual periodsending after June 15, 2009. The Company is currently evaluating the impact that the adoption ofSFAS 165 may have on its combined financial statements.

F-27

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R)(‘‘SFAS 167’’), which amends FASB Interpretation No. 46(revised December 2003) to address theelimination of the concept of a qualifying special purpose entity. SFAS 167 updates FIN 46R’s approachto determination of a controlling financial interest with one focused on identifying (a) which enterprisehas the power to direct the activities of a variable interest entity (VIE) and (b) the obligation to absorblosses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 requiresentities provide more timely and useful information about an enterprise’s involvement with a VIE.SFAS 167 is effective as of the beginning of each reporting entity’s first annual reporting period thatbegins after November 15, 2009. The Company is currently evaluating the impact that the adoption ofSFAS 167 may have on its combined financial statements.

In July 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASBAccounting Codification and the Hierarchy of Generally Accepted Accounting Principles (‘‘SFAS 168’’).SFAS 168 supersedes FASB Statement No. 162 issued in May 2008. SFAS 168 will become the sourceof authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to beapplied by nongovernmental entities. Rules and interpretive releases of the Securities and ExchangeCommission (SEC) under authority of federal securities laws are also sources of authoritative GAAPfor SEC registrants. On the effective date of this Statement, the Codification will supersede allthen-existing non-SEC accounting and reporting standards. All other non-SEC accounting literature notincluded in the Codification will become nonauthoritative. This Statement is effective for financialstatements issued for interim and annual periods ending after September 15, 2009. The Company iscurrently evaluating the impact that the adoption of SFAS 168 may have on its combined financialstatements.

3. INVESTMENTS

Investments, at fair value consist of the following:

Fair ValueDecember 31,

2008 2007

Private Equity Investments . . . . . . . . . . . . . . . . . . . . . . $20,230,405 $30,743,120Debt Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481,945 563,579Other Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,169 511,633

$20,883,519 $31,818,332

Investments, at fair value held by the consolidated KKR Funds amounted to $20,747,407 and$31,435,621 at December 31, 2008 and December 31, 2007, respectively.

As of December 31, 2008, Investments at fair value totaling $3,605,297 were pledged as collateralagainst various financing arrangements. In addition, KPE holds limited partnership interests in ourTraditional Private Equity Funds with a fair value of $1,184,958 as of December 31, 2008 that arepledged as collateral.

F-28

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

Private Equity Investments

The following table presents the Company’s private equity investments at fair value:

Fair Value as aFair Value Percentage of Total

December 31, December 31,2008 2007 2008 2007

Private Equity Investments, at Fair ValueNorth America

Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,676,801 $ 2,886,448 13.2% 9.4%Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,632,998 3,369,354 13.0% 11.0%Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,285,506 3,148,948 11.3% 10.2%Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,412,075 2,042,250 7.0% 6.6%Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,138,520 1,320,477 5.6% 4.3%Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970,409 1,232,040 4.8% 4.0%Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456,061 383,225 2.3% 1.2%Consumer Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360,398 841,578 1.8% 2.7%Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234,436 986,915 1.2% 3.2%Telecom. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,946 50,036 0.2% 0.2%Hotels/Leisure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,179 27,150 0.1% 0.1%Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 418,679 0.0% 1.4%

North America Total (Cost: December, 31 2008, $17,052,851;December 31, 2007, $15,861,018) . . . . . . . . . . . . . . . . . . 12,212,329 16,707,100 60.5% 54.3%

EuropeManufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,103,930 4,244,510 10.4% 13.8%Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,410,686 2,500,052 7.0% 8.1%Telecom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710,611 672,061 3.5% 2.2%Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609,955 1,301,249 3.0% 4.2%Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389,832 426,091 1.9% 1.4%Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236,672 472,681 1.2% 1.5%Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154,810 539,269 0.8% 1.8%Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,060 1,583,525 0.4% 5.2%

Europe Total (Cost: December 31, 2008, $10,226,067;December 31, 2007, $9,319,196) . . . . . . . . . . . . . . . . . . . 5,705,556 11,739,438 28.2% 38.2%

Australia, Asia and Other LocationsTechnology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,386,984 1,313,052 6.9% 4.3%Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,638 590,654 1.4% 1.9%Telecom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222,795 — 1.1% 0.0%Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,655 198,729 0.7% 0.6%Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,240 113,579 0.6% 0.4%Consumer Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,208 — 0.4% 0.0%Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 80,568 0.2% 0.3%

Australia, Asia and Other Locations, Total (Cost:December 31, 2008, $2,703,356; December 31, 2007,$1,980,800) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,312,520 2,296,582 11.3% 7.5%

Private Equity Investments, at Fair Value . . . . . . . . . . . . . . $20,230,405 $30,743,120 100.0% 100.0%

F-29

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

The classifications of the private equity investments included in the table above are based primarilyon the primary business and the domiciled location of the business.

As of December 31, 2008, investments which represented greater than 5% of the net assets ofconsolidated private equity funds included: (i) First Data valued at $1,514,986; (ii) Legrand S.A. valuedat $1,501,887; (iii) Energy Future Holdings valued at $1,412,075; (iv) Alliance Boots valued at$1,410,686; (v) Dollar General valued at $1,398,016; (vi) Biomet valued at $1,054,149; and (vii) LeggMason valued at $1,053,059.

As of December 31, 2007, investments which represented greater than 5% of the net assets ofconsolidated private equity funds included: (i) Legrand S.A. valued at $2,682,863; (ii) First Data valuedat $2,524,977; (iii) Alliance Boots valued at $2,500,052; and (iv) Energy Future Holdings valued at$2,042,250.

The majority of the securities underlying the Company’s private equity investments representequity securities. As of December 31, 2008, the aggregate amount of investments that were other thanequity securities was approximately $2,016,278. As of December 31, 2007 the aggregate amount ofinvestments that were other than equity securities was less than 5% of the net assets of consolidatedprivate equity funds.

All Portfolio Companies included in private equity investments are deemed affiliates due to thenature of the ownership interests and the Company’s ability to control, direct or substantially influencemanagement and the operations of such Portfolio Companies.

Net (Losses) Gains from Investment Activities in the combined statement of operations include netrealized gains or losses from sales of investments and the net change in unrealized gains or lossesresulting from changes in fair value of the Company’s private equity investments (including foreignexchange gains and losses attributable to foreign-denominated investments). The following tablepresents the Company’s realized and net change in unrealized gains or losses relating to its privateequity investments:

Year Ended December 31,2008 2007 2006

Realized Gains . . . . . . . . . . . . . . . . . . . . . $ 353,406 $1,500,283 $3,240,050Net Change in Unrealized Losses . . . . . . . . (13,333,975) (166,516) (23,535)

$(12,980,569) $1,333,767 $3,216,515

F-30

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

Debt Investments

The following table presents the Company’s debt investments at fair value:

December 31,2008 2007

Debt Investments, carried at fair value:Fixed Income Securities(a) . . . . . . . . . . . . . . . . . . . . . . . . . $353,983 $147,643Strategic Capital Master Fund(b) . . . . . . . . . . . . . . . . . . . . 126,187 402,536Restricted Stock(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,775 8,960Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,535Vested Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,905

Total Debt Investments (Cost: December 31, 2008$926,975; December 31, 2007, $585,299) . . . . . . . . . . . . $481,945 $563,579

(a) Net trading losses relating to these investments amounted to $183,427 and $16,465 for theyears ended December 31, 2008 and 2007. Net trading gains were $4,538 for the yearended December 31, 2006.

(b) Represents an investment in a master investment partnership resulting from a June 2007reorganization of SCF whereby each side-by-side fund contributed a significant portion oftheir loans, fixed income and corporate securities investments for an ownership interest ina master investment partnership that pools the contributed assets for the benefit of eachside-by-side fund. The Company, through the two consolidated SCF side-by-side funds,accounts for the investment in the master fund at fair value.

Net (Losses) Gains from Investment Activities in the combined statement of operations include netrealized gains or losses from sales of investments and the net change in unrealized gains or lossesresulting from changes in fair value of the Company’s debt investments. The following table presentsthe Company’s realized and net change in unrealized gains or losses relating to its debt investments:

Year Ended December 31,2008 2007 2006

Realized (Losses) Gains . . . . . . . . . . . . . . . . . . . . . $ (87,088) $ 25,616 $ 71Net Change in Unrealized (Losses) Gains . . . . . . . . (422,787) (45,428) 17,330

$(509,875) $(19,812) $17,401

F-31

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

Other Investments

The following table presents the Company’s other investments at fair value:

Fair ValueDecember 31,

2008 2007

Government and Government Agency Bonds . . . . . . . . . . . . . $109,443 $ 92,889Corporate Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,426 55,066Municipal Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,267 19,699Opportunistic Investments in Publicly Traded Securities(a) . . . 1,072 327,497Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,961 16,482

Total (Cost: December 31, 2008, $168,562; December 31,2007, $555,585) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $171,169 $511,633

(a) Net trading (losses) gains relating to these investments amounted to $(565) and $43,341for the years ended December 31, 2008 and 2007, respectively. Net trading gains were$3,988 for the year ended December 31, 2006.

Net (Losses) Gains from Investment Activities in the combined statement of operations include netrealized gains or losses from sales of investments and the net change in unrealized gains or lossesresulting from changes in fair value of the Company’s other investments. The following table presentsthe Company’s realized and net change in unrealized gains or losses relating to its other investments.

Year Ended December 31,2008 2007 2006

Realized (Losses) Gains . . . . . . . . . . . . . . . . . . . . . $(70,218) $ 31,202 $ 4,810Net Change in Unrealized Gains (Losses) . . . . . . . . 46,126 (43,453) 12,121

$(24,092) $(12,251) $16,931

F-32

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table summarizes the valuation of the Company’s investments by the SFAS 157 fairvalue hierarchy levels described in Note 2 as of December 31, 2008:

Assets, at fair value:

December 31, 2008Level I Level II Level III Total

Private Equity Investments . . . . . . . . . . . . . . . . . $1,908,845 $2,164,933 $16,156,627 $20,230,405Debt Investments . . . . . . . . . . . . . . . . . . . . . . . 1,775 335,237 144,933 481,945Other Investments . . . . . . . . . . . . . . . . . . . . . . . 153,245 — 17,924 171,169

Total Investments . . . . . . . . . . . . . . . . . . . . . . 2,063,865 2,500,170 16,319,484 20,883,519Unrealized Gain on Foreign Exchange Forward

Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 84,094 — 84,094Foreign Currency Options . . . . . . . . . . . . . . . . . — 45,816 — 45,816

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $2,063,865 $2,630,080 $16,319,484 $21,013,429

Liabilities, at fair value:

Securities Sold, Not Yet Purchased . . . . . . . . . . . $ 1,916 $ — $ — $ 1,916Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . — 12,539 — 12,539Total Return Swap . . . . . . . . . . . . . . . . . . . . . . . — 4,610 — 4,610

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,916 $ 17,149 $ — $ 19,065

The following table summarizes our Level III investments by valuation methodology as ofDecember 31, 2008:

December 31, 2008Private Equity Debt Other Total Level III

Investments Investments Investments Holdings

Third-Party Fund Managers . . . . . . . . . . . . . . . . . —% .9% .1% 1.0%Public/Private Company Comparables and

Discounted Cash Flows . . . . . . . . . . . . . . . . . . 99.0 — — 99.0%Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.0% .9% .1% 100.0%

F-33

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The changes in investments measured at fair value for which the Company has used Level IIIinputs to determine fair value from December 31, 2007 through December 31, 2008 are as follows:

Year endedDecember 31, 2008

Balance, December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,391,146Transfers In (Out) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Purchases (Sales), Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,490,883Realized and Unrealized (Losses) Gains, Net . . . . . . . . . . . . . . . . (9,562,545)Balance, December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,319,484

Changes in Unrealized (Losses) Gains Included in Net Losses fromInvestment Activities (including foreign exchange gains and lossesattributable to foreign-denominated investments) Related toInvestments Still Held at Reporting Date . . . . . . . . . . . . . . . . . . $ (9,880,084)

Total realized and unrealized gains and losses recorded for Level III investments are reported inNet (Losses) Gains from Investment Activities in the combined statements of operations.

The carrying amounts of cash and cash equivalents, restricted cash and cash equivalents, due fromaffiliates, and accounts payable, accrued expenses and other liabilities approximate fair value due totheir short-term maturities. All investments are carried at fair value, with the exception of corporateloans, which are carried at amortized cost. The Company’s debt obligations bear interest at floatingrates and therefore the fair value approximates carrying value.

F-34

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

5. OTHER ASSETS AND ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

Other assets consist of the following:

December 31,2008 2007

Unrealized Gains on Foreign Exchange Forward Contracts(a) . $ 84,094 $ —Foreign Currency Options (Cost: December 31, 2008, $13,736;

December 31, 2007, $20,630)(b) . . . . . . . . . . . . . . . . . . . . . 45,816 31,384Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,751 7,377Furniture & Fixtures(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,966 28,894Intangible Asset(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,676 —Leasehold Improvements(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 19,247 36,390Deferred Financing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,070 3,840Prepaid Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,243 3,311Escrow Receivable(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 113,848Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,405 23,741

$313,268 $248,785

(a) Represents derivative financial instruments used to manage foreign exchange risk arisingfrom certain assets and liabilities. Such instruments are measured at fair value withchanges in fair value recorded in Net (Losses) Gains from Investment Activities in theaccompanying combined statement of operations. Fair value of Unrealized Losses onForeign Exchange Forward Contracts for the year ended December 31, 2007 was $405,662and was reported in Other Liabilities. The net changes in fair value recorded in Net(Losses) Gains from Investment Activities in the accompanying combined statement ofoperations associated with these instruments was a realized gain of $40,234 and a netunrealized gain of $489,756 for the year ended December 31, 2008, and a net unrealizedloss of $202,911 and $145,324 for the years ended December 31, 2007 and 2006,respectively. See Note 2, ‘‘Summary of Significant Accounting Policies.’’

(b) Represents a hedging instrument used to manage foreign exchange risk. The instrument ismeasured at fair value with changes in fair value recorded in Net (Losses) Gains fromInvestment Activities in the accompanying combined statement of operations. The netchanges in fair value associated with this instrument included gains of $30,323 ($8,998 ofrealized gains and $21,325 of unrealized gains) for the year ended December 31, 2008and an unrealized gain of $10,754 for the year ended December 31, 2007. There were nosuch instruments during the year ended December 31, 2006.

(c) Net of accumulated depreciation and amortization of $50,276 and $35,003 as ofDecember 31, 2008 and 2007, respectively. Depreciation and amortization expense totaled$17,352, $4,542 and $3,044 for the years ended December 31, 2008, 2007 and 2006,respectively.

F-35

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

5. OTHER ASSETS AND ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES(Continued)

(d) Net of accumulated amortization and amortization expense of $2,211 as and for the yearended December 31, 2008. There was no amortization for the years ended December 31,2007, and 2006 as the intangible was purchased during 2008.

(e) Represents an amount held in escrow at December 31, 2007 pending the completion ofan investment in a Portfolio Company that closed during year ended December 31, 2008.

Accounts Payable, Accrued Expenses and Other Liabilities consist of the following:

December 312008 2007

Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 92,618 $ 37,755Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . . . 40,125 70,103Derivative Liabilities(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,149 —Unsettled Investment Trades . . . . . . . . . . . . . . . . . . . . . . . . . 13,183 —Accrued Benefits and Compensation . . . . . . . . . . . . . . . . . . . 12,889 22,159Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,656 6,541Securities Sold Not Yet Purchased (proceeds of $1,785)(b) . . . 1,916 —Unrealized Losses on Foreign Exchange Forward Contracts . . . — 405,662Other Liabilities(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,012 13,088

$185,548 $555,308

(a) Represents derivative financial instruments used to manage credit and market risk arisingfrom certain assets and liabilities. Such instruments are measured at fair value withchanges in fair value recorded in Net (Losses) Gains from Investment Activities in theaccompanying combined statement of operations. The net changes in fair value recordedin Net (Losses) Gains from Investment Activities in the accompanying combinedstatement of operations were $(24,920) ($7,771 of realized losses and $17,149 ofunrealized losses) for the year ended December 31, 2008. See Note 2, ‘‘Summary ofSignificant Accounting Policies.’’

(b) Represents securities sold short, which are obligations of the Company to deliver aspecified security at a contracted price at a future point in time. Such securities aremeasured at fair value with changes in fair value recorded in Net (Losses) Gains fromInvestment Activities in the accompanying combined statements of operations. Netchanges in fair value recorded in Net (Losses) Gains from Investment Activities in theaccompanying combined statement of operations were net gains of $12,231 ($12,364 ofrealized gains and $133 of unrealized losses) for the year ended December 31, 2008.There were no such securities during the years ended December 31, 2007 or 2006.

(c) As of December 31, 2007, Other Liabilities includes premiums received with respect tocall options written of $7,290, net of $2,025 of unrealized gains. Total changes in fairvalue recorded in Net (Losses) Gains from Investment Activities in the accompanyingcombined statement of operations were gains of $1,673 ($3,698 of realized gains and

F-36

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

5. OTHER ASSETS AND ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES(Continued)

$2,025 of unrealized losses) for the year ended December 31, 2008. There were no calloptions outstanding as of December 31, 2006.

6. DEBT OBLIGATIONS

Debt obligations consist of the following:

December 31,2008 2007

Other Financing Arrangements . . . . . . . . . . . . . . . . . . . . . $1,314,911 $ 684,483Revolving Credit Agreements . . . . . . . . . . . . . . . . . . . . . . 1,090,214 1,002,240Short-term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 333,605

$2,405,125 $2,020,328

On February 26, 2008, Kohlberg Kravis Roberts & Co. L.P entered into a credit agreement with amajor financial institution (the ‘‘Management Company Credit Agreement’’). The ManagementCompany Credit Agreement provides for revolving borrowings of up to $1 billion, with a $50 millionsublimit for swingline notes and a $25 million sublimit for letters of credit. The facility has a term ofthree years that expires on February 26, 2011, which may be extended through February 26, 2013 at theoption of the Company. As of December 31, 2008, $100 million was outstanding under theManagement Company Credit Agreement, and the interest rate on such borrowings was approximately.96% as of December 31, 2008.

During February 2008, Kohlberg Kravis Roberts & Co. L.P. renewed its $25 million line of credit(the ‘‘Management Company Credit Line’’) with a major financial institution. The ManagementCompany Credit Line expires in 2009. The Management Company Credit Line is available for generalcorporate purposes. As of December 31, 2008, $25 million was outstanding under the ManagementCompany Credit Line, and the interest rate on such borrowings was approximately 3.3% as ofDecember 31, 2008.

From time to time, the Company may borrow amounts to satisfy general short-term needs of thebusiness by opening short-term lines of credit with established financial institutions. These amounts maybe incremental to, or in lieu of, borrowings made under the Management Company Credit Line, andare generally repaid within 30 days, at which time such short-term lines of credit would close. Therewere no short term lines of credit outstanding as of December 31, 2008.

On February 27, 2008, KKR Capital Markets entered into a revolving credit agreement with amajor financial institution (the ‘‘KCM Credit Agreement’’). The KCM Credit Agreement provides forrevolving borrowings of up to $700 million with a $500 million sublimit for letters of credit. The KCMCredit Agreement has a maturity date of February 27, 2013. There was $14 million outstanding underthe KCM Credit Agreement as of December 31, 2008. As of December 31, 2008, the interest rate onborrowings under the KCM Credit Agreement was 3.3%.

F-37

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

6. DEBT OBLIGATIONS (Continued)

In March 2009, the KCM Credit Agreement was amended to reduce the amounts available onrevolving borrowings from $700 million to $500 million. As a result of this amendment, thecounterparty returned approximately $1.6 million in financing costs.

In June 2007, KPE entered into a revolving credit agreement (the ‘‘KPE Credit Agreement’’) witha syndicate of financial institutions. The KPE Credit Agreement provides for up to $1.0 billion ofsenior secured credit, subject to availability under a borrowing base determined by the value of certaininvestments KPE pledged as collateral security for its obligations under the KPE Credit Agreement.The borrowing base is subject to certain investment concentration limitations and the value of theinvestments constituting the borrowing base is subject to certain advance rates based on type ofinvestment.

In October 2008, Lehman Commercial Paper Inc. (‘‘Lehman’’), an original lender under the CreditAgreement with an initial $75.0 million commitment, filed for bankruptcy and was responsible forfunding an additional $43.8 million in commitments as of December 31, 2008. Due to Lehman’sbankruptcy, KPE believes that Lehman will not fund any part of its remaining commitments. Therefore,the remaining availability under the Credit Agreement has effectively been reduced from $48.8 millionabsent Lehman’s bankruptcy to $5.0 in unfunded commitments as of December 31, 2008, or from$1.0 billion to $925.0 million in total commitments, unless Lehman’s commitments are assigned toanother existing or new lender. There can be no assurance that any lender will assume any part ofLehman’s commitment under the KPE Credit Agreement.

As of December 31, 2008, the interest rates on borrowings under the KPE Credit Agreementranged from 1.47% to 3.85%. As of December 31, 2008, the Company had $951.2 million of borrowingsoutstanding, which included $969.0 million of borrowings and $17.8 million of foreign currencyadjustments relating to borrowings denominated in foreign currency. Foreign currency adjustmentsrelated to the debt during the period are recorded in Net (Losses) Gains from Investment Activities inthe accompanying combined statements of operations. The net change in fair value associated withthese borrowings for the year ended December 31, 2008 totaled $34,552 ($13,821 of realized gains and$20,731 of unrealized gains).

December 31,2008 2007

Notional borrowings under the KPE Credit Agreement . . . . . $968,970 $ 999,266Foreign currency adjustments:

Less: Unrealized gain related to borrowings denominatedin British pounds sterling . . . . . . . . . . . . . . . . . . . . . . . 14,058 3,237

Less: Unrealized gain (loss) related to borrowingsdenominated in Canadian dollars . . . . . . . . . . . . . . . . . 3,698 (6,211)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $951,214 $1,002,240

As of December 31, 2008, the Company had entered into various financing arrangements totaling$1,328.9 million with major financial institutions with respect to certain of our private equityinvestments with a cost of $1,324.5 million. Of the $1,328.9 million of financing arrangements,$1,146.4 million was structured through the use of total return swaps which effectively convert third

F-38

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

6. DEBT OBLIGATIONS (Continued)

party capital contributions into borrowings of the Company. Upon the occurrence of certain events,including an event based on the value of the collateral and events of default, the Company may berequired to provide additional collateral, up to the amount borrowed plus accrued interest, under theterms of these financing arrangements. The per annum rates of interest payable by us for the financingsrange from three-month LIBOR plus 0.90% to three-month LIBOR plus 1.75% (rates ranging from4.40% to 5.40% as of December 31, 2008). The remaining $182.5 million of financing was structuredthrough the use of a syndicated term and a revolving credit facility (the ‘‘Term Facility’’). As ofDecember 31, 2008, $168.5 million was outstanding under this facility. The per annum rate of interestfor each borrowing under the Term Facility is equal to the Bloomberg United States Dollar InterestRate Swap Ask Rate plus 1.75% at the time of each borrowing under the Term Facility (rates rangefrom 4.90% to 7.20% at December 31, 2008) for the first five years of the loan. Commencing on thefifth anniversary of the Term Facility, the per annum rate of interest will equal the one year LIBORrate plus 1.75%.

The Company’s Fixed Income Funds may leverage their portfolios of securities and loans throughthe use of short-term borrowings in the form of warehouse facilities and repurchase agreements. Theseborrowings used by the Company generally bear interest at floating rates based on a spread above theLondon Interbank Offered Rate (‘‘LIBOR’’). There were no such borrowings as of December 31, 2008.

The Company believes the carrying value of its debt approximates fair value as of December 31,2008.

Scheduled maturities of debt obligations for the five years subsequent to December 31, 2008 are asfollows:

Years Ending December 31, Amount

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,0002010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,0002012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,297,6422013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 968,483Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,405,125

7. INCOME TAXES

The Company has provided for New York City unincorporated business tax for certain entitiesbased on a statutory rate of 4%. Certain consolidated entities of the Company are subject to incometax of the foreign countries in which they conduct business. The Company’s effective income tax rate

F-39

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

7. INCOME TAXES (Continued)

was approximately 3.02%, 3.13% and 2.90% for the years ended December 31, 2008, 2007 and 2006respectively.

Years Ended December 31,2008 2007 2006

CurrentForeign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . $6,366 $ 7,042 $3,206State and Local Income Tax . . . . . . . . . . . . . . . . . . . . (612) 9,754 700

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,754 16,796 3,906Deferred

Foreign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . (451) 107 257State and Local Income Tax . . . . . . . . . . . . . . . . . . . . 1,483 (4,839) —

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,032 (4,732) 257Total Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . $6,786 $12,064 $4,163

Income taxes are provided at the applicable statutory rates. The tax effects of the changes in thetemporary differences in the areas listed below resulted in deferred tax assets and liabilities:

December 31,2008 2007

Deferred Tax AssetsNet Operating Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,726 $ —Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650 1,154Asset Retirement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 194 166Revenue Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,711Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 81

Total Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,610 $5,112

Deferred Tax LiabilitiesDepreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 540 $1,258Revenue Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 —Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 49

Total Deferred Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 837 $1,307

A deferred tax asset has been recognized for certain foreign timing differences with a full valuationallowance as it is more likely that the asset will not be recognized. As of December 31, 2008 and 2007the amount of the asset and valuation allowance not recognized is approximately $6.6 million and$7.9 million, respectively.

The Company’s Deferred Tax Assets and Deferred Tax Liabilities are included in the combinedfinancial statements within Other Assets and Accounts Payable, Accrued Expenses and Other

F-40

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

7. INCOME TAXES (Continued)

Liabilities, respectively. The following table reconciles the provision for income taxes to the US federalstatutory tax rate:

Years Ended December 31,2008 2007 2006

Statutory U.S. Federal Income Tax Rate . . . . . . . . . . 35.00% 35.00% 35.00%Income Passed Through to Partners . . . . . . . . . . . . . (35.00) (35.00) (35.00)Foreign Income Taxes . . . . . . . . . . . . . . . . . . . . . . . 2.64 1.86 2.41State and Local Income Taxes . . . . . . . . . . . . . . . . . .38 1.27 .49Effective Income Tax Rate . . . . . . . . . . . . . . . . . . . . 3.02% 3.13% 2.90%

The Company analyzed its tax filing positions in all of the federal, state and foreign taxjurisdictions where it is required to file income tax returns, as well as for all open tax years in thesejurisdictions. Based on this review, no reserves for uncertain tax positions were required to have beenrecorded.

8. RELATED PARTY TRANSACTIONS

Due from Affiliates consists of:

December 312008 2007

Due from Portfolio Companies . . . . . . . . . . . . . . . . . . . . . . . . . $14,337 $15,684Due from Related Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,287 12,234Due from Unconsolidated Funds . . . . . . . . . . . . . . . . . . . . . . . . 3,265 16,051

$29,889 $43,969

Discretionary Investments

Certain of the Company’s investment professionals, including its Principals and other qualifyingemployees, are permitted to invest and have invested their own capital in side-by-side investments withits Traditional Private Equity Funds. Side-by-side investments are investments in Portfolio Companiesthat are made on the same terms and conditions as those acquired by the applicable fund, except thatthe side-by-side investments are not subject to management fees or a carried interest. The cash investedby these individuals aggregated $25.1 million, $174 million and $110 million for the years endedDecember 31, 2008, 2007 and 2006, respectively. These investments are not included in theaccompanying combined financial statements.

Aircraft and Other Services

Certain of the Senior Principals own aircraft that the Company uses for business purposes in theordinary course of its operations. These Senior Principals paid for the purchase of these aircraft withtheir personal funds and bear all operating, personnel and maintenance costs associated with theiroperation. The hourly rates that the Company pays for the use of these aircraft are based on currentmarket rates for chartering private aircraft of the same type. The Company paid $7,851, $6,339 and$6,518 for the use of these aircraft during the years ended December 31, 2008, 2007 and 2006,respectively.

F-41

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

8. RELATED PARTY TRANSACTIONS (Continued)

Facilities

Certain of the Senior Principals are partners in a real-estate based partnership that maintains anownership interest in the Company’s Menlo Park location. Payments made to this partnershipaggregated $2,426, $2,073 and $1,821 for the years ended December 31, 2008, 2007 and 2006,respectively.

9. SEGMENT REPORTING

The Company operates through two reportable business segments. These segments, which aredifferentiated primarily by their investment focuses and strategies, consist of the following:

• Private Markets—The Company’s Private Markets segment involves sponsoring and managing agroup of funds and co-investment vehicles that make primarily control-oriented investments inconnection with leveraged buyouts and other similarly-yielding investment opportunities. Thesefunds are managed by Kohlberg Kravis Roberts & Co. L.P. and currently consist of TraditionalPrivate Equity Funds and KPE.

• Public Markets—The Company’s Public Markets segment is comprised of KKR’s fixed incomeand mezzanine finance businesses, as well as other businesses that invest primarily in publiclytraded securities. Through these businesses, KKR manages a number of investment funds,structured finance vehicles and separately managed accounts that invest primarily in bank loans,high yield securities, distressed and rescue financings, private debt investments and mezzanineinstruments. These businesses are managed by subsidiaries of Kohlberg Kravis Roberts & Co.(Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic CapitalManagement, L.L.C., and KKR FI Advisors LLC.

Economic Net Income (‘‘ENI’’) and Fee Related Earnings (‘‘FRE’’) are key performance measuresused by management. ENI is a measure of profitability for the Company’s reportable segments andrepresents income before taxes less net income attributable to noncontrolling interests in the KKRFunds and certain non-cash amortization charges. FRE represents income before taxes adjusted to:(i) exclude the expenses of consolidated funds; (ii) include management fees earned from consolidatedfunds that were eliminated in consolidation; (iii) exclude investment income; (iv) exclude amortizationof intangibles assets; and (v) exclude net income attributable to noncontrolling interests in the KKRFunds. These measures are used by management for the Company’s segments in making resourcedeployment and other operational decisions.

Management makes operating decisions and assesses the performance of each of the Company’sbusiness segments based on financial and operating metrics and data that is presented excluding theimpact of any of the KKR Funds that are consolidated into the combined financial statements.Consequently, all segment data excludes the assets, liabilities and operating results related to the KKRFunds.

F-42

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

The following table presents the financial data for the Company’s reportable segments as of andfor the year ended December 31, 2008:

December 31, 2008Total

Private Public ReportableMarkets Markets Segments

Fee IncomeManagement Fees . . . . . . . . . . . . . . . . . . . . $ 426,005 $62,030 $ 488,035Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . 137,531 14,038 151,569Incentive Fees . . . . . . . . . . . . . . . . . . . . . . . — — —

Total Fee Income . . . . . . . . . . . . . . . . . . . 563,536 76,068 639,604

ExpensesEmployee Compensation and Benefits . . . . . 136,807 12,375 149,182Other Operating Expenses . . . . . . . . . . . . . . 227,513 20,238 247,751

Total Expenses . . . . . . . . . . . . . . . . . . . . . 364,320 32,613 396,933Fee Related Earnings . . . . . . . . . . . . . . . . 199,216 43,455 242,671

Investment Loss . . . . . . . . . . . . . . . . . . . . . . . (1,431,569) (192) (1,431,761)(Loss) Income before Taxes . . . . . . . . . . . . . . . (1,232,353) 43,263 (1,189,090)(Loss) Income Attributable to Noncontrolling

Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . (37) 6,421 6,384Economic Net (Loss) Income . . . . . . . . . . . . . $(1,232,316) $36,842 $(1,195,474)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 311,302 $52,256 $ 363,558

The following table reconciles the Company’s total reportable segments to the combined financialstatements as of and for the year ended December 31, 2008:

December 31, 2008Total

Reportable CombinationSegments Adjustments Combined

Fee Income(a) . . . . . . . . . . . . . . . . . . . . $ 639,604 $ (404,423) $ 235,181Expenses(b) . . . . . . . . . . . . . . . . . . . . . . $ 396,933 $ 21,455 $ 418,388Investment Loss(c) . . . . . . . . . . . . . . . . . $(1,431,761) $(11,433,478) $(12,865,239)Loss before Taxes . . . . . . . . . . . . . . . . . $(1,189,090) $(11,859,356) $(13,048,446)(Loss) Income Attributable to

Noncontrolling Interests . . . . . . . . . . . $ 6,384 $(11,857,145) $(11,850,761)Total Assets(d) . . . . . . . . . . . . . . . . . . . $ 363,558 $ 22,077,472 $ 22,441,030

(a) The Fee Income adjustment represents the elimination of intercompany transactions uponconsolidation of the KKR Funds and other adjustments necessary to reconcile fromsegment reporting measures to combined financial results. In periods where the amount

F-43

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

of fee income attributable to the Company’s consolidated funds exceeds the amount ofmanagement fees earned from its consolidated funds, a positive adjustment will berequired to eliminate this intercompany transaction and reconcile to the Company’scombined fee income.

(b) The Expenses adjustment primarily represents the inclusion of certain operating expensesupon consolidation of the KKR Funds.

(c) The Investment Loss adjustment primarily represents the inclusion of investment incomeallocable to noncontrolling interests upon consolidation of the KKR Funds.

(d) The Total Assets adjustment primarily represents the inclusion of private equity and creditinvestments that are allocable to noncontrolling interests upon consolidation of the KKRFunds.

The reconciliation of Economic Net Loss to Net Loss Attributable to KKR Group as reported inthe combined Statement of Operations consists of the following:

Year EndedDecember 31,

2008

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,195,474)Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,786)Amortization of Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,211)Net Loss Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . . . $(1,204,471)

F-44

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

The following table presents the financial data for the Company’s reportable segments as of andfor the year ended December 31, 2007:

December 31, 2007Total

Private Public ReportableMarkets Markets Segments

Fee IncomeManagement Fees . . . . . . . . . . . . . . . . . . . . $ 231,527 $ 68,194 $ 299,721Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . 537,126 11,421 548,547Incentive Fees . . . . . . . . . . . . . . . . . . . . . . . — 23,335 23,335

Total Fee Income . . . . . . . . . . . . . . . . . . . 768,653 102,950 871,603

ExpensesEmployee Compensation and Benefits . . . . . . 187,540 24,507 212,047Other Operating Expenses . . . . . . . . . . . . . . 209,700 16,349 226,049

Total Expenses . . . . . . . . . . . . . . . . . . . . . 397,240 40,856 438,096Fee Related Earnings . . . . . . . . . . . . . . . . 371,413 62,094 433,507

Investment Income . . . . . . . . . . . . . . . . . . . . . 403,601 984 404,585Income before Taxes . . . . . . . . . . . . . . . . . . . . 775,014 63,078 838,092

Loss Attributable to Noncontrolling Interests . . — 23,264 23,264Economic Net Income . . . . . . . . . . . . . . . . . . . $ 775,014 $ 39,814 $ 814,828

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $1,933,741 $ 30,961 $1,964,702

The following table reconciles the Company’s total reportable segments to the combined financialstatements as of and for the year ended December 31, 2007:

December 31, 2007Total

Reportable CombinationSegments Adjustments Combined

Fee Income(a) . . . . . . . . . . . . . . . . . . . . . . $ 871,603 $ (9,338) $ 862,265Expenses(b) . . . . . . . . . . . . . . . . . . . . . . . $ 438,096 $ 2,814 $ 440,910Investment Income(c) . . . . . . . . . . . . . . . . $ 404,585 $ 1,587,198 $ 1,991,783Income before Taxes . . . . . . . . . . . . . . . . . $ 838,092 $ 1,575,046 $ 2,413,138(Loss) Income Attributable to

Noncontrolling Interests . . . . . . . . . . . . . $ 23,264 $ 1,575,046 $ 1,598,310Total Assets(d) . . . . . . . . . . . . . . . . . . . . . $1,964,702 $30,878,094 $32,842,796

(a) The Fee Income adjustment represents the elimination of intercompany transactions uponconsolidation of the KKR Funds and other adjustments necessary to reconcile fromsegment reporting measures to combined financial results. In periods where the amount

F-45

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

of fee income attributable to the Company’s consolidated funds exceeds the amount ofmanagement fees earned from its consolidated funds, a positive adjustment will berequired to eliminate this intercompany transaction and reconcile to the Company’scombined fee income.

(b) The Expenses adjustment primarily represents the inclusion of certain operating expensesupon consolidation of the KKR Funds.

(c) The Investment Income adjustment primarily represents the inclusion of investmentincome allocable to noncontrolling interests upon consolidation of the KKR Funds.

(d) The Total Assets adjustment primarily represents the inclusion of private equity and creditinvestments that are allocable to noncontrolling interests upon consolidation of the KKRFunds.

The following table presents the financial data for the Company’s reportable segments as of andfor the year ended December 31, 2006:

December 31, 2006Total

Private Public ReportableMarkets Markets Segments

Fee IncomeManagement Fees . . . . . . . . . . . . . . . . . . . . $ 181,371 $ 55,994 $ 237,365Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . 172,950 9,119 182,069Incentive Fees . . . . . . . . . . . . . . . . . . . . . . . — 15,613 15,613

Total Fee Income . . . . . . . . . . . . . . . . . . . 354,321 80,726 435,047

ExpensesEmployee Compensation and Benefits . . . . . . 92,950 18,662 111,612Other Operating Expenses . . . . . . . . . . . . . . 121,327 12,193 133,520

Total Expenses . . . . . . . . . . . . . . . . . . . . . 214,277 30,855 245,132Fee Related Earnings . . . . . . . . . . . . . . . . 140,044 49,871 189,915

Investment Income . . . . . . . . . . . . . . . . . . . . . 929,518 10,103 939,621Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 1,069,562 59,974 1,129,536(Loss) Income Attributable to Noncontrolling

Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 25,428 25,428Economic Net Income . . . . . . . . . . . . . . . . . . . $1,069,562 $ 34,546 $1,104,108

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,687,205 $ 72,034 $1,759,239

F-46

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

The following table reconciles the Company’s total reportable segments to the combined financialstatements as of and for the year ended December 31, 2006:

December 31, 2006Total

Reportable CombinationSegments Adjustments Combined

Fee Income(a) . . . . . . . . . . . . . . . . . . . . . . $ 435,047 $ (24,718) $ 410,329Expenses(b) . . . . . . . . . . . . . . . . . . . . . . . $ 245,132 $ 22,334 $ 267,466Investment Income(c) . . . . . . . . . . . . . . . . $ 939,621 $ 3,061,301 $ 4,000,922Income before Taxes . . . . . . . . . . . . . . . . . $1,129,536 $ 3,014,249 $ 4,143,785(Loss) Income Attributable to

Noncontrolling Interests . . . . . . . . . . . . . $ 25,428 $ 3,014,249 $ 3,039,677Total Assets(d) . . . . . . . . . . . . . . . . . . . . . $1,759,239 $21,533,544 $23,292,783

(a) The Fee Income adjustment represents the elimination of intercompany transactions uponconsolidation of the KKR Funds and other adjustments necessary to reconcile fromsegment reporting measures to combined financial results. In periods where the amountof fee income attributable to the Company’s consolidated funds exceeds the amount ofmanagement fees earned from its consolidated funds, a positive adjustment will berequired to eliminate this intercompany transaction and reconcile to the Company’scombined fee income.

(b) The Expenses adjustment primarily represents the inclusion of certain operating expensesupon consolidation of the KKR Funds.

(c) The Investment Income adjustment primarily represents the inclusion of investmentincome allocable to noncontrolling interests upon consolidation of the KKR Funds.

(d) The Total Assets adjustment primarily represents the inclusion of private equity and creditinvestments that are allocable to noncontrolling interests upon consolidation of the KKRFunds.

10. CREDIT AND MARKET RISK

In the normal course of business, the Company primarily encounters two significant types ofeconomic risk: credit and market. Credit risk is the risk of default on the Company’s investments indebt securities, loans, leases and derivatives that results from a borrower’s, lessee’s or derivativecounterparty’s inability or unwillingness to make required or expected payments. Market risk reflectschanges in the value of investments in loans, securities, portfolio companies or derivatives, asapplicable, due to changes in interest rates, credit spreads or other market factors, including the valueof the collateral underlying loans and the valuation of equity and debt securities. Management believesthat the carrying values of its investments are reasonable taking into consideration these risks alongwith estimated collateral values, payment histories, and other borrower information.

The Company makes investments outside of the United States. The Company’s non-U.S.investments are subject to the same risks associated with its U.S. investments as well as additional risks,

F-47

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

10. CREDIT AND MARKET RISK (Continued)

such as fluctuations in foreign currency exchange rates, unexpected changes in regulatory requirements,heightened risk of political and economic instability, difficulties in managing non-U.S. investments,potentially adverse tax consequences and the burden of complying with a wide variety of foreign laws.

The Company is exposed to economic risk concentrations insofar as it is dependent on the abilityof the KKR Funds to compensate it for the services which the Company provides to these funds.Further, the carried interest and incentive income component of this compensation is based on theability of the KKR Funds to generate adequate returns on their investments. In addition, substantiallyall of the Company’s net assets, after deducting the portion attributable to noncontrolling interests, arecomprised of capital investments in these funds.

Furthermore, the Company is exposed to economic risk concentrations related to certain largeinvestments as well as concentrations of investments in certain industries and geographic locations, asdisclosed in Note 3.

11. COMMITMENTS AND CONTINGENCIES

KFN Revolving Credit Agreement

On November 10, 2008, the Company entered into a two-year $100.0 million standby unsecuredrevolving credit agreement with KFN pursuant to which the Company has agreed to provide financingto KFN under the arrangement. The borrowing facility matures in December 2010 and bears interest ata rate equal to LIBOR for an interest period of 1, 2 or 3 months (at KFN’s option) plus 15.00% perannum. Under the terms of the agreement, KFN can elect to capitalize a portion of accrued interest onany loan under the agreement by adding up to 80% of the interest due and payable at a particular timein respect of such loan to the outstanding principal amount of the loan. As of December 31, 2008, noamounts were outstanding under this arrangement.

Debt Covenants

Borrowings of the Company contain various customary loan covenants. These covenants do not, inmanagement’s opinion, materially restrict KKR’s investment or financing strategy. The Company is incompliance with all of its loan covenants as of December 31, 2008.

Investment Commitments

As of December 31, 2008 there were no outstanding investment commitments at any of the KKRFunds.

The general partners of the Traditional Private Equity Funds had unfunded general partner capitalcommitments to such funds of approximately $470.1 million as of December 31, 2008.

Contingent Repayment Guarantee

Certain Company personnel who have received carried interest distributions with respect toTraditional Private Equity Funds have personally guaranteed, on a several basis and subject to a cap,the contingent obligations of the general partners of the Traditional Private Equity Funds to repayamounts to fund limited partners pursuant to the general partners’ equity clawback obligations, if any.

F-48

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

11. COMMITMENTS AND CONTINGENCIES (Continued)

As of December 31, 2008, approximately $945.7 million of carried interest has been paid to certain ofthe general partners of the KKR Funds that is subject to contingent repayment if such funds wereliquidated at zero value, a possibility which management views as remote. If such funds were liquidatedat their current fair values, the contingent repayment amount would be approximately $380.4 million. Aportion of the carried interest paid to current and former KKR personnel is held in segregatedaccounts in the event of a cash clawback obligation. These segregated accounts are not included in thefinancial statements of the Company. At December 31, 2008, $88.8 million was held in such segregatedaccounts.

Certain Traditional Private Equity funds allocate to the general partner a greater share of thefund’s losses from investments relative to the capital contributed by the general partner andcorrespondingly reduce noncontrolling interests’ allocable share of those losses. Based on fair marketvalues as of December 31, 2008, capital deficits resulting from losses in excess of gains at certain of theTraditional Private Equity Funds amounted to $288.0 million. If the Funds were liquidated at zerovalue, such capital deficits in excess of any contingent repayments of carried interest previouslydistributed would be approximately $1,090.3 million.

Indemnifications

In the normal course of business, the Company and its subsidiaries enter into contracts thatcontain a variety of representations and warranties and provide general indemnifications. TheCompany’s maximum exposure under these arrangements is unknown as this would involve futureclaims that may be made against the Company’s that have not yet occurred. However, based onexperience, the Company expects the risk of material loss to be remote.

Litigation

From time to time, the Company is involved in various legal proceedings, lawsuits and claimsincidental to the conduct of the Company’s business. The Company believes that the ultimate liabilityarising from such proceedings, lawsuits and claims, if any, will not have a material effect on theCompany’s business, results of operations, cash flows or financial condition.

In August 2008, KFN, its directors and executive officers, including certain of the Company’spersonnel, were named as defendants in a purported class action complaint by KFN shareholders underfederal securities laws (the ‘‘Charter Litigation’’). The suit alleges that the registration statementutilized by KFN to effectuate its restructuring plan in May 2007 was false and misleading in that itmisrepresented and/or omitted material facts, including carrying value and allowance for loan losses,relating to the portfolio of mortgage loans held at such time by its REIT subsidiary, KKR FinancialCorp. An amended complaint was filed in March 2009 whereby KFN’s directors were no longer namedas defendants. On April 27, 2009, KFN and the remaining individual defendants in the CharterLitigation moved to dismiss with prejudice all of the claims in the amended complaint. The motion iscurrently pending.

Also in August 2008, a shareholder derivative action (the ‘‘CA Derivative Action’’) was filed inCalifornia Superior Court purportedly on behalf of KFN against its directors and executive officers,including certain of the Company’s personnel, as well as against KFN as nominal defendant. The suit

F-49

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

11. COMMITMENTS AND CONTINGENCIES (Continued)

alleges breaches of fiduciary duty, waste of corporate assets and unjust enrichment by such individualsin connection with the conduct at issue in the Charter Litigation discussed above. By Order datedJanuary 8, 2009, the California Superior Court approved the parties’ stipulation to stay the proceedingsin the CA Derivative Action until the Charter Litigation is dismissed on the pleadings or KFN files ananswer to the Charter Litigation. In addition, in March 2009, a shareholder derivative action was filedin United States District Court for the Southern District of New York purportedly on behalf of KFNagainst its directors and executive officers, including certain of the Company’s personnel, as well asagainst KFN as nominal defendant. The suit alleges breaches of fiduciary duty, waste of corporateassets and unjust enrichment by such individuals in connection with the conduct at issue in the CharterLitigation discussed above

In December 2007, the Company, along with 15 other private equity firms and investment banks,were named as defendants in a purported class action complaint by shareholders in certain publiccompanies recently acquired by private equity firms. In August 2008, the Company, along with 16 otherprivate equity firms and investment banks, were named as defendants in a purported amended classaction complaint. The suits allege that the defendant firms engaged in certain cooperative behaviorduring the bidding process in certain going-private transactions in violation of antitrust laws and thatthis purported behavior suppressed the price paid by the private equity firms for the plaintiffs’ shares inthe acquired companies below that which would otherwise have been paid in the absence of suchbehavior.

In 2005, the Company and certain of the Company’s investment professionals were named asdefendants in now-consolidated shareholder derivative actions relating to one of our portfoliocompanies. These actions claim that the board of directors of the portfolio company breached itsfiduciary duty of loyalty in connection with the redemption of certain shares of preferred stock in 2004and 2005. The plaintiffs further allege that the Company benefited from these redemptions of preferredstock at the expense of the portfolio company and that the Company usurped a corporate opportunityof the portfolio company in 2002 by purchasing shares of its preferred stock at a discount on the openmarket while causing the portfolio company to refrain from doing the same. In February 2008, thespecial litigation committee formed by the board of directors of the portfolio company, following areview of plaintiffs’ claims, filed a motion to dismiss the actions, which is still pending.

In August 1999, the Company was named as a defendant in an action alleging breach of fiduciaryduty and conspiracy in connection with the acquisition of one of the Company’s portfolio companies in1995. In April 2000, the complaint in this action was amended to further allege that the Company andothers violated state law by fraudulently misrepresenting the financial condition of this portfoliocompany.

The Company believes that each of these actions is without merit and intends to defend themvigorously.

In addition, in September 2006 and March 2009, the Company received requests for certaindocuments and other information from the Antitrust Division of the U.S. Department of Justice(‘‘DOJ’’) in connection with the DOJ’s investigation of private equity firms to determine whether theyhave engaged in conduct prohibited by United States antitrust laws. The Company is fully cooperatingwith the DOJ’s investigation.

F-50

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

11. COMMITMENTS AND CONTINGENCIES (Continued)

As of December 31, 2008 and December 31, 2007, no amounts were accrued relating to threatenedor pending litigation as the Company believes that losses are neither probable nor reasonableestimable.

Operating Leases

The Company leases office space under non-cancelable lease agreements in New York, MenloPark, Houston, San Francisco, Washington DC, London, Paris, Beijing, Hong Kong, Tokyo and Sydney.There are no material rent holidays, contingent rent, rent concessions or leasehold improvementincentives associated with any of our property leases. In addition to base rentals, certain leaseagreements are subject to escalation provisions, and are recognized on a straight-line basis over theterm of the lease agreement.

As of December 31, 2008, the approximate aggregate minimum future lease payments, net ofsublease income, required on the operating leases are as follows:

Year Ending December 31, Amount

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,2922010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,9582011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,5192012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,3172013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,452Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,331Total minimum payments required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $226,869

Rent expense recognized on a straight-line basis for the years ended December 31, 2008, 2007 and 2006was $27,665, $19,820 and $13,315, respectively.

Principal Protected Product for Private Equity Investments

The fund agreements for the Company’s principal protected product for private equity investmentscontain provisions that require the fund underlying the principal protected product for private equityinvestments (the ‘‘Master Fund’’) to liquidate certain of its portfolio investments in order to satisfyliquidity requirements of the fund agreements, if the performance of the Master Fund is lower thancertain benchmarks defined in the agreements. In an instance where the Master Fund is not incompliance with the defined liquidity requirements and has no remaining liquid portfolio investments,the Company has an obligation to purchase up to $18.4 million of illiquid portfolio investments of theMaster Fund at 95% of their current fair market value. As of December 31, 2008, the Master Fund wasin compliance with the defined liquidity requirements.

F-51

KKR GROUP

Notes to Combined Financial Statements (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

12. SUBSEQUENT EVENTS

Sale of Private Equity Investments

On March 16, 2009, KPE sold certain interests in private-equity investments to an unconsolidatedKKR sponsored co-investment fund for an aggregate purchase price of $200.4 million in cash. Netrealized losses in connection with these transactions were $39.9 million.

Investments

Subsequent to December 31, 2008, the KKR Funds committed approximately $1,204.4 million tosix private equity investments. Four of these investments, amounting to $469.4 million, have sinceclosed and none of these investments are expected to exceed 5% of the net assets of consolidatedprivate equity investments.

KPE Transaction

On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR pursuant to which, among other things, KKR agreed to acquire all of the assets of KPE andassume all of the liabilities of KPE in exchange for newly issued partner interests in KKR GroupHoldings L.P., or KKR Group Holdings L.P. units (‘‘KPE Transaction’’). The KKR Group Holdings L.P.units will represent equity in the combined business of KPE and KKR and will allow their holders toshare ratably in the assets, liabilities, profits, losses and distributions, if any, of the combined business.Upon completion of the KPE Transaction, the holding of KPE units by KPE unitholders will notchange. KPE will receive KKR Group Holdings L.P. units representing 30% of the combined business.

KPE will undertake a consent solicitation pursuant to which its unitholders will be asked toconsent to the KPE Transaction. The consent of unitholders representing at least a majority of the KPEunits for which a properly submitted consent form is submitted (excluding KPE units whose consentrights are controlled by KKR or its affiliates) is a condition to completing the Combination Transaction.If the unitholder consent described above is obtained and the other conditions precedent in theamended purchase and sale agreement are satisfied or waived, KKR will consummate the transaction asdescribed. If the conditions to closing the KPE Transaction are satisfied or waived on or prior toSeptember 30, 2009, then October 1, 2009 would be the date that KPE and KKR would begin to shareratably in the assets, liabilities, profits, losses and distributions, if any, of the combined business of KPEand KKR and that reporting as a combined company would begin.

F-52

KKR GROUP

Condensed Combined Statements of Financial Condition (Unaudited)

As of March 31, 2009 and December 31, 2008

(Dollars in Thousands)

March 31, December 31,2009 2008

AssetsCash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 254,313 $ 198,646Cash and Cash Equivalents Held at Consolidated Entities . . . . . . . . . . . 1,107,587 965,319Restricted Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 12,970 50,389Investments, at Fair Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,863,053 20,883,519Due from Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,933 29,889Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609,067 313,268

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,882,923 $22,441,030

Liabilities and EquityDebt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,420,295 $ 2,405,125Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . 236,530 185,548

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,656,825 2,590,673Commitments and ContingenciesEquity

KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,858 150,634Accumulated Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . 33 1,245

Total KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 29,891 151,879Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,196,207 19,698,478

Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,226,098 19,850,357Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,882,923 $22,441,030

See notes to condensed combined financial statements.

F-53

KKR GROUP

Condensed Combined Statements of Operations (Unaudited)

For the Three Months ended March 31, 2009 and 2008

(Dollars in Thousands)

Three months endedMarch 31,

2009 2008

RevenuesFee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,070 $ 68,590

ExpensesEmployee Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,542 48,064Occupancy and Related Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,885 6,538General, Administrative and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,403 30,703Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,928 18,232

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,758 103,537Investment Loss

Net Losses from Investment Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (720,849) (732,974)Dividend Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700 4,592Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,082 25,343Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,278) (35,359)

Total Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (715,345) (738,398)Loss Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (781,033) (773,345)Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,531 888Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (782,564) (774,233)

Less: Net Loss Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . (727,981) (656,335)Net Loss Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (54,583) $(117,898)

See notes to condensed combined financial statements.

F-54

KKR GROUP

Condensed Combined Statements of Changes in Equity (Unaudited)

For the Three Months ended March 31, 2009 and 2008

(Dollars in Thousands)

KKR GroupAccumulated

KKR Group Other TotalPartners’ Comprehensive Noncontrolling ComprehensiveCapital Income Interests Income (Loss) Total Equity

Balance at December 31, 2008 . . . . $150,634 $ 1,245 $19,698,478 $19,850,357Comprehensive Income (Loss):

Net Loss . . . . . . . . . . . . . . . . (54,583) (727,981) $(782,564) (782,564)Other Comprehensive

Income—CurrencyTranslation Adjustment . . . . (1,212) 1 (1,211) (1,211)

Total Comprehensive Income(Loss) . . . . . . . . . . . . . . . . . . $(783,775) (783,775)

Capital Contributions . . . . . . . . . 542 230,699 231,241Capital Distributions . . . . . . . . . (66,735) (4,990) (71,725)

Balance at March 31, 2009 . . . . . . $ 29,858 $ 33 $19,196,207 $19,226,098

KKR GroupAccumulated

KKR Group Other TotalPartners’ Comprehensive Noncontrolling ComprehensiveCapital Income Interests Income (Loss) Total Equity

Balance at December 31, 2007 . . . $1,507,694 $ 9,652 $28,749,814 $30,267,160Comprehensive Income (Loss):

Net Loss . . . . . . . . . . . . . . . . (117,898) (656,335) $(774,233) (774,233)Other Comprehensive

Income—CurrencyTranslation Adjustment . . . . 2,467 — 2,467 2,467

Total Comprehensive Income(Loss) . . . . . . . . . . . . . . . . . . $(771,766) (771,766)

Capital Contributions . . . . . . . . 33,559 1,915,249 1,948,808Capital Distributions . . . . . . . . . (106,286) (313,993) (420,279)

Balance at March 31, 2008 . . . . . . $1,317,069 $12,119 $29,694,735 $31,023,923

See notes to condensed combined financial statements.

F-55

KKR GROUP

Condensed Combined Statements of Cash Flows (Unaudited)

For the Three Months ended March 31, 2009 and 2008

(Dollars in Thousands)

Three Months endedMarch 31,

2009 2008

Cash Flows from Operating ActivitiesNet Loss Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (54,583) $ (117,898)Adjustments to Reconcile Net Loss Attributable to KKR Group to Net

Cash Used in Operating Activities:Net Loss Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . (727,981) (656,335)Net Realized Losses (Gains) on Investments . . . . . . . . . . . . . . . . . . . . . 96,521 (162,273)Change in Unrealized Losses on Investments Attributable to KKR

Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,492 212,914Change in Unrealized Losses on Investments Attributable to

Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530,836 682,333Other Non-Cash Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,037 893

Cash Flows Due to Changes in Operating Assets and Liabilities:Change in Cash and Cash Equivalents Held at Consolidated Entities . . . (143,468) (147,188)Change in Due from Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,044) (17,628)Change in Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,228 118,872Change in Accounts Payable, Accrued Expenses and Other Liabilities . . . 27,970 72,636Investments Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (220,323) (1,906,940)Cash Proceeds from Sale of Investments . . . . . . . . . . . . . . . . . . . . . . . . 229,486 666,540

Net Cash Used In Operating Activities . . . . . . . . . . . . . . . . . . . . . . . (156,829) (1,254,074)

Cash Flows from Investing ActivitiesChange in Restricted Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . 37,419 (26,881)Purchase of Furniture, Equipment and Leasehold Improvements . . . . . . . . (3,894) (6,340)

Net Cash Provided by (Used in) Investing Activities . . . . . . . . . . . . . . . . 33,525 (33,221)

Cash Flows from Financing ActivitiesDistributions to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . (4,990) (313,993)Contributions from Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . 230,699 1,915,249Distributions to KKR Group Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . (66,735) (106,286)Contributions from KKR Group Partners . . . . . . . . . . . . . . . . . . . . . . . . . 542 33,559Proceeds from Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,191 49,069Repayment of Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,238) (367,674)Deferred Financing Costs Returned (Incurred) . . . . . . . . . . . . . . . . . . . . . 1,502 (19,621)

Net Cash Provided By Financing Activities . . . . . . . . . . . . . . . . . . . . . . 178,971 1,190,303

Net Change in Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . 55,667 (96,992)Cash and Cash Equivalents, Beginning of Year . . . . . . . . . . . . . . . . . . . . . 198,646 272,045Cash and Cash Equivalents, End of Year . . . . . . . . . . . . . . . . . . . . . . . . . $ 254,313 $ 175,053

F-56

KKR GROUP

Condensed Combined Statements of Cash Flows (Unaudited) (Continued)

For the Three Months ended March 31, 2009 and 2008

(Dollars in Thousands)

Three Months endedMarch 31,

2009 2008

Supplemental Disclosures of Cash Flow InformationPayments for Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,003 $ 18,853Payments for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 792 $ 3,110

Supplemental Disclosure of Non-Cash ActivitiesRestricted Stock Grant from Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 15,939Non-Cash Debt Financing / Purchase of Investments . . . . . . . . . . . . . . . . . . . $ — $625,000Proceeds Due from Unsettled Sales of Investments . . . . . . . . . . . . . . . . . . . . $210,699 $ —Purchases of Unsettled Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (37,107) $ —Change in Unrealized Foreign Exchange on Debt Obligations . . . . . . . . . . . . . $ (2,028) $ —Change in Foreign Exchange on Cash and Cash Equivalents Held at

Consolidated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,200) $ —

See notes to condensed combined financial statements.

F-57

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited)

(All Dollars are in Thousands Except Where Otherwise Noted)

1. ORGANIZATION AND BASIS OF PRESENTATION

The KKR Group (the ‘‘Company’’) is a global alternative asset manager with principal executiveoffices in New York and Menlo Park, California. The Company’s alternative asset management businessinvolves sponsoring and managing investment funds that make investments worldwide in private equityand debt transactions on behalf of third-party investors and the Company’s owners (‘‘Principals’’),including its founders. In connection with these activities, the Company also manages investments inpublic equity and is engaged in capital markets activities. With respect to certain funds that it sponsors,the Company commits to contribute a specified amount of equity as the general partner of the fund(ranging from approximately 2% to 4% of the funds’ total capital commitments) to fund a portion ofthe acquisition price for the fund’s investments.

The accompanying condensed combined financial statements of the Company include the results ofeight of the Company’s private equity funds and two of the Company’s fixed income funds (the ‘‘KKRFunds’’) and the general partners and management companies of those funds. The Company operatesas a single professional services firm and carries out its investment activities under the ‘‘KKR’’ brandname. The entities comprising the Company are under the common control of its senior Principals (the‘‘Senior Principals’’). The Senior Principals are actively involved in the Company’s operations andmanagement.

The accompanying combined financial statements include the accounts of the managementcompanies, specifically Kohlberg Kravis Roberts & Co. L.P., KKR Financial Advisors LLC, KKRStrategic Capital Management, L.L.C., and KKR FI Advisors LLC, as well as the general partners ofthe private equity funds (collectively the ‘‘Common Control Entities’’) and their respective consolidatedfunds: KKR 1996 Fund, KKR European Fund, KKR Millennium Fund, KKR European Fund II, KKR2006 Fund, KKR Asian Fund, KKR European Fund III, KKR Private Equity Investors (‘‘KPE’’) andcertain of the KKR Strategic Capital Funds. KPE consists of an upper-tier limited partnership, which isreferred to as the feeder fund, which makes all of its investments through a lower-tier limitedpartnership which is referred to as the master fund, of which the feeder fund is the sole limitedpartner. The accompanying condensed combined financial statements include the general partner of theKKR Private Equity Investors master fund as well as the master fund. The general partner of thefeeder fund and the feeder fund itself are not included in the accompanying condensed combinedfinancial statements. In addition, the general partner of an unconsolidated fund, KKR IFI GP L.P.(‘‘IFI’’), has been included in the accompanying condensed combined financial statements. IFI is thegeneral partner of a partnership that offers a principal protected product for private equity investments.

KKR Financial Holdings LLC (‘‘KFN’’) is a publicly traded fixed income fund whose limitedliability company interests are listed on the New York Stock Exchange under the symbol ‘‘KFN.’’ KFNis managed by the Company but is not under the common control of the Senior Principals or otherwiseconsolidated by the Company as control is maintained by third-party investors. KFN was organized inAugust 2004 and completed its initial public offering on June 24, 2005. As of March 31, 2009 andDecember 31, 2008, KFN had consolidated assets of $10.9 billion and $12.5 billion, respectively, andshareholders’ equity of $0.7 billion as of March 31, 2009 and December 31, 2008. Shares of KFN heldby the Company are accounted for as trading securities (see Note 2, ‘‘Summary of SignificantAccounting Policies—Management fees received from consolidated and unconsolidated funds’’) andrepresented approximately 0.7% of KFN’s outstanding shares as of March 31, 2009 and December 31,2008. If the Company were to exercise all of its outstanding vested and unvested options, the

F-58

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)

Company’s ownership interest in KFN would be approximately 1.2% of KFN’s outstanding shares as ofMarch 31, 2009 and December 31, 2008.

For management reporting purposes, the Company operates through two reportable businesssegments:

• Private Markets—The Company’s Private Markets segment involves sponsoring and managing agroup of funds and co-investment vehicles that make primarily control-oriented investments inconnection with leveraged buyouts and other similar investment opportunities. These funds aremanaged by Kohlberg Kravis Roberts & Co. L.P. and currently consist of a number of privateequity funds that have a finite life and investment period (‘‘Traditional Private Equity Funds’’)and KPE.

• Public Markets—The Company’s Public Markets segment involves sponsoring and managing agroup of private and publicly traded investment funds that invest primarily in corporate debt(‘‘Fixed Income Funds’’) and managing six structured finance vehicles which were established tocomplete secured financing transactions. Additionally, beginning in July 2008, the Company’sPublic Markets segment began serving as investment manager for accounts held by largeinstitutional investors (‘‘Separately Managed Accounts’’). The Fixed Income Funds andSeparately Managed Accounts are managed by subsidiaries of Kohlberg Kravis Roberts & Co.(Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic CapitalManagement, L.L.C., and KKR FI Advisors LLC. The Fixed Income Funds currently consist ofKFN and the KKR Strategic Capital Funds (‘‘SCF’’), which are comprised of three side-by-sideprivate fixed income funds. Two of the three side-by-side funds in SCF have been consolidatedin the accompanying condensed combined financial statements of the Company. The thirdside-by-side fund is not consolidated by the KKR Group, because this fund is owned andcontrolled by third-party investors and the KKR Group holds no economic or voting interests.As of March 31, 2009, all six of the structured finance vehicles were not consolidated by theKKR Group as KFN holds the majority of the economic and voting interests. Accordingly, thesestructured finance vehicles are consolidated by KFN. The KKR Group holds no economic orvoting interests in these structured finance vehicles.

The KKR Group receives management fees for all assets managed in the Public Markets segmentand incentive fees for assets managed at KFN and SCF. See Note 2, ‘‘Summary of SignificantAccounting Policies,’’ to the condensed combined financial statements for the Company’s accountingpolicy regarding Fee Income.

The instruments governing the Traditional Private Equity Funds provide that the funds willcontinue in existence for a varying term (generally up to 18 years from the date of initial funding),unless the funds are terminated by the Principals or through an event of dissolution, as defined in theapplicable governing instruments. The instruments governing KPE and the Fixed Income Fundsgenerally provide that those funds will continue in existence indefinitely, unless the funds areterminated earlier as provided in the applicable governing instruments.

The Company has three primary sources of income: (i) fee income (consisting primarily ofmanagement, advisory and incentive fees); (ii) amounts received from the Company’s funds in the formof a carried interest or other distributions that entitle the Company to a disproportionate share of the

F-59

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)

gains generated by the funds; and (iii) investment income generated through the investment of theCompany’s own capital in its funds and other proprietary investments.

The KKR Funds are consolidated by the Company pursuant to accounting principles generallyaccepted in the United States of America (‘‘GAAP’’) as described in Note 2 ‘‘Summary of SignificantAccounting Policies,’’ notwithstanding the fact that the Company has only a minority economic interestin those funds. Specifically, the general partners of the KKR Funds consolidate their respective fundsand certain of their respective entities in accordance with either Emerging Issues Task Force (‘‘EITF’’)No. 04-5, ‘‘Determining Whether a General Partner, or the General Partners as a Group, Controls aLimited Partnership or Similar Entity When the Limited Partners Have Certain Rights’’ or FinancialAccounting Standards Board (‘‘FASB’’) Interpretation No. 46 (revised December 2003) ‘‘Consolidationof Variable Interest Entities—an Interpretation of ARB 51 (‘‘FIN 46R’’).’’ Consequently, theCompany’s condensed combined financial statements reflect the assets, liabilities, revenues, expenses,investment income and cash flows of the consolidated KKR Funds on a gross basis, and the majority ofthe economic interests in those funds, which are held by third-party investors, are attributed tononcontrolling interests in the accompanying condensed combined financial statements. Substantially allof the management fees and certain other amounts earned by the Company from those funds areeliminated in combination. However, because the eliminated amounts are earned from, and funded by,noncontrolling interests, the Company’s attributable share of the net income from those funds isincreased by the amounts eliminated. Accordingly, the elimination in combination of such amounts hasno net effect on net income attributable to the Company or KKR Group’s partners’ capital. SeeNote 2, ‘‘Summary of Significant Accounting Policies.’’

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Basis of Accounting—The accompanying condensed combined financial statements are prepared inaccordance with GAAP. The condensed combined financial statements and these notes are unauditedand exclude some of the disclosures required in annual financial statements. Management believes ithas made all necessary adjustments (consisting of only normal recurring items) so that the condensedcombined financial statements are presented fairly and that estimates made in preparing its condensedcombined financial statements are reasonable and prudent. The operating results presented for interimperiods are not necessarily indicative of the results that may be expected for any other interim periodor for the entire year. These condensed combined financial statements should be read in conjunctionwith the annual audited combined financial statements of the Company.

Principles of Consolidation—The Company’s policy is to consolidate those entities in which it,through the Senior Principals, has control, as well as those entities in which it is the primary beneficiaryof a variable interest entity (‘‘VIE’’). Hereinafter, all entities that are included in the accompanyingcondensed combined financial statements are referred to as consolidated entities.

The majority of the consolidated entities are under the common control of the Senior Principalsand are comprised of: (i) those entities in which the Company, directly or through the SeniorPrincipals, has majority ownership and has control over significant operating, financial and investingdecisions; and (ii) the consolidated KKR Funds, which are those entities in which the Company,

F-60

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

through the Senior Principals, holds substantive, controlling general partner or managing memberinterests. With respect to the consolidated KKR Funds, the Company generally has operationaldiscretion and control, and fund investors have no substantive rights to impact ongoing governance andoperating activities of the fund.

The KKR Funds do not consolidate their majority-owned and controlled investments in portfoliocompanies (‘‘Portfolio Companies’’). Rather, those investments are accounted for as investments andcarried at fair value as described below.

FASB Staff Position (‘‘FSP’’) Financial Accounting Standard (‘‘FAS’’) No. 140-4 and FIN 46R-8provides disclosure requirements for, among other things, involvements with VIEs. Those involvementsinclude when the Company (i) consolidates an entity because it is the primary beneficiary, (ii) has asignificant variable interest in the entity, or (iii) is the sponsor of the entity.

The nature of these VIEs includes investments related to the Private Markets segment(‘‘Investment Vehicles’’). The disclosures under FSP FAS No. 140-4 and FIN 46R-8 are presented on afully aggregated basis. The Company’s investment strategies differ by Investment Vehicle; however, thefundamental risks have similar characteristics, including loss of invested capital and loss of incentiveand management fees. Accordingly, disaggregation of the Company’s involvement with VIEs would notprovide more useful information. In the Company’s role as general partner or investment advisor, itgenerally considers itself the sponsor of the applicable Investment Vehicle. For certain of theseInvestment Vehicles, the Company is determined to be the primary beneficiary and hence consolidatessuch Investment Vehicle within the condensed combined financial statements.

FIN 46R requires an analysis to (i) determine whether an entity in which the Company holds avariable interest is a variable interest entity, and (ii) whether the Company’s involvement, throughholding interests directly or indirectly in the entity or contractually through other variable interests(e.g., incentive and management fees), would be expected to absorb a majority of the variability of theentity. Performance of that analysis requires the exercise of judgment. The Company determineswhether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interestentity and reconsiders that conclusion based on certain events. In evaluating whether the Company isthe primary beneficiary, the Company evaluates its economic interests in the fund held either directlyby the Company or indirectly through its related parties. The consolidation analysis under FIN 46R cangenerally be performed qualitatively. However, if it is not readily apparent that the Company is not theprimary beneficiary, a quantitative expected losses and expected residual returns calculation will beperformed. Investments and redemptions (either by the Company, affiliates of the Company or thirdparties) or amendments to the governing documents of the respective Investment Vehicle could affectan entity’s status as a VIE or the determination of the primary beneficiary.

For those VIEs in which the Company is the sponsor, the Company may have an obligation asgeneral partner to provide commitments to such funds. During 2008, the Company did not provide anysupport other than its obligated amount.

At March 31, 2009, the Company was the primary beneficiary of VIEs whose gross assets were$3,967,565, which is the carrying amount of such financial assets in the consolidated financialstatements. The Company is also a significant variable interest holder in certain VIE’s which are notconsolidated, as the Company is not the primary beneficiary. At March 31, 2009, assets recognized in

F-61

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

the Company’s condensed combined statements of financial condition related to our variable interest inthis unconsolidated entity totaled $1,583 of receivables. In addition, in an instance where one of theseentities is not in compliance with certain defined liquidity requirements in its governing documents andhas no remaining liquid portfolio investments, the Company has an obligation to purchase up to$18.4 million of illiquid portfolio investments of the entity at 95% of their current fair market value. Asof March 31, 2009, the entity was in compliance with the defined liquidity requirements. See Note 11‘‘Commitments and Contingencies.’’ Therefore, the Company’s aggregate maximum exposure to losswas $1,583 as of March 31, 2009.

Intercompany transactions and balances have been eliminated.

Noncontrolling Interests—Noncontrolling interests represent the ownership interests inconsolidated entities held by entities or persons other than our Principals. Noncontrolling interestholders in the Company have a substantial ownership position in the Company’s combined total assets(approximately 88% as of March 31, 2009). Income or loss attributable to noncontrolling interests inconsolidated KKR Funds is based on the respective funds’ governing instruments.

In the case of the Traditional Private Equity Funds, profits on capital invested on behalf of limitedpartners are generally allocated to the limited partners in an amount equal to 80% of the ratio of theircapital contributions to the total capital contributed by all partners with respect to each investment.The general partners of the funds receive the remaining portion of the profits in the form of a carriedinterest. Losses on a fund’s investments are generally first applied to the excess of any prior incomeover such losses. For the majority of the Traditional Private Equity Funds, any remaining fund lossesare applied to the equity accounts of the partners in proportion to their capital contributed with respectto each individual investment, until the partners’ equity accounts have been reduced to zero. Forcertain other Traditional Private Equity Funds, remaining fund losses are allocated to the limitedpartners and general partners in a manner consistent with profits as described above. For all TraditionalPrivate Equity Funds, any remaining fund losses are allocated to the fund’s general partner.

In the case of KPE, one of the fund’s general partners holds an economic interest in the fund thatwill entitle it to a disproportionate share of the gains generated by the fund’s direct investments oncethe fund’s capitalization costs (the ‘‘Creditable Amount’’) have been recouped as described below. Thiseconomic interest consists of:

• a carried interest that generally will allocate to the general partner 20% of the gain that isrealized on private equity investments that are made with fund investors’ capital after anyrealized losses on other direct private equity investments have been recovered; and

• a distribution right that generally will allocate to the general partner 20% of the annual increasein the net asset value of all other direct investments that are made with fund investors’ capitalabove the highest net asset value at which an incentive amount was previously made.

The general partner is not entitled to a carried interest or incentive distribution right with respectto the fund’s indirect investments, which consist of investments made through other funds that theCompany sponsors. However, if the KPE fund acquires a partner interest in one of the Company’sother funds from a third party, the amount of distributions that the general partner receives pursuantto its distribution right may be adjusted to reflect realized gains or losses relating to the value of the

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acquired partner interest. As noted above, the general partner of KPE has agreed to forego receiving acarried interest or distribution until the profits on investments with respect to which it would beentitled to receive a carried interest or distribution equal the Creditable Amount. As of March 31, 2009and December 31, 2008, the Creditable Amount had a remaining balance of $142,478.

On May 30, 2008, the Company acquired all of the outstanding noncontrolling interests in themanagement companies of our Public Markets segment (‘‘KFI Transaction’’) in order to furtherintegrate our operations, enhance existing collaboration among all of the Company’s investmentprofessionals and to accelerate the growth of the Company’s Public Markets business. Immediatelyprior to the KFI Transaction, the Company owned 65% of the equity of such management companies.The KFI Transaction has been accounted for as an acquisition of noncontrolling interests using thepurchase method of accounting in accordance with FASB Statement of Financial Accounting Standards(‘‘SFAS’’) No. 141 (‘‘SFAS 141’’) ‘‘Business Combinations.’’ The total consideration of the KFITransaction was $44,171. The Company recorded the excess of the total consideration over the carryingvalue of the noncontrolling interests acquired (which approximates the fair value of the net assetsacquired and which are already included in the condensed combined statements of financial condition)to finite-lived identifiable intangible assets consisting of management, advisory, and incentive feecontracts. The Company has recorded intangible assets of $37,887 which are being amortized over anestimated useful life of ten years, based on contractual provisions that enable renewal of the contractswithout substantial cost and our prior history of such renewals. Subsequent to the KFI Transaction,100% of the results of operations of the management companies of our Public Markets segment wereincluded in net income attributable to KKR Group.

Use of Estimates—The preparation of the condensed combined financial statements in conformitywith GAAP requires management to make estimates and assumptions that affect the reported amountsof assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensedcombined financial statements and the reported amounts of revenues, expenses and investment incomeduring the reporting periods. Such estimates include but are not limited to the valuation of PortfolioCompanies owned by the KKR Funds, financial instruments owned and other matters that affectreported amounts of assets and liabilities. Actual results could differ from those estimates and suchdifferences could be material to the condensed combined financial statements.

Fair Value Measurements—The Company accounts for its investments in accordance with FASBStatement 157 ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’). SFAS 157 establishes a hierarchal disclosureframework which prioritizes and ranks the level of market price observability used in measuringinvestments at fair value. Market price observability is affected by a number of factors, including thetype of investment and the characteristics specific to the investment. Investments with readily availableactive quoted prices or for which fair value can be measured from actively quoted prices generally willhave a higher degree of market price observability and a lesser degree of judgment used in measuringfair value.

Investments measured and reported at fair value are classified and disclosed in one of thefollowing categories:

Level I—Quoted prices are available in active markets for identical investments as of thereporting date. The type of investments included in Level I include publicly-listed equities and

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publicly listed derivatives. In addition, securities sold, but not yet purchased and options written bythe KKR Private Equity Investors Master Fund are included in Level I. As required by SFAS 157,the Company does not adjust the quoted price for these investments, even in situations where theCompany holds a large position and a sale could reasonably affect the quoted price.

Level II—Pricing inputs are other than quoted prices in active markets, which are eitherdirectly or indirectly observable as of the reporting date, and fair value is determined through theuse of models or other valuation methodologies. Investments which are generally included in thiscategory include corporate bonds and loans, convertible debt securities indexed to publicly listedsecurities and certain over-the-counter derivatives.

Level III—Pricing inputs are unobservable for the investment and includes situations wherethere is little, if any, market activity for the investment. The inputs into the determination of fairvalue require significant management judgment or estimation. Investments that are included in thiscategory generally include private portfolio companies held through our private equity funds andKPE.

In certain cases, the inputs used to measure fair value may fall into different levels of the fairvalue hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on thelowest level of input that is significant to the fair value measurement. The Company’s assessment of thesignificance of a particular input to the fair value measurement in its entirety requires judgment, and itconsiders factors specific to the investment.

Statement of Operations Measurements

Fee Income—Fee income is comprised of: (i) transaction and monitoring fees received fromPortfolio Companies and transaction fees from Capital Markets activities (collectively ‘‘Advisory Fees’’);(ii) management fees received from unconsolidated funds; and (iii) incentive fees received fromunconsolidated funds. Such fees are based upon the contractual terms of fund management and relatedagreements and are recognized in the period during which the related services are performed and theamounts have been contractually earned.

For the three months ended March 31, 2009 and 2008, fee income consisted of the following:

Three Months endedMarch 31,

2009 2008

Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,715 $53,660Management Fees Received from Unconsolidated Funds . . . . . . 13,355 14,930Incentive Fees Received from Unconsolidated Funds . . . . . . . . . — —

Total Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $39,070 $68,590

Management fees received from consolidated and unconsolidated funds—For the Traditional PrivateEquity Funds and certain unconsolidated KKR sponsored funds, gross management fees generallyrange from 1% to 1.5% of committed capital during the fund’s investment period and approximately0.75% of invested capital after the expiration of the fund’s investment period. Typically, an investment

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period is defined as a period of up to six years. The actual length of the period may be shorter basedon the timing and use of committed capital.

Management fees received from consolidated KKR Funds are eliminated in consolidation.However, because these amounts are funded by, and earned from, noncontrolling interests, theCompany’s allocated share of the net income from consolidated KKR Funds is increased by the amountof fees that are eliminated. Accordingly, the elimination of the fees does not have an effect on the netincome attributable to the Company or KKR Group’s partners’ capital. For KPE, management fees aredetermined quarterly based on 25% of the sum of (i) that fund’s equity up to and including $3 billionmultiplied by 1.25% plus (ii) that fund’s equity in excess of $3 billion multiplied by 1%. For purposesof calculating the management fee, equity is an amount defined in the management agreement. Untilthe Creditable Amount is reached, the Company has generally agreed to reduce the amount ofmanagement fees payable by the fund in any period by any carried interest or incentive distributionsthat the Company or its affiliates receive during the period pursuant to a carried interest in a privateequity fund in which KPE invests.

In advance of the management service period, the Company has elected to waive the right to earncertain management fees that it would be entitled to from its Traditional Private Equity Funds. Thecash that would have been payable is collected from the funds’ investors and is initially included as acomponent of Cash and Cash Equivalents Held at Consolidated Entities. In lieu of making direct cashcapital contributions, these cash collections are used to satisfy a portion of the capital commitments towhich the Company would otherwise be subject as the general partner of the fund. As a result of theelection to waive the fees, the Company is not entitled to any portion of these fees until the fund hasachieved positive investment results. Because the ability to earn the waived fees is contingent upon theachievement of positive investment returns by the fund, the recognition of income only occurs when thecontingency is satisfied.

Our Traditional Private Equity Funds require the management company to refund up to 20% ofany cash management fees earned from limited partners in the event that the funds recognize a carriedinterest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% ofthe management earned or a portion thereof, a liability to the fund’s limited partners is recorded andrevenue is reduced for the amount of the carried interest recognized, not to exceed 20% of themanagement earned. As of March 31, 2009, the amount subject to refund for which no liability hasbeen recorded totaled $123.7 million as a result of certain funds not yet recognizing sufficient carriedinterests. The refunds to the limited partners are paid, and the liabilities relieved, at such time that theunderlying investments are sold and the associated carried interests are realized. In the event that afund’s carried interest is not sufficient to cover all or a portion of the amount that represents 20% ofthe earned management fees, these fees will not be returned to the funds’ limited partners, inaccordance with the respective fund agreements.

The Company’s management agreement with KFN provides, among other things, that KFN isresponsible for paying to the Company certain fees and reimbursements, consisting of a basemanagement fee, an incentive fee and reimbursement for out-of-pocket and certain other costs andexpenses incurred by the Company on behalf of KFN. The Company earns a management fee,computed and payable monthly in arrears, based on an annual rate of 1.75% of adjusted equity. For

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purposes of calculating the base management fee, adjusted equity is an amount defined in themanagement agreement.

Effective January 1, 2009, the Company has elected to defer receipt of 50% of the monthly basemanagement fee that would otherwise be payable by KFN until December 2009. As of and for thethree months ended March 31, 2009, $1.8 million is included in due from unconsolidated funds and feeincome.

The Company’s management agreement with KFN was renewed on January 1, 2009 and willautomatically be renewed for successive one-year terms following December 31, 2009 unless theagreement is terminated in accordance with its terms. The management agreement provides that thefund may terminate the agreement only if:

• the termination is approved at least 180 days prior to the expiration date by at least two-thirdsof the fund’s independent directors or by the holders of a majority of the outstanding shares ofthe fund’s common stock and the termination is based upon (i) a determination that theCompany’s performance has been unsatisfactory and materially detrimental to the fund or (ii) adetermination that the management and incentive fees payable to the Company are not fair(subject to the Company’s right to prevent a termination by reaching an agreement to reducethe Company’s management and incentive fees), in which case a termination fee is payable tothe Company; or

• the Company’s subsidiary that manages the fund experiences a ‘‘change of control’’ or theCompany materially breaches the provisions of the agreement, engages in certain acts of willfulmisconduct or gross negligence, becomes bankrupt or insolvent or is dissolved, in which case atermination fee is not payable to the Company.

None of the aforementioned events have occurred as of March 31, 2009.

The Company has received restricted common stock and common stock options from KFN as acomponent of compensation for management services to that fund. The restricted common stock andstock options vest ratably over applicable vesting periods and are initially recorded as deferred revenueat their estimated fair values at the date of grant. Subsequently, the Company re-measures therestricted common stock and stock options to the extent that they are unvested, with a correspondingadjustment to deferred revenue. Income from restricted common stock and common stock options isrecognized ratably over the vesting period as a component of fee income and amounted to $(140) and$2,095 for the three months ended March 31, 2009 and 2008, respectively.

Vested stock options received as a component of compensation for management services meet thecharacteristics of derivative investments. Vested stock options are recorded at estimated fair value withchanges in fair value recognized in Net Gains (Losses) from Investment Activities. Both vested andunvested common stock options are valued using a Black-Scholes pricing model as of the end of eachperiod.

Vested common stock that is received as a component of compensation for management servicesare carried as trading securities, because the Company generally intends to distribute the common stocksubsequent to vesting. Vested common stock is recorded at estimated fair value with changes in fairvalue recognized in Net Gains (Losses) from Investment Activities.

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The Company has entered into management agreements with the side-by-side funds comprising theKKR Strategic Capital Funds pursuant to which it has agreed to provide them with management andother services. Under the management agreement and, in some cases, other documents governing theindividual funds, through October 31, 2008 the Company was entitled to receive:

• with respect to investors who have agreed to a 25 month lock-up period, a monthly managementfee that is equal to 0.1667% (or 2.0% annualized) of the net asset value of the individual fundthat is allocable to those investors; and

• with respect to investors who have agreed to a 60 month lock-up period, a monthly managementfee that is equal to 0.1250% (or 1.5% annualized) of the net asset value of the primary fundthat is allocable to those investors.

The Company has elected to reduce the management fee it earns under the managementagreements with the side-by-side funds comprising the KKR Strategic Capital Funds. EffectiveNovember 1, 2008, the Company is entitled to receive a monthly management fee from all investorsthat is equal to 0.0208% (or 0.25% annualized) of the net asset value of the investments allocable toeach investor.

On December 11, 2008, the boards of directors of two of the KKR Strategic Capital Funds and thegeneral partner of the other KKR Strategic Capital Fund elected to suspend redemptions.

On December 15, 2008, a special redemption right, as described in the governing documents of theKKR Strategic Capital Funds was triggered whereby all investors became eligible to submit redemptionrequests, in full, without regard to class or lock-up period. Subsequent to December 15, 2008, allinvestors have since submitted such redemption requests. The redemptions would be payable after theboard of directors (or general partner, as applicable) of the KKR Strategic Capital Funds rescinds thesuspension of redemptions.

The Company’s management agreement for its Separately Managed Accounts provides formanagement fees determined quarterly based on an annual rate of 0.5% of the fund’s equity. Forpurposes of calculating the management fee, equity is an amount defined in the managementagreement.

The Company’s management agreement for its principal protected product for private equityinvestments provides for management fees determined quarterly based on an annual rate of 1.25% ofthe fund’s equity. For purposes of calculating the management fee, equity is an amount defined in themanagement agreement.

Incentive fees received from KFN—The Company’s management agreement with KFN provides thatKFN is responsible for paying a quarterly incentive fee when the return on assets under managementexceeds certain benchmark returns or other performance targets. This incentive fee is accruedquarterly, after all contingencies have been removed, based on performance to date versus theperformance benchmark stated in the management agreement. Once earned, there are no clawbacks ofincentive fees received from KFN.

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Incentive fees received from KKR Strategic Capital Funds—As part of the Company’s managementagreements with the side-by-side funds comprising the KKR Strategic Capital Funds, certain of whichare consolidated, through October 31, 2008 the Company was entitled to receive incentive fees asfollows:

• with respect to investors who have agreed to a 25 month lock-up period, an annual incentive feeequal to 20% of the increase in the net asset value of the individual fund that is allocable tothose investors above the highest net asset value at which an incentive fee has previously beenreceived; and

• with respect to investors who have agreed to a 60 month lock-up period, an annual incentive feeequal to 15% of the increase in the net asset value of the individual fund that is allocable tothose investors above the highest net asset value at which an incentive fee has previously beenreceived.

The Company has elected to reduce the incentive fee it earns under the management agreementswith the side-by-side funds comprising the KKR Strategic Capital Funds. Effective November 1, 2008,the Company is entitled to an annual incentive fee from all investors equal to 15% of the increase inthe net asset value of the individual fund above the highest net asset value at which an incentive feehas previously been received, and subject to an 8% preferred return that is retroactive to the date oforiginal investment.

These incentive fees are accrued annually, after all contingencies have been removed, based onperformance to date versus the performance benchmark stated in the management agreement. Sinceperformance can fluctuate during interim periods, no incentive fees are recognized on a quarterly basis.Once earned, there are no provisions for clawbacks of incentive fees received from the side-by-sidefunds comprising the KKR Strategic Capital Funds. Incentive fees received from consolidated KKRStrategic Capital Funds have been eliminated. However, because these amounts are funded by, andearned from, noncontrolling interests, the Company’s allocated share of the net income fromconsolidated KKR Funds is increased by the amount of fees that are eliminated. Accordingly, theelimination of the fees does not have an effect on net income attributable to the Company or partners’capital.

Incentive fees received from Principal Protected Product for Private Equity Investments—TheCompany’s management agreement for its principal protected product for private equity investmentsprovides for an annual incentive fee to be paid to the Company when the return on assets undermanagement exceeds certain benchmark returns or other performance targets. This incentive fee isaccrued annually, after all contingencies have been removed, based on performance to date versus theperformance benchmark stated in the management agreement. Once earned, there are no clawbacks ofincentive fees received under this agreement.

Transaction fees received from Portfolio Companies—Transaction fees are earned by the Companyprimarily in connection with successful acquisitions of Portfolio Companies by private equity funds andwith respect to certain other negotiated investments. Transaction fees are recorded in advisory feeincome upon closing of the transaction. Fees are typically paid by Portfolio Companies on or aroundthe closing date and generally approximate 1% of the total transaction value to which the Company is

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entitled to its proportionate share. There were no Transaction fees received from portfolio companiesduring the three months ended March 31, 2009. Transaction fees received from portfolio companiesamounted to $16,608 for the three months ended March 31, 2008. Transaction-related expensesassociated with successful Portfolio Company investments are deferred and recorded in Other Assetsuntil the transaction is consummated. See description under ‘‘—Reimbursement of Transaction-RelatedExpenses’’ below. Transaction-related expenses associated with investigating Portfolio Companyinvestments that are not consummated are recorded in fund expenses when facts and circumstancesindicate that the transactions are unlikely to be consummated.

Monitoring fees received from Portfolio Companies—Monitoring fees are earned by the Company forservices provided to Portfolio Companies and are recognized in advisory fee income as services arerendered. These fees are paid based on a fixed periodic schedule by the Portfolio Companies either inadvance or in arrears and are separately negotiated for each Portfolio Company. Monitoring feesamounted to $21,960 and $24,700 for the three months ended March 31, 2009 and 2008, respectively.

Transaction fees from Capital Market Activities—Transaction fees are earned by the Company forservices provided by our Capital Markets business and are recognized in fee income upon closing of thetransaction. Fees are typically paid on or around the closing date and vary based on the nature of thetransaction. Transaction fees received from Capital Market activities amounted to $191 and $8,085 forthe three months ended March 31, 2009 and 2008, respectively.

Reimbursement of Transaction-Related Expenses—In connection with pursuing successful PortfolioCompany investments, the Company receives reimbursement for certain transaction-related expenses.Transaction-related expenses, which are reimbursed by third parties, are deferred until the transaction isconsummated and are recorded in other assets on the date the expense is incurred. The costs ofsuccessfully completed transactions are borne by the KKR Funds and included as a component of theinvestment’s cost basis. Subsequent to closing, investments are recorded at fair value each reportingperiod as described in the section below titled Investments, at Fair Value. Upon reimbursement from athird party, the cash receipt is recorded and the deferred amounts are relieved. No fee income orexpense is recorded for these reimbursements.

Reimbursement of Monitoring Costs—In connection with the monitoring of Portfolio Companies,KFN and the KKR Strategic Capital Funds, the Company receives reimbursement for certain expensesincurred on behalf of these entities. Billable monitoring expenses are recognized as revenue inaccordance with EITF 01-14, ‘‘Income Statement Characterization of Reimbursement Received for Outof Pocket Expenses Incurred.’’ Monitoring costs are classified as fund expenses or general,administrative and other expenses and reimbursements of such costs are classified as monitoring feeincome. These reimbursements amounted to $3,564 and $4,267 for the three months ended March 31,2009 and 2008, respectively.

Investment Income—Investment income consists primarily of unrealized and realized gains andlosses on private equity investments as well as dividends and interest received primarily from thePortfolio Companies, after giving effect to interest expense incurred primarily by the Company’s FixedIncome Funds and foreign exchange gains and losses relating to mark-to-market activity on foreignexchange forward contracts, foreign currency options and interest rate swaps. The amount of

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investment income retained in net income attributable to the Company, after allocation to net incomeattributable to noncontrolling interests, represents investment income attributable to the Companyresulting from earnings on its investments and its carried interest and similar distribution rights.Carried interests and similar distribution rights generally entitle the Company to a percentage of theprofits generated by a fund as described below. Unrealized gains or losses result from changes in fairvalue of investments during the period, and are included in Net Gains (Losses) from InvestmentActivities. Upon disposition of an investment, previously recognized unrealized gains or losses arereversed and a realized gain or loss is recognized. Net Losses from Investment Activities earned by theconsolidated KKR Funds amounted to $725,396 and $732,421 for the three months ended March 31,2009 and 2008, respectively.

Carried interests entitle the general partner of a fund to a greater allocable share of the fund’searnings from investments relative to the capital contributed by the general partner andcorrespondingly reduce noncontrolling interests’ attributable share of those earnings. Amounts earnedpursuant to carried interests in Traditional Private Equity Funds are included as investment income inNet Gains (Losses) from Investment Activities and are earned by the general partner of those funds tothe extent that investment returns are positive. If these investment returns decrease or turn negative insubsequent periods, recognized carried interest will be reduced and reflected as investment losses.Carried interest is recognized based on the contractual formula set forth in the instruments governingthe fund as if the fund was terminated at the reporting date with the then estimated fair values of theinvestments realized. Due to the extended durations of the Traditional Private Equity Funds,management believes that this approach results in income recognition that best reflects the periodicperformance of the Company in the management of those funds. Carried interest recognized amountedto approximately $(69) million and $(133) million for the three months ended March 31, 2009 and2008, respectively.

The instruments governing KKR’s Traditional Private Equity Funds generally include a ‘‘clawback’’or, in certain instances, a ‘‘net loss sharing’’ provision that, if triggered, may give rise to a contingentobligation that may require the general partner to return or contribute amounts to the fund fordistribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon theliquidation of a fund, the general partner is required to return, on an after-tax basis, previouslydistributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the terms of the fundexceed the amount to which the general partner was ultimately entitled. As of March 31, 2009, theamount of carried interest KKR has received, that is subject to this contingent repayment obligationwas $945.7 million, assuming that all applicable private equity funds were liquidated at no value. Hadthe investments in such funds been liquidated at their March 31, 2009 fair values, the contingentrepayment obligation would have been $411.9 million. Under a ‘‘net loss sharing provision,’’ upon theliquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% ofthe net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’straditional private equity vehicles allocate a greater share of their investment losses to KKR relative tothe amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required tobe paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fundregardless of whether any carried interest had previously been distributed. Based on the fair marketvalues as of March 31, 2009, KKR’s contingent repayment obligation would have been approximately

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$322.0 million. If the vehicles were liquidated at zero value, the contingent repayment obligation wouldhave been approximately $1,093.8 million as of March 31, 2009. See Note 11, ‘‘Commitments andContingencies.’’

In Traditional Private Equity Funds where the allocation of cumulative net losses is proportional tothe capital contributed by the partners in the fund, the Company will not earn any carried interest inthat fund until all such losses have been recovered. As losses are recovered, income is allocated inproportion to the capital contributed until the fund has reached a net positive investment return, atwhich time carried interest is recognized and income is allocated as described above. The performanceof each fund is independent from all other funds and the losses to be recovered vary from fund to fundbased on the size and performance of the underlying investments in each fund.

Dividend income is recognized by the Company on the ex-dividend date, or in the absence of aformal declaration, on the date it is received. For the three months ended March 31, 2009 and 2008,dividends earned by the consolidated KKR Funds amounted to $580 and $4,242, respectively.

Interest income is recognized as earned. Interest income earned by the consolidated KKR Fundsamounted to $25,839 and $21,501 for the three months ended March 31, 2009 and 2008, respectively.

Profit Sharing—The Company has various profit sharing arrangements which provide for a sharingof the income earned on its investments and carried interests in the KKR Funds. Amounts payableunder such arrangements are charged to compensation expense or professional fees expense whenpayment is probable and amounts owed are reasonably estimable.

Statement of Financial Condition Measurements

Cash and Cash Equivalents—The Company considers all highly liquid short-term investments withoriginal maturities of 90 days or less when purchased to be cash equivalents.

Cash and Cash Equivalents Held at Consolidated Entities—Cash and cash equivalents held atconsolidated entities represents cash that, although not legally restricted, is not available to fundgeneral liquidity needs of the Company as the use of such funds is generally limited to the investmentactivities of the KKR Funds.

Restricted Cash and Cash Equivalents—Restricted cash and cash equivalents represent amountsthat are held by third parties under certain of the Company’s financing and derivative transactions.

Investments, at Fair Value—The Company’s investments consist primarily of private equityinvestments, debt investments and other investments. See Note 3, ‘‘Investments,’’ for informationrelating to the Company’s investments.

Private Equity Investments—Private equity investments consist of investments in PortfolioCompanies of consolidated KKR Funds that are, for GAAP purposes, investment companies under theAICPA Audit and Accounting Guide—‘‘Investment Companies.’’ The KKR Funds reflect investments attheir estimated fair values, with unrealized gains or losses resulting from changes in fair value reflectedas a component of Net Gains (Losses) from Investment Activities in the condensed combinedstatement of operations. Fair value is the amount at which the investments could be exchanged in a

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current transaction between willing parties, other than in a forced or liquidation sale. The Company hasretained the specialized accounting of these investments pursuant to EITF No. 85-12, ‘‘Retention ofSpecialized Accounting for Investments in Consolidation.’’

Private equity investments that have readily observable market prices (such as those traded on asecurities exchange) are stated at the last reported sales price on the statement of financial conditiondate.

As of March 31, 2009, approximately 81% of the fair value of the Company’s private equityinvestments has been valued by the Company in the absence of readily observable market prices. Thedetermination of fair value may differ materially from the values that would have resulted if a readymarket had existed. For these investments, the Company generally uses a market approach and anincome (discounted cash flow) approach when determining fair value. Management considers variousinternal and external factors when applying these approaches, including the price at which theinvestment was acquired, the nature of the investment, current market conditions, recent public marketand private transactions for comparable securities, and financing transactions subsequent to theacquisition of the investment. The fair value recorded for a particular investment will generally bewithin the range suggested by the two approaches.

Investments denominated in currencies other than the U.S. dollar are valued based on the spotrate of the respective currency at the end of the respective reporting period with changes related toexchange rate movements reflected as a component of Net Gains (Losses) from Investment Activities.

Fixed Income Securities—Fixed income securities that are listed on a securities exchange areclassified as trading securities and are valued at their last quoted sales price. Securities that are notlisted on an exchange and traded over the counter are valued at the mean of bid and ask quotations.Investments in corporate debt, including syndicated bank loans, high-yield securities and other fixedincome securities, are valued at the mean of the ‘‘bid’’ and ‘‘asked’’ prices obtained from third-partypricing services. In the event that third-party pricing service quotations are unavailable, values areobtained from dealers or market makers. Investments where third-party values are not available arevalued by the Company and the Company may engage a third-party valuation firm to assist in suchvaluations.

Derivatives—The Company invests in derivative financial instruments, including total rate of returnswaps and credit default swaps. In a total rate of return swap, the Company receives the sum of allinterest, fees and any positive economic change in fair value amounts from a reference asset with aspecified notional amount and pays interest on the referenced notional amount plus any negativechange in fair value amounts from such asset. Credit default swaps, when purchasing protection, involvethe payment of a fixed rate premium for protection against the loss in value of an underlying debtinstrument in the event of a defined credit event, such as payment default or bankruptcy. Under acredit default swap, one party acts as a guarantor by receiving the fixed periodic payment in exchangefor the commitment to purchase the underlying security at par if a credit event occurs. Derivativecontracts, including total rate of return swap contracts and credit default swap contracts, are recordedat estimated fair value with changes in fair value recorded as unrealized gains or losses in Net Gains(Losses) from Investment Activities in the accompanying condensed combined statement of operations.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Opportunistic Investments in Publicly Traded Securities—The Company’s opportunistic investments inpublicly traded securities represent equity securities, which are classified as trading securities andcarried at fair market value. Changes in the fair market value of trading securities are reported withinNet Gains (Losses) from Investment Activities in the accompanying condensed combined statement ofoperations. These investments represent investments by KPE other than debt, investments ingovernmental bonds and other similar investments.

Securities Sold, Not Yet Purchased—Whether part of a hedging transaction or a transaction in itsown right, securities sold, not yet purchased, or securities sold short, represent obligations of theCompany to deliver the specified security at the contracted price, and thereby create a liability torepurchase the security in the market at then prevailing prices. Short selling allows the investor toprofit from declines in market prices. The liability for such securities sold short is marked to marketbased on the current value of the underlying security at the date of valuation with changes in fair valuerecorded as unrealized gains or losses in Net Gains (Losses) from Investment Activities in theaccompanying condensed combined statement of operations. These transactions may involve a marketrisk in excess of the amount currently reflected in the Company’s condensed combined statement offinancial condition.

Due from and Due to Affiliates—For purposes of classifying amounts, the Company considers itsPrincipals, employees, nonconsolidated funds and the Portfolio Companies of its funds to be affiliates.Receivables from and payables to affiliates are recorded at their current settlement amount.

Foreign Exchange Derivatives and Hedging Activities—The Company enters into derivativefinancial instruments primarily to manage foreign exchange risk and interest rate risk arising fromcertain assets and liabilities. All derivatives are recognized as either assets or liabilities in thecondensed combined statements of financial condition and measured at fair value with changes in fairvalue recorded in Net Gains (Losses) from Investment Activities in the accompanying condensedcombined statement of operations. The Company does not apply ‘‘hedge accounting’’ under SFASNo. 133, ‘‘Accounting for Derivative Instruments and Hedging Activities’’ (‘‘SFAS 133’’). TheCompany’s derivative financial instruments contain credit risk to the extent that its bank counterpartiesmay be unable to meet the terms of the agreements. The Company minimizes this risk by limiting itscounterparties to major financial institutions with strong credit ratings.

Fixed Assets, Depreciation and Amortization—Fixed assets consist primarily of leaseholdimprovements, furniture, fixtures and equipment, and computer hardware and software. Such amountsare recorded at cost less accumulated depreciation and amortization. Depreciation and amortization arecalculated using the straight-line method over the assets’ estimated useful lives, which are the life of therelated lease for leasehold improvements, and three to seven years for other fixed assets.

Securities Sold Under Agreements to Repurchase—Transactions involving sales of securities underagreements to repurchase are accounted for as collateralized financings. The Company recognizesinterest expense on all borrowings on an accrual basis.

Capital Distributions—Capital distributions to Principals are generally in proportion to their equityinterests and take the form of cash distributions and, in certain cases, non-cash distributions. Non-cashdistributions consist primarily of shares in Portfolio Companies which have been exited as well as

F-73

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

vested common stock and common stock options of KFN. Payment for services rendered by thePrincipals historically has been accounted for as distributions from partner’s capital rather than ascompensation and benefits expense. As a result, the Company’s net income historically has notreflected payments for services rendered by its Principals.

Comprehensive Income—Comprehensive income is defined as the change in equity of a businessenterprise during a period from transactions and other events and circumstances, excluding thoseresulting from contributions and distributions to owners. For the Company’s purposes, comprehensiveincome represents Net Income, as presented in the accompanying condensed combined statements ofoperations and net foreign currency translation adjustments.

Foreign Currency—Foreign currency denominated assets, liabilities and operations are primarilyheld through the KKR Funds. Assets and liabilities relating to foreign investments are translated usingthe exchange rates prevailing at the end of each reporting period. Results of foreign operations aretranslated at the weighted average exchange rate for each reporting period. Translation adjustments areincluded in current income to the extent that unrealized gains and losses on the related investment areincluded in income, otherwise they are included as a component of accumulated other comprehensiveincome until realized. Foreign currency gains or losses resulting from transactions outside of thefunctional currency of a consolidated entity are recorded in income as incurred and were not materialduring the three months ended March 31, 2009 and 2008.

Income Taxes—No federal income taxes have been provided for by the Company in theaccompanying condensed combined financial statements as each existing partner is individuallyresponsible for paying federal income taxes on their respective share of the reported income or loss ofan entity’s income and expenses as reported for income tax purposes. However, certain consolidatedentities of the Company are subject to either New York City unincorporated business tax on their tradeand business activities conducted in New York City or other foreign, state or local income taxes.Current income tax expense is recorded as income is earned, and interest and penalties levied byrelevant taxing jurisdictions, if any, are recorded as incurred as a component of Income Taxes in theCompany’s condensed combined statements of operations. Deferred taxes are provided for the taxeffects of differences between the financial reporting and tax bases of the Company’s assets andliabilities at the enacted tax rates in effect for the years in which the differences are expected toreverse. The Company evaluates the recoverability of the deferred tax assets and establishes a valuationallowance when it is more likely than not that some portion or all of the deferred tax assets will not berealized.

Recent Accounting Pronouncements—In December 2007, the FASB issued SFAS No. 141(R),Business Combinations (‘‘SFAS No. 141(R)’’). SFAS No. 141(R) requires the acquiring entity in abusiness combination to recognize the full fair value of assets, liabilities, contractual contingencies andcontingent consideration obtained in the transaction (whether for a full or partial acquisition);establishes the acquisition date fair value as the measurement objective for all assets acquired andliabilities assumed; requires expensing of most transaction and restructuring costs; and requires theacquirer to disclose to investors and other users all of the information needed to evaluate andunderstand the nature and financial effect of the business combination. SFAS No. 141(R) applies to alltransactions or other events in which the Company obtains control of one or more businesses, including

F-74

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

those sometimes referred to as ‘‘true mergers’’ or ‘‘mergers of equals’’ and combinations achievedwithout the transfer of consideration, for example, by contract alone or through the lapse of minorityveto rights. SFAS No. 141(R) applies prospectively to business combinations for which the acquisitiondate is on or after January 1, 2009. The Company had no such transactions for the three months endedMarch 31, 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in ConsolidatedFinancial Statements—an amendment of Accounting Research Bulletin No. 51 (‘‘SFAS No. 160’’). SFASNo. 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposedto as a liability or mezzanine equity) and provides guidance on the accounting for transactions betweenan entity and noncontrolling interests. SFAS No. 160 applies prospectively as of January 1, 2009, exceptfor the presentation and disclosure requirements applied retrospectively for all periods presented. TheCompany adopted SFAS No. 160 effective January 1, 2009 and as a result, (1) with respect to thecondensed combined statements of financial condition, noncontrolling interests have been reclassifiedas a component of Equity, (2) with respect to the condensed combined statements of operations, NetIncome (Loss) is now presented before noncontrolling interests and the condensed combinedstatements of operations now net to Net Income (Loss) Attributable to KKR Group, (3) with respectto the condensed combined statement of changes in equity, a rollforward column has been included fornoncontrolling interests.

In November 2008, the EITF reached a consensus on Issue No. 08-6, Equity Method InvestmentAccounting Considerations (‘‘EITF 08-6’’). EITF 08-6 clarifies the accounting for certain transactionsand impairment considerations involving equity method investments. An entity is required to recognizeits share of other-than-temporary impairments of equity method investments rather than test theinvestee’s underlying assets for impairment. Additionally, a share issuance by an equity method investeeshould be accounted for as if the investor sold a proportionate share of its investment, with anyassociated gain or loss recognized in earnings. EITF 08-6 is effective in fiscal years and interim periodsbeginning on or after December 15, 2008. The adoption of EITF 08-6 did not have a material impacton the Company’s condensed combined financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments andHedging Activities (‘‘SFAS No. 161’’). SFAS No. 161 is intended to improve financial reporting aboutderivative instruments and hedging activities by requiring enhanced disclosures to enable investors tobetter understand how those instruments and activities are accounted for; how and why they are used;and their effects on an entity’s financial position, financial performance, and cash flows. SFAS No. 161is effective for financial statements issued for fiscal years and interim periods beginning afterNovember 15, 2008, with early application encouraged. The adoption of SFAS No. 161 did not have amaterial impact on the Company’s condensed combined financial statements.

In March 2008, the EITF reached a consensus on Issue No. 07-4, Application of the Two-ClassMethod under FASB Statement No. 128, ‘‘Earnings Per Share, to Master Limited Partnerships(‘‘EITF 07-4’’). EITF 07-4 applies to master limited partnerships that make incentive equitydistributions. EITF 07-4 is to be applied retrospectively beginning with financial statements issued inthe interim periods of fiscal years beginning after December 15, 2008. The adoption of EITF 07-4 didnot have a material impact on the Company’s condensed combined financial statements.

F-75

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life ofIntangible Assets (‘‘FSP No. 142-3’’). FSP No. 142-3 amends the factors an entity should consider indeveloping renewal or extension assumptions used in determining the useful life of recognizedintangible assets under SFAS No. 142, Goodwill and Other Intangible Assets . FSP No. 142-3 affectsentities with recognized intangible assets and is effective for financial statements issued for fiscal yearsbeginning after December 15, 2008, and interim periods within those fiscal years. Early adoption isprohibited. The new guidance applies prospectively to (1) intangible assets that are acquiredindividually or with a group of other assets and (2) both intangible assets acquired in businesscombinations and asset acquisitions. The adoption of FSP No. 142-3 did not have a material impact onthe Company’s condensed combined financial statements.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Levelof Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are NotOrderly (‘‘FSP FAS 157-4’’), to help constituents estimate fair value when the volume and level ofactivity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance onidentifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective forinterim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively.Early adoption is permitted for periods ending after March 15, 2009. The Company is currentlyevaluating the impact that the adoption of FSP FAS 157-4 may have the Company’s condensedcombined financial statements.

In April 2009, the FASB issued Staff Position No. 115-2 and 124-2, Recognition and Presentation ofOther-Than-Temporary Impairments (‘‘FSP FAS 115-2’’) which provides new guidance on the recognitionof other-than-temporary impairments of investments in debt securities and provides new presentationand disclosure requirements for other-than-temporary impairments of investments in debt and equitysecurities. FSP FAS 115-2 is effective for financial statements issued for interim or annual periodsending after June 15, 2009. The Company is currently evaluating the impact of FSP FAS 157-4 on theCompany’s condensed combined financial statements.

In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, Interim Disclosures aboutFair Value of Financial Statements (‘‘FSP FAS 107-1’’). FSP FAS 107-1 amends SFAS No. 107,Disclosures about Fair Value of Financial Instruments to require disclosures about fair value of financialinstruments in interim reporting periods. Such disclosures were previously required only in annualfinancial statements. FSP FAS 107-1 is effective for financial statements issued for interim or annualperiods ending after June 15, 2009. As FSP FAS 107-1 applies only to financial statement disclosures,the impact of adoption will be limited to financial statement disclosure.

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, SubsequentEvents (‘‘SFAS 165’’). SFAS 165 is intended to establish general accounting and disclosure standards forevents that occur after the balance sheet date but before financial statements are issued or areavailable to be issued. SFAS 165 requires disclosure of the date through which an entity has evaluatedsubsequent events and the basis for that date. SFAS 165 is effective for interim and annual periodsending after June 15, 2009. The Company is currently evaluating the impact that the adoption ofSFAS 165 may have on the Company’s condensed combined financial statements.

F-76

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R)(‘‘SFAS 167’’), which amends FASB Interpretation No. 46 (revised December 2003) to address theelimination of the concept of a qualifying special purpose entity. SFAS 167 updates FIN 46R’s approachto determination of a controlling financial interest with one focused on identifying (a) which enterprisehas the power to direct the activities of a variable interest entity (VIE) and (b) the obligation to absorblosses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 requiresentities provide more timely and useful information about an enterprise’s involvement with a VIE.SFAS 167 is effective as of the beginning of each reporting entity’s first annual reporting period thatbegins after November 15, 2009. The Company is currently evaluating the impact that the adoption ofSFAS 167 may have on the Company’s condensed combined financial statements.

In July 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASBAccounting Codification and the Hierarchy of Generally Accepted Accounting Principles (‘‘SFAS 168’’).SFAS 168 supersedes FASB Statement No. 162 issued in May 2008. SFAS 168 will become the sourceof authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to beapplied by nongovernmental entities. Rules and interpretive releases of the Securities and ExchangeCommission (SEC) under authority of federal securities laws are also sources of authoritative GAAPfor SEC registrants. On the effective date of this Statement, the Codification will supersede allthen-existing non-SEC accounting and reporting standards. All other non-SEC accounting literature notincluded in the Codification will become nonauthoritative. This Statement is effective for financialstatements issued for interim and annual periods ending after September 15, 2009. The Company iscurrently evaluating the impact that the adoption of SFAS 168 may have on the Company’s condensedcombined financial statements.

3. INVESTMENTS

Investments, at fair value consist of the following:

Fair ValueMarch 31, 2009 December 31, 2008

Private Equity Investments . . . . . . . . . . . . . . . . . . . $19,247,910 $20,230,405Debt Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 446,353 481,945Other Investments . . . . . . . . . . . . . . . . . . . . . . . . . 168,790 171,169

$19,863,053 $20,883,519

Investments at fair value held by the consolidated KKR Funds amounted to $19,683,270 and$20,747,407 as of March 31, 2009 and December 31, 2008, respectively.

As of March 31, 2009, Investments at fair value totaling $3,570,837 were pledged as collateralagainst various financing arrangements. In addition, KPE holds limited partnership interests in ourTraditional Private Equity Funds with a fair value of $1,162,992 as of March 31, 2009 that are pledgedas collateral.

F-77

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

Private Equity Investments

The following table presents the Company’s private equity investments at fair value:

Fair Value as aFair Value Percentage of Total

March 31, December 31, March 31, December 31,2009 2008 2009 2008

Private Equity Investments, at Fair ValueNorth America

Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,890,975 $ 2,676,801 15.0% 13.2%Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . 2,464,643 2,632,998 12.8% 13.0%Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,414,973 2,285,506 12.6% 11.3%Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,102,134 1,138,520 5.7% 5.6%Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,008,625 1,412,075 5.2% 7.0%Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 947,918 970,409 4.9% 4.8%Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,918 456,061 2.6% 2.3%Consumer Products . . . . . . . . . . . . . . . . . . . . . . . . 262,857 360,398 1.4% 1.8%Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,354 234,436 0.9% 1.2%Telecom. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,872 34,946 0.2% 0.2%Hotels/Leisure . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,232 10,179 0.0% 0.1%

North America Total (Cost: March 31 2009,$16,830,561; December 31, 2008, $17,052,851) . . . . . 11,805,501 12,212,329 61.3% 60.5%

EuropeManufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,748,912 2,103,930 9.1% 10.4%Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,386,906 1,410,686 7.2% 7.0%Telecom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675,867 710,611 3.5% 3.5%Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601,786 609,955 3.1% 3.0%Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325,815 389,832 1.7% 1.9%Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,100 236,672 1.2% 1.2%Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,160 154,810 0.5% 0.8%Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,764 89,060 0.2% 0.4%

Europe Total (Cost: March 31, 2009, $10,226,067;December 31, 2008, $10,226,067) . . . . . . . . . . . . . . 5,094,310 5,705,556 26.5% 28.2%

Australia, Asia and Other LocationsTechnology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,431,444 1,386,984 7.4% 6.9%Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234,240 287,638 1.2% 1.4%Telecom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222,795 222,795 1.2% 1.1%Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,964 117,240 0.7% 0.6%Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . 142,857 148,655 0.7% 0.7%Consumer Products . . . . . . . . . . . . . . . . . . . . . . . . 139,399 99,208 0.7% 0.4%Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,400 50,000 0.3% 0.2%

Australia, Asia and Other Locations, Total (Cost:March 31, 2009, $2,743,547; December 31, 2008,$2,703,356) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,348,099 2,312,520 12.2% 11.3%

Private Equity Investments, at Fair Value . . . . . . . . . . $19,247,910 $20,230,405 100.0% 100.0%

F-78

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

The classifications of the private equity investments included in the table above are based primarilyon the primary business and the domiciled location of the business.

As of March 31, 2009, investments which represented greater than 5% of the net assets ofconsolidated private equity funds included: (i) Dollar General valued at $1,612,190; (ii) First Datavalued at $1,476,141; (iii) Alliance Boots valued at $1,386,906; (iv) Legrand S.A valued at $1,368,324;(v) HCA Inc. valued at $1,117,194; (vi) Biomet valued at $1,015,303; (vii) Energy Future Holdingsvalued at $1,008,625; and (viii) Legg Mason valued at $988,502.

As of December 31, 2008, investments which represented greater than 5% of the net assets ofconsolidated private equity funds included: (i) First Data valued at $1,514,986; (ii) Legrand S.A. valuedat $1,501,887; (iii) Energy Future Holdings valued at $1,412,075; (iv) Alliance Boots valued at$1,410,686; (v) Dollar General valued at $1,398,016; (vi) Biomet valued at $1,054,149; and (vii) LeggMason valued at $1,053,059.

The majority of the securities underlying the Company’s private equity investments representequity securities. As of March 31, 2009 and December 31, 2008 the aggregate amount of investmentsthat were other than equity securities was approximately $1,950,757 and $2,016,278 respectively.

All Portfolio Companies included in private equity investments are deemed affiliates due to thenature of the ownership interests and the Company’s ability to control, direct or substantially influencemanagement and the operations of such Portfolio Companies.

Net Losses from Investment Activities in the condensed combined statement of operations includenet realized gains or losses from sales of investments and the net change in unrealized gains or lossesresulting from changes in fair value of the Company’s private equity investments (including foreignexchange gains and losses attributable to foreign-denominated investments). The following tablepresents the Company’s realized and net change in unrealized gains or losses relating to its privateequity investments:

Three Months endedMarch 31,

2009 2008

Realized (Losses) Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (39,931) $ 167,077Net Change in Unrealized Losses . . . . . . . . . . . . . . . . . . . . (800,395) (510,345)

$(840,326) $(343,268)

F-79

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

Debt Investments

The following table presents the Company’s debt investments at fair value:

March 31, 2009 December 31, 2008

Debt Investments, carried at fair value:Fixed Income Securities(a) . . . . . . . . . . . . . . . . . $314,559 $353,983Strategic Capital Master Fund(b) . . . . . . . . . . . . . 130,805 126,187Restricted Stock(b) . . . . . . . . . . . . . . . . . . . . . . . 989 1,775

Total Debt Investments (Cost: March 31, 2009$828,882; December 31, 2008, $926,975) . . . . $446,353 $481,945

(a) Net trading losses relating to these investments amounted to $144,923 and $17,495 for thethree months ended March 31, 2009 and 2008

(b) Represents the fair value of an investment in a master investment partnership heldthrough the two consolidated SCF side-by-side funds.

Net Losses from Investment Activities in the condensed combined statement of operations includenet realized gains or losses from sales of investments and the net change in unrealized gains or lossesresulting from changes in fair value of the Company’s debt investments. The following table presentsthe Company’s realized and net change in unrealized gains or losses relating to its debt investments:

Three Months endedMarch 31,

2009 2008

Realized (Losses) Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(71,983) $ 245Net Change in Unrealized Gains (Losses) . . . . . . . . . . . . . . . . 62,270 (66,725)

$ (9,713) $(66,480)

F-80

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

3. INVESTMENTS (Continued)

Other Investments

The following table presents the Company’s other investments at fair value:

Fair ValueMarch 31, December 31,

2009 2008

Government and Government Agency Bonds . . . . . . . . . . . $105,990 $109,443Corporate Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,850 40,426Municipal Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,983 2,267Opportunistic Investments in Publicly Traded Securities(a) . . — 1,072Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,967 17,961

Total (Cost: March 31, 2009, $164,240; December 31,2008, $168,562) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $168,790 $171,169

(a) There were no net trading gains for the three months ended March 31, 2009. Net tradinggains relating to these investments amounted to $4,125 for the three months endedMarch 31, 2008.

Net Losses from Investment Activities in the condensed combined statement of operations includenet realized gains or losses from sales of investments and the net change in unrealized gains or lossesresulting from changes in fair value of the Company’s other investments. The following table presentsthe Company’s realized and net change in unrealized gains or losses relating to its other investments.

Three Months endedMarch 31,

2009 2008

Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,597) $(9,994)Net Change in Unrealized Gains . . . . . . . . . . . . . . . . . . . . . . . . 1,971 18,212

$ 374 $ 8,218

F-81

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables summarize the valuation of the Company’s investments by the SFAS 157 fairvalue hierarchy levels described in Note 2 as of March 31, 2009 and December 31, 2008, respectively:

Assets, at fair value:

March 31, 2009Level I Level II Level III Total

Private Equity Investments . . . . . . . . . . . . . . . . . $1,653,748 $2,093,614 $15,500,548 $19,247,910Debt Investments . . . . . . . . . . . . . . . . . . . . . . . 989 310,482 134,882 446,353Other Investments . . . . . . . . . . . . . . . . . . . . . . . 152,845 — 15,945 168,790

Total Investments . . . . . . . . . . . . . . . . . . . . . . 1,807,582 2,404,096 15,651,375 19,863,053Unrealized Gains on Foreign Exchange Forward

Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 204,620 — 204,620Foreign Currency Option . . . . . . . . . . . . . . . . . . — 29,542 — 29,542

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $1,807,582 $2,638,258 $15,651,375 $20,097,215

December 31, 2008Level I Level II Level III Total

Private Equity Investments . . . . . . . . . . . . . . . . . $1,908,845 $2,164,933 $16,156,627 $20,230,405Debt Investments . . . . . . . . . . . . . . . . . . . . . . . 1,775 335,237 144,933 481,945Other Investments . . . . . . . . . . . . . . . . . . . . . . . 153,245 — 17,924 171,169

Total Investments . . . . . . . . . . . . . . . . . . . . . . 2,063,865 2,500,170 16,319,484 20,883,519Unrealized Gains on Foreign Exchange Forward

Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 84,094 — 84,094Foreign Currency Option . . . . . . . . . . . . . . . . . . — 45,816 — 45,816

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $2,063,865 $2,630,080 $16,319,484 $21,013,429

Liabilities, at fair value:

March 31, 2009Level I Level II Level III Total

Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $10,674 $ — $10,674

December 31, 2008Level I Level II Level III Total

Securities Sold, Not Yet Purchased . . . . . . . . . . . . . . . . . . . . . . $1,916 $ — $ — $ 1,916Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 12,539 — 12,539Total Return Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,610 — 4,610

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,916 $17,149 $ — $19,065

F-82

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The following table summarizes our Level III investments by valuation methodology as ofMarch 31, 2009:

March 31, 2009Private Equity Debt Other Total Level III

Investments Investments Investments Holdings

Third-Party Fund Managers . . . . . . . . . . . . . . . . . —% .9% .1% 1.0%Public/Private Company Comparables and

Discounted Cash Flows . . . . . . . . . . . . . . . . . . 99.0 — — 99.0%Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.0% .9% .1% 100.0%

The changes in investments measured at fair value for which the Company has used Level IIIinputs to determine fair value for the three months ended December 31, 2008 through March 31, 2009and for the three months ended December 31, 2007 through March 31, 2008 are as follows:

Three months endedMarch 31, 2009 March 31, 2008

Balance, Beginning of Period . . . . . . . . . . . . . . . . . . . $16,319,484 $24,391,146Transfers In (Out) . . . . . . . . . . . . . . . . . . . . . . . . . . . — —(Sales) Purchases, Net . . . . . . . . . . . . . . . . . . . . . . . . (144,177) 772,870Realized and Unrealized Losses, Net . . . . . . . . . . . . . (523,932) 644,846Balance, End of Period . . . . . . . . . . . . . . . . . . . . . . . $15,651,375 $25,808,862

Changes in Unrealized Losses Included in Net Lossesfrom Investment Activities (including foreignexchange gains and losses attributable to foreign-denominated investments) Related to InvestmentsStill Held at Reporting Date . . . . . . . . . . . . . . . . . . $ (455,260) $ 643,377

Total realized and unrealized gains and losses recorded for Level III investments are reported inNet Losses from Investment Activities in the condensed combined statements of operations.

The carrying amounts of cash and cash equivalents, restricted cash and cash equivalents, due fromaffiliates, and accounts payable, accrued expenses and other liabilities approximate fair value due totheir short-term maturities. All investments are carried at fair value, with the exception of corporateloans, which are carried at amortized cost. The Company’s debt obligations bear interest at floatingrates and therefore fair value approximates carrying value.

F-83

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

5. OTHER ASSETS AND ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

Other assets consist of the following:

March 31, 2009 December 31, 2008

Unrealized Gains on Foreign Exchange ForwardContracts(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $204,620 $ 84,094

Proceeds Due from Sale of Certain Private EquityInvestments(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 200,400 —

Furniture & Fixtures(c) . . . . . . . . . . . . . . . . . . . . . 41,560 38,966Intangible Asset(d) . . . . . . . . . . . . . . . . . . . . . . . . 34,729 35,676Foreign Currency Option (Cost: March 31, 2009,

$10,741; December 31, 2008, $13,736)(e) . . . . . . . 29,542 45,816Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . 29,248 42,751Leasehold Improvements(c) . . . . . . . . . . . . . . . . . . 17,964 19,247Deferred Financing Costs . . . . . . . . . . . . . . . . . . . . 14,949 18,070Prepaid Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 5,624 4,243Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,431 24,405

$609,067 $313,268

(a) Represents derivative financial instruments used to manage foreign exchange risk arisingfrom certain assets and liabilities. Such instruments are measured at fair value withchanges in fair value recorded in Net Losses from Investment Activities in theaccompanying condensed combined statement of operations. The net changes in fair valuerecorded in Losses from Investment Activities in the accompanying condensed combinedstatements of operations associated with these instruments was a realized gain of $129,084($8,558 of realized gains, and $120,526 of unrealized gains) and $334,345 of unrealizedlosses for the three months ended March 31, 2009 and 2008 respectively. See Note 2,‘‘Summary of Significant Accounting Policies.’’

(b) Represents proceeds due from the sale of certain private equity investments of $200,400.Cash proceeds were received in April 2009.

(c) Net of accumulated depreciation and amortization of $51,910 and $50,276 as ofMarch 31, 2009 and December 31, 2008, respectively. Depreciation and amortizationexpense totaled $2,042 and $1,082 for the three months ended March 31, 2009 and 2008,respectively.

(d) Net of accumulated amortization of $3,158 and $2,211 as of March 31, 2009 andDecember 31, 2008, respectively. Amortization expense totaled $947 for the three monthsended March 31, 2009. There was no amortization for the three months ended March 31,2008 as the intangible was purchased during the second quarter of 2008.

(e) Represents a hedging instrument used to manage foreign exchange risk. The instrument ismeasured at fair value with changes in fair value recorded in Net Losses from InvestmentActivities in the accompanying condensed combined statement of operations. The netchanges in fair value associated with this instrument included losses of $4,490 ($8,788 of

F-84

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

5. OTHER ASSETS AND ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES(Continued)

realized gains and $13,278 of unrealized losses) for the three months ended March 31,2009. The net changes in fair value associated with this instrument included unrealizedlosses of $8,420 for the three months ended March 31, 2008.

Accounts Payable, Accrued Expenses and Other Liabilities consist of the following:

March 31, 2009 December 31, 2008

Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 97,610 $ 92,618Unsettled Investment Trades . . . . . . . . . . . . . . . . . 50,289 13,183Accrued Benefits and Compensation . . . . . . . . . . . . 36,718 12,889Accounts Payable and Accrued Expenses . . . . . . . . . 27,561 40,125Derivative Liabilities(a) . . . . . . . . . . . . . . . . . . . . . 10,674 17,149Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . 7,760 4,656Securities Sold, Not Yet Purchased (proceeds of

$1,785 at December 31, 2008)(b) . . . . . . . . . . . . . — 1,916Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 5,918 3,012

$236,530 $185,548

(a) Represents derivative financial instruments used to manage credit and market risk arisingfrom certain assets and liabilities. Such instruments are measured at fair value withchanges in fair value recorded in Net Losses from Investment Activities in theaccompanying condensed combined statement of operations. The net changes in fair valuerecorded in Net Losses from Investment Activities in the accompanying condensedcombined statement of operations were $2,303 ($4,172 of realized losses and $6,475 ofunrealized gains) and $11,391 of unrealized losses for the three months ended March 31,2009 and 2008, respectively. See Note 2, ‘‘Summary of Significant Accounting Policies.’’

(b) Represents securities sold short, which are obligations of the Company to deliver aspecified security at a contracted price at a future point in time. Such securities aremeasured at fair value with changes in fair value recorded in Net Gains Losses fromInvestment Activities in the accompanying condensed combined statements of operations.Net changes in fair value recorded in Net Losses from Investment Activities in theaccompanying condensed combined statement of operations were net gains of $336 ($205of realized gains and $131 of unrealized gains) and net gains of $1,215 ($1,555 of realizedgains and $340 of unrealized losses) for the three months ended March 31, 2009 and2008, respectively.

F-85

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

6. DEBT OBLIGATIONS

Debt obligations consist of the following:

March 31, 2009 December, 31, 2008

Other Financing Arrangements . . . . . . . . . . . . . . . $1,314,911 $1,314,911Revolving Credit Agreements . . . . . . . . . . . . . . . . . 1,065,193 1,090,214Short-term Loans . . . . . . . . . . . . . . . . . . . . . . . . . 40,191 —

$2,420,295 $2,405,125

On February 26, 2008, Kohlberg Kravis Roberts & Co. L.P entered into a credit agreement with amajor financial institution (the ‘‘Management Company Credit Agreement’’). The ManagementCompany Credit Agreement provides for revolving borrowings of up to $1 billion, with a $50 millionsublimit for swingline notes and a $25 million sublimit for letters of credit. The facility has a term ofthree years that expires on February 26, 2011, which may be extended through February 26, 2013 at theoption of the Company. As of March 31, 2009, $100 million was outstanding under the ManagementCompany Credit Agreement, and the interest rate on such borrowings was approximately 1.0% as ofMarch 31, 2009.

The Company maintained a $25 million line of credit (the ‘‘Management Company Credit Line’’)with a major financial institution for general corporate purposes. The Management Company CreditLine expired in February 2009 and was not renewed. As of March 31, 2009, $25 million wasoutstanding under the Management Company Credit Line, and the interest rate on such borrowingswas approximately 3.3%. During April 2009, the Company repaid all amounts outstanding as ofMarch 31, 2009.

From time to time, the Company may borrow amounts to satisfy general short-term needs of thebusiness by opening short-term lines of credit with established financial institutions. These amounts maybe incremental to, or in lieu of, borrowings made under the Management Company Credit Line, andare generally repaid within 30 days, at which time such short-term lines of credit would close. As ofMarch 31, 2009, there was a $40.2 million short-term loan outstanding, and the interest rate on suchborrowing was approximately $3.3%.

On February 27, 2008, KKR Capital Markets entered into a revolving credit agreement with amajor financial institution (the ‘‘KCM Credit Agreement’’). The KCM Credit Agreement provides forrevolving borrowings of up to $700 million with a $500 million sublimit for letters of credit. The KCMCredit Agreement has a maturity date of February 27, 2013. There was $14 million outstanding underthe KCM Credit Agreement as of March 31, 2009. As of March 31, 2009, the interest rate onborrowings under the KCM Credit Agreement was 2.1%.

In March 2009, the KCM Credit Agreement was amended to reduce the amounts available onrevolving borrowings from $700 million to $500 million. As a result of this amendment, thecounterparty returned approximately $1.6 million in financing costs.

In June 2007, KPE entered into a revolving credit agreement (the ‘‘KPE Credit Agreement’’) witha syndicate of financial institutions. The KPE Credit Agreement provides for up to $1.0 billion ofsenior secured credit, subject to availability under a borrowing base determined by the value of certaininvestments KPE pledged as collateral security for its obligations under the KPE Credit Agreement.

F-86

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

6. DEBT OBLIGATIONS (Continued)

The borrowing base is subject to certain investment concentration limitations and the value of theinvestments constituting the borrowing base is subject to certain advance rates based on type ofinvestment.

In October 2008, Lehman Commercial Paper Inc. (‘‘Lehman’’), an original lender under the CreditAgreement with an initial $75.0 million commitment, filed for bankruptcy and was responsible forfunding an additional $45.6 million in commitments as of March 31, 2009. Due to Lehman’sbankruptcy, KPE believes that Lehman will not fund any part of its remaining commitments. Therefore,the remaining availability under the Credit Agreement has effectively been reduced from $73.8 millionabsent Lehman’s bankruptcy to $28.2 million in unfunded commitments as of March 31, 2009, or from$1.0 billion to $925.0 million in total commitments, unless Lehman’s commitments are assigned toanother existing or new lender. There can be no assurance that any lender will assume any part ofLehman’s commitment under the KPE Credit Agreement.

As of March 31, 2009, the interest rates on borrowings under the KPE Credit Agreement rangedfrom 1.3% to 2.2%. As of March 31, 2009, the Company had $926.2 million of borrowings outstanding,which included $941.9 million of borrowings and $15.7 million of foreign currency adjustments relatingto borrowings denominated in foreign currency. Foreign currency adjustments related to the debtduring the period are recorded in Net Losses from Investment Activities in the accompanyingcondensed combined statements of operations. The net change in fair value associated with theseborrowings for the three months ended March 31, 2009 totaled $2,783 ($4,811 of realized gains and$2,028 of net unrealized losses).

March 31 December 31,2009 2008

Notional borrowings under the KPE Credit Agreement . . . . $941,921 $968,970Foreign currency adjustments:

Less: Unrealized gain related to borrowings denominatedin British pounds sterling . . . . . . . . . . . . . . . . . . . . . . . 15,728 14,058

Less: Unrealized gain related to borrowings denominatedin Canadian dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,698

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $926,193 $951,214

As of March 31, 2009, the Company had entered into various financing arrangements totaling$1,328.9 million with major financial institutions with respect to certain of our private equityinvestments with a cost of $1,324.5 million. Of the $1,328.9 million of financing arrangements,$1,146.4 million was structured through the use of total return swaps which effectively convert thirdparty capital contributions into borrowings of the Company. Upon the occurrence of certain events,including an event based on the value of the collateral and events of default, the Company may berequired to provide additional collateral up to the amount borrowed plus accrued interest, under theterms of these financing arrangements. As a result of a decline in collateral value, the Companyprovided additional collateral in the amount of $16.7 million as of March 31, 2009. The per annumrates of interest payable by us for the financings range from three-month LIBOR plus 0.90% to three-month LIBOR plus 1.75% (rates ranging from 2.1% to 2.9% as of March 31, 2009). The remaining

F-87

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

6. DEBT OBLIGATIONS (Continued)

$182.5 million of financing was structured through the use of a syndicated term and a revolving creditfacility (the ‘‘Term Facility’’). As of March 31, 2009, $168.5 million was outstanding under this facility.The per annum rate of interest for each borrowing under the Term Facility is equal to the BloombergUnited States Dollar Interest Rate Swap Ask Rate plus 1.75% at the time of each borrowing under theTerm Facility (rates range from 4.90% to 7.20% at March 31, 2009) for the first five years of the loan.Commencing on the fifth anniversary of the Term Facility, the per annum rate of interest will equal theone year LIBOR rate plus 1.75%.

The Company’s Fixed Income Funds may leverage their portfolios of securities and loans throughthe use of short-term borrowings in the form of warehouse facilities and repurchase agreements. Theseborrowings used by the Company generally bear interest at floating rates based on a spread above theLondon Interbank Offered Rate (‘‘LIBOR’’). There were no such borrowings as of March 31, 2009 orDecember 31, 2008.

The Company believes the carrying value of its debt approximates fair value as of March 31, 2009.

7. INCOME TAXES

The Company has provided for New York City unincorporated business tax for certain entitiesbased on a statutory rate of 4%. Certain consolidated entities of the Company are subject to incometax of the foreign countries in which they conduct business. The Company’s effective income tax ratewas approximately 3.80% and 2.75% for the three months ended March 31, 2009 and 2008,respectively.

March 31,2009 2008

CurrentForeign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,547 $684State and Local Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16) 149

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,531 833Deferred

Foreign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 55State and Local Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 55Total Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,531 $888

Income taxes are provided at the applicable statutory rates. The Company’s deferred tax assets andliabilities did not change materially from December 31, 2008.

As of and for the three months ended March 31, 2009 and 2008, no interest or penalties relatingto the underpayment of income taxes have been recognized in the condensed combined financialstatements.

F-88

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

8. RELATED PARTY TRANSACTIONS

Due from Affiliates consists of:

March 31, December 31,2009 2008

Due from Portfolio Companies . . . . . . . . . . . . . . . . . . . . . . $17,333 $14,337Due from Related Entities . . . . . . . . . . . . . . . . . . . . . . . . . 10,980 12,287Due from Unconsolidated Funds . . . . . . . . . . . . . . . . . . . . . 7,620 3,265

$35,933 $29,889

Discretionary Investments

Certain of the Company’s investment professionals, including its Principals and other qualifyingemployees, are permitted to invest and have invested their own capital in side-by-side investments withits Traditional Private Equity Funds. Side-by-side investments are investments in Portfolio Companiesthat are made on the same terms and conditions as those acquired by the applicable fund, except thatthe side-by-side investments are not subject to management fees or a carried interest. The cash investedby these individuals aggregated $0.3 million and $15.1 million for the three months ended March 31,2009 and 2008, respectively. These investments are not included in the accompanying condensedcombined financial statements.

Aircraft and Other Services

Certain of the Senior Principals own aircraft that the Company uses for business purposes in theordinary course of its operations. These Senior Principals paid for the purchase of these aircraft withtheir personal funds and bear all operating, personnel and maintenance costs associated with theiroperation. The hourly rates that the Company pays for the use of these aircraft are based on currentmarket rates for chartering private aircraft of the same type. The Company paid $2,182 and $1,648 forthe use of these aircraft during the three months ended March 31, 2009 and 2008, respectively.

Facilities

Certain of the Senior Principals are partners in a real-estate based partnership that maintains anownership interest in the Company’s Menlo Park location. Payments made to this partnershipaggregated $1,290 and $484 for the three months ended March 31, 2009 and 2008, respectively.

9. SEGMENT REPORTING

The Company operates through two reportable business segments. These segments, which aredifferentiated primarily by their investment focuses and strategies, consist of the following:

• Private Markets—The Company’s Private Markets segment involves sponsoring and managing agroup of funds and co-investment vehicles that make primarily control-oriented investments inconnection with leveraged buyouts and other similarly-yielding investment opportunities. Thesefunds are managed by Kohlberg Kravis Roberts & Co. L.P. and currently consist of TraditionalPrivate Equity Funds and KPE.

F-89

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

• Public Markets—The Company’s Public Markets segment is comprised of KKR’s fixed incomeand mezzanine finance businesses, as well as other businesses that invest primarily in publiclytraded securities. Through these businesses, KKR manages a number of investment funds,structured finance vehicles and separately managed accounts that invest primarily in bank loans,high yield securities, distressed and rescue financings, private debt investments and mezzanineinstruments. These businesses are managed by subsidiaries of Kohlberg Kravis Roberts & Co.(Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic CapitalManagement, L.L.C., and KKR FI Advisors LLC.

Economic Net Income (‘‘ENI’’) and Fee Related Earnings (‘‘FRE’’) are key performance measuresused by management. ENI is a measure of profitability for the Company’s reportable segments andrepresents income before taxes less net income attributable to noncontrolling interests in the KKRFunds and certain non-cash amortization charges. FRE represents income before taxes adjusted to:(i) exclude the expenses of consolidated funds; (ii) include management fees earned from consolidatedfunds that were eliminated in consolidation; (iii) exclude investment income; (iv) exclude amortizationof intangibles assets; and (v) exclude net income attributable to noncontrolling interests in the KKRFunds. These measures are used by management for the Company’s segments in making resourcedeployment and other operational decisions.

Management makes operating decisions and assesses the performance of each of the Company’sbusiness segments based on financial and operating metrics and data that is presented excluding theimpact of any of the KKR Funds that are consolidated into the condensed combined financialstatements. Consequently, all segment data excludes the assets, liabilities and operating results relatedto the KKR Funds.

F-90

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

The following table presents the financial data for the Company’s reportable segments as of andfor the three months ended March 31, 2009:

March 31, 2009Total

Private Public ReportableMarkets Markets Segments

Fee IncomeManagement Fees . . . . . . . . . . . . . . . . . . . . . . . . $103,802 $11,928 $115,730Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,993 — 23,993Incentive Fees . . . . . . . . . . . . . . . . . . . . . . . . . . — — —

Total Fee Income . . . . . . . . . . . . . . . . . . . . . . 127,795 11,928 139,723

ExpensesEmployee Compensation and Benefits . . . . . . . . . 39,416 6,126 45,542Other Operating Expenses . . . . . . . . . . . . . . . . . 44,324 6,121 50,445

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . 83,740 12,247 95,987Fee Related Earnings . . . . . . . . . . . . . . . . . . . 44,055 (319) 43,736

Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (95,913) (17) (95,930)Loss before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (51,858) (336) (52,194)Loss Attributable to Noncontrolling Interests . . . . . . (89) — (89)Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . $ (51,769) $ (336) $(52,105)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $245,814 $53,043 $298,857

The following table reconciles the Company’s total reportable segments to the condensedcombined financial statements as of and for the three months ended March 31, 2009:

March 31, 2009Total

Reportable Combination CondensedSegments Adjustments Combined

Fee Income(a) . . . . . . . . . . . . . . . . . . . . . . . $139,723 $ (100,653) $ 39,070Expenses(b) . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,987 $ 8,771 $ 104,758Investment Loss(c) . . . . . . . . . . . . . . . . . . . . $ (95,930) $ (619,415) $ (715,345)Loss before Taxes . . . . . . . . . . . . . . . . . . . . . $ (52,194) $ (728,839) $ (781,033)Loss Attributable to Noncontrolling Interests . $ (89) $ (727,892) $ (727,981)Total Assets(d) . . . . . . . . . . . . . . . . . . . . . . . $298,857 $21,584,066 $21,882,923

(a) The Fee Income adjustment represents the elimination of intercompany transactions uponconsolidation of the KKR Funds and other adjustments necessary to reconcile fromsegment reporting measures to consolidated financial results. In periods where theamount of fee income attributable to the Company’s consolidated funds exceeds theamount of management fees earned from its consolidated funds, a positive adjustment

F-91

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

will be required to eliminate this intercompany transaction and reconcile to theCompany’s condensed combined fee income.

(b) The Expenses adjustment primarily represents the inclusion of certain operating expensesupon consolidation of the KKR Funds.

(c) The Investment Income adjustment primarily represents the inclusion of investmentincome attributable to noncontrolling interests upon consolidation of the KKR Funds.

(d) The Total Assets adjustment primarily represents the inclusion of private equity and creditinvestments that are attributable to noncontrolling interests upon consolidation of theKKR Funds.

The reconciliation of Economic Net Loss to Net Loss Attributable to KKR Group as reported inthe Condensed combined Statement of Operations consists of the following:

Three MonthsEnded March 31,

2009

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(52,105)Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,531)Amortization of Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (947)Net Loss Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . $(54,583)

F-92

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

The following table presents the financial data for the Company’s reportable segments as of andfor the three months ended March 31, 2008:

March 31, 2008Total

Private Public ReportableMarkets Markets Segments

Fee IncomeManagement Fees . . . . . . . . . . . . . . . . . . . . . $ 78,833 $16,127 $ 94,960Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . 37,740 3,333 41,073Incentive Fees . . . . . . . . . . . . . . . . . . . . . . . . — — —

Total Fee Income . . . . . . . . . . . . . . . . . . . . 116,573 19,460 136,033

ExpensesEmployee Compensation and Benefits . . . . . . . 43,412 4,651 48,063Other Operating Expenses . . . . . . . . . . . . . . . 48,561 4,154 52,715

Total Expenses . . . . . . . . . . . . . . . . . . . . . . 91,973 8,805 100,778Fee Related Earnings . . . . . . . . . . . . . . . . . 24,600 10,655 35,255

Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . (148,310) (85) (148,395)(Loss) Income before Taxes . . . . . . . . . . . . . . . . (123,710) 10,570 (113,140)

Income Attributable to Noncontrolling Interests . 65 3,805 3,870

Economic Net (Loss) Income . . . . . . . . . . . . . . . $ (123,775) $ 6,765 $ (117,010)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,428,678 $47,632 $1,476,310

The following table reconciles the Company’s total reportable segments to the condensedcombined financial statements as of and for the three months ended March 31, 2008:

March 31, 2008Total

Reportable Combination CondensedSegments Adjustments Combined

Fee Income(a) . . . . . . . . . . . . . . . . . . . . . . $ 136,033 $ (67,443) $ 68,590Expenses(b) . . . . . . . . . . . . . . . . . . . . . . . $ 100,778 $ 2,759 $ 103,537Investment Loss(c) . . . . . . . . . . . . . . . . . . $ (148,395) $ (590,003) $ (738,398)Loss before Taxes . . . . . . . . . . . . . . . . . . . $ (113,140) $ (660,205) $ (773,345)Income (Loss) Attributable to

Noncontrolling Interests . . . . . . . . . . . . . $ 3,870 $ (660,205) $ (656,335)Total Assets(d) . . . . . . . . . . . . . . . . . . . . . $1,476,310 $32,865,704 $34,342,014

(a) The Fee Income adjustment represents the elimination of intercompany transactions uponconsolidation of the KKR Funds and other adjustments necessary to reconcile fromsegment reporting measures to consolidated financial results. In periods where the

F-93

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

9. SEGMENT REPORTING (Continued)

amount of fee income attributable to the Company’s consolidated funds exceeds theamount of management fees earned from its consolidated funds, a positive adjustmentwill be required to eliminate this intercompany transaction and reconcile to theCompany’s condensed combined fee income.

(b) The Expenses adjustment primarily represents the inclusion of certain operating expensesupon consolidation of the KKR Funds.

(c) The Investment Loss adjustment primarily represents the inclusion of investment incomeattributable to noncontrolling interests upon consolidation of the KKR Funds.

(d) The Total Assets adjustment primarily represents the inclusion of private equity and creditinvestments that are attributable to noncontrolling interests upon consolidation of theKKR Funds.

The reconciliation of Economic Net Loss to Net Loss Attributable to KKR Group as reported inthe Condensed Combined Statement of Operations consists of the following:

Three MonthsEnded March 31,

2008

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(117,010)Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (888)Net Loss Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . $(117,898)

10. COMMITMENTS AND CONTINGENCIES

KFN Revolving Credit Agreement

On November 10, 2008, the Company entered into a two-year $100.0 million standby unsecuredrevolving credit agreement with KFN pursuant to which the Company has agreed to provide financingto KFN under the arrangement. The borrowing facility matures in December 2010 and bears interest ata rate equal to LIBOR for an interest period of 1, 2 or 3 months (at KFN’s option) plus 15.00% perannum. Under the terms of the agreement, KFN can elect to capitalize a portion of accrued interest onany loan under the agreement by adding up to 80% of the interest due and payable at a particular timein respect of such loan to the outstanding principal amount of the loan. As of March 31, 2009, noamounts were outstanding under this arrangement.

Debt Covenants

Borrowings of the Company contain various customary loan covenants. These covenants do not, inmanagement’s opinion, materially restrict KKR’s investment or financing strategy. The Company is incompliance with all of its loan covenants as of March 31, 2009.

Investment Commitments

As of March 31, 2009 there were no outstanding investment commitments at any of the KKRFunds.

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KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

10. COMMITMENTS AND CONTINGENCIES (Continued)

The general partners of the Traditional Private Equity Funds had unfunded general partner capitalcommitments to such funds of approximately $469.8 million as of March 31, 2009.

Contingent Repayment Guarantee

Certain Company personnel who have received carried interest distributions with respect toTraditional Private Equity Funds have personally guaranteed, on a several basis and subject to a cap,the contingent obligations of the general partners of the Traditional Private Equity Funds to repayamounts to fund limited partners pursuant to the general partners’ equity clawback obligations, if any.As of March 31, 2009, approximately $945.7 million of carried interest has been paid to certain of thegeneral partners of the KKR Funds that is subject to contingent repayment if such funds wereliquidated at zero value, a possibility which management views as remote. If such funds were liquidatedat their current fair market values, the contingent repayment amount would be approximately$411.9 million Certain Traditional Private Equity funds allocate to the general partner a greater shareof the fund’s losses from investments relative to the capital contributed by the general partner andcorrespondingly reduce noncontrolling interests’ attributable share of those losses. Based on the fairmarket values as of March 31, 2009, capital deficits resulting from losses in excess of gains at certain ofthe Traditional Private Equity Funds amounted to $322.0 million. If the funds were liquidated at zerovalue, such capital deficits in excess of any contingent repayments of carried interest previouslydistributed would be approximately $1,093.8 million.

A portion of the carried interest paid to current and former KKR personnel is held in segregatedaccounts in the event of a cash clawback obligation. These segregated accounts are not included in thefinancial statements of the Company. At March 31, 2009, $94.3 million was held in such segregatedaccounts.

Indemnifications

In the normal course of business, the Company and its subsidiaries enter into contracts thatcontain a variety of representations and warranties and provide general indemnifications. TheCompany’s maximum exposure under these arrangements is unknown as this would involve futureclaims that may be made against the Company’s that have not yet occurred. However, based onexperience, the Company expects the risk of material loss to be remote.

Litigation

From time to time, the Company is involved in various legal proceedings, lawsuits and claimsincidental to the conduct of the Company’s business. The Company believes that the ultimate liabilityarising from such proceedings, lawsuits and claims, if any, will not have a material effect on theCompany’s financial condition, results of operations, or cash flows.

In August 2008, KFN, its directors and executive officers, including certain of the Company’scurrent and former personnel, were named as defendants in a purported class action complaint by KFNshareholders under federal securities laws (the ‘‘Class Action’’). The suit alleges that the registrationstatement utilized by KFN to effectuate its restructuring plan in May 2007 was false and misleading inthat it misrepresented and/or omitted material facts, including carrying value and allowance for loan

F-95

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

10. COMMITMENTS AND CONTINGENCIES (Continued)

losses, relating to the portfolio of mortgage loans held at such time by its REIT subsidiary, KKRFinancial Corp. An amended complaint was filed in March 2009 whereby KFN’s directors were nolonger named as defendants. On April 27, 2009, KFN and the remaining individual defendants in theCharter Litigation moved to dismiss with prejudice all of the claims in the amended complaint. Themotion is currently pending. Also in August 2008, a shareholder derivative action (the ‘‘CA DerivativeAction’’) was filed in California Superior Court purportedly on behalf of KFN against its directors andexecutive officers, including certain of the Company’s current and former personnel, as well as againstKFN as nominal defendant. The suit alleges breaches of fiduciary duty, waste of corporate assets andunjust enrichment by such individuals in connection with the conduct at issue in the Class Actiondiscussed above. By Order dated January 8, 2009, the California Superior Court approved the parties’stipulation to stay the proceedings in the CA Derivative Action until the Class Action is dismissed onthe pleadings or KFN files an answer to the Class Action. In addition, in March 2009, a shareholderderivative action (the ‘‘NY Derivative Action’’) was filed in United States District Court for theSouthern District of New York purportedly on behalf of KFN against its directors and executiveofficers, including certain of the Company’s current and former personnel, as well as against KFN asnominal defendant. The suit alleges breaches of fiduciary duty, waste of corporate assets and unjustenrichment by such individuals in connection with the conduct at issue in the Class Action discussedabove. By order dated June 18, 2009, the United States District Court for the Southern District of NewYork approved the parties’ stipulation to stay the proceedings in the NY Derivative Action until theClass Action is dismissed on the pleadings or KFN files an answer to the Class Action.

In December 2007, the Company, along with 15 other private equity firms and investment banks,were named as defendants in a purported class action complaint by shareholders in certain publiccompanies recently acquired by private equity firms. In August 2008, the Company, along with 16 otherprivate equity firms and investment banks, were named as defendants in a purported amended classaction complaint. The suits allege that the defendant firms engaged in certain cooperative behaviorduring the bidding process in certain going-private transactions in violation of antitrust laws and thatthis purported behavior suppressed the price paid by the private equity firms for the plaintiffs’ shares inthe acquired companies below that which would otherwise have been paid in the absence of suchbehavior.

In 2005, the Company and certain of the Company’s investment professionals were named asdefendants in now-consolidated shareholder derivative actions relating to one of our portfoliocompanies. These actions claim that the board of directors of the portfolio company breached itsfiduciary duty of loyalty in connection with the redemption of certain shares of preferred stock in 2004and 2005. The plaintiffs further allege that the Company benefited from these redemptions of preferredstock at the expense of the portfolio company and that the Company usurped a corporate opportunityof the portfolio company in 2002 by purchasing shares of its preferred stock at a discount on the openmarket while causing the portfolio company to refrain from doing the same. In February 2008, thespecial litigation committee formed by the board of directors of the portfolio company, following areview of plaintiffs’ claims, filed a motion to dismiss the actions, which is still pending.

In August 1999, the Company was named as a defendant in an action alleging breach of fiduciaryduty and conspiracy in connection with the acquisition of one of the Company’s portfolio companies in1995. In April 2000, the complaint in this action was amended to further allege that the Company and

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KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

10. COMMITMENTS AND CONTINGENCIES (Continued)

others violated state law by fraudulently misrepresenting the financial condition of this portfoliocompany.

The Company believes that each of these actions is without merit and intends to defend themvigorously.

In addition, in September 2006 and March 2009, the Company received requests for certaindocuments and other information from the Antitrust Division of the U.S. Department of Justice(‘‘DOJ’’) in connection with the DOJ’s investigation of private equity firms to determine whether theyhave engaged in conduct prohibited by United States antitrust laws. The Company is fully cooperatingwith the DOJ’s investigation.

Moreover, in the ordinary course of business, the Company is and can be both the defendant andthe plaintiff in numerous actions with respect to bankruptcy, insolvency and other types of proceedings.Such lawsuits may involve claims that adversely affect the value of certain investments owned by theKKR Funds.

As of March 31, 2009 and December 31, 2008, no amounts were accrued relating to threatened orpending litigation as the Company believes that losses are neither probable nor reasonable estimable.

Operating Leases

The Company leases office space under noncancelable lease agreements in New York, Menlo Park,Houston, San Francisco, Washington DC, London, Paris, Beijing, Hong Kong, Tokyo, Sydney, Mumbaiand Dubai. There are no material rent holidays, contingent rent, rent concessions or leaseholdimprovement incentives associated with any of our property leases. In addition to base rentals, certainlease agreements are subject to escalation provisions, and are recognized on a straight-line basis overthe term of the lease agreement. The related lease commitments have not changed materially sinceMarch 31, 2009.

Principal Protected Product for Private Equity Investments

The fund agreements for the Company’s principal protected product for private equity investmentscontain provisions that require the fund underlying the principal protected product for private equityinvestments (the ‘‘Master Fund’’) to liquidate certain of its portfolio investments in order to satisfyliquidity requirements of the fund agreements, if the performance of the Master Fund is lower thancertain benchmarks defined in the agreements. In an instance where the Master Fund is not incompliance with the defined liquidity requirements and has no remaining liquid portfolio investments,the Company has an obligation to purchase up to $18.41 million of illiquid portfolio investments of theMaster Fund at 95% of their current fair market value. As of March 31, 2009, the performance of theMaster Fund was lower than the defined benchmarks, however, the Master Fund was able to meet itsdefined liquidity requirements

F-97

KKR GROUP

Notes to Condensed Combined Financial Statements (Unaudited) (Continued)

(All Dollars are in Thousands Except Where Otherwise Noted)

11. SUBSEQUENT EVENTS

Investments

Subsequent to March 31, 2009, the KKR Funds committed approximately $1,186.4 million to fiveprivate equity investments. Three of these investments, amounting to $451.4 million, have since closedand none of these investments are expected to exceed 5% of the net assets of consolidated privateequity investments.

KPE Transaction

On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement withKKR pursuant to which, among other things, KKR agreed to acquire all of the assets of KPE andassume all of the liabilities of KPE in exchange for newly issued partner interests in KKR GroupHoldings L.P., or KKR Group Holdings L.P. units (‘‘KPE Transaction’’). The KKR Group Holdings L.P.units will represent equity in the combined business of KPE and KKR and will allow their holders toshare ratably in the assets, liabilities, profits, losses and distributions, if any, of the combined business.Upon completion of the KPE Transaction, the holding of KPE units by KPE unitholders will notchange. KPE will receive KKR Group Holdings L.P. units representing 30% of the combined business.

KPE will undertake a consent solicitation pursuant to which its unitholders will be asked toconsent to the KPE Transaction. The consent of unitholders representing at least a majority of the KPEunits for which a properly submitted consent form is submitted (excluding KPE units whose consentrights are controlled by KKR or its affiliates) is a conditions to completing the CombinationTransaction. If the unitholder consent described above is obtained and the other conditions precedentin the amended purchase and sale agreement are satisfied or waived, KKR will consummate thetransaction as described. If the conditions to closing the KPE Transaction are satisfied or waived on orprior to September 30, 2009, then October 1, 2009 would be the date that KPE and KKR would beginto share ratably in the assets, liabilities, profits, losses and distributions, if any, of the combinedbusiness of KPE and KKR and that reporting as a combined company would begin.

F-98

Appendix A

AMENDED AND RESTATEDPURCHASE AND SALE AGREEMENT

by and among

KKR & CO. L.P.,

KKR PRIVATE EQUITY INVESTORS, L.P.,

KKR GROUP HOLDINGS L.P.

(solely for purposes of Section 1.1, Section 1.2, Section 3 and Section 9.2),

KKR PEI ASSOCIATES, L.P.

(solely for purposes of Section 1.4),

KKR HOLDINGS L.P.

(solely for purposes of Section 4, Section 5.4, Section 5.7, Section 5.10(b) and Section 9.10),

KKR MANAGEMENT HOLDINGS L.P.

(solely for purposes of Section 6)

and

KKR FUND HOLDINGS L.P.

(solely for purposes of Section 6)

Dated as of July 19, 2009

TABLE OF CONTENTS

Page

1. THE PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

1.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

1.3 Satisfaction of Conditions; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

1.4 Acquired Partnership GP Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

2. REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . . . . . . . . . . . . . . A-3

2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

2.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

2.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4

2.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5

2.5 Ownership of Limited Partner Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5

2.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5

2.7 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THECONTROLLING PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6

3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6

3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

3.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

3.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

3.5 Absence of Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8

3.6 Contributed Interests; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8

3.7 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8

3.8 Internal Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9

3.9 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9

3.10 Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

3.11 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

3.12 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

3.13 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

3.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10

3.16 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11

3.17 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11

3.18 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11

Page

3.19 No Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12

3.20 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12

3.21 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12

4. REPRESENTATIONS AND WARRANTIES OF HOLDINGS . . . . . . . . . . . . . . . . . . . . . A-12

4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12

4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13

4.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13

4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13

5. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13

5.1 Consent Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13

5.2 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15

5.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15

5.4 Restructuring Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16

5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17

5.6 Modifications to Existing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17

5.7 Execution of Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17

5.8 Delivery of Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18

5.9 Conduct of Business of the Controlling Partnership . . . . . . . . . . . . . . . . . . . . . . . . . A-18

5.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20

5.11 Anti-takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20

5.12 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20

5.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21

6. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21

7. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23

7.1 Mutual Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23

7.2 Conditions to Obligations of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23

7.3 Conditions to Obligations of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24

8. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25

8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25

8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26

ii

Page

9. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26

9.1 Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . A-26

9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26

9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27

9.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28

9.5 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28

9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28

9.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28

9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29

9.9 Assignment; Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29

9.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29

9.11 Actions of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29

9.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29

9.13 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29

9.14 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30

9.15 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30

9.16 Effect on Original Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30

iii

Exhibits

Exhibit A: Press Release

Exhibit B: Transaction Structure

Exhibit C: Structuring Memorandum

Exhibit D: Form of Investment Agreement

Exhibit E: Form of Exchange Agreement

Exhibit F: Form of Confidentiality and Restrictive Covenant Agreement

Exhibit G: Form of Amended and Restated Limited Partnership Agreement of the Purchaser

Exhibit H: Form of Amended and Restated Limited Partnership Agreement of KKR ManagementHoldings L.P.

Exhibit I: Form of Amended and Restated Limited Partnership Agreement of KKR FundHoldings L.P.

Exhibit J: Form of Amended and Restated Limited Liability Company Agreement of theControlling Partnership GP

Exhibit K: Forms of Lock-Up Agreements

Exhibit L: Form of Tax Receivables Agreement

Exhibit M: Termination of Investment Agreement

Exhibit N: Amended and Restated Services Agreement

Exhibit O: Investment Policies and Procedures

Exhibit P: Amended and Restated Acquired Partnership LPA

Exhibit Q: Audit Committee Charter

Exhibit R: Amendment to Articles of Incorporation of Seller GP

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INDEX OF DEFINED TERMS

Acquired Partnership . . . . . . . . . . . . . . . A-1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Acquired Partnership GP . . . . . . . . . . . . A-1 Limited Partner Interests . . . . . . . . . . . . A-1

Acquired Partnership LPA . . . . . . . . . . . A-4 Lock-Up Agreement . . . . . . . . . . . . . . . A-21

Acquisition Proposal . . . . . . . . . . . . . . . A-19 Losses . . . . . . . . . . . . . . . . . . . . . . . . . . A-25

affiliate . . . . . . . . . . . . . . . . . . . . . . . . . A-33 Management Holdings . . . . . . . . . . . . . . A-1

Agreement . . . . . . . . . . . . . . . . . . . . . . A-1 Management Holdings LPA . . . . . . . . . . A-21

Board . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 Material Adverse Effect . . . . . . . . . . . . . A-5

Code . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13 Material Contract . . . . . . . . . . . . . . . . . A-13

Confidential Controlling Partnership Original Agreement . . . . . . . . . . . . . . . . A-1Disclosure Schedule . . . . . . . . . . . . . . A-7 Outside Date . . . . . . . . . . . . . . . . . . . . . A-30

Consent Solicitation Documents . . . . . . . A-16 Participant . . . . . . . . . . . . . . . . . . . . . . . A-13Consolidated Persons . . . . . . . . . . . . . . . A-7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . A-12Contract . . . . . . . . . . . . . . . . . . . . . . . . A-8 Permitted Liens . . . . . . . . . . . . . . . . . . . A-6Contributed Interests . . . . . . . . . . . . . . . A-9 person . . . . . . . . . . . . . . . . . . . . . . . . . . A-33Controlling Partnership . . . . . . . . . . . . . A-1 Press Release . . . . . . . . . . . . . . . . . . . . A-14Controlling Partnership GP . . . . . . . . . . A-1 Proceedings . . . . . . . . . . . . . . . . . . . . . . A-25Controlling Partnership GP Agreement . . A-21 Purchase and Sale . . . . . . . . . . . . . . . . . A-2Effect . . . . . . . . . . . . . . . . . . . . . . . . . . A-5 Purchaser . . . . . . . . . . . . . . . . . . . . . . . A-1Effective Time . . . . . . . . . . . . . . . . . . . . A-3 Purchaser Common Units . . . . . . . . . . . . A-2Exchange Act . . . . . . . . . . . . . . . . . . . . A-33 Purchaser Enhanced Arrangement . . . . . A-13Exchange Agreement . . . . . . . . . . . . . . . A-21 Purchaser GP . . . . . . . . . . . . . . . . . . . . A-1Fund Holdings . . . . . . . . . . . . . . . . . . . . A-1 Purchaser LPA . . . . . . . . . . . . . . . . . . . . A-21Fund Holdings LPA . . . . . . . . . . . . . . . . A-21 Requisite Unitholder Consent . . . . . . . . . A-16GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . A-5 Restructuring Transactions . . . . . . . . . . . A-19Governmental Entity . . . . . . . . . . . . . . . A-6 Satisfaction Date . . . . . . . . . . . . . . . . . . A-3Group Partnerships . . . . . . . . . . . . . . . . A-1 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10Holdings . . . . . . . . . . . . . . . . . . . . . . . . A-1 Securities Act . . . . . . . . . . . . . . . . . . . . A-10HSR Act . . . . . . . . . . . . . . . . . . . . . . . . A-6 Seller . . . . . . . . . . . . . . . . . . . . . . . . . . A-1Independent Directors . . . . . . . . . . . . . . A-2 Seller Common Units . . . . . . . . . . . . . . . A-2Interim Financial Statements . . . . . . . . . A-9 Seller GP . . . . . . . . . . . . . . . . . . . . . . . A-1Investment Agreement . . . . . . . . . . . . . . A-21 Seller Limited Partnership Agreement . . . A-5Investment Company Act . . . . . . . . . . . . A-11 Seller Recommendation . . . . . . . . . . . . . A-16KKR Funds . . . . . . . . . . . . . . . . . . . . . . A-7 Specified Information . . . . . . . . . . . . . . . A-17KKR Group . . . . . . . . . . . . . . . . . . . . . A-9 Tax Receivables Agreement . . . . . . . . . . A-21Liability . . . . . . . . . . . . . . . . . . . . . . . . A-3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . A-12

v

AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT

This AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT, dated as ofJuly 19, 2009 (as amended, supplemented or otherwise modified from time to time, this ‘‘Agreement’’),is entered into by and among (1) KKR & Co. L.P., a Delaware limited partnership (the ‘‘ControllingPartnership’’), acting through KKR Management LLC, a Delaware limited liability company (the‘‘Controlling Partnership GP’’) in its capacity as the general partner of the Controlling Partnership,(2) KKR Private Equity Investors, L.P., a Guernsey limited partnership (the ‘‘Seller’’), acting throughKKR Guernsey GP Limited, a Guernsey company limited by shares (the ‘‘Seller GP’’) in its capacity asthe general partner of the Seller, (3) KKR PEI Associates, L.P., a Guernsey limited partnership (the‘‘Acquired Partnership GP’’), acting in its capacity as the general partner of KKR PEI Investments, L.P.,a Guernsey limited partnership (the ‘‘Acquired Partnership’’), and acting through KKR PEI GP Limited,a Guernsey company limited by shares in its capacity as general partner of the AcquiredPartnership GP (solely for purposes of Section 1.4), (4) KKR Holdings L.P., a Cayman Islandsexempted limited partnership (‘‘Holdings’’), acting through KKR Holdings GP Limited in its capacity asgeneral partner of Holdings (solely for purposes of Section 4, Section 5.4, Section 5.7, Section 5.10(b)and Section 9.10), (5) KKR Management Holdings L.P., a Delaware limited partnership (‘‘ManagementHoldings’’), acting through KKR Management Holdings Corp. in its capacity as the general partner ofManagement Holdings (solely for purposes of Section 6), (6) KKR Fund Holdings L.P. (‘‘FundHoldings’’), a Cayman Islands exempted limited partnership, acting through KKR Management LLC inits capacity as the general partner of the general partner of Fund Holdings (solely for purposes ofSection 6) (Management Holdings and Fund Holdings are sometimes collectively referred to herein asthe ‘‘Group Partnerships’’) and (7) KKR Group Holdings L.P. (the ‘‘Purchaser’’), a Cayman Islandsexempted limited partnership, acting through KKR Group Limited, a Cayman limited company (the‘‘Purchaser GP’’) in its capacity as the general partner of the Purchaser (solely for purposes ofSection 1.1, Section 1.2, Section 3 and Section 9.2).

WHEREAS, the parties hereto (other than the Purchaser) entered into a Purchase and SaleAgreement, dated as of July 27, 2008 (the ‘‘Original Agreement’’);

WHEREAS, the parties hereto now desire to amend and restate the Original Agreement in itsentirety as provided in this Agreement;

WHEREAS, the Seller owns all of the limited partner interests (the ‘‘Limited Partner Interests’’) inthe Acquired Partnership and certain other assets;

WHEREAS, the Seller desires to sell, and the Purchaser desires to purchase, all of the LimitedPartner Interests and all of the other assets of the Seller upon the terms and subject to the conditionsset forth in this Agreement;

WHEREAS, the Controlling Partnership, the Purchaser, Holdings and Messrs. Henry Kravis andGeorge Roberts have each disclosed to the Seller and the board of directors of the Seller GP (the‘‘Board’’) in accordance with the organizational documents of the Seller GP and the Seller LimitedPartnership Agreement (as defined below) that each of them is an Interested Party (as such term isdefined in the Seller Limited Partnership Agreement) and accordingly this Agreement and thetransactions contemplated hereby are required, among other things, to be approved by a majority of thedirectors of the Seller GP who are not affiliated with the Controlling Partnership, the Purchaser, thePurchaser GP or Holdings (the ‘‘Independent Directors’’);

WHEREAS, the Board approved guidelines to govern the conduct of the Independent Directors’review of the transactions contemplated by this Agreement, which guidelines, among other things,provided that the Independent Directors have the authority to set up their own process for evaluatingthe transactions contemplated by this Agreement, have the sole authority to select their advisors, havethe sole authority to negotiate for and on behalf of the Seller the terms and conditions of this

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Agreement, and have the sole authority to recommend to the Board that the Board approve or notapprove the transactions contemplated by this Agreement;

WHEREAS, the Independent Directors have unanimously recommended to the Board that theBoard approve this Agreement and the transactions contemplated by this Agreement; and

WHEREAS, the Board, acting upon the unanimous recommendation of the IndependentDirectors, has unanimously determined that this Agreement and the transactions contemplated herebyare fair to and in the best interests of the Seller and the holders of common units, including restricteddepository units, of the Seller (the ‘‘Seller Common Units’’) and has approved the execution, deliveryand performance of this Agreement and the consummation of the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties andagreements contained herein, and intending to be legally bound hereby, the parties agree as follows:

1. THE PURCHASE AND SALE

1.1 Purchase and Sale. Upon the terms and subject to the conditions set forth in thisAgreement, at the Effective Time, the Seller shall sell, convey, assign and transfer to the Purchaser,and the Purchaser shall purchase from the Seller, the Limited Partner Interests and all of the otherassets of the Seller, free and clear of all liens, claims, charges, mortgages, pledges, security interests orother encumbrances of any kind (‘‘Liens’’), other than Permitted Liens (as defined below). Inconsideration of the sale, conveyance, assignment and transfer of the Limited Partner Interests and allof the other assets of the Seller and upon the terms and subject to the conditions set forth in thisAgreement, at the Effective Time, the Purchaser shall deliver to the Seller a number of common unitsrepresenting limited partner interests of the Purchaser (the ‘‘Purchaser Common Units’’) equal to thenumber of Seller Common Units then outstanding, as a result of which the Seller will at the EffectiveTime own 100% of the outstanding Purchaser Common Units. The transactions contemplated by thisSection 1.1 are sometimes referred to herein as the ‘‘Purchase and Sale’’.

1.2 Assumption of Liabilities. Upon the terms and subject to the conditions set forth in thisAgreement, at the Effective Time, the Purchaser shall assume and pay, perform and discharge whendue and indemnify the Seller and the Seller GP and hold the Seller and the Seller GP harmless againstall of the Liabilities of the Seller and the Seller GP as of the Effective Time and all of the Liabilities ofthe Seller and the Seller GP incurred at or arising after the Effective Time. The Purchaser shall havethe right to cause one or more of its designated affiliates to assume and pay, perform and dischargewhen due the Liabilities, but in no event shall the Purchaser be released from its obligation in thisSection 1.2 to indemnify the Seller and the Seller GP and hold the Seller and the Seller GP harmlessagainst such Liabilities. For purposes of the foregoing, ‘‘Liability’’ means any debt, liability or obligation(whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, presentor future, accrued or unaccrued, liquidated or unliquidated, or due or to become due, and whether incontract, tort, strict liability or otherwise), including any off-balance sheet liabilities and all liabilitiesrelating to or incurred in connection with any suit, claim, action, proceeding, arbitration or investigationarising out of or related to this Agreement or the transactions contemplated by this Agreement.

1.3 Satisfaction of Conditions; Effective Time.

(a) All of the conditions set forth in Section 7 of this Agreement shall be deemed to beirrevocably satisfied or waived for all purposes of this Agreement on the first date on which all of theconditions set forth in Section 7 of this Agreement have been satisfied or lawfully waived (such date,the ‘‘Satisfaction Date’’) (it being understood and agreed that for purposes of determining theSatisfaction Date, the conditions set forth in Section 7.2(a)-(c) and Section 7.3(a)-(c) shall be deemedsatisfied or waived on the date on which all of the other conditions set forth in Section 7 of thisAgreement have been satisfied or waived if the conditions set forth in Section 7.2(a)-(c) and

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Section 7.3(a)-(c) are waived or capable of being satisfied (and in the case of Section 7.2(b) andSection 7.3(b) have been satisfied) as of such date, or if not capable of being satisfied as of such date,on the first date after such date on which the conditions set forth in Section 7.2(a)-(c) andSection 7.3(a)-(c) are waived or capable of being satisfied (and in the case of Section 7.2(b) andSection 7.3(b) have been satisfied)); provided that in no event shall the Satisfaction Date be prior toAugust 14, 2009 unless the Controlling Partnership has consented to an earlier Satisfaction Date.

(b) Each party agrees to deliver, or cause to be delivered, any documents or instruments that arerequired to be delivered in order to satisfy the conditions set forth in Section 7.2 and Section 7.3 onthe date that would constitute the Satisfaction Date assuming that such documents and instrumentshave been delivered on such date, and the delivery of those documents shall occur at the offices ofSimpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, or such otherplace as the parties shall mutually agree.

(c) The transfer of assets contemplated pursuant to Section 1.1 hereof, and the assumption ofliabilities contemplated pursuant to Section 1.2 hereof, shall not be effected, or deemed to be effected,until the Effective Time. For purposes of this Agreement, the ‘‘Effective Time’’ shall mean 12:01 amEastern Time on October 1, 2009 or, in the event the Satisfaction Date has not occurred on or prior toOctober 1, 2009, 12:01 am Eastern Time on the first day of the fiscal quarter of the ControllingPartnership immediately succeeding the fiscal quarter in which the Satisfaction Date occurs; providedhowever without the consent of the Seller the Effective Time shall not occur if (i) the ControllingPartnership or Holdings has not performed in all material respects all obligations required to beperformed by it under Section 5.4, Section 5.5, Section 5.6, Section 5.7 and Section 5.9 during theperiod from the Satisfaction Date to the Effective Time, (ii) the Restructuring Transactions shall nothave been implemented in a manner consistent with the steps set forth in the structure memorandumset forth as Exhibit C hereto, except for deviations thereto which would not reasonably be expected tohave an adverse impact in more than an insignificant respect on the Seller, the Controlling Partnershipor the holders of the Seller Common Units or deviations consented to by the Seller, which consentshall not be unreasonably withheld or delayed or (iii) the Seller shall not have received the certificaterequired to be delivered pursuant to Section 5.4(d). For the avoidance of doubt, notwithstanding theoccurrence of the Satisfaction Date, the beneficial ownership of the assets and liabilities of the Sellerand the Consolidated Persons will be retained by the Seller and the Consolidated Persons, respectively,until the Effective Time and neither the Seller nor the Consolidated Persons shall begin to share in orreceive any of the assets, liabilities, profits, losses or distributions of each other until the EffectiveTime.

1.4 Acquired Partnership GP Consent. In accordance with the requirements of Clause 9.2 of thelimited partnership agreement of the Acquired Partnership (as amended, supplemented or otherwisemodified from time to time, the ‘‘Acquired Partnership LPA’’), the Acquired Partnership GP, acting asgeneral partner of the Acquired Partnership, hereby consents to the transfer of the Limited PartnerInterests upon the terms and subject to the conditions set forth in this Agreement and agrees, subjectto the Purchaser becoming a party to the Acquired Partnership LPA and assuming the Seller’sobligations thereunder, to register the Purchaser as the sole limited partner of the AcquiredPartnership in the books of the Acquired Partnership.

2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.

The Seller GP acting as the general partner of the Seller hereby represents and warrants to theControlling Partnership as follows:

2.1 Organization. The Seller is a limited partnership duly organized, validly existing and in goodstanding under the laws of the Island of Guernsey.

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2.2 Authority. The Seller (acting through the Seller GP) has the requisite power and authority toexecute and deliver this Agreement and to perform its obligations hereunder and consummate thetransactions contemplated hereby. The execution, delivery and performance of this Agreement and theconsummation of the transactions contemplated hereby have been duly authorized by all necessaryaction on the part of the Seller and the Seller GP and, except as contemplated by Section 2.4, no otheraction is necessary on the part of the Seller or the Seller GP for the execution, delivery andperformance by the Seller (acting through the Seller GP) of this Agreement and the consummation ofthe transactions contemplated hereby. This Agreement has been duly executed and delivered by theSeller GP acting as the general partner of the Seller and, assuming due authorization, execution anddelivery by the Controlling Partnership, the Purchaser, Holdings, the Group Partnerships and theAcquired Partnership GP, constitutes a valid and binding obligation of the Seller enforceable againstthe Seller in accordance with its terms, except to the extent that enforceability may be limited bybankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting creditors’rights generally and by general equity principles. The Board, acting upon the unanimousrecommendation of the Independent Directors, has unanimously determined that this Agreement andthe transactions contemplated hereby are fair to and in the best interests of the Seller and the holdersof the Seller Common Units and has approved the execution, delivery and performance of thisAgreement and the consummation of the transactions contemplated hereby.

2.3 No Conflicts.

(a) Neither the execution and delivery of this Agreement by the Seller nor the consummation bythe Seller of the transactions contemplated hereby (including the Restructuring Transactions andincluding the execution and performance of each of the agreements referenced in Section 3.20), norcompliance by the Seller with any of the terms or provisions hereof, will (i) violate any provision of theamended and restated limited partnership agreement of the Seller, dated as of May 2, 2007 (asamended, supplemented or otherwise modified from time to time, the ‘‘Seller Limited PartnershipAgreement’’) and (ii) assuming that the consents, approvals and filings referred to in Section 2.4 areduly obtained or made and except as would not reasonably be expected to have, individually or in theaggregate, a Material Adverse Effect (as defined below) on the Acquired Partnership, violate anystatute, code, ordinance, rule or regulation applicable to the Seller.

(b) For purposes of this Agreement, ‘‘Material Adverse Effect’’ means, with respect to any person(other than the holders of the Seller Common Units), a material adverse effect on the business, resultsof operations or financial condition of such person and any person (other than the AcquiredPartnership and its subsidiaries in the case of the Purchaser) whose financial results are consolidatedwith such person (including, in the case of the Purchaser, the KKR Funds (as defined below)), taken asa whole, and, with respect to the holders of the Seller Common Units, a material adverse effect on theoverall economic value to be received as of the date of this Agreement by the Seller as a result of thePurchase and Sale, taken as a whole (it being understood that for purposes of determining whetherthere has been a Material Adverse Effect with respect to the holders of the Seller Common Units, anyEffect that does not generally affect holders of a material proportion of Seller Common Units will bedisregarded); provided, however, that in determining whether a Material Adverse Effect has occurred orwould reasonably be expected to occur, there shall be excluded any effect, event, development,occurrence or change (each, an ‘‘Effect’’) on the referenced person to the extent the cause of suchEffect is (i) changes in general economic or political conditions, (ii) changes in the financial orsecurities markets generally, (iii) entry into or announcement of the execution of this Agreement,(iv) the commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism,(v) general changes or developments in the industries in which the referenced person operates,(vi) changes in law, rules, regulations, accounting principles generally accepted in the United States ofAmerica (‘‘GAAP’’) or interpretations thereof and (vii) with respect to the Acquired Partnership, anyactions or omissions on the part of the Seller that are directed by the Controlling Partnership or any of

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its affiliates including the Seller GP or the Seller, acting through the Seller GP, except for such actionsor omissions of the Seller GP or the Seller, acting through the Seller GP, that are due to the taking ofany action, or failure to take any action, by the Independent Directors (in their capacity as such);except, in the cases of clauses (ii), (v) and (vi) to the extent that the referenced person, taken as awhole, together with any person (other than the Acquired Partnership and its subsidiaries in the case ofthe Purchaser) whose financial results are consolidated with such person, is materiallydisproportionately affected thereby as compared with other participants in the applicable industry orindustries in which any such persons operate. The parties hereto acknowledge and agree that theexclusions set forth in clauses (i) through (vii) above shall not include, and in determining whether aMaterial Adverse Effect has occurred or would reasonably be expected to occur there may be takeninto account, any Effect the cause of which is any enacted change in United States Tax law, rules,regulations or interpretations thereof, including, for the avoidance of doubt, the enactment of theLevin-Rangel bill (H.R. 1935), the Welch bill (H.R. 2762) and/or any Tax law, statute, rule, ordinanceand/or regulation enacted by any Governmental Entity (as defined below) in the United States having asimilar effect.

2.4 Consents and Approvals. No order, permission, consent, approval, license, authorization,registration, or validation of, or filing with, or notice to, or exemption by, any court, administrativeagency or commission or other governmental authority or instrumentality, legislative body orself-regulatory organization (each a ‘‘Governmental Entity’’) by the Seller is necessary in connection withthe execution, delivery and performance of this Agreement by the Seller and the consummation by theSeller of the transactions contemplated hereby, except (i) for the giving of written notice by theSeller GP to the Guernsey Financial Services Commission, (ii) for the giving of notice by the Seller tothe Authority for the Financial Markets in The Netherlands and/or Euronext Amsterdam by NYSEEuronext, the regulated market of Euronext Amsterdam N.V., (iii) filings necessary to comply with theapplicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended(the ‘‘HSR Act’’) and (iv) for compliance with Section 3.01 of the Authorised Closed-Ended InvestmentSchemes Rules 2008 or for the granting by the Guernsey Financial Services Commission of amodification to Rule 3.01(12) of the Authorised Closed-Ended Investment Schemes Rules 2008 to theeffect that the Purchase and Sale satisfies the criteria for independent valuation if the value of theproperty being sold is subject to an independent fairness opinion from a person qualified to providesuch an opinion.

2.5 Ownership of Limited Partner Interests. The Seller owns beneficially and of record theLimited Partner Interests free and clear of any Liens other than Liens for Taxes (as defined below) andother governmental charges and assessments not yet due and payable or that are being contested ingood faith and for which adequate accruals or reserves have been established (‘‘Permitted Liens’’). TheLimited Partner Interests to be sold pursuant to Section 1.1 of this Agreement consist of Class Alimited partner interests, Class B limited partner interests, Class C limited partner interests andClass D limited partner interests. There are no voting trusts, proxies, powers of attorney or otheragreements or understandings with respect to the voting of any of the Limited Partner Interests.

2.6 Brokers. The Seller has not incurred any obligation or liability, contingent or otherwise, forbrokers’ or finders’ fees or commissions in connection with the transactions contemplated by thisAgreement for which the Controlling Partnership, the Purchaser or the Acquired Partnership is or willbecome liable, except for the fees of Lazard Freres & Co. LLC and Citigroup Global Markets Limitedin connection with the transactions contemplated by this Agreement as advisors to the Seller and theIndependent Directors the amount of which have been disclosed to the Controlling Partnership and willbe borne by the Purchaser in accordance with Section 9.2 in the event the Effective Time occurs andotherwise will be borne by the Seller.

2.7 Other Agreements. Each of the Investment Agreement, the Exchange Agreement and the TaxReceivables Agreement will be duly authorized, executed and delivered by the Seller, and, assuming

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due authorization, execution and delivery by the other parties thereto, will be a valid and bindingobligation of the Seller enforceable against the Seller in accordance with its terms, except to the extentthat enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other lawsrelating to or affecting creditors’ rights generally and by general equity principles.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE CONTROLLINGPARTNERSHIP

Except as otherwise specified in a correspondingly enumerated section of the disclosure scheduledelivered to the Seller by the Controlling Partnership concurrently with the execution of thisAgreement (the ‘‘Confidential Controlling Partnership Disclosure Schedule’’) (it being understood that anymatter set forth under any item under any section or subsection of the Confidential ControllingPartnership Disclosure Schedule shall be deemed disclosure with respect to any other section orsubsection to the extent such matter is disclosed in such a way as to make its relevance to theinformation called for by such other section or subsection reasonably apparent), the ControllingPartnership GP acting as the general partner of the Controlling Partnership and the Purchaser GPacting as the general partner of the Purchaser hereby represents and warrants to the Seller as follows:

3.1 Organization.

(a) Each of the Purchaser, the Controlling Partnership, the Consolidated Persons (as definedbelow) and each of the KKR Funds (as defined below) (i) is duly organized, validly existing and ingood standing (to the extent such a concept exists in the relevant jurisdiction) in the jurisdiction inwhich it is organized, (ii) has the power and authority to own or lease all of its properties and assetsand to carry on its business as it is now being conducted, and (iii) is licensed or qualified to dobusiness in each jurisdiction in which the nature of the business conducted by it or the character orlocation of the properties or assets owned or leased by it makes such licensing or qualificationnecessary, except, in the cases of clauses (ii) and (iii) where the failure to have such power andauthority, or to be so licensed or qualified would not reasonably be expected to have, individually or inthe aggregate, a Material Adverse Effect on the Purchaser (after giving effect to the RestructuringTransactions, but excluding the Acquired Partnership and its subsidiaries).

(b) For purposes of this Agreement, (i) ‘‘Consolidated Persons’’ means the Purchaser and each ofthe persons whose financial results will be consolidated with the Purchaser in accordance with GAAPupon the consummation of the Restructuring Transactions (as defined below) other than (A) the KKRFunds and (B) the Acquired Partnership and its subsidiaries and (ii) ‘‘KKR Funds’’ means investmentfunds or investment vehicles that are from time-to-time managed, sponsored or otherwise advised byone or more members of the KKR Group whose financial results will be required to be consolidatedwith the Purchaser in accordance with GAAP upon the consummation of the RestructuringTransactions, other than the Acquired Partnership and its subsidiaries.

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3.2 Authority. The Controlling Partnership (acting through the Controlling Partnership GP), thePurchaser (acting through the Purchaser GP) and the Group Partnerships have the requisite power andauthority to execute and deliver this Agreement, to perform their obligations hereunder and toconsummate the transactions contemplated hereby (including the Restructuring Transactions). Theexecution, delivery and performance of this Agreement have been and the consummation of thetransactions contemplated hereby (including the Restructuring Transactions) have been, or will be, dulyauthorized by all necessary action on the part of the Controlling Partnership, the Purchaser, thePurchaser GP and the Group Partnerships and no other action will be necessary on the part of theControlling Partnership, the Purchaser, the Controlling Partnership GP and the Group Partnerships forthe execution, delivery and performance by the Controlling Partnership (acting through the ControllingPartnership GP), the Purchaser and the Group Partnerships of this Agreement and the consummationof the transactions contemplated hereby (including the Restructuring Transactions). This Agreementhas been duly executed and delivered by the Controlling Partnership, the Purchaser and the GroupPartnerships and, assuming due authorization, execution and delivery by the Seller, Holdings and theAcquired Partnership GP, constitutes a valid and binding obligation of the Controlling Partnership, thePurchaser and the Group Partnerships, enforceable against the Controlling Partnership, the Purchaserand the Group Partnerships in accordance with its terms, except to the extent that enforceability maybe limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affectingcreditors’ rights generally and by general equity principles.

3.3 No Conflicts. Neither the execution and delivery of this Agreement by the ControllingPartnership, the Purchaser and the Group Partnerships nor the consummation by the ControllingPartnership, the Purchaser and the Group Partnerships of the transactions contemplated hereby(including the Restructuring Transactions and including the execution and performance of each of theagreements referenced in Section 3.20), nor compliance by the Controlling Partnership, the Purchaseror the Group Partnerships with any of the terms or provisions hereof, will (i) violate any provision ofthe certificate of formation or limited partnership agreement of the Controlling Partnership or anysimilar organizational documents of any of the Consolidated Persons or any of the KKR Funds or ofthe Purchaser GP and (ii) assuming that the consents, approvals and filings referred to in Section 3.4are duly obtained or made and except as would not reasonably be expected to have, individually or inthe aggregate, a Material Adverse Effect on the Purchaser (after giving effect to the RestructuringTransactions, but excluding the Acquired Partnership and its subsidiaries), (x) violate any statute, code,ordinance, rule, regulation, judgment, order, award, decree or injunction applicable to the ControllingPartnership, the Purchaser GP, any of the Consolidated Persons or any of the KKR Funds or any oftheir respective properties or assets, or (y) violate, conflict with, result in a breach of any provision ofor the loss of any benefit under, or require redemption or repurchase or otherwise require thepurchase or sale of any securities, constitute a default (or an event which, with notice or lapse of time,or both, would constitute a default) under, result in the termination of or a right of termination orcancellation under, accelerate the performance required by, or result in the creation of any Lien uponany of the properties or assets of the Controlling Partnership, the Purchaser GP, any of theConsolidated Persons or any of the KKR Funds under, any of the terms, conditions or provisions ofany note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument orobligation (each, a ‘‘Contract’’) to which the Controlling Partnership, the Purchaser GP or any of theConsolidated Persons is a party, or by which any of them or any of their respective properties or assetsmay be bound or affected.

3.4 Consents and Approvals. No order, permission, consent, approval, license, authorization,registration, or validation of, or filing with, or notice to, or exemption by, any Governmental Entity bythe Controlling Partnership, the Purchaser or the Group Partnerships is necessary in connection withthe execution, delivery and performance of this Agreement by the Controlling Partnership, thePurchaser or the Group Partnerships and the consummation by the Controlling Partnership, thePurchaser or the Group Partnerships of the transactions contemplated hereby (including the

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Restructuring Transactions and including the execution of the agreements referenced in Section 3.20),except filings necessary to comply with the applicable requirements of the HSR Act.

3.5 Absence of Material Adverse Effect. Since March 31, 2009, there has been no Effect that,individually or in the aggregate, has had or would reasonably be expected to have, individually or in theaggregate, a Material Adverse Effect on the Purchaser (after giving effect to the RestructuringTransactions, but excluding the Acquired Partnership and its subsidiaries).

3.6 Contributed Interests; Financial Statements.

(a) Except as set forth in Section 3.6(a) of the Confidential Controlling Partnership DisclosureSchedule, upon consummation of the Restructuring Transactions, the Group Partnerships will own,directly and indirectly, all of the controlling and economic interests in the group of entities (the ‘‘KKRGroup’’) whose financial position, results of operations and cash flows are reflected in the historicalcondensed combined financial statements of the KKR Group as of December 31, 2008 and for the yearthen ended and as of March 31, 2009 and for the three months then ended (the ‘‘Interim FinancialStatements’’). Such interests (other than those included in the exceptions set forth in the precedingsentence) are sometimes referred to herein as the ‘‘Contributed Interests.’’

(b) Complete, true and correct copies of the Interim Financial Statements and the historicalcombined financial statements of the KKR Group as of December 31, 2007 and for the year thenended and as of December 31, 2008 and for the year then ended are attached hereto as Section 3.6(b)of the Confidential Controlling Partnership Disclosure Schedule. Such financial statements (including,in each case, any notes thereto) comply in all material respects with the published rules and regulationsof the SEC in effect as of the date of this Agreement and have been prepared in accordance withGAAP applied on a consistent basis throughout the periods involved (except as may be indicated in thenotes thereto). The combined financial statements of the KKR Group as of December 31, 2008 and forthe year then ended were audited by Deloitte & Touche LLP and fairly present, in all material respects,the combined financial condition, results of operations, changes in equity and cash flows of the KKRGroup as of December 31, 2008 and for the year then ended. The Interim Financial Statements wereprepared in a manner that is consistent with the preparation of the annual financial statements andfairly present in all material respects, the combined financial position, results of operations, changes inequity and cash flows of the KKR Group as of the dates and for the periods presented therein (subjectto normal year-end audit adjustments which are not expected to be, individually or in the aggregate,materially adverse to the KKR Group taken as a whole and the absence of certain footnote disclosuresnot required with respect to interim dates).

(c) Deloitte & Touche LLP is, and during the periods covered by the KKR Group’s financialstatements referred to in Section 3.6(b), was an independent registered public accounting firm asrequired under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’), and thepublished rules and regulations thereunder adopted by the United States Securities and ExchangeCommission (the ‘‘SEC’’) and the Public Company Accounting Oversight Board (United States).

3.7 No Undisclosed Liabilities.

(a) Except (i) for those liabilities that are reflected or reserved against on the combined statementof financial condition included in the Interim Financial Statements or described in the footnotes to theInterim Financial Statements, (ii) for liabilities incurred in the ordinary course of business sinceMarch 31, 2009 and (iii) for liabilities incurred in connection with this Agreement and the transactionscontemplated hereby, including the Restructuring Transactions, the KKR Group has not incurred anymaterial liabilities or obligations that would be required to be reflected or reserved against on acombined statement of financial condition of the KKR Group prepared in accordance with GAAP.

(b) The Controlling Partnership, the Purchaser, the Purchaser GP and KKR ManagementHoldings Corp. (i) have been formed solely for the purpose of engaging in the transactions

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contemplated hereby (including the Restructuring Transactions) and (ii) have engaged and, prior to theSatisfaction Date, will have engaged in no other business activities, and have incurred and, prior to theSatisfaction Date, will have incurred no liabilities or obligations other than in furtherance of thetransactions contemplated hereby (including the Restructuring Transactions).

3.8 Internal Controls. The Controlling Partnership, each of the Consolidated Persons and each ofthe KKR Funds have established and maintain a system of internal accounting controls sufficient toprovide reasonable assurance that (i) transactions are executed in accordance with management’sgeneral or specific authorizations; (ii) transactions are recorded as necessary to permit preparation offinancial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assetsis permitted only in accordance with management’s general or specific authorization; and (iv) therecorded accountability for assets is compared with the existing assets at reasonable intervals andappropriate action is taken with respect to any differences. Since December 31, 2008, there has been nochange in the KKR Group’s internal controls over financial reporting that has materially adverselyaffected, or is reasonably likely to materially adversely affect, the KKR Group’s internal controls overfinancial reporting.

3.9 Capitalization.

(a) The Purchaser Common Units and the limited partnership interests evidenced thereby to beissued to the Seller pursuant to Section 1.1 will be duly authorized prior to issuance and, when issuedpursuant to the terms and conditions of this Agreement, will be validly issued and fully paid and freeand clear of any Liens. Except for (i) Purchaser Common Units issuable to the Seller pursuant toSection 1.1 or in connection with an exchange by Holdings or its designees of partner interests in theGroup Partnerships in accordance with the Exchange Agreement (as defined below), and(ii) non-economic general partner interests in the Purchaser, there are no (A) outstanding equityinterests in the Purchaser, (B) outstanding securities or other instruments or rights of any personconvertible or exchangeable for equity interests in the Purchaser or (C) options or other rights toacquire from the Purchaser any equity interests in the Purchaser or obligations of the Purchaser toissue any equity interests in the Purchaser.

(b) All of the issued shares of capital stock, partnership interests, member interests or otherequity interests of each other Consolidated Person have been or will be, duly authorized and validlyissued and fully paid (in the case of any other Consolidated Persons that are organized as limitedliability companies, limited partnerships or other business entities, to the extent required under theapplicable limited liability company, limited partnership or other organizational agreement) andnon-assessable (except in the case of interests held by general partners or similar entities under theapplicable laws of other jurisdictions, in the case of any Consolidated Persons that are organized aslimited liability companies, as such non-assessability may be affected by Section 18-303, Section 18-607or Section 18-804 of the Delaware Limited Liability Company Act or similar provisions under theapplicable laws of other jurisdictions or the applicable limited liability company agreement and, in thecase of any Consolidated Persons that are organized as limited partnerships, as such non-assessabilitymay be affected by Section 17-303, Section 17-607 or Section 17-804 of the Delaware Revised UniformLimited Partnership Act or similar provisions under the applicable laws of other jurisdictions or theapplicable limited partnership agreement) and are owned or will be owned, as the case may be, directlyor indirectly by the Purchaser or Holdings, free and clear of any Liens other than Permitted Liens.

(c) Other than as referred to in Section 3.9(a), there are no preemptive rights or other rights tosubscribe for, to purchase, to exchange any securities or interests for or to convert any securities orinterests into, any partnership interests or partnership units or membership interests or shares of capitalstock of the Controlling Partnership or any of the Consolidated Persons pursuant to any partnership orlimited liability company agreement, any articles or certificates of incorporation or other governingdocuments or any agreement or other instrument to which the Controlling Partnership or such

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Consolidated Person is a party or by which the Controlling Partnership or such Consolidated Personmay, directly or indirectly, be bound, and there are no outstanding options or warrants to purchase anysecurities of the Controlling Partnership or any of the Consolidated Persons.

3.10 Investment Company. Neither the Controlling Partnership nor any of the ConsolidatedPersons is, nor on the Satisfaction Date, after giving effect to the transactions contemplated hereby(including the Restructuring Transactions), will be required to register as an investment company underthe United States Investment Company Act of 1940, as amended (the ‘‘Investment Company Act’’).

3.11 Compliance with Law. The businesses of the Controlling Partnership, the ConsolidatedPersons and the KKR Funds are being, and since January 1, 2007, have been, conducted in compliancein all material respects with any law, statute, rule, ordinance or regulation of any Governmental Entity.Since January 1, 2007, neither the Controlling Partnership nor any of the Consolidated Persons nor anyof the KKR Funds has received any written communication or notice from any Governmental Entitythat alleges that the Controlling Partnership or a Consolidated Person or a KKR Fund is not incompliance in any material respect with any law, statute, rule, ordinance or regulation of anyGovernmental Entity and that is reasonably likely to give rise to any material liability on the part of theControlling Partnership, any of the Consolidated Persons or any of the KKR Funds.

3.12 Permits. The Controlling Partnership, the Consolidated Persons and the KKR Funds havereceived all material permits, certificates, licenses and authorizations (the ‘‘Permits’’) to own or holdunder lease and operate their respective assets and to conduct the business of the ControllingPartnership, the Consolidated Persons and the KKR Funds as currently conducted. All such Permits arevalidly held by the Controlling Partnership, the Consolidated Persons and the KKR Funds, as the casemay be, and each of the Controlling Partnership, the Consolidated Persons and the KKR Funds hascomplied in all material respects with all terms and conditions of any such Permit.

3.13 Absence of Litigation. There is no suit, claim, action, proceeding, arbitration or investigationpending or, to the knowledge of the Controlling Partnership, threatened against the ControllingPartnership, any of the Consolidated Persons or any KKR Fund that would reasonably be expected tohave, individually or in the aggregate, a Material Adverse Effect on the Purchaser (after giving effect tothe Restructuring Transactions, but excluding the Acquired Partnership and its subsidiaries). Neither theControlling Partnership nor any of the Consolidated Persons nor any KKR Fund is subject to or boundby any outstanding order, injunction, judgment, award or decree that would reasonably be expected tohave, individually or in the aggregate, a Material Adverse Effect on the Purchaser (after giving effect tothe Restructuring Transactions, but excluding the Acquired Partnership and its subsidiaries).

3.14 Taxes. Each of the Controlling Partnership, the Consolidated Persons and, to theknowledge of the Controlling Partnership, the KKR Funds has (i) duly and timely filed (includingpursuant to applicable extensions) all material returns, reports, information returns or other documentsrequired to be filed with any taxing authority with respect to any taxes, charges, levies, penalties,interest, fees or other assessments imposed by any United States federal, state, local or foreign taxingauthority (‘‘Taxes’’) and such returns, reports and other documents are true and correct and (ii) paid infull all material Taxes due or claimed to be due or owing from such entity, other than any suchamounts being contested in good faith and by appropriate proceedings and for which adequate reserveshave been provided in accordance with GAAP. There are no material Tax audits or investigations ofwhich the Controlling Partnership, any of the Consolidated Persons or, to the knowledge of theControlling Partnership, any of the KKR Funds has notice, nor does the Controlling Partnership havenotice of any proposed additional material Tax assessments against the Controlling Partnership, any ofthe Consolidated Persons or, to the knowledge of the Controlling Partnership, any of the KKR Funds.

3.15 Material Contracts. As of the date of this Agreement, except for this Agreement, neitherthe Controlling Partnership nor any of the Consolidated Persons nor any KKR Fund is a party to orbound by any Contract that is a ‘‘material contract’’ (as such term is defined in Item 601(b)(10) of

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Regulation S-K but without giving effect to the provisions of clause (i) thereof relating to the exclusionof contracts entered into more than two years before the filing of a registration statement) of theControlling Partnership (after giving effect to the Restructuring Transactions, but excluding theAcquired Partnership and its subsidiaries) (each such Contract, a ‘‘Material Contract’’). As of the dateof this Agreement, each of the Material Contracts is valid and binding on the Controlling Partnershipor the Consolidated Person or the KKR Fund party thereto and is in full force and effect in allmaterial respects. There is no material breach or default under any Material Contract or any materialmanagement agreement by the Controlling Partnership or the Consolidated Person or the KKR Fundparty thereto or, to the knowledge of the Controlling Partnership, any other party thereto and no eventhas occurred that with or without the lapse of time or the giving of notice or both would constitute amaterial breach or default thereunder by the Controlling Partnership, the Consolidated Person, theKKR Fund party thereto or, to the knowledge of the Controlling Partnership, any other party thereto.None of the Controlling Partnership or any of the applicable Consolidated Persons or KKR Funds hasreceived prior to the date of this Agreement any notice of the intention of any party to terminate anyMaterial Contract or any material management agreement. Complete, true and correct copies of allMaterial Contracts, together with all existing modifications and amendments thereto, have been madeavailable to the Seller prior to the date of this Agreement.

3.16 Benefits. No condition exists that would subject the Controlling Partnership or any of theConsolidated Persons, either directly or by reason of their affiliation with any member of their‘‘controlled group’’ (defined as any organization which is a member of a controlled group oforganizations within the meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of1986, as amended (the ‘‘Code’’)), to any material Tax, fine, lien, penalty or other liability imposed bythe Employee Retirement Income Security Act of 1974, as amended, the Code or other applicable laws,rules and regulations. There are no plans, programs, policies, agreements, arrangements orunderstandings of the Controlling Partnership or any of the Consolidated Persons pursuant to theexpress terms of which any partner, member, director, officer, employee or consultant of theControlling Partnership or any of the Consolidated Persons (each, a ‘‘Participant’’) would reasonably beexpected to become entitled to (a) any additional compensation, enhanced severance or other benefitsor grant of Purchaser Common Units or awards related thereto or any acceleration of the time ofpayment or vesting of any compensation, severance or other benefits or any funding of anycompensation or benefits by the Controlling Partnership or any of the Consolidated Persons, in eachcase, as a result of the Restructuring Transactions or (b) any other compensation or benefits from theControlling Partnership or any of the Consolidated Persons that is related to, contingent upon, or thevalue of which would be calculated on the basis of the Purchaser Common Units (each such plan,program, policy, agreement, arrangement or understanding described in the foregoing clause (a) or (b),a ‘‘Purchaser Enhanced Arrangement’’). Neither the Controlling Partnership nor any of the ConsolidatedPersons (other than Holdings or an affiliate thereof (other than the Controlling Partnership or any ofthe Consolidated Persons)) is a party to any written employment, retention bonus, change in control,severance or termination agreement with any Participant who is entitled to compensation from theControlling Partnership or any of the Consolidated Persons in excess of $1,000,000 per year.

3.17 Brokers. Neither the Controlling Partnership, the Purchaser, the Purchaser GP, nor anyConsolidated Person has incurred any obligation or liability, contingent or otherwise, for brokers’ orfinders’ fees or commissions in connection with the transactions contemplated by this Agreement forwhich the Seller is or will become liable.

3.18 Press Release. (a) The press release to be issued on announcement of the execution of thisAgreement, including any attachments thereto, is attached hereto as Exhibit A (the ‘‘Press Release’’).The information set forth in the Press Release is true and correct in all material respects and is notmisleading in any material respect. The Press Release contains, in summary form, all the informationabout the Purchaser (after giving effect to the Restructuring Transactions), the terms and conditions of

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the Purchase and Sale, the Restructuring Transactions, the Investment Agreement and theconsideration to be received by the Seller pursuant hereto, including information necessary forassessing the value of such consideration, that is required to be made publicly available as of the dateof this Agreement pursuant to the Dutch Financial Markets Supervision Act or the Protection ofInvestors (Bailiwick of Guernsey) Law, 1987, as amended. Without limiting the provisions set forth inthe preceding sentence, the parties acknowledge that additional information with respect to thePurchaser, the terms and conditions of the Purchase and Sale, the Restructuring Transaction, theInvestment Agreement and the consideration to be received by the Seller, including pro forma financialinformation, will be included in the Consent Solicitation Documents.

(b) The ranges of economic net income, assets under management and fee-related earnings of thetotal reportable segments of the KKR Group and the range of net asset value of the Seller included inthe Press Release as of and for the three months ended June 30, 2009 are the Controlling Partnership’sgood faith estimates of such ranges. The economic net income of the total reportable segments of theKKR Group shall be reported by the Controlling Partnership in the footnotes to its financial statementsas at June 30, 2009 within the range included in the Press Release.

3.19 No Registration Rights. There are no Contracts between the Controlling Partnership or anyConsolidated Person and any person granting such a person the right to require the ControllingPartnership or a Consolidated Person to register any securities of any Consolidated Person.

3.20 Other Agreements. Each of the agreements referred to in Section 5.7 will be dulyauthorized, executed and delivered by the Controlling Partnership or the parties thereto that areaffiliated with the Controlling Partnership (other than the Seller), as applicable, and, assuming dueauthorization, execution and delivery by the other parties thereto, will be a valid and binding obligationof the Controlling Partnership or the parties thereto that are affiliated with the Controlling Partnership(other than the Seller), as applicable, enforceable against them in accordance with its terms, except tothe extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium orother laws relating to or affecting creditors’ rights generally and by general equity principles.

3.21 Intellectual Property. (i) The Consolidated Persons own or have the right to use inperpetuity, without payment to any other person, and have duly registered or filed for registration withthe appropriate Governmental Entities, the ‘‘KKR’’ trademark in the United States and, to theknowledge of the Controlling Partnership, in all other countries or jurisdictions where such trademarkis reasonably necessary for the conduct of the business of the Controlling Partnership and theConsolidated Persons as presently conducted, (ii) the consummation of the Purchase and Sale and theother transactions contemplated hereby (including the Restructuring Transactions) does not and will notconflict with, alter or impair any such rights, (iii) since January 1, 2007, none of the ControllingPartnership or any of the Consolidated Persons has received any written communication or notice fromany person asserting any ownership interest in the ‘‘KKR’’ trademark and (iv) none of the ControllingPartnership or any of the Consolidated Persons has granted any license of any kind relating to the‘‘KKR’’ trademark to any unaffiliated third party or is bound by or a party to any written option,license or similar Contract relating to the ‘‘KKR’’ trademark with any unaffiliated third party.

4. REPRESENTATIONS AND WARRANTIES OF HOLDINGS

Holdings hereby represents and warrants to the Seller as follows:

4.1 Organization. Holdings is duly organized and validly existing and in good standing under thelaws of the Cayman Islands.

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4.2 Authority. Holdings has the requisite power and authority to execute and deliver thisAgreement, to perform its obligations hereunder and to consummate the transactions contemplatedhereby (including the Restructuring Transactions). The execution, delivery and performance of thisAgreement and the consummation of the transactions contemplated hereby (including theRestructuring Transactions) have been, or will be, duly authorized by all necessary action on the part ofHoldings and no other action will be necessary on the part of Holdings for the execution, delivery andperformance by Holdings of this Agreement and the consummation of the transactions contemplatedhereby (including the Restructuring Transactions). This Agreement has been duly executed anddelivered by Holdings and, assuming due authorization, execution and delivery by the Purchaser, theControlling Partnership, the Seller, the Group Partnerships and the Acquired Partnership GP,constitutes a valid and binding obligation of Holdings enforceable against Holdings in accordance withits terms, except to the extent that enforceability may be limited by bankruptcy, insolvency,reorganization, moratorium or other laws relating to or affecting creditors’ rights generally and bygeneral equity principles.

4.3 No Conflicts. Neither the execution and delivery of this Agreement by Holdings nor theconsummation of the transactions contemplated hereby, nor compliance by Holdings with any of theterms or provisions hereof, will (i) violate any provision of the certificate of formation or limitedpartnership agreement of Holdings and (ii) assuming that the consents, approvals and filings referred toin Section 3.4 are duly obtained or made and except as would not reasonably be expected to have,individually or in the aggregate, a Material Adverse Effect on Holdings (after the giving effect to theRestructuring Transactions), (x) violate any statute, code, ordinance, rule, regulation, judgment, order,award, decree or injunction applicable to Holdings or any of its properties or assets, or (y) violate,conflict with, result in a breach of any provision of or the loss of any benefit under, or requireredemption or repurchase or otherwise require the purchase or sale of any securities or constitute adefault under, result in the termination of or a right of termination or cancellation under, acceleratethe performance required by, or result in the creation of any Lien upon any of the properties or assetsof Holdings under, any of the terms, conditions or provisions of any Contract to which Holdings is aparty, or by which Holdings or any of its properties or assets may be bound or affected.

4.4 Consents and Approvals. No order, permission, consent, approval, license, authorization,registration, or validation of, or filing with, or notice to, or exemption by, any Governmental Entity byHoldings is necessary in connection with the execution, delivery and performance of this Agreement byHoldings and the consummation by Holdings of the transactions contemplated hereby.

5. ADDITIONAL AGREEMENTS

5.1 Consent Solicitation.

(a) The Controlling Partnership and the Seller shall as promptly as practicable prepare a writtenconsent and such other documents, substantially in the form of the draft provided by the ControllingPartnership to the Seller concurrently with the execution of this Agreement with such changes asdeemed reasonably necessary by the Controlling Partnership and Seller acting in good faith(collectively, the ‘‘Consent Solicitation Documents’’) that may be necessary or desirable (as agreedreasonably and in good faith by the Controlling Partnership and the Seller, taking into accountrequirements under applicable law) to obtain the consent of the holders of at least a majority of theSeller Common Units for which a properly submitted consent form is submitted in response to theConsent Solicitation Documents (excluding in both the numerator and the denominator any SellerCommon Units whose consent rights are controlled by the Controlling Partnership or its affiliates) toconsummate the Purchase and Sale (the ‘‘Requisite Unitholder Consent’’), all pursuant to the proceduresto be agreed reasonably and in good faith by the Controlling Partnership and the Seller, taking intoaccount requirements under applicable law. To the extent that the consent of holders of at least amajority of the Seller Common Units outstanding (excluding from the numerator and the denominator

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any Seller Common Units whose consent rights are controlled by the Controlling Partnership or itsaffiliates and any Seller Common Units whose consent rights are controlled as of the applicable recorddate by a person who has informed the Seller in writing that it will not submit a consent form inresponse to the Consent Solicitation Documents) have been obtained, all consents shall cease to berevocable and the Requisite Unitholder Consent shall be deemed to have been obtained on such date.Subject to Section 5.1(e), the Board has recommended that the holders of Seller Common Unitsconsent to the matters included in the Requisite Unitholder Consent (the ‘‘Seller Recommendation’’),and the Seller shall include the Seller Recommendation in the Consent Solicitation Documents.

(b) On July 24, 2009, or as promptly as possible thereafter, the Seller shall mail, or otherwisedisseminate in a manner that complies with any applicable law, rule, regulation and the Seller LimitedPartnership Agreement, the Consent Solicitation Documents to the holders of the Seller CommonUnits. The Seller shall use its reasonable best efforts to obtain the Requisite Unitholder Consent aspromptly as practicable following the mailing or other dissemination of the Consent SolicitationDocuments. In the event that the consent solicitation period contemplated by the Consent SolicitationDocuments has expired, or would otherwise expire, and the condition set forth in Section 7.1(a) wasnot, or would not be, satisfied upon such expiration, the expiry time of the consent solicitation shall beextended from time to time upon the request of either the Controlling Partnership or the Seller;provided that in no event will the expiry time be extended beyond the Outside Date or in violation ofthe Seller Limited Partnership Agreement without in either case the prior consent of both theControlling Partnership and the Seller.

(c) The Controlling Partnership shall furnish to the Seller all information concerning theControlling Partnership and each of the Consolidated Persons and KKR Funds and such other mattersas may be reasonably necessary or advisable in connection with the Consent Solicitation Documents.The Seller shall provide the Controlling Partnership with a reasonable opportunity to review andcomment (and the Seller shall consider in good faith the inclusion of any comments provided by theControlling Partnership) on the Consent Solicitation Documents and any amendments or supplementsthereto prior to the mailing or other dissemination thereof to the holders of the Seller Common Units.The Controlling Partnership represents that the preliminary unaudited pro forma segment informationto be included in the Consent Solicitation Documents will be based on historical segment informationof the KKR Group and historical financial information of the Acquired Partnership and its subsidiariesand will give effect in all material respects to the aspects of the transactions contemplated hereby(including the Restructuring Transactions) described therein as if such transaction aspects had occurredon January 1, 2008 with respect to the preliminary unaudited pro forma statement of operationssegment information and as of March 31, 2009 with respect to the preliminary unaudited pro formastatement of financial condition segment information by applying the adjustments described in theaccompanying notes. Such adjustments are based on information that is available and determinable asof the date of this Agreement and are based on assumptions that management of the ControllingPartnership believes are reasonable as of the date of this Agreement in order to reflect, on a pro formabasis, the impact of the transaction aspects described therein on the historical segment financialinformation of the KKR Group.

(d) The Controlling Partnership and, with respect only to the Specified Information (as definedbelow), the Seller, agree that none of the information included or incorporated by reference in theConsent Solicitation Documents will, at the time the Consent Solicitation Documents are mailed orotherwise disseminated to the holders of the Seller Common Units, contain any untrue statement of amaterial fact or omit to state any material fact necessary to make the statements therein, in the light ofthe circumstances under which they were made, not misleading. If at any time prior to the date onwhich the Requisite Unitholder Consent is received any information should be discovered by either theControlling Partnership or the Seller that should be set forth in an amendment or supplement to theConsent Solicitation Documents so that the Consent Solicitation Documents would not include any

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misstatement of a material fact or omit to state any material fact necessary to make the statementtherein, in the light of the circumstances under which they were made, not misleading, the party thatdiscovers such information shall promptly notify the other party, and to the extent required by law,rules or regulations, an appropriate amendment or supplement describing such information shall bepromptly mailed or otherwise disseminated to the holders of the Seller Common Units. For purposes ofthis Agreement, ‘‘Specified Information’’ shall mean any information concerning the IndependentDirectors and the process conducted by them in connection with the transactions contemplated herebyfurnished in writing by or on behalf of the Independent Directors specifically for use in the ConsentSolicitation Documents, it being understood that such information shall be identified as such by theSeller prior to the mailing or other dissemination of the Consent Solicitation Documents.

(e) At any time prior to the obtaining of the Requisite Unitholder Consent, the IndependentDirectors may change their recommendation to the Board in response to any material events orcircumstances, if the Independent Directors have concluded in good faith, after consultation with, andtaking into account the advice of, their outside legal counsel, that had such material events orcircumstances occurred and/or been known to the Independent Directors prior to the date of thisAgreement, the Independent Directors would, in compliance with their fiduciary duties underapplicable law, not have recommended, or would have modified the terms of their recommendation, tothe Board that the Board approve this Agreement and the transactions contemplated by thisAgreement.

5.2 Reasonable Best Efforts.

(a) Subject to the terms and conditions of this Agreement, each of the Controlling Partnershipand the Seller shall use its reasonable best efforts to take, or cause to be taken, all actions and to do,or cause to be done, all things necessary, proper or advisable to ensure that the conditions set forth inSection 7 of this Agreement are satisfied and to consummate the transactions contemplated by thisAgreement as promptly as practicable, including using its reasonable best efforts to (i) obtain (and tocooperate with the other party to obtain) any consent, authorization, order or approval of, or anyexemption by, any Governmental Entity or any third party which is required to be obtained inconnection with the transactions contemplated by this Agreement from Governmental Entities or thirdparties and (ii) making all registrations, notifications and filings with any Governmental Entity or anythird party that are required to be made in connection with the transactions contemplated by thisAgreement. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to require theControlling Partnership or the Seller to take, or agree to take, any action if the taking of such actionwould reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect onthe Purchaser (after giving effect to the Restructuring Transactions, but excluding the AcquiredPartnership and its subsidiaries) or the Seller, as applicable. Notwithstanding the foregoing, nothingcontained in this Agreement shall be deemed to require the Controlling Partnership or any of itsaffiliates to take any action that would require the Controlling Partnership or any of its affiliates tobecome subject to regulation under the Investment Company Act.

(b) Each of the Controlling Partnership and the Seller shall in connection with the effortsreferenced in Section 5.2(a) (i) promptly cooperate with and furnish information to the other inconnection with any action required to be taken pursuant to Section 5.2(a), and (ii) permit the other toreview any communication given by it to, and consult with each other in advance of any meeting orconference with, any Governmental Entity in connection with the foregoing, and to the extentpermitted by law, give the other the opportunity to attend and participate in such meetings andconferences.

5.3 No Solicitation.

(a) The Seller shall not, and shall cause its investment bankers, attorneys, accountants, agents andother representatives not to, directly or indirectly, (i) solicit, initiate, knowingly encourage, or take any

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action intended to, or which could reasonably be expected to, facilitate the making by any person of anAcquisition Proposal (as defined below) or any inquiry or proposal that could reasonably be expectedto lead to an Acquisition Proposal, (ii) participate in any discussions or negotiations regarding anAcquisition Proposal or any inquiry that constitutes or could reasonably be expected to lead to anAcquisition Proposal, (iii) furnish to any person any information or data with respect to it or any of itsassets or otherwise cooperate with or take any action to knowingly facilitate any proposal thatconstitutes or could reasonably be expected to lead to an Acquisition Proposal or (iv) enter into anyletter of intent, memorandum of understanding or other agreement or understanding relating to, orthat could reasonably be expected to lead to, an Acquisition Proposal. The Seller shall promptly notifythe Controlling Partnership of the receipt of any Acquisition Proposal (or any request for anyinformation or data or other inquiry or request that could reasonably be expected to lead to anAcquisition Proposal). For the avoidance of doubt, the parties understand and agree that nothing inthis Agreement is intended to give the Independent Directors the power or authority to participate inany discussions or negotiations regarding, or entering into any agreement or understanding on behalf ofthe Seller with any person with respect to, any direct or indirect acquisition of any Limited PartnerInterests, any of the outstanding Seller Common Units or any of the assets of the AcquiredPartnership.

(b) For purposes of this Agreement, ‘‘Acquisition Proposal’’ means any inquiry, proposal or offer,whether or not conditional, from any person other than the Controlling Partnership or its affiliatesrelating to any direct or indirect acquisition of (i) any Limited Partner Interests, (ii) 20% or more ofthe outstanding Seller Common Units or (iii) 20% or more of the consolidated assets of the AcquiredPartnership.

5.4 Restructuring Transactions.

(a) Holdings shall use its reasonable best efforts to take, or cause to be taken, such actions as arenecessary so that at the Effective Time: (i) the Group Partnerships shall own, directly or indirectly, allof the Contributed Interests, (ii) upon the completion of the Purchase and Sale, the Purchaser shallcontribute all of the Limited Partnership Interests and any assets of the Acquired Partnershipdistributed to the Purchaser in respect of such Limited Partnership Interests, directly or indirectly, tothe Group Partnerships in exchange for a direct or indirect controlling interest and 30% of theoutstanding Class A units representing limited partner interests in each of the Group Partnerships (itbeing understood that no Class A units that are permitted to be issued pursuant toSection 5.9(a)(iv)(C) shall be deemed outstanding for purposes of the foregoing), and (iii) upon thecompletion of the Purchase and Sale, the structure of the KKR Group shall be consistent with thestructure set forth in Exhibit B hereto. The transactions contemplated by this Section 5.4 are sometimesreferred to herein as the ‘‘Restructuring Transactions’’.

(b) The Restructuring Transactions shall be implemented in a manner that is consistent with thesteps set forth in the structure memorandum attached as Exhibit C hereto, except for deviations thereto(including to address a change in law) which would not reasonably be expected to have an adverseimpact in more than an insignificant respect on the Seller, the Controlling Partnership or the holders ofthe Seller Common Units or deviations consented to by the Seller, which consent shall not beunreasonably withheld or delayed. The Controlling Partnership shall consider in good faith anydeviations to the steps (or methods of implementing the steps) set forth in Exhibit C requested by theSeller or its representatives, it being understood that the decision of whether or not to implement anysuch requested deviations or methods shall be in the sole determination of the Controlling Partnershipacting in good faith.

(c) In connection with the Restructuring Transactions, the Seller and KKR Management HoldingsCorp. shall not make an election under Section 362(e)(2)(C) of the Code to reduce the tax basis in theSeller Common Units held by holders of Seller Common Units immediately before the Restructuring

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Transactions unless a majority of the Independent Directors, prior to the US Listing (as defined in theInvestment Agreement) consent to such election in their sole discretion. Notwithstanding the foregoing,the Independent Directors shall consult in good faith with the Controlling Partnership about whether tomake such an election.

(d) At or prior to the Effective Time, the Controlling Partnership shall deliver to the Seller acertificate signed by a senior officer on behalf of each of the Controlling Partnership GP and thegeneral partner of Holdings in form and substance reasonably satisfactory to the Seller certifying thateach has performed in all material respects all obligations required to be performed by it underSection 5.4, Section 5.5, Section 5.6, Section 5.7 and Section 5.9 during the period from the SatisfactionDate to the Effective Time. The certificate shall be delivered at the offices of Simpson Thacher &Bartlett LLP, 425 Lexington Avenue, New York, NY 10017 or such other place as the parties maymutually agree.

5.5 Insurance. Except as otherwise set forth in Section 5.5 of the Confidential ControllingPartnership Disclosure Schedules, from the Effective Time until the occurrence of the closingcontemplated by the Investment Agreement, the Seller shall, and to the extent required, theControlling Partnership shall cause the non-Independent Directors of the Seller GP to authorize theSeller to, maintain directors’ and officers’ liability insurance for the benefit of the directors and officers(and former directors and officers) of the Seller GP containing at least the same coverage and amountsas the existing directors’ and officers’ liability insurance of the Seller GP in effect on the date of thisAgreement; provided that (i) the Seller shall use its commercially reasonable efforts to increase thecoverage limit for such insurance coverage to $100 million and (ii) the Seller shall not be permitted toexpend annually in excess of the percentage set forth in Section 5.5 of the Confidential ControllingPartnership Disclosure Schedule of the annual premium currently paid by the Seller for such insurance;provided that if the annual premium for such insurance coverage exceeds such amount, the Seller shallbe required to obtain a policy with the greatest coverage available for a cost not exceeding suchamount.

5.6 Modifications to Existing Agreements. Each of the Controlling Partnership and the Seller shalluse its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done,all things necessary, proper or advisable to cause, prior to the Satisfaction Date, or as promptly aspracticable thereafter and in any event prior to the Effective Time (i) the Investment Agreement, datedas of May 10, 2006, between Kohlberg Kravis Roberts & Co. L.P. and the Seller, as amended,supplemented or otherwise modified from time to time, to be terminated at the Effective Timepursuant to the Termination Agreement substantially in the form attached hereto as Exhibit M, (ii) theServices Agreement, dated as of April 23, 2006 among the Seller, Kohlberg Kravis Roberts & Co. L.P.,the Seller GP and the other service recipients named therein to be amended effective at orimmediately following the Effective Time so as to read substantially in the form attached hereto asExhibit N, (iii) the Investment Policies and Procedures of the Seller to be amended effective as of theEffective Time so as to read substantially in the form attached hereto as Exhibit O, (iv) the limitedpartnership agreement of the Acquired Partnership to be amended as of the Effective Time so as toread substantially in the form attached hereto as Exhibit P, (v) the audit committee charter of theboard of the Seller GP to be amended as of the Effective Time so as to read substantially in the formattached hereto as Exhibit Q and (vi) the articles of incorporation of the Seller GP to be amendedeffective as of the Effective Time so as to read in substantially the form attached hereto as Exhibit R.

5.7 Execution of Additional Agreements. The Controlling Partnership and Holdings shall use itsreasonable best efforts to execute, or to cause the other parties thereto to execute, prior to theSatisfaction Date (it being understood that the provisions of the following agreements shall not beeffective until the Effective Time), the Investment Agreement between the Controlling Partnership, theSeller and the Group Partnerships, substantially in the form attached hereto as Exhibit D (the‘‘Investment Agreement’’), the Exchange Agreement between the Seller, the Group Partnerships,

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Holdings and the Purchaser, substantially in the form attached hereto as Exhibit E (the ‘‘ExchangeAgreement’’), the Amended and Restated Limited Partnership of the Purchaser, substantially in theform attached hereto as Exhibit G (the ‘‘Purchaser LPA’’), the Amended and Restated LimitedPartnership Agreement of Management Holdings, substantially in the form attached hereto as Exhibit H(the ‘‘Management Holdings LPA’’), the Amended and Restated Limited Partnership Agreement ofFund Holdings, substantially in the form attached hereto as Exhibit I (the ‘‘Fund Holdings LPA’’), theLock-Up Agreements, substantially in the forms attached hereto as Exhibit K (the ‘‘Lock-UpAgreement’’) and the Tax Receivables Agreement between the Seller, Holdings, Management HoldingsCorp. and Management Holdings substantially in the form attached hereto as Exhibit L (the ‘‘TaxReceivables Agreement’’). The Controlling Partnership shall use its reasonable best efforts to execute, orto cause the other parties thereto to execute, prior to the Effective Time, the Confidentiality andRestrictive Covenant Agreement between the applicable employing entity and those persons who aremembers of KKR & Co. L.L.C. immediately prior to the consummation of the RestructuringTransactions, substantially in the form attached hereto as Exhibit F, and the Amended and RestatedLimited Liability Company Agreement of the Controlling Partnership GP, substantially in the formattached hereto as Exhibit J (the ‘‘Controlling Partnership GP Agreement’’). The Seller shall use itsreasonable best efforts to execute, prior to the Satisfaction Date, the Investment Agreement, theExchange Agreement and the Tax Receivables Agreement, substantially in the forms attached asexhibits hereto.

5.8 Delivery of Letters.

(a) The Controlling Partnership shall use its reasonable best efforts to cause to be delivered tothe Seller a ‘‘comfort’’ letter from Deloitte & Touche LLP with respect to financial informationcontained in the Consent Solicitation Documents, dated the date of the Consent SolicitationDocuments, in a form customary in scope and substance for ‘‘comfort’’ letters delivered by independentpublic accountants in connection with registration statements related to equity securities of an issuer (itbeing understood that such ‘‘comfort’’ letters shall also provide comfort on the interim financialstatements included in the Consent Solicitation Documents in accordance with applicable Statement onAuditing Standards, customary comfort on the pro forma financial statements (except that it isanticipated that the pro forma financial statements will not be compliant with Rule 11-02 ofRegulation S-X) and other data and customary negative assurance comfort).

(b) The Controlling Partnership shall use its reasonable best efforts to cause to be delivered tothe Seller a ‘‘negative assurance’’ letter from Simpson Thacher & Bartlett LLP with respect to theabsence of material misstatements or omissions in the Consent Solicitation Documents, dated the dateof the Consent Solicitation Documents in a form customary in scope and substance for ‘‘negativeassurance’’ letters delivered by issuer’s counsel in connection with registration statements relating toequity securities of an issuer.

(c) The Controlling Partnership shall use its reasonable best efforts to cause to be delivered tothe Seller an opinion from Simpson Thacher & Bartlett LLP dated as of the date of the ConsentSolicitation Documents, substantially to the effect that, subject to the qualifications, assumptions andlimitations stated therein, the statements made in the Consent Solicitation Documents under thecaption ‘‘Material U.S. Federal Income Tax Considerations,’’ insofar as they purport to constitutesummaries of matters of United States federal tax law and regulations or legal conclusions with respectthereto, constitute accurate summaries of the matters described therein in all material respects.

5.9 Conduct of Business of the Controlling Partnership.

(a) Except as contemplated by this Agreement, including the Restructuring Transactions, as setforth in Section 5.9 of the Confidential Controlling Partnership Disclosure Schedule, as required byapplicable law, statute, rule, ordinance or regulation or with the prior written consent of the Seller,during the period from the date of this Agreement until the Effective Time, the Controlling Partnership

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shall, and shall cause each of the Consolidated Persons to, conduct its business in all material respectsin the usual, regular and ordinary course. Without limiting the generality of the foregoing, except ascontemplated by this Agreement, including the Restructuring Transactions, as set forth in Section 5.9 ofthe Confidential Controlling Partnership Disclosure Schedule or as required by applicable, law, statute,rule, ordinance or regulation or with the prior written consent of the Seller, from the date of thisAgreement until the Effective Time:

(i) the Controlling Partnership shall not, and shall not permit any Consolidated Person to,amend its respective partnership agreement, articles of association, certificate of incorporation,bylaws or equivalent organizational documents in any manner that would adversely affect theholders of Seller Common Units in any material respect;

(ii) the Controlling Partnership shall not, and shall not permit any Consolidated Person to,make any change in any method of accounting or accounting practice or policy other than thoserequired by GAAP or the SEC;

(iii) the Controlling Partnership shall not, and shall not permit the Purchaser to, adopt, enterinto, amend or modify any Purchaser Enhanced Arrangement;

(iv) the Controlling Partnership shall not, and shall not permit any Consolidated Person to,(1) subdivide, combine or reclassify, directly or indirectly, any of the partnership units orpartnership interests, membership interests, shares of capital stock, other equity securities orinterests, (2) redeem, purchase or otherwise acquire, or call for redemption any partnership unitsor partnership interests, membership interests, shares of capital stock, other equity securities orinterests or (3) issue any partnership units or partnership interests, membership interests, shares ofcapital stock or other equity securities or interests or any option, warrant or right relating theretoor any securities convertible into or exchangeable therefor, other than (A) to the Purchaser oranother Consolidated Person, (B) grants of equity awards to any officer, employee, consultant,director or other service provider of the Purchaser or any of its affiliates but only to the extentsuch grants do not, and will not, reduce the percentage of the Class A common units of the GroupPartnerships that will be owned directly or indirectly by the Seller below 30% of the outstandingClass A common units of the Group Partnerships, (C) issuances not involving securities of theControlling Partnership or the Purchaser to third parties pursuant to an arms-length transaction,(D) issuances not involving securities of the Controlling Partnership or the Purchaser to personswho will hold a direct or indirect equity interest in Holdings following the RestructuringTransactions so long as any equity interests so issued will constitute Contributed Interests, exceptas otherwise set forth in Section 3.6(a) of the Confidential Controlling Partnership DisclosureSchedule, or (E) redemptions or repurchases of equity securities or interests or options, warrantsor rights relating thereto or securities convertible into or exchangeable therefor from former ordeparting employees, members, partners, or consultants of any Consolidated Person consistent withsuch Consolidated Person’s ordinary practice;

(v) the Controlling Partnership shall not, and shall not permit any Consolidated Person to,declare, set aside, pay or make any dividend or other distribution to the holders of its respectivepartnership units or partnership interests, membership interests, shares of capital stock or otherequity securities or interests, except for dividends or distributions to the Purchaser or anotherConsolidated Person;

(vi) the Controlling Partnership shall not, and shall not permit any Consolidated Person to,enter into any related party transaction as such term is defined in Item 404(a) of Regulation S-Kunder the Securities Act other than any such transaction the terms of which are no less favorableto the Controlling Partnership or the Consolidated Person, as applicable, than those that would beavailable on an arm’s-length basis with a third party;

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(vii) none of the Controlling Partnership, the Purchaser GP, KKR Management HoldingsCorp. or the Purchaser shall incur or assume any indebtedness for borrowed money or guaranteeany such indebtedness; and

(viii) the Controlling Partnership shall not, and shall not permit any Consolidated Persons tocommit or agree to take, whether in writing or otherwise, any of the foregoing actions that theControlling Partnership or such Consolidated Persons are prohibited from taking under clauses (i)through (vii) above.

In addition, the Controlling Partnership shall take the actions set forth in Section 5.9(ii) of theConfidential Controlling Partnership Disclosure Schedule on or prior to the Effective Time.

(b) Notwithstanding Section 5.9(a), nothing in this Agreement shall prohibit or otherwise preventthe Controlling Partnership or the Consolidated Persons from expanding any of their existing businessesor entering into new lines of business in the asset management or financial services industries.

5.10 Publicity.

(a) The Controlling Partnership and the Seller shall consult with each other prior to issuing anypress release or other public announcement materials with respect to this Agreement or thetransactions contemplated by this Agreement and neither the Controlling Partnership or the Seller shallissue any such press release or other public announcement materials without the prior consent of theother party (such consent not to be unreasonably withheld or delayed), except as may be required bylaw, rule or regulation, in which case the party required to make the release or announcement shallallow the other party reasonable time to comment on such release or announcement in advance of suchissuance. The Controlling Partnership and the Seller shall consult with each other regardingcommunications with holders of the Seller Common Units, analysts, journalists and prospectiveinvestors related to this Agreement and the transactions contemplated hereby.

(b) Notwithstanding any other provisions of this Agreement, nothing contained in this Agreementshall prohibit the Seller from making any disclosure to the holders of Seller Common Units or to thepublic (including with respect to any change in the Independent Directors recommendation made inaccordance with Section 5.1) if, in the good faith judgment of the Independent Directors afterconsultation with outside legal counsel, such disclosure would be required under applicable law or stockexchange rules and would be true and correct in all material respects; provided that the ControllingPartnership shall be given, to the extent possible, a reasonable time to comment on such disclosureprior to it being made to the holders of Seller Common Units or to the public. The ControllingPartnership and Holdings acknowledge that the Seller is a publicly listed limited partnership in theNetherlands and is accordingly required to comply with applicable Dutch disclosure rules of the DutchFinancial Markets Supervision Act.

5.11 Anti-takeover Statutes. If any anti-takeover or similar statute or regulation is or may becomeapplicable to the transactions contemplated by this Agreement, the Seller shall grant such approvalsand take such other actions as are necessary so that such transactions may be consummated aspromptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate orminimize the effects of such statute or regulation on such transactions.

5.12 Access to Information. Upon reasonable notice and subject to the terms of theConfidentiality Agreement, dated June 20, 2008, between the Seller and Kohlberg KravisRoberts & Co. L.P., the Controlling Partnership shall, and shall cause the Consolidated Persons to,afford the Seller, the Independent Directors and the respective representatives reasonable access,during normal business hours during the period prior to the Effective Time, to their respectivepersonnel and documents (including, books, accounts, contracts, commitments, tax returns and otherrecords) and shall furnish to the Seller, the Independent Directors and their respective representativesas promptly as practicable after receiving a request therefor such other information concerning the

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business of the Controlling Partnership and the Consolidated Persons as the Seller, the IndependentDirectors or their respective representatives may reasonably request; provided, that the foregoing shallnot obligate the Controlling Partnership to disclose any information of the Controlling Partnership orthe Consolidated Persons that the Controlling Partnership reasonably determines, based on the adviceof counsel, to be privileged; provided that the Controlling Partnership shall use reasonable best effortsto make appropriate substitute disclosure arrangements under circumstances in which the immediatelypreceding proviso applies.

5.13 Litigation. In the event a Proceeding (as defined below) relating to this Agreement, thePurchase and Sale or the other transactions contemplated hereby is initiated by a third party betweenthe date of the Original Agreement and the Effective Time against the Seller, during such period theSeller shall conduct and control such Proceeding. The Seller shall give the Controlling Partnership theopportunity to comment with respect to the defense of such Proceedings and such comments shall beduly taken into account. The Seller shall give the Controlling Partnership the opportunity to participatein the defense of any such Proceeding, shall keep the Controlling Partnership informed of the progressof such Proceeding and its or their defense and shall make available to the Controlling Partnership alldocuments, notices, communications and filings (including court papers) as may be requested by theGroup Partnerships. The Seller shall not settle or compromise any such Proceeding without the priorwritten consent of the Controlling Partnership, which shall not be unreasonably withheld or delayed.Following the Effective Time, the Group Partnerships shall be entitled to take control of and toconduct such Proceeding.

6. INDEMNIFICATION

(a) To the fullest extent permitted by applicable law, from the Effective Time through the earlierof (i) the sixth anniversary thereof and (ii) until such time as the beneficiaries of this Section 6 becomeentitled to the benefits of the covenants and agreements contained in Section 5 of the InvestmentAgreement, the Group Partnerships shall indemnify, defend and hold harmless, and provideadvancement of expenses to, each present and former director and officer of the Seller GP and thepersons identified in Section 6.1 of the Confidential Controlling Partnership Disclosure Scheduleagainst all losses, liabilities, damages, judgments and fines (‘‘Losses’’) incurred in connection with anysuit, claim, action, proceeding, arbitration or investigation (‘‘Proceedings’’) arising out of or related toactions taken by them in their capacity as directors or officers of the Seller GP (including, thisAgreement and the transactions contemplated hereby) or taken by them at the request of the Seller orthe Seller GP, whether asserted or claimed prior to, at or after the Effective Time.

(b) The Group Partnerships shall indemnify and hold harmless to the fullest extent permitted byapplicable law the Purchaser, the Purchaser GP, the Controlling Partnership, the Seller and eachpresent and former director and officer of the Seller GP and the persons identified in Section 6.1 ofthe Confidential Controlling Partnership Disclosure Schedule against any and all Losses to which theyor any of them may become subject under the Securities Act, the Exchange Act or other applicablelaw, statute, rule or regulation insofar as such Losses arise out of or are based upon any untruestatement or alleged untrue statement of a material fact contained in the Consent SolicitationDocuments, the Press Release, any other document issued by the Controlling Partnership, the Seller orany of their respective affiliates in connection with or otherwise relating to the Purchase and Sale, or inany amendment or supplement thereto, or arise out of or are based upon the omission or allegedomission to state therein a material fact required to be stated therein or necessary to make thestatements therein, in the light of the circumstances under which they were made, not misleading, andthe Group Partnerships agree to reimburse each such person, as incurred, for any legal or otherexpenses reasonably incurred by such person in connection with investigating or defending against anysuch Losses to the fullest extent permitted by applicable law; provided, however that the GroupPartnerships shall not be liable in any such case to the extent that any such Losses arise out of or are

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based upon any such untrue statement or alleged untrue statement or omission or alleged omissionmade in the Consent Solicitation Documents, the Press Release or in any amendment thereof orsupplement thereto, or in any such other document in reliance upon and in conformity with theSpecified Information.

(c) The Group Partnerships shall, in respect of any indemnified person that was a director of theSeller GP as of the date of this Agreement who may be called upon, subsequent to the date of hisresignation or expiration of his term, to testify in any Proceeding in connection with this Agreement orthe transactions contemplated hereby, provide such person with reasonable compensation for his timespent testifying in such Proceeding and preparing for such testimony.

(d) If the indemnification provided for this Section 6.1 is unavailable (other than as a result ofapplication of the proviso to Section 6.1(b)) to or insufficient to hold harmless the indemnified personin respect of any Losses, then the Group Partnerships shall contribute to the amount paid or payableby the indemnified person as a result of such Losses (A) in such proportion as is appropriate to reflectthe relative fault of the Group Partnerships, on the one hand, and the indemnified person, on the otheror (B) if the allocation provided by clause (A) is not permitted by applicable law, or provides a lessersum to the indemnified person than the amount hereinafter calculated, in such proportion as isappropriate to reflect not only the relative fault of the Group Partnerships, on the one hand, and theindemnified person, on the other, in respect of such Losses but also the relative benefits received bythe Group Partnerships, on the one hand, and the indemnified person, on the other, from thetransactions contemplated by this Agreement as well as any other relevant equitable considerations.The amount paid or payable by the indemnified person as a result of the Losses referred to above inthis Section 6.1 shall be deemed to include any legal or other expenses reasonably incurred by suchindemnified person in connection with investigating or defending any such action or claim. Forpurposes of this Section 6, any benefit or fault in respect of the transactions contemplated by thisAgreement attributable to Holdings and its affiliates shall be attributed to the Group Partnerships.

(e) In case any Proceeding shall be commenced or instituted involving any person in respect ofwhich indemnity or contribution may be sought pursuant to this Section 6.1, such person shall promptlynotify the Group Partnerships thereof in writing; provided that the failure to so notify the GroupPartnerships will not affect the rights of such person under this Section 6.1 except to the extent that theGroup Partnerships are actually prejudiced by such failure. The Group Partnerships shall be entitled totake control of and conduct such Proceeding and to appoint counsel (including local counsel) of theGroup Partnerships’ choosing to represent the indemnified party in connection with such Proceeding(in which case the Group Partnerships shall not thereafter be responsible for the fees and expenses ofany separate counsel retained by the indemnified party). Notwithstanding the Group Partnerships’election to appoint counsel (including local counsel) to represent the indemnified party in connectionwith a Proceeding, the indemnified party shall have the right to employ separate counsel (includinglocal counsel), and the Group Partnerships shall bear the reasonable fees, costs and expenses of suchseparate counsel if (i) the use of counsel chosen by the Group Partnerships to represent theindemnified party would present such counsel with a conflict of interest (based on the advice of counselto the indemnified person), (ii) such Proceeding includes both the indemnified party and the GroupPartnerships, and the indemnified party shall have reasonably concluded (based on the advice ofcounsel to the indemnified person) that there may be legal defenses available to it and/or otherindemnified parties that are different from or additional to those available to the Group Partnershipsor (iii) the Group Partnerships shall authorize the indemnified party to employ separate counsel at theexpense of the Group Partnerships. It is understood that the Group Partnerships shall not, in respect ofthe legal expenses of any indemnified party in connection with any Proceeding or related Proceedingsin the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in additionto any local counsel) for all such indemnified parties. The Group Partnerships shall not be liable underthis Section 6.1 for any settlement or compromise or consent to the entry of any judgment with respect

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to any pending or threatened Proceeding in respect of which indemnification or contribution may besought under this Section 6.1 (whether or not the indemnified parties are actual or potential parties tosuch claim or action), unless such settlement, compromise or consent is consented to by the GroupPartnerships, such consent not to be unreasonably withheld or delayed.

(f) Notwithstanding any other provision of this Agreement to the contrary, the indemnifiedparties specified in this Section 6.1 shall be third party beneficiaries of this Section 6.1. The provisionsof this Section 6.1 are intended to be for the benefit of each such person to whom this Section 6.1applies (and, in the case of each director of the Seller GP, for the benefit of such director in hisindividual capacity) and his or her heirs. The obligations of the Group Partnerships under thisSection 6.1 shall not be terminated or modified in such a manner as to adversely affect any such personto whom this Section 6.1 applies without the express written consent of such affected person.

(g) If any of the Group Partnerships or their successors or assigns shall (i) consolidate with ormerge into any person and shall not be the continuing or surviving person in such consolidation ormerger or (ii) transfer all or substantially all of its assets to any other persons, then, and in each suchcase, proper provisions shall be made so that the successors and assigns of the Group Partnerships shallassume the obligations of the Group Partnerships set forth in this Section 6.1.

(h) The Group Partnerships or their successors or assigns shall be entitled to repayment of allapplicable expenses advanced to any person pursuant to this Section 6 if it is ultimately determined bya non-appealable judgment that such person is not entitled to indemnification hereunder with respectto the matter for which any such expenses were advanced.

(i) The obligations of the Group Partnerships set forth in this Section 6 shall be joint and several.

7. CONDITIONS PRECEDENT

7.1 Mutual Conditions. The respective obligations of each party to consummate the Purchaseand Sale shall be subject to the satisfaction or waiver on the Satisfaction Date by the ControllingPartnership and the Seller of each of the following conditions:

(a) Unitholder Approval. The Requisite Unitholder Consent shall have been obtainedand shall be in full force and effect.

(b) Regulatory Approvals. Any applicable waiting period (and any extension thereof)under the HSR Act relating to the transactions contemplated by this Agreement shall haveexpired or been terminated.

(c) No Injunctions or Restraints; Illegality. No order, injunction, judgment, award ordecree issued by any Governmental Entity of competent jurisdiction or other legal restraint orprohibition preventing the consummation of the Purchase and Sale shall be in effect. No law,statute, rule, ordinance or regulation shall have been enacted, entered, promulgated orenforced by any Governmental Entity which prohibits or makes illegal the consummation ofthe Purchase and Sale.

7.2 Conditions to Obligations of the Purchaser. The obligations of the Purchaser to consummatethe Purchase and Sale are also subject to the satisfaction or waiver on the Satisfaction Date by theControlling Partnership of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Seller setforth in this Agreement shall be true and correct as of the date of this Agreement and (exceptto the extent such representations and warranties are expressly limited to an earlier date) asof the Satisfaction Date as though made on and as of the Satisfaction Date, except where thefailure of such representations and warranties to be so true and correct (without giving effectto any materiality or Material Adverse Effect or similar qualifiers set forth therein),

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individually or in the aggregate, has not had, and would not reasonably be expected to have, aMaterial Adverse Effect on the Acquired Partnership. The Controlling Partnership shall havereceived on the Satisfaction Date a certificate, signed on behalf of the Seller by the ChiefFinancial Officer of the Seller, attesting to the foregoing in form and substance reasonablysatisfactory to the Controlling Partnership.

(b) Performance of Obligations by the Seller. The Seller shall have performed in allmaterial respects all obligations required to be performed by it under this Agreement at orprior to the Satisfaction Date. The Controlling Partnership shall have received on theSatisfaction Date a certificate, signed on behalf of the Seller by the Chief Financial Officer ofthe Seller, attesting to the foregoing in form and substance reasonably satisfactory to theControlling Partnership.

(c) Absence of Material Adverse Effect. Since the date of this Agreement, there shallnot have been any Effect that has had or would reasonably be expected to have, individuallyor in the aggregate, a Material Adverse Effect on the Acquired Partnership.

(d) Execution of Other Agreements. The Investment Agreement, the ExchangeAgreement and the Tax Receivables Agreement, in substantially the forms attached as anexhibit to this Agreement shall have been duly authorized, executed and delivered by theSeller and shall be in full force (it being understood that the provisions of such agreementsshall not be effective until the Effective Time).

7.3 Conditions to Obligations of the Seller. The obligations of the Seller to consummate thePurchase and Sale are also subject to the satisfaction or waiver on the Satisfaction Date by the Sellerof each of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of theControlling Partnership set forth in Section 3.18 shall be true and correct as of the date of thisAgreement, except where the failure of such representations and warranties to be so true andcorrect, individually or in the aggregate has not had, and would not reasonably be expected tohave, a Material Adverse Effect on the holders of Seller Common Units and (ii) the otherrepresentations and warranties of the Controlling Partnership and the representations andwarranties of Holdings and the Purchaser set forth in this Agreement shall be true and correctas of the date of this Agreement and (except to the extent such representations andwarranties are expressly limited to an earlier date) as of the Satisfaction Date as though madeon and as of the Satisfaction Date, except where the failure of such representations andwarranties to be so true and correct (without giving effect to any materiality or MaterialAdverse Effect or similar qualifiers set forth therein), individually or in the aggregate, has nothad, and would not reasonably be expected to have, a Material Adverse Effect on (1) thePurchaser in the case of the other representations and warranties of the ControllingPartnership and the Purchaser, or (2) Holdings, in the case of the representations andwarranties of Holdings (in each case after giving effect to the Restructuring Transactions, but,in the case of the Purchaser, excluding the Acquired Partnership and its subsidiaries). TheSeller shall have received a certificate on the Satisfaction Date signed on behalf of a seniorofficer of each of the Controlling Partnership GP and the general partner of Holdingsattesting to the foregoing in form and substance reasonably satisfactory to the Seller.

(b) Performance of Obligations of the Controlling Partnership. Each of the ControllingPartnership, the Purchaser and Holdings shall have performed in all material respects allobligations required to be performed by it under this Agreement at or prior to the SatisfactionDate. The Seller shall have received a certificate on the Satisfaction Date signed on behalf ofa senior officer of each of the Controlling Partnership GP and the general partner of Holdingsattesting to the foregoing in form and substance reasonably satisfactory to the Seller.

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(c) Absence of Material Adverse Effect. Since the date of this Agreement, there shallnot have been any Effect that has had or would reasonably be expected to have, individuallyor in the aggregate, a Material Adverse Effect on the holders of the Seller Common Units.

(d) Execution of Other Agreements. Each of the Investment Agreement, the ExchangeAgreement, the Tax Receivables Agreement, the Purchaser LPA, the ManagementHoldings LPA, the Fund Holdings LPA and the Lock-Up Agreements in substantially theforms attached as exhibits to this Agreement shall have been duly authorized, executed anddelivered by each of the parties thereto (other than the Seller) and shall be in full force (itbeing understood that the provisions of such agreements shall not be effective until theEffective Time).

(e) Delivery of Letters. The Seller shall have received the ‘‘comfort’’ letter, the‘‘negative assurance’’ letter and the opinion letter contemplated by Section 5.8 of thisAgreement, each in form and substance reasonably satisfactory to the Seller.

8. TERMINATION

8.1 Termination. This Agreement may be terminated and the transactions contemplated herebymay be abandoned at any time prior to the Satisfaction Date (or the Effective Time, in the case ofclauses (a) and (b)):

(a) by mutual written consent of the Controlling Partnership and the Seller;

(b) by either the Controlling Partnership or the Seller if any Governmental Entity ofcompetent jurisdiction shall have issued an order, injunction, judgment, award or decree or takenany other action permanently enjoining, restraining or otherwise prohibiting the Purchase and Saleand such order, injunction, judgment, award, decree or other action shall have become final andnon-appealable; provided, however, that the right to terminate this Agreement pursuant to thisSection 8.1(b) shall not be available to any party who has not used its reasonable best efforts tocause such order, injunction, judgment, award, decree or other action to be vacated, annulled orlifted;

(c) by either the Controlling Partnership or the Seller if the consent solicitation contemplatedby the Consent Solicitation Documents expires (and is not extended) and the Requisite UnitholderConsent is not obtained; provided, however, that the right to terminate this Agreement pursuant tothis Section 8.1(c) shall not be available to any party whose failure to fulfill any of its obligationsunder this Agreement has been a principal cause of the failure of the Requisite UnitholderConsent to be obtained;

(d) by either the Controlling Partnership or the Seller if the Satisfaction Date shall not haveoccurred on or before October 31, 2009 (the ‘‘Outside Date’’); provided, however, that the right toterminate this Agreement pursuant to this Section 8.1(d) shall not be available to any party whosefailure to fulfill any of its obligations under this Agreement has been a principal cause of or hasresulted in the failure of the Satisfaction Date to occur on or before such date;

(e) by the Controlling Partnership if any of the conditions set forth in Section 7.1 orSection 7.2 shall become incapable of being satisfied on or before the Outside Date; provided thatif the condition giving rise to the right to terminate under this Section 8.1(e) is incapable of beingsatisfied due to a breach by the Seller of any of its representations, warranties, covenants oragreements in this Agreement or the failure of any representation or warranty of the Seller to betrue, the Controlling Partnership shall not be permitted to terminate this Agreement unless suchbreach or failure to be true has not been cured prior to the earlier of (i) 30 days after the givingof written notice by the Controlling Partnership to the Seller of such breach or failure to be trueand (ii) the Outside Date; provided, further, that the right to terminate this Agreement pursuant to

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this Section 8.1(e) shall not be available to the Controlling Partnership if the ControllingPartnership is then in breach of any representation, warranty, covenant or agreement in thisAgreement that would cause any of the conditions set forth in Section 7.1 or Section 7.3 not to besatisfied; or

(f) by the Seller if any of the conditions set forth in Section 7.1 or Section 7.3 shall becomeincapable of being satisfied on or before the Outside Date; provided, that if the condition givingrise to the right to terminate under this Section 8.1(f) is incapable of being satisfied due to abreach by the Controlling Partnership, the Purchaser or Holdings of any of their respectiverepresentations, warranties, covenants or agreements in this Agreement or the failure of anyrepresentation or warranty of the Controlling Partnership, the Purchaser or Holdings to be true,the Seller shall not be permitted to terminate this Agreement unless such breach or failure to betrue has not been cured prior to the earlier of (i) 30 days after the giving of written notice by theSeller to the Controlling Partnership, the Purchaser or Holdings, as applicable, of such breach orfailure to be true and (ii) the Outside Date; provided, further that the right to terminate thisAgreement pursuant to this Section 8.1(f) shall not be available to the Seller if the Seller is then inbreach of any representation, warranty, covenant or agreement in this Agreement that would causeany of the conditions set forth in Section 7.1 or Section 7.2 not to be satisfied.

8.2 Effect of Termination. In the event of termination of this Agreement and the abandonmentof the transactions contemplated hereby pursuant to Section 8.1, this Agreement shall forthwith becomevoid and have no effect, and no party or any of their respective affiliates, employees or representativesshall have any liability of any nature whatsoever under this Agreement, or in connection with thetransactions contemplated by this Agreement, except that (i) Section 5.10 (Publicity), this Section 8.2(Effect of Termination) and Section 9 (General Provisions) shall survive any termination of thisAgreement and (ii) neither the Seller, the Purchaser, the Controlling Partnership, the GroupPartnerships nor Holdings shall be relieved or released from any liabilities or damages arising out of itswillful or intentional breach of any provision of this Agreement.

9. GENERAL PROVISIONS

9.1 Nonsurvival of Representations, Warranties and Agreements. None of the representations,warranties, covenants, agreements and provisions contained in this Agreement or in any officer’scertificate delivered pursuant to this Agreement, including any rights arising out of any breach of suchrepresentations, warranties, covenants, agreements and provisions, shall survive following theSatisfaction Date, except (i) those covenants and agreements contained in, Section 1.3, Section 5.2,Section 5.4, Section 5.6, Section 5.7, Section 5.9, Section 5.10, Section 5.11 and Section 5.12 shallsurvive until the Effective Time, (ii) those covenants contained in Section 5.5 shall survive inaccordance with the terms thereof, (iii) those covenants and agreements contained in Section 6 shallsurvive until such time as the beneficiaries thereof become entitled to the benefits of the covenants andagreements contained in Section 5 of the Investment Agreement, and (iv) those covenants andagreements contained in Section 1.1, Section 1.2, Section 1.4, Section 5.4(c), Section 5.13 and Section 9shall survive indefinitely.

9.2 Expenses. All costs and expenses incurred in connection with this Agreement and thetransactions contemplated hereby shall be paid by the party incurring such costs and expenses; providedthat if the Effective Time occurs, (i) all costs and expenses incurred by the Seller or the Seller GP inconnection with this Agreement and the transactions contemplated hereby shall be paid by thePurchaser and (ii) all other costs and expenses incurred in connection with this Agreement shall bepaid by one or more Consolidated Persons in which the Purchaser, directly or indirectly, has a 30%economic interest (it being understood that no Class A common units in the Group Partnership thatare issued in accordance with Section 5.9(a)(iv)(C) or Class B common units in the Group Partnerships

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shall be deemed to be outstanding for purposes of calculating the Purchaser’s direct or indirecteconomic interest in a Consolidated Person).

9.3 Notices. All notices and other communications hereunder shall be in writing and shall bedeemed duly given (a) on the date of delivery if delivered personally, or by facsimile, uponconfirmation of receipt, (b) on the first business day following the date of dispatch if delivered by arecognized next-day courier service or (c) on the fifth business day following the date of mailing ifdelivered by registered or certified mail, return receipt requested, postage prepaid. All noticeshereunder shall be delivered as set forth below, or pursuant to such other instructions as may bedesignated in writing by the party to receive such notice:

if to the Controlling Partnership, to:

KKR & Co. L.P.9 W. 57th Street, Suite 4200New York, NY 10019Attention: David J. SorkinFacsimile: (212) 750-0003

with a copy to (which shall not constitute notice):

Simpson Thacher & Bartlett LLP425 Lexington AvenueNew York, NY 10017Attention: Alan M. Klein

Joseph H. KaufmanFacsimile: (212) 455-2502

if to the Seller, to:

KKR Private Equity Investors, L.P.P.O. Box 255Trafalgar Court, Les BanquesSt. Peter Port, Guernsey GY1 3QLChannel IslandsAttention: Christopher LeeFacsimile: +44.1481.745.074

with a copy to (which shall not constitute notice):

Bredin Prat130 rue du Faubourg Saint Honore75008 ParisFranceAttention: Patrick Dziewolski

Benjamin KanovitchFacsimile: +33 (0)1.42.89.10.73

and

Cravath, Swaine & Moore LLPCityPoint | One Ropemaker StreetLondon EC2Y 9HRUKAttention: George StephanakisFacsimile: +44 (0)207 860 1150

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and

Cravath, Swaine & Moore LLP825 Eighth AvenueNew York, NY 10019Attention: Sarkis JebejianFacsimile: (212) 474-3700

9.4 Interpretation. The words ‘‘hereof,’’ ‘‘herein’’ and ‘‘hereunder’’ and words of similar importwhen used in this Agreement shall refer to this Agreement as a whole and the schedules hereto andnot to any particular provision of this Agreement, and Section references are to this Agreement unlessotherwise specified. Whenever the words ‘‘include,’’ ‘‘includes’’ or ‘‘including’’ are used in thisAgreement, they shall be deemed to be followed by the words ‘‘without limitation.’’ The word ‘‘or’’shall be inclusive and not exclusive. The table of contents and headings contained in this Agreementare for reference purposes only and shall not affect in any way the meaning or interpretation of thisAgreement. This Agreement shall be construed without regard to any presumption or interpretationagainst the party drafting or causing any instrument to be drafted. All schedules accompanying thisAgreement and all information specifically referenced in any such schedule form an integral part of thisAgreement, and references to this Agreement include references to them. The term ‘‘affiliate’’ has themeaning given to it in Rule 12b-2 of the United States Securities Exchange Act of 1934, as amended(the ‘‘Exchange Act’’), and the term ‘‘person’’ has the meaning given to it in Sections 3(a)(9) and13(d)(3) of the Exchange Act. Whenever this Agreement requires the Seller or the ControllingPartnership to take, or not take, any action, such requirement shall be deemed to include anundertaking on the part of the Seller GP or the Controlling Partnership GP, as the case may be, tocause the Seller or the Partnership to take, or not take, such action. For the avoidance of doubt, norepresentations, warranties, covenants or agreements set forth in this Agreement are intended to applyto any portfolio companies of any of the KKR Funds.

9.5 Amendment; Waiver. Subject to compliance with applicable law, this Agreement may beamended by the parties hereto, by a written instrument authorized and executed on behalf of theparties hereto (provided that in the case of the Seller in addition to any other requirement underapplicable law, any such amendment shall be valid only if approved by all of the IndependentDirectors). At any time prior to the Effective Time, each party hereto may, to the extent legallyallowed, (a) extend the time for the performance of any of the obligations or other acts of the otherparty hereto, (b) waive any inaccuracies in the representations and warranties by the other partieshereto contained herein or in any document delivered pursuant hereto and (c) waive compliance by theother parties hereto with any of the agreements or conditions contained herein. Any agreement on thepart of a party hereto to any such extension or waiver shall be valid only if set forth in a writteninstrument signed on behalf of such party (provided that in the case of the Seller in addition to anyother requirement under applicable law, any such extension or waiver shall be valid only if approved byall of the Independent Directors), but such extension or waiver or failure to insist on strict compliancewith an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel withrespect to, any subsequent or other failure.

9.6 Counterparts. This Agreement may be executed in counterparts, all of which shall beconsidered one and the same agreement and shall become effective when counterparts have beensigned by each party and delivered to the other party, it being understood that all parties need not signthe same counterpart.

9.7 Entire Agreement. This Agreement (together with the documents, schedules and theinstruments referred to herein) constitutes the entire agreement and supersedes all prior agreementsand understandings, both written and oral, among the parties with respect to the subject matter hereof.

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9.8 Severability. Any term or provision of this Agreement which is determined by a court ofcompetent jurisdiction to be invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, beineffective to the extent of such invalidity or unenforceability without rendering invalid orunenforceable the remaining terms and provisions of this Agreement or affecting the validity orenforceability of any of the terms or provisions of this Agreement in any other jurisdiction, and if anyprovision of this Agreement is determined to be so broad as to be unenforceable, the provision shall beinterpreted to be only so broad as is enforceable, in all cases so long as neither the economic nor legalsubstance of the transactions contemplated hereby is affected in any manner materially adverse to anyparty.

9.9 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights, interestsor obligations of any party hereunder shall be assigned by any of the parties hereto (whether byoperation of law or otherwise) without the prior written consent of the other parties hereto. Subject tothe preceding sentence, this Agreement will be binding upon, inure to the benefit of and beenforceable by the parties and their respective successors and permitted assigns. This Agreement(including the documents and instruments referred to herein), except for the provisions of Section 5.5and Section 6, is not intended to, and does not, confer upon any person other than the parties heretoany rights or remedies hereunder.

9.10 Further Assurances. The Purchaser, the Controlling Partnership, the Seller and Holdingseach agrees to execute and deliver such other documents or agreements and to use their respectivereasonable best efforts to take such other actions as may be reasonably necessary or desirable for theimplementation of this Agreement and the consummation of the transactions contemplated hereby.

9.11 Actions of the Seller. The parties agree that, in accordance with Article 22(3) of the Articlesof Association of the Seller GP, during the period from the date of this Agreement until the earlier ofthe Effective Time and the termination of this Agreement in accordance with the terms hereof, theIndependent Directors, acting based on the affirmative vote of a majority of the Independent Directors,shall be entitled to implement on behalf of the Seller the transactions contemplated by this Agreement,to exercise the rights of the Seller under this Agreement and to enforce this Agreement against thePurchaser, the Controlling Partnership and/or Holdings. The parties hereto further agree that (i) theSeller shall not be deemed to have breached this Agreement unless such breach was due to the takingof any action, or failure to take any action, by the Independent Directors and (ii) the ControllingPartnership shall be deemed to have breached this Agreement if the Controlling Partnership or any ofits affiliates (other than the Seller or the Seller GP) takes any action, or fails to take any action, thatcauses the Seller to breach this Agreement; provided that if the taking of such action, or failure to takesuch action, would not reasonably have been expected to cause the Seller to breach this Agreement,the Controlling Partnership shall not be deemed to have breached this Agreement as a result of thetaking of, or failure to take, such action other than for purposes of determining whether the conditionset forth in Section 7.3(b) has been satisfied and the Controlling Partnership shall have no liability tothe Seller as a result of the taking of, or failure to take, such action.

9.12 Governing Law. This Agreement shall be governed and construed in accordance with thelaws of the State of New York.

9.13 Submission to Jurisdiction. Each party irrevocably submits to the jurisdiction of (a) theSupreme Court of the State of New York, New York County, and (b) the United States District Courtfor the Southern District of New York, for the purposes of any suit, action or other proceeding arisingout of this Agreement or any transaction contemplated hereby. Each party agrees to commence anyaction, suit or proceeding relating hereto either in the United States District Court for the SouthernDistrict of New York or, if such suit, action or other proceeding may not be brought in such court forreasons of subject matter jurisdiction, in the Supreme Court of the State of New York, New YorkCounty. Each party irrevocably and unconditionally waives any objection to the laying of venue of any

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action, suit or proceeding arising out of this Agreement or any transaction contemplated hereby in(i) the Supreme Court of the State of New York, New York County, or (ii) the United States DistrictCourt for the Southern District of New York, and hereby further irrevocably and unconditionally waivesand agrees not to plead or claim in any such court that any such action, suit or proceeding brought inany such court has been brought in an inconvenient forum. Each party further irrevocably consents tothe service of process out of any of the aforementioned courts in any such suit, action or otherproceeding by the mailing of copies thereof by mail to such party at its address set forth in thisAgreement, such service of process to be effective upon acknowledgment of receipt of such registeredmail; provided that nothing in this Section 9.13 shall affect the right of any party to serve legal processin any other manner permitted by law. The consent to jurisdiction set forth in this Section 9.13 shallnot constitute a general consent to service of process in the State of New York and shall have no effectfor any purpose except as provided in this Section 9.13. The parties agree that a final judgment in anysuch suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit onthe judgment or in any other manner provided by law.

9.14 Enforcement. The parties agree that irreparable damage would occur in the event that anyof the provisions of this Agreement were not performed in accordance with their specific terms on atimely basis or were otherwise breached. It is accordingly agreed that the parties shall be entitled to aninjunction or other equitable relief to prevent breaches of this Agreement and to enforce specificallythe terms and provisions of this Agreement in any court identified in Section 9.13, this being inaddition to any other remedy to which they are entitled at law or in equity.

9.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES TRIAL BYJURY IN ANY JUDICIAL PROCEEDING DIRECTLY INVOLVING ANY MATTERS (WHETHERSOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY TRANSACTIONCONTEMPLATED HEREBY.

9.16 Effect on Original Agreement. The parties agree that this Agreement amends and restatesthe Original Agreement in its entirety and upon execution and delivery of this Agreement by theparties hereto the Original Agreement shall cease to have any force or effect and no person shall haveany rights or obligations with respect thereto.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as ofthe date first above written.

KKR & CO. L.P.

By: KKR MANAGEMENT LLC, its generalpartner

By: /s/ WILLIAM J. JANETSCHEK

Name: William J. JanetschekTitle: Chief Financial Officer

KKR PRIVATE EQUITY INVESTORS, L.P.

By: KKR GUERNSEY GP LIMITED, its generalpartner (Registration No. 44666)

By: /s/ KENDRA DECIOUS

Name: Kendra DeciousTitle: Chief Financial Officer

KKR PEI ASSOCIATES, L.P., in its capacity asgeneral partner of KKR PEI Investments, L.P.(solely for purposes of Section 1.4)

By: KKR PEI GP LIMITED, its general partner(Registration No. 44667)

By: /s/ KENDRA DECIOUS

Name: Kendra DeciousTitle: Vice President

KKR HOLDINGS L.P. (solely for purposes ofSection 4, Section 5.4, Section 5.7, Section 5.10(b) andSection 9.10)

By: KKR HOLDINGS GP LIMITED, its generalpartner

By: /s/ WILLIAM J. JANETSCHEK

Name: William J. JanetschekTitle: Director

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KKR FUND HOLDINGS L.P. (solely for purposes ofSection 6)

By: KKR & CO. L.P., its general partner

By: KKR MANAGEMENT LLC, its generalpartner

By: /s/ WILLIAM J. JANETSCHEK

Name: William J. JanetschekTitle: Chief Financial Officer

KKR MANAGEMENT HOLDINGS L.P. (solely forpurposes of Section 6)

By: KKR MANAGEMENT HOLDINGS CORP.,its general partner

By: /s/ WILLIAM J. JANETSCHEK

Name: William J. JanetschekTitle: Chief Financial Officer

KKR GROUP HOLDINGS L.P. (solely for purposesof Section 1.1, Section 1.2, Section 3 and Section 9.2)

By: KKR GROUP LIMITED, its general partner

By: /s/ WILLIAM J. JANETSCHEK

Name: William J. JanetschekTitle: Director

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Appendix B

FORM OF

INVESTMENT AGREEMENT

by and among

KKR & CO. L.P.,

KKR PRIVATE EQUITY INVESTORS, L.P.,

KKR HOLDINGS L.P.,

(solely for purposes of Section 4.7 and Section 8.12),

KKR MANAGEMENT HOLDINGS L.P.,

(solely for purposes of Section 5),

and

KKR FUND HOLDINGS L.P.

(solely for purposes of Section 5)

Dated as of [ ], 2009

TABLE OF CONTENTS

Page

1. THE RIGHT TO EFFECT A US LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

1.1 Right to Effect a US Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

2. REPRESENTATIONS AND WARRANTIES OF KPE . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2

2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2

2.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2

2.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2

2.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2

3. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP . . . . . . . . . . . . . . B-3

3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3

3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3

3.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3

3.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3

3.5 Due Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4

3.6 Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4

3.7 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4

4. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5

4.1 Contribution of Purchaser Common Units; Restrictions; Affirmation of Assumptionof Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5

4.2 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5

4.3 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7

4.4 Dissolution Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7

4.5 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8

4.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8

4.7 Execution of Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8

4.8 Delivery of Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8

4.9 Resignation of Independent Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-9

4.10 Consent Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-9

4.11 Ongoing Reporting Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-10

4.12 Equity Incentive Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-10

4.13 Treatment of Seller Unit Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11

5. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12

Page

6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14

6.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14

7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14

7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14

7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14

8. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14

8.1 Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . B-14

8.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15

8.3 Change in Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15

8.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15

8.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-16

8.6 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17

8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17

8.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17

8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17

8.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18

8.11 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18

8.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18

8.13 Actions of KPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18

8.14 Actions of the Controlling Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18

8.15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18

8.16 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18

8.17 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-19

8.18 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-19

8.19 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-19

ii

Exhibits

Exhibit A—Form of Amended and Restated Exchange Agreement

Exhibit B—Form of Amended and Restated Tax Receivables Agreement

Exhibit C—Form of Amended and Restated Limited Partnership Agreement of the ControllingPartnership

Exhibit D—Form of Amended and Restated Limited Liability Company Agreement of the ControllingPartnership GP

Exhibit E—Form of Amendment to KPE Limited Partnership Agreement

Exhibit F—Form of Pre-Listing Equity Incentive Plan

Exhibit G—Form of Post-Listing Equity Incentive Plan

iii

INDEX OF DEFINED TERMS

Adjusted UARs . . . . . . . . . . . . . . . . . . . B-13 Independent Directors . . . . . . . . . . . . . . B-6

affiliate . . . . . . . . . . . . . . . . . . . . . . . . . B-19 KPE . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

Agreement . . . . . . . . . . . . . . . . . . . . . . B-1 KPE Common Units . . . . . . . . . . . . . . . B-5

Business Day . . . . . . . . . . . . . . . . . . . . . B-2 KPE GP . . . . . . . . . . . . . . . . . . . . . . . . B-1

Closing . . . . . . . . . . . . . . . . . . . . . . . . . B-2 KPE Limited Partnership Agreement . . . B-2

Closing Date . . . . . . . . . . . . . . . . . . . . . B-2 KPE UAR . . . . . . . . . . . . . . . . . . . . . . . B-13

Consent Period . . . . . . . . . . . . . . . . . . . B-10 Listing Right . . . . . . . . . . . . . . . . . . . . . B-1

Contribution Transactions . . . . . . . . . . . . B-5 Losses . . . . . . . . . . . . . . . . . . . . . . . . . . B-13

Controlling Partnership . . . . . . . . . . . . . B-1 Management Holdings . . . . . . . . . . . . . . B-1

Controlling Partnership GP Agreement . . B-9 person . . . . . . . . . . . . . . . . . . . . . . . . . . B-19

Controlling Partnership LPA . . . . . . . . . . B-9 Proceedings . . . . . . . . . . . . . . . . . . . . . . B-13

Controlling Partnership Units . . . . . . . . . B-5 Purchase Agreement . . . . . . . . . . . . . . . B-1

Covered Agreement . . . . . . . . . . . . . . . . B-10 Purchaser . . . . . . . . . . . . . . . . . . . . . . . B-1

Dissolution Transactions . . . . . . . . . . . . . B-9 Purchaser Common Units . . . . . . . . . . . B-1

Distribution . . . . . . . . . . . . . . . . . . . . . . B-8 Registration Statement . . . . . . . . . . . . . . B-6

Election Notice . . . . . . . . . . . . . . . . . . . B-1 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4

Exchange Act . . . . . . . . . . . . . . . . . . . . B-6 Securities Act . . . . . . . . . . . . . . . . . . . . B-6

Exchange Agent . . . . . . . . . . . . . . . . . . B-8 Specified Information . . . . . . . . . . . . . . . B-7

Exchange Agreement . . . . . . . . . . . . . . . B-9 Tax Receivables Agreement . . . . . . . . . . B-9

Governmental Entity . . . . . . . . . . . . . . . B-3 Transfer . . . . . . . . . . . . . . . . . . . . . . . . B-5

Group Partnerships . . . . . . . . . . . . . . . . B-1 US Listing . . . . . . . . . . . . . . . . . . . . . . . B-1

iv

INVESTMENT AGREEMENT

This INVESTMENT AGREEMENT, dated as of [ ], 2009 (as amended, supplemented orotherwise modified from time to time, this ‘‘Agreement’’), is entered into by and among(1) KKR & Co. L.P., a Delaware limited partnership (the ‘‘Controlling Partnership’’), (2) KKR PrivateEquity Investors, L.P., a Guernsey limited partnership (‘‘KPE’’), acting through KKR Guernsey GPLimited, a Guernsey company limited by shares (the ‘‘KPE GP’’) in its capacity as the general partnerof KPE, (3) KKR Management Holdings L.P. (‘‘Management Holdings’’), a Delaware limitedpartnership, acting through KKR Management Holdings Corp. in its capacity as the general partner ofManagement Holdings, (4) KKR Fund Holdings L.P., a Cayman Islands exempted limited partnership,acting through KKR Management LLC in its capacity as the indirect general partner of KKR FundHoldings L.P. (Management Holdings and KKR Fund Holdings L.P. are sometimes collectively referredto herein as the ‘‘Group Partnerships’’) and (5) KKR Holdings L.P., a Cayman Islands exempted limitedpartnership (‘‘Holdings’’), acting through KKR Holdings GP Limited in its capacity as general partnerof Holdings (solely for purposes of Section 4.7 and Section 8.12).

WHEREAS, pursuant to the Amended and Restated Purchase and Sale Agreement dated as ofJuly 19, 2009 (the ‘‘Purchase Agreement’’), among the Controlling Partnership, KPE, KKR GroupHoldings L.P. (the ‘‘Purchaser’’) and the other parties thereto, the Purchaser has agreed to issue anddeliver to KPE a number of units representing limited partner interests in the Purchaser (the‘‘Purchaser Common Units’’); and

WHEREAS, the parties hereto now desire to enter into this Agreement in order to provide theparties with certain rights and obligations with respect to the Purchaser Common Units that will beissued to KPE pursuant to the Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties andagreements contained herein, and intending to be legally bound hereby, the parties agree as follows:

1. THE RIGHT TO EFFECT A US LISTING

1.1 Right to Effect a US Listing. Subject to the terms and conditions of this Agreement, each ofKPE and the Controlling Partnership shall have the right (the ‘‘Listing Right’’) to require that the otheruse its reasonable best efforts to cause the Contribution Transactions to occur and, in connectiontherewith, the Controlling Partnership Units to be listed and traded on the New York Stock Exchangeor The NASDAQ Stock Market (the ‘‘US Listing’’) by delivering to the other party a written noticeinforming such party of its exercise of the Listing Right (such notice, an ‘‘Election Notice’’). TheControlling Partnership shall only be permitted to deliver an Election Notice following the 6 monthanniversary of the date of this Agreement and KPE shall only be permitted to deliver an ElectionNotice following the 12 month anniversary of the date of this Agreement. If an Election Notice isdelivered by either KPE or the Controlling Partnership, subject to Section 4.2 the ControllingPartnership shall, after promptly advising and consulting with KPE (it being understood that thedecision to take any action shall be in the sole determination of the Controlling Partnership) beentitled to take any and all actions that it deems necessary or appropriate in order to effectuate the USListing and any transactions ancillary thereto, including selecting the national stock exchange on whichto effect the US Listing and determining whether to appoint one or more dealer managers orinformation agents in connection therewith and whether to effectuate a separate primary offering of itsunits (on an underwritten basis or otherwise) simultaneously therewith.

1.2 Closing. Subject to the terms and conditions of this Agreement, if an Election Notice isdelivered in accordance with Section 1.1, the closing of the US Listing (the ‘‘Closing’’) shall take placeat the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017at 9:00 a.m. eastern time on the date that is the fifth Business Day after the satisfaction or waiver(subject to applicable law) of the conditions set forth in Section 6 of this Agreement (other than

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conditions which by their terms are to be satisfied at Closing but subject to the satisfaction or waiver ofthose conditions), or such other place, date or time as the parties may mutually agree (the ‘‘ClosingDate’’). For purposes of this Agreement, a ‘‘Business Day’’ shall mean any day that is not a Saturday, aSunday or other day on which banks are required or authorized by law to close in the City of NewYork, Amsterdam, Netherlands, the Island of Guernsey or the Cayman Islands.

2. REPRESENTATIONS AND WARRANTIES OF KPE

KPE GP acting as the general partner of KPE hereby represents and warrants to the ControllingPartnership as follows:

2.1 Organization. KPE is a limited partnership duly organized, validly existing and in goodstanding under the laws of the Island of Guernsey.

2.2 Authority. KPE (acting through the KPE GP) has the requisite power and authority toexecute and deliver this Agreement and to perform its obligations hereunder and consummate thetransactions contemplated hereby. The execution, delivery and performance of this Agreement and theconsummation of the transactions contemplated hereby have been, or will be, duly authorized by allnecessary action on the part of KPE and the KPE GP and, except as contemplated by Section 2.4, noother action is necessary on the part of KPE or the KPE GP for the execution, delivery andperformance by KPE (acting through the KPE GP) of this Agreement and the consummation of thetransactions contemplated hereby. This Agreement has been duly executed and delivered by theKPE GP acting as the general partner of KPE and, assuming due authorization, execution and deliveryby the Controlling Partnership and the Group Partnerships constitutes a valid and binding obligation ofKPE enforceable against KPE in accordance with its terms, except to the extent that enforceability maybe limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affectingcreditors’ rights generally and by general equity principles.

2.3 No Conflicts. Neither the execution and delivery of this Agreement by KPE nor theconsummation by KPE of the transactions contemplated hereby nor compliance by KPE with any ofthe terms or provisions hereof, will (i) upon execution of the amendment to the KPE LimitedPartnership Agreement substantially in the form attached hereto as Exhibit E, violate any provision ofthe amended and restated limited partnership agreement of KPE, dated as of May 2, 2007 (asamended, supplemented or otherwise modified from time to time, the ‘‘KPE Limited PartnershipAgreement’’) and (ii) assuming that the consents, approvals and filings referred to in Section 2.4 areduly obtained or made violate any statute, code, ordinance, rule or regulation applicable to KPE.

2.4 Consents and Approvals. No order, permission, consent, approval, license, authorization,registration, or validation of, or filing with, or notice to, or exemption by, any court, administrativeagency or commission or other governmental authority or instrumentality, legislative body orself-regulatory organization (each a ‘‘Governmental Entity’’) by KPE is necessary in connection with theexecution, delivery and performance of this Agreement by KPE and the consummation by KPE of thetransactions contemplated hereby, except (i) for the giving of written notice by the KPE GP to theGuernsey Financial Services Commission, (ii) for the giving of notice by KPE to the Authority for theFinancial Markets in The Netherlands, (iii) for consultation with Euronext Amsterdam with respect tothe amendment to the Seller Limited Partnership Agreement substantially in the form attached heretoas Exhibit E and for filing of the draft amendment with the Authority for the Financial Markets in theNetherlands and Euronext Amsterdam, (iv) for any consent, authorization, order or approval by theAuthority for the Financial Markets in the Netherlands in connection with the Distribution, (iv) theconsent of Euronext Amsterdam N.V. for the delisting of KPE Common Units from EuronextAmsterdam by NYSE Euronext, the regulated market of Euronext Amsterdam N.V., and (v) for theKPE GP filing notice of the dissolution of KPE with Her Majesty’s Greffier in Guernsey and publishing

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such notice in La Gazette Officielle, and for the KPE GP preparing and providing all limited partnersof KPE with a copy of an account of the winding up of KPE.

3. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

The Controlling Partnership GP acting as the general partner of the Controlling Partnershiphereby represents and warrants to KPE as follows:

3.1 Organization. The Controlling Partnership is a limited partnership duly organized, validlyexisting and in good standing under the laws of the jurisdiction in which it is organized.

3.2 Authority. The Controlling Partnership (acting through the Controlling Partnership GP) andthe Group Partnerships have the requisite power and authority to execute and deliver this Agreement,to perform their obligations hereunder and to consummate the transactions contemplated hereby. Theexecution, delivery and performance of this Agreement have been and the consummation of thetransactions contemplated hereby have been, or will be, duly authorized by all necessary action on thepart of the Controlling Partnership and the Group Partnerships and no other action will be necessaryon the part of the Controlling Partnership, the Controlling Partnership GP and the Group Partnershipsfor the execution, delivery and performance by the Controlling Partnership (acting through theControlling Partnership GP) and the Group Partnerships of this Agreement and the consummation ofthe transactions contemplated hereby. This Agreement has been duly executed and delivered by theControlling Partnership and the Group Partnerships and, assuming due authorization, execution anddelivery by KPE, constitutes a valid and binding obligation of the Controlling Partnership and theGroup Partnerships, enforceable against the Controlling Partnership and the Group Partnerships inaccordance with its terms, except to the extent that enforceability may be limited by bankruptcy,insolvency, reorganization, moratorium or other laws relating to or affecting creditors’ rights generallyand by general equity principles.

3.3 No Conflicts. Neither the execution and delivery of this Agreement by the ControllingPartnership and the Group Partnerships nor the consummation by the Controlling Partnership and theGroup Partnerships of the transactions contemplated hereby, nor compliance by the ControllingPartnership and the Group Partnerships with any of the terms or provisions hereof, will (i) violate anyprovision of the certificate of formation or limited partnership agreement of the ControllingPartnership or the Group Partnerships or (ii) except as would not reasonably be expected to prevent ormaterially impede or delay the consummation of the transactions contemplated hereby (x) assumingthat the consents, approvals and filings referred to in Section 3.4 are duly obtained or made violate anystatute, code, ordinance, rule or regulation applicable to the Controlling Partnership or the GroupPartnerships or (y) violate, conflict with, result in a breach of any provision or constitute a default (oran event which, with notice or lapse of time, or both, would constitute a default) under any of theterms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease,agreement or other instrument or obligation to which the Controlling Partnership or any of the GroupPartnerships is a party, or by which any of them or any of their respective properties or assets may bebound or affected.

3.4 Consents and Approvals. No order, permission, consent, approval, license, authorization,registration, or validation of, or filing with, or notice to, or exemption by, any Governmental Entity bythe Controlling Partnership or the Group Partnerships is necessary in connection with the execution,delivery and performance of this Agreement by the Controlling Partnership or the Group Partnershipsand the consummation by the Controlling Partnership or the Group Partnerships of the transactionscontemplated hereby, except (i) the approval of the listing of the Controlling Partnership Units to beissued pursuant to Section 4.1 on the New York Stock Exchange or The NASDAQ Stock Market, asapplicable, (ii) the filing with the United States Securities and Exchange Commission (the ‘‘SEC’’) and

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the declaration of effectiveness thereby of the Registration Statement and (iii) filings necessary tocomply with foreign or state securities or blue sky laws.

3.5 Due Authorization and Validity. The Controlling Partnership Units and the limitedpartnership interests evidenced thereby to be issued pursuant to Section 4.1 will be duly authorizedprior to issuance and, when issued pursuant to the terms and conditions of this Agreement, will bevalidly issued and fully paid and non-assessable (except as such non-assessability may be affected bySection 17-303, Section 17-607 or Section 17-804 of the Delaware Revised Uniform Limited PartnershipAct or the Controlling Partnership LPA) and free and clear of any Liens. Except for (i) ControllingPartnership Units issuable to KPE pursuant to Section 4.1, (ii) Controlling Partnership Units issuableupon exchange by Holdings or its designees or other holders of Class A Units to the ControllingPartnership of partner interests in the Group Partnerships in accordance with the Exchange Agreementor a similar agreement providing for similar exchange rights, (iii) Controlling Partnership Units thatmay be issued at or following the Closing upon exchange of Group Partnership Units issued pursuantto awards (including actual Group Partnership Units or phantom, option or other derivative securities)granted under the Pre-Listing Incentive Plan following the Effective Time (as defined in the PurchaseAgreement), in accordance of Section 4.12 of this Agreement; provided, that for the avoidance ofdoubt, awards of Controlling Partnership Common Units (including grants of phantom, option or otherderivative securities) may also be issued upon the completion of the Closing under the Post-ListingIncentive Plan in accordance with its terms and (iv) non-economic general partner interests in theControlling Partnership, there are (A) no outstanding equity interests in the Controlling Partnership,(B) outstanding securities or other instruments or rights of any person convertible or exchangeable forequity interests in the Controlling Partnership or (C) options or other rights to acquire from theControlling Partnership any equity interests in the Controlling Partnership or obligations of theControlling Partnership to issue any equity securities in the Controlling Partnership.

3.6 Activities. Except as set forth in Section 3.6 of the Confidential Controlling PartnershipDisclosure Schedules delivered to the Seller by the Controlling Partnership concurrently with theexecution of this Agreement (the ‘‘Confidential Controlling Partnership Disclosure Schedules’’), each ofthe Controlling Partnership, the Purchaser, KKR Group Limited (the ‘‘Purchaser GP’’) and KKRManagement Holdings Corp. has been formed solely for the purpose of engaging in the transactionscontemplated hereby (including the Contribution Transactions) and in the Purchase Agreement andserving as the direct or indirect general partner of the Purchaser and the Group Partnerships, asapplicable, and has engaged and, at the Closing, will have engaged in no other business activities, andhas incurred and, at the Closing, will have incurred no liabilities or obligations other than infurtherance of the transactions contemplated hereby (including the Contribution Transactions) or as aresult of serving as the direct or indirect general partner of the Purchaser or the Group Partnerships,as applicable.

3.7 Other Agreements. Each of the agreements referred to in Section 4.7 will be duly authorized,executed and delivered by the Controlling Partnership or the parties thereto that are affiliated with theControlling Partnership, as applicable, and, assuming due authorization, execution and delivery by theother parties thereto, will be a valid and binding obligation of the Controlling Partnership or the partiesthereto that are affiliated with the Controlling Partnership, as applicable, enforceable against them inaccordance with its terms, except to the extent that enforceability may be limited by bankruptcy,insolvency, reorganization, moratorium or other laws relating to or affecting creditors’ rights generallyand by general equity principles.

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4. ADDITIONAL AGREEMENTS

4.1 Contribution of Purchaser Common Units; Restrictions; Affirmation of Assumption of Liabilities.

(a) In the event that an Election Notice is delivered in accordance with Section 1.1, at the time ofthe Closing, KPE shall contribute all of its Purchaser Common Units to the Controlling Partnership inexchange for a number of units representing limited partner interests in the Controlling Partnership(the ‘‘Controlling Partnership Units’’) equal to the number of common units of KPE (the ‘‘KPE CommonUnits’’) then outstanding. The transactions contemplated by this Section 4.1(a), together with theexecution of the agreements required to be executed pursuant to Section 4.7 prior to the Closing, arereferred to as the ‘‘Contribution Transactions’’.

(b) Except as contemplated by this Section 4.1, KPE shall not, and shall not permit any of itsaffiliates to, directly or indirectly transfer, sell, assign, pledge, gift, donate or otherwise dispose of(‘‘Transfer’’) its Purchaser Common Units without the prior written consent of the ControllingPartnership. Other than in furtherance of the transactions contemplated by this Agreement, neitherKPE nor the KPE GP shall engage in any other business activities, including making, or agreeing tomake, any investments in any person and incurring any liabilities or obligations. Other than infurtherance of the transactions contemplated hereby (including the Contribution Transactions) orserving as the direct or indirect general partner of the Purchaser or the Group Partnerships, asapplicable, each of the Controlling Partnership, the Purchaser, the Purchaser GP and KKRManagement Holdings Corp. shall engage in no other business activities, including making, or agreeingto make, any investments in any person and incurring any liabilities or obligations.

(c) Notwithstanding any provision herein to the contrary, it is the intention of the parties heretothat, with respect to any benefits of the combined business of the Consolidated Persons to which theholders of the Class A units in the Group Partnerships (the ‘‘Class A Units’’) are entitled, the ultimatebeneficial owners of the Class A Units (in their capacity as such, the ‘‘Ultimate Owners’’) are intendedto be entitled to such benefits in proportion to their relative ultimate beneficial ownership of theClass A Units and, accordingly, from the Effective Time until the Closing, issuances of equity or othereconomic interests, dividends and other distributions by any Consolidated Person shall be structured toensure that no Ultimate Owner shall be disproportionately adversely affected relative to any otherUltimate Owner without the consent of any such Ultimate Owner (or the Seller, in the case of anUltimate Owner whose beneficial interest is through the ownership of KPE Common Units) that wouldbe so disproportionately adversely affected.

(d) In the event that an Election Notice is delivered in accordance with Section 1.1, at the time ofthe completion of the Dissolution Transactions, the Controlling Partnership shall cause the Purchaser toreaffirm the assumption of the liabilities assumed by the Purchaser pursuant to Section 1.2 of thePurchase Agreement.

4.2 Registration Statement.

(a) The Controlling Partnership shall as promptly as practicable following the delivery of anElection Notice in accordance with Section 1.1 prepare a registration statement on such form as theControlling Partnership in consultation with its legal counsel shall determine to be appropriate underthe United States Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) and, if applicable,the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’) for the ControllingPartnership Units to be issued to, and distributed by, KPE pursuant to this Agreement (suchregistration statement(s), as amended or supplemented from time to time and together with anyprospectus included therein, the ‘‘Registration Statement’’) and shall as promptly as practicablethereafter file the Registration Statement with the SEC. Each of the Controlling Partnership and KPEshall use its reasonable best efforts to have the Registration Statement declared effective by the SEC aspromptly as practicable and to keep the Registration Statement effective as long as is necessary to

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consummate the transactions contemplated by this Agreement. As promptly as practicable following thedate on which the Registration Statement is declared effective by the SEC, KPE shall mail, orotherwise disseminate in a manner that complies with any applicable law, rule, regulation and the KPELimited Partnership Agreement, the Registration Statement (or prospectus contained therein) to theholders of the KPE Common Units. Notwithstanding the foregoing, nothing contained in thisAgreement, including Section 4.3 and Section 4.5, shall be deemed to require the ControllingPartnership or any of its affiliates to take any action that would require the Controlling Partnership orany of its affiliates to become subject to regulation under the Investment Company Act.

(b) The directors of the KPE GP who are not affiliated with the Controlling Partnership (the‘‘Independent Directors’’) shall furnish, or cause to be furnished, to the Controlling Partnership allinformation concerning the Independent Directors, if any, required to be included in the RegistrationStatement. The Controlling Partnership shall provide KPE and its legal counsel with a reasonableopportunity to review and comment on the Registration Statement and any amendments orsupplements thereto prior to the filing thereof with the SEC. The Controlling Partnership shall, aspromptly as practicable after receipt thereof, (i) provide KPE and its legal counsel with copies of anywritten comments and advise KPE and its legal counsel of any oral comments with respect to theRegistration Statement received from the SEC and (ii) notify KPE and its legal counsel of any requestsby the SEC for any supplement thereto or for additional information. As promptly as practicable afterreceipt of any written correspondence from the SEC and reasonably in advance of transmitting anywritten correspondence to the SEC, in each case relating to the Registration Statement, the ControllingPartnership shall provide KPE and its legal counsel with (i) copies of any such correspondence and(ii) a reasonable opportunity to review and comment on any such correspondence.

(c) The Controlling Partnership and KPE shall cooperate and consult with each other inconnection with the filing with, and the review by, the SEC of the Registration Statement. TheControlling Partnership shall (i) consider in good faith any comments and suggestions on the disclosureto be included in the Registration Statement made by KPE and/or its legal counsel and (ii) incorporatesuch comments into the Registration Statement if failure to do so would reasonably be expected, in thegood faith judgment of the Controlling Partnership after taking into account the advice of its outsidelegal counsel, to result in a violation of, or give rise to liability under any applicable securities laws. Forpurposes of clauses (i) and (ii) above, where the Controlling Partnership would otherwise elect not toincorporate any comment or suggestion made by KPE or its legal counsel, KPE and its legal counselshall be provided with the reasonable opportunity to discuss any such comments directly with theControlling Partnership, the Controlling Partnership’s auditors and outside legal counsel for theControlling Partnership.

(d) Notwithstanding the provisions of Section 4.2(c), neither the Registration Statement (or anyamendment or supplement thereto) nor any written correspondence relating to the RegistrationStatement (including any responses to any comments from the SEC) shall include any statementsregarding the Independent Directors without KPE’s prior written consent to include such statements,which consent shall not be unreasonably withheld or delayed.

(e) The Controlling Partnership covenants and agrees that (i) as of each of the date on which theRegistration Statement becomes effective and as of the Closing Date, the Registration Statement willnot contain any untrue statement of a material fact or omit to state a material fact required to bestated therein or necessary to make the statements therein not misleading; provided that the foregoingcovenant shall not apply to any information concerning the Independent Directors furnished in writingby or on behalf of the Independent Directors specifically for use in the Registration Statement, it beingunderstood that such information shall be identified as such by KPE prior to the effectiveness of theRegistration Statement (the ‘‘Specified Information’’) and (ii) as of the date on which the RegistrationStatement becomes effective, the Registration Statement will comply as to form in all material respects

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with the applicable provisions of the Securities Act, Exchange Act and the applicable rules andregulations of the SEC thereunder.

(f) If at any time prior to the Closing any information should be discovered by either theControlling Partnership or KPE that should be set forth in an amendment or supplement to theRegistration Statement so that the Registration Statement would not include any misstatement of amaterial fact or omit to state any material fact necessary to make the statement therein, in the light ofthe circumstances under which they were made, not misleading, the party that discovers suchinformation shall promptly notify the other party, and to the extent required by law, rules orregulations, an appropriate amendment or supplement describing such information shall be promptlyfiled with the SEC.

4.3 Reasonable Best Efforts.

(a) Subject to the terms and conditions of this Agreement, following the delivery of an ElectionNotice in accordance with Section 1.1, each of the Controlling Partnership and KPE shall use itsreasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, allthings necessary, proper or advisable to ensure that the conditions set forth in Section 6 of thisAgreement are satisfied and to consummate the transactions contemplated by this Agreement aspromptly as practicable, including using its reasonable best efforts to (i) obtain (and to cooperate withthe other party to obtain) any consent, authorization, order or approval of, or any exemption by, anyGovernmental Entity or any third party which is required to be obtained in connection with thetransactions contemplated by this Agreement from Governmental Entities or third parties, (ii) makingall registrations, notifications and filings with any Governmental Entity or any third party that arerequired to be made in connection with the transactions contemplated by this Agreement and(iii) resolve any objections asserted or suits instituted with respect to any of the transactionscontemplated hereby, by any Governmental Entity, which, if not resolved, would reasonably beexpected to prevent or materially impede or delay the consummation of the transactions contemplatedhereby. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to require theControlling Partnership or KPE to take, or agree to take, any action if the taking of such action wouldreasonably be expected to have, individually or in the aggregate, a material adverse effect on theControlling Partnership (after giving effect to the Contribution Transactions).

(b) Each of the Controlling Partnership and KPE shall in connection with the efforts referencedin Section 4.3(a) (i) promptly cooperate with and furnish information to the other in connection withany action required to be taken pursuant to Section 4.3(a), and (ii) permit the other to review anycommunication given by it to, and consult with each other in advance of any meeting or conferencewith, any Governmental Entity in connection with the foregoing, and to the extent permitted by law,give the other the opportunity to attend and participate in such meetings and conferences.

4.4 Dissolution Transactions. Following the delivery of an Election Notice in accordance withSection 1.1, KPE shall take, and the Controlling Partnership shall cause the non-Independent Directorsof the KPE GP to authorize, all actions necessary or advisable to (i) cause the amendment to the KPELimited Partnership Agreement in substantially the form attached hereto as Exhibit E to be executedprior to the Closing, (ii) deliver the Controlling Partnership Units to a bank or trust companydesignated by KPE and reasonably acceptable to the Controlling Partnership (the ‘‘Exchange Agent’’)immediately upon the Closing, (iii) cause the Exchange Agent to distribute the Controlling PartnershipUnits to the holders of KPE Common Units in accordance with the KPE Limited PartnershipAgreement as of, or as promptly as practicable after, the Closing (the ‘‘Distribution’’), (iv) cause theKPE Common Units to be delisted from, and to cease to be traded on, Euronext Amsterdam by NYSEEuronext, the regulated market of Euronext Amsterdam N.V. as of, or as promptly as practicable after,the Closing, and (v) cause KPE to be dissolved and liquidated by the KPE GP acting as liquidator, inaccordance with KPE Limited Partnership Agreement and the Limited Partnerships (Guernsey) Law,

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1995, as amended, as promptly as practicable after the Closing. The transactions contemplated by thisSection 4.4 are sometimes referred to herein as the ‘‘Dissolution Transactions’’.

4.5 Stock Exchange Listing. In the event an Election Notice is delivered in accordance withSection 1.1, the Controlling Partnership shall use its reasonable best efforts to cause the ControllingPartnership Units that are to be registered in the Registration Statement to be approved for listing onthe relevant United States stock exchange, subject to official notice of issuance, prior to the Closing.

4.6 Insurance. In the event an Election Notice is delivered in accordance with Section 1.1, priorto the Closing, the Controlling Partnership shall obtain and fully pay the premium for, or shall cause tobe obtained and to be fully paid the premium for, directors’ and officers’ liability insurance for thebenefit of the directors and officers (and former directors and officers) of the KPE GP, which shall(i) be effective for a period from the date of the dissolution of KPE (the ‘‘Dissolution Date’’) throughand including the date that is six years after the Dissolution Date, (ii) cover claims arising out of orrelating to any action, statement or omission (including a failure to act) of such directors and officersof the KPE GP, whether on or before the Dissolution Date (including the transactions contemplated bythis Agreement and the decision making process by the directors of the KPE GP in connectiontherewith) to the same extent as the directors and officers of the Controlling Partnership GP acting intheir capacities as the directors and officers of the KPE GP are insured with respect thereto, and(iii) shall contain a coverage limit of $100 million, and shall contain coverage terms and conditions,including exclusions, substantially comparable to the directors’ and officers’ liability insurance in effecton the date of the Purchase Agreement; provided, however, that in no event shall the ControllingPartnership be required to, or be required to cause any other person to, expend for such insurance anamount in excess of the amount set forth in Section 4.6 of the Confidential Controlling PartnershipDisclosure Schedules.

4.7 Execution of Additional Agreements. In the event an Election Notice is delivered inaccordance with Section 1.1, the Controlling Partnership and Holdings shall use its reasonable bestefforts to execute, or to cause the other parties thereto to execute, prior to the Closing, the Amendedand Restated Exchange Agreement between the Controlling Partnership, the Group Partnerships andHoldings (the ‘‘Exchange Agreement’’), the Amended and Restated Tax Receivables Agreement betweenthe Controlling Partnership, Holdings, KKR Management Holdings Corp. and Management Holdings(the ‘‘Tax Receivables Agreement’’), the Amended and Restated Limited Partnership Agreement of theControlling Partnership (the ‘‘Controlling Partnership LPA’’) and the Amended and Restated LimitedLiability Company Agreement of the Controlling Partnership GP (the ‘‘Controlling Partnership GPAgreement’’), in each case substantially in the form attached as exhibits to this Agreement (togetherwith any changes thereto as may be necessary to comply with requirements of the jurisdiction oforganization of the Controlling Partnership in the event that the Controlling Partnership’s rights andobligations under this Agreement are assigned pursuant to Section 8.10).

4.8 Delivery of Letters.

(a) In the event an Election Notice is delivered in accordance with Section 1.1, the ControllingPartnership shall use its reasonable best efforts to cause to be delivered to KPE a ‘‘comfort’’ letterfrom Deloitte & Touche LLP with respect to financial information contained in the RegistrationStatement, dated the effective date of the Registration Statement, in a form customary in scope andsubstance for ‘‘comfort’’ letters delivered by independent public accountants in connection withregistration statements similar to the Registration Statement (it being understood that such ‘‘comfort’’letters shall also provide comfort on the interim financial statements included in the RegistrationStatement in accordance with applicable Statement on Auditing Standards, customary comfort on thepro forma financial statements and other data and customary negative assurance comfort).

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(b) In the event an Election Notice is delivered in accordance with Section 1.1, the ControllingPartnership shall use its reasonable best efforts to cause to be delivered to KPE a ‘‘negative assurance’’letter from Simpson Thacher & Bartlett LLP with respect to the absence of material misstatements oromissions in the Registration Statement, dated the effective date of the Registration Statement, in aform customary in scope and substance for ‘‘negative assurance’’ letters delivered by issuer’s counsel inconnection with registration statements similar to the Registration Statement.

4.9 Resignation of Independent Directors. Unless the Independent Directors agree otherwise inwriting with the KPE GP and the Controlling Partnership, the Independent Directors shall not berequired to resign until the completion of the Dissolution Transactions at which point the IndependentDirectors shall be required to resign.

4.10 Consent Rights. From the Effective Time (as such term is defined in the PurchaseAgreement) until the Closing (the ‘‘Consent Period’’), without the prior consent of a majority of theIndependent Directors, the Controlling Partnership shall not, and shall not permit the Purchaser GP orany Consolidated Person (as defined in the Purchase Agreement) to: (i) enter into any amendment tothe Exchange Agreement, the Tax Receivables Agreement, a Lock-Up Agreement, the ControllingPartnership LPA, the Management Holdings LPA, the Fund Holdings LPA, the Purchaser LPA or theControlling Partnership GP Agreement (each as defined in the Purchase Agreement) (each of theforegoing, a ‘‘Covered Agreement’’) that, in the reasonable judgment of the Controlling Partnership, isor will result in a conflict of interest or would have a materially disproportional impact on KPE,(ii) enter into any transaction or series of related transactions involving an aggregate amount in excessof $20 million with any related person (as such term is defined in Item 404 of Regulation S-K underthe Securities Act) of the Controlling Partnership, the Purchaser GP or Consolidated Person (otherthan any related person that is another Consolidated Person or an investment fund or investmentvehicle that is managed, sponsored, or otherwise advised by the Controlling Partnership, thePurchaser GP or any Consolidated Person) (a ‘‘Related Person’’) that is the type of transaction thatwould be required to be disclosed under the Securities Act by the Controlling Partnership, thePurchaser GP or such Consolidated Person pursuant to Item 404 of Regulation S-K under theSecurities Act if the Controlling Partnership, the Purchaser, the Purchaser GP or such ConsolidatedPerson were subject to the disclosure requirements of such Item (provided, however, that, except withrespect to any transaction for which the restrictions of clause (ii) do not apply by virtue of the provisobelow, the Controlling Partnership shall on at least a quarterly basis provide a report in reasonabledetail of transactions which would be covered by this clause (ii) but for the requirement set forth inthis clause (ii) as to a minimum aggregate amount), (iii) except in accordance with the ExchangeAgreement, enter into any transaction with any Related Person if such transaction would reduce thepercentage of KPE’s direct or indirect equity interest in any Consolidated Person or the percentage ofthe equity interest in the Controlling Partnership that the holders of KPE Common Units will receiveupon the Distribution; provided, however the foregoing clauses (ii) and (iii) shall not restrict, and theapproval of a majority of the Independent Directors shall not be required with respect to, (A) thepayment, issuance, grant or delivery of compensation, including, subject to Section 4.12, equity-basedcompensation, to any Related Person in respect of such Related Person’s provision of services to theControlling Partnership or a Consolidated Person provided that in performing such services, theRelated Person is acting as a partner, member, director, officer or employee of the ControllingPartnership or a Consolidated Person and not as a third-party service provider, (B) any transaction orseries of related transactions with a Related Person made on substantially similar terms as have beenagreed to with unaffiliated third parties in connection with the same transaction or series of relatedtransactions, (C) any investment by a Related Person in any investment fund or investment vehicle thatis managed, sponsored or otherwise advised by the Controlling Partnership or any Consolidated Personor (D) the matters set forth in Section 4.10 of the Confidential Controlling Partnership DisclosureSchedules. In addition, upon the request of the Controlling Partnership, the Independent Directorsshall review any other transaction among the Controlling Partnership, the Purchaser GP and any of the

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Consolidated Persons submitted to the Independent Directors by the Controlling Partnership for thepurposes of determining whether a conflict of interest exists with respect to such transaction and thatsuch transaction is in compliance with the respective organizational documents of the ControllingPartnership, the Controlling Partnership GP, the Purchaser GP and each of the Consolidated Persons.Upon a determination by a majority of the Independent Directors that any such transaction is incompliance with the respective organizational documents of the Controlling Partnership, the ControllingPartnership GP, the Purchaser GP and the Consolidated Persons, such transaction shall not be void orvoidable as a result of any conflict of interest existing between the parties to such transaction and,except as set forth in Section 5, neither the Controlling Partnership nor any of its affiliates shall haveany liability to KPE, any affiliate thereof, or any person that has an equity interest in KPE, anyConsolidated Person or any affiliate thereof as a result of, or arising from, any such transaction. At therequest of the Controlling Partnership, the organizational documents of any Consolidated Person maybe amended to include provisions to limit the liability of the Controlling Partnership and its affiliates inthe manner described in the immediately preceding sentence. During the Consent Period, (w) upon therequest of KPE, the Controlling Partnership agrees to take, or cause to be taken, any action to enforcethe rights of the Controlling Partnership directly or through one or more entities controlled by theControlling Partnership, under any Covered Agreement against (A) Holdings (and any subsidiary orother designee of Holdings through which Holdings holds any units representing limited partnerinterests in the Group Partnership) and (B) each person that is or becomes from time to time a generalpartner or limited partner of Holdings or a general partner, limited partner or holder of any other typeof equity interest of any such person, (x) the Controlling Partnership shall not incur or assume anyindebtedness for borrowed money or guarantee any such indebtedness, (y) the Controlling Partnershipshall not permit the Designated Percentage with respect to Future Carried Interests (as such terms aredefined in the limited partnership agreements of the Group Partnerships) to exceed 40%, and (z) uponreasonable notice and subject to the terms of the Confidentiality Agreement, dated June 20, 2008,between KPE and Kohlberg Kravis Roberts & Co. L.P., the Controlling Partnership agrees to take, orcause to be taken, all actions necessary to provide the audit committee of the KPE GP board ofdirectors or the Independent Directors with access during normal business hours to the personnel,books and records of the Consolidated Persons, and any financial statements generated therefrom,relating to the activities of the Controlling Partnership, the Purchaser GP and the ConsolidatedPersons, and shall furnish to the audit committee of the KPE GP or the Independent Directors aspromptly as practicable after receiving a request therefor such other information concerning thebusiness of the Controlling Partnership, the Purchaser GP and the Consolidated Persons as the auditcommittee or the Independent Directors may reasonably request; provided that the foregoing shall notobligate the Controlling Partnership to disclose any information to such audit committee or theIndependent Directors that the Controlling Partnership, the Purchaser GP or the Consolidated Personreasonably determines, based on the advice of counsel, to be privileged; provided further thatControlling Partnership, the Purchaser GP or the Consolidated Person shall use its reasonable bestefforts to make appropriate substitute disclosure arrangements under circumstances in which theimmediately preceding proviso applies.

4.11 Ongoing Reporting Obligations. From the Effective Time (as such term is defined in thePurchase Agreement) to the Closing Date, the Controlling Partnership shall, and shall cause theConsolidated Persons (as such term is defined in the Purchase Agreement) to, cooperate in good faithwith KPE to take such actions as may be reasonably necessary or advisable to comply with the financialreporting obligations of KPE under applicable law, including the preparation of the financial statementsand other financial information of the KKR Group (as defined in the Purchase Agreement) required tobe included in the reports to be submitted to holders of KPE Common Units.

4.12 Equity Incentive Plans. At any time prior to the Closing, the Controlling Partnership maycause the KKR Management Holdings L.P. Equity Incentive Plan, substantially in the form attachedhereto as Exhibit F (the ‘‘Pre-Listing Incentive Plan’’) to be adopted. Upon the Closing, the Controlling

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Partnership shall adopt the KKR & Co. L.P. Equity Incentive Plan, substantially in the form attachedhereto as Exhibit G (the ‘‘Post-Listing Incentive Plan’’). Without the prior written consent of a majorityof the Independent Directors, from and after the date of this Agreement until the completion of theClosing, the Controlling Partnership shall not, and shall not permit any Consolidated Person to, (i) payto, grant, issue or otherwise deliver, or (ii) enter into or adopt any plan, program, policy, agreement orarrangement that provides for the payment, grant, issuance or delivery of, in the case of bothclauses (i) and (ii), to any current, former or future Participant (as defined in the Purchase Agreement)to the Controlling Partnership or any Consolidated Person, any cash or equity-based compensation that(A) is for such Participant’s services to the Controlling Partnership, the Purchaser GP or anyConsolidated Person, (B) the amount of which is determined primarily based on the value of theinterests in the Controlling Partnership, the Purchaser GP or of any Consolidated Person and(C) reduces (or upon exercise, payment or settlement, would reduce) the Seller’s direct or indirectequity interest in any Consolidated Person or the percentage of the equity interest in the ControllingPartnership that the holders of KPE Common Units will receive upon the Distribution or the amountof cash distributable to the Seller as a result of its direct or indirect equity interest in the ControllingPartnership or any Consolidated Person; provided, however, that the foregoing restrictions shall notprohibit grants of awards pursuant to the Pre-Listing Incentive Plan during the period beginning at theEffective Time (as defined in the Purchase Agreement) and ending immediately prior to the Closing,subject to the aggregate limitation set forth therein (as such limitation is specified in Exhibit F), exceptthat until the earlier of (x) immediately following the Closing and (y) the first anniversary of theEffective Time (or, in the case of this clause (y), in the event that an Election Notice has beendelivered prior to such first anniversary but if the Closing has not occurred, the fifteen monthanniversary of the Effective Time), without the prior written consent of a majority of the IndependentDirectors, no grants of awards shall be made under the Pre-Listing Incentive Plan to any person whowas a member of KKR & Co. LLC as of the date of execution of the Purchase Agreement.

4.13 Treatment of Seller Unit Appreciation Rights. Upon the closing of the transactionscontemplated by the Purchase Agreement, each outstanding unit appreciation right with respect to KPECommon Units issued under KPE’s 2007 Equity Incentive Plan (each, a ‘‘KPE UAR’’) became fullyvested and immediately exercisable. Upon the Closing, except as may otherwise be agreed in writingbetween the Controlling Partnership and a holder of a KPE UAR at any time prior to the Closing,(i) each outstanding KPE UAR for which the exercise price per KPE Common Unit of such KPE UARequals or exceeds the closing price per KPE Common Unit on Euronext Amsterdam on the finaltrading day of KPE Common Units shall be cancelled without the payment of any consideration inrespect thereof and (ii) each other KPE UAR (other than those referred to in clause (i)) shall beconverted into a fully vested unit appreciation right, on the same terms and conditions as wereapplicable under such KPE UAR, with respect to a number of Controlling Partnership Units equal tothe number of KPE Common Units subject to such KPE UAR immediately prior to the Closing withan exercise price per Controlling Partnership Unit equal to the per unit exercise price for such KPEUAR (the KPE UARs referred to in this clause (ii), the ‘‘Adjusted UARs’’). Upon the Closing, theControlling Partnership shall assume the Adjusted UARs and all obligations with respect thereto. Assoon as practicable following the Closing, the Controlling Partnership shall deliver to the holders ofAdjusted UARs appropriate notices setting forth such holders’ rights pursuant to the Adjusted UARs(including the number of Controlling Partnership Units subject to each such Adjusted UAR and theper unit exercise price with respect thereto) and specifying that such Adjusted UARs have beenassumed by the Controlling Partnership and shall continue in effect on the same terms and conditionsas were applicable to the KPE UARs immediately prior to the Closing. Prior to the Closing, KPE andthe Controlling Partnership shall take all actions necessary or appropriate to effectuate the provisionsof this Section 4.13.

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5. INDEMNIFICATION

(a) To the fullest extent permitted by applicable law, from the Closing Date through the sixthanniversary thereof, the Group Partnerships shall indemnify, defend and hold harmless, and provideadvancement of expenses to, each present and former director and officer of the KPE GP and thepersons identified in Schedule 5.1 to this Agreement against all losses, liabilities, damages, judgmentsand fines (‘‘Losses’’) incurred in connection with any suit, claim, action, proceeding, arbitration orinvestigation (‘‘Proceedings’’) arising out of or related to actions taken by them in their capacity asdirectors or officers of the KPE GP (including, this Agreement and the transactions contemplatedhereby) or taken by them at the request of KPE or the KPE GP, whether asserted or claimed prior to,at or after the Closing Date.

(b) The Group Partnerships shall indemnify and hold harmless to the fullest extent permitted byapplicable law the Controlling Partnership, KPE and each present and former director and officer ofthe KPE GP and the persons identified in Schedule 5.1 to this Agreement against any and all Losses towhich they or any of them may become subject under the Securities Act, the Exchange Act or otherapplicable law, statute, rule or regulation insofar as such Losses arise out of or are based upon anyuntrue statement or alleged untrue statement of a material fact contained in the Registration Statementand any other document issued by the Controlling Partnership, KPE or any of their respective affiliatesin connection with or otherwise relating to the US Listing, or in any amendment or supplementthereto, or arise out of or are based upon the omission or alleged omission to state therein a materialfact required to be stated therein or necessary to make the statements therein, in the light of thecircumstances under which they were made, not misleading, and the Group Partnerships agree toreimburse each such person, as incurred, for any legal or other expenses reasonably incurred by suchperson in connection with investigating or defending against any such Losses to the fullest extentpermitted by applicable law; provided, however that the Group Partnerships shall not be liable in anysuch case to the extent that any such Losses arise out of or are based upon any such untrue statementor alleged untrue statement or omission or alleged omission made in the Registration Statement or inany amendment thereof or supplement thereto, or in any such other document in reliance upon and inconformity with the Specified Information.

(c) The Group Partnerships shall, in respect of any indemnified person that was a director of theKPE GP as of the date of this Agreement who may be called upon, subsequent to the date of hisresignation or expiration of his term, to testify in any Proceeding in connection with this Agreement orthe transactions contemplated hereby, provide such person with reasonable compensation for his timespent testifying in such Proceeding and preparing for such testimony.

(d) If the indemnification provided for this Section 5.1 is unavailable (other than as a result ofapplication of the proviso to Section 5.1(b)) to or insufficient to hold harmless the indemnified personin respect of any Losses, then the Group Partnerships shall contribute to the amount paid or payableby the indemnified person as a result of such Losses (A) in such proportion as is appropriate to reflectthe relative fault of the Group Partnerships, on the one hand, and the indemnified person, on the otheror (B) if the allocation provided by clause (A) is not permitted by applicable law, or provides a lessersum to the indemnified person than the amount hereinafter calculated, in such proportion as isappropriate to reflect not only the relative fault of the Group Partnerships, on the one hand, and theindemnified person, on the other, in respect of such Losses but also the relative benefits received bythe Group Partnerships, on the one hand, and the indemnified person, on the other, from thetransactions contemplated by this Agreement as well as any other relevant equitable considerations.The amount paid or payable by the indemnified person as a result of the Losses referred to above inthis Section 5.1 shall be deemed to include any legal or other expenses reasonably incurred by suchindemnified person in connection with investigating or defending any such action or claim.

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(e) In case any Proceeding shall be commenced or instituted involving any person in respect ofwhich indemnity or contribution may be sought pursuant to this Section 5.1, such person shall promptlynotify the Group Partnerships thereof in writing; provided that the failure to so notify the GroupPartnerships will not affect the rights of such person under this Section 5.1 except to the extent that theGroup Partnerships are actually prejudiced by such failure. The Group Partnerships shall be entitled totake control of and conduct such Proceeding and to appoint counsel (including local counsel) of theGroup Partnerships’ choosing to represent the indemnified party in connection with such Proceeding(in which case the Group Partnerships shall not thereafter be responsible for the fees and expenses ofany separate counsel retained by the indemnified party). Notwithstanding the Group Partnerships’election to appoint counsel (including local counsel) to represent the indemnified party in connectionwith a Proceeding, the indemnified party shall have the right to employ separate counsel (includinglocal counsel), and the Group Partnerships shall bear the reasonable fees, costs and expenses of suchseparate counsel if (i) the use of counsel chosen by the Group Partnerships to represent theindemnified party would present such counsel with a conflict of interest (based on the advice of counselto the indemnified person), (ii) such Proceeding includes both the indemnified party and the GroupPartnerships, and the indemnified party shall have reasonably concluded (based on the advice ofcounsel to the indemnified person) that there may be legal defenses available to it and/or otherindemnified parties that are different from or additional to those available to the Group Partnershipsor (iii) the Group Partnerships shall authorize the indemnified party to employ separate counsel at theexpense of the Group Partnerships. It is understood that the Group Partnerships shall not, in respect ofthe legal expenses of any indemnified party in connection with any Proceeding or related Proceedingsin the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in additionto any local counsel) for all such indemnified parties. The Group Partnerships shall not be liable underthis Section 5.1 for any settlement or compromise or consent to the entry of any judgment with respectto any pending or threatened Proceeding in respect of which indemnification or contribution may besought under this Section 5.1 (whether or not the indemnified parties are actual or potential parties tosuch claim or action), unless such settlement, compromise or consent is consented to by the GroupPartnerships, such consent not to be unreasonably withheld or delayed.

(f) Notwithstanding any other provision of this Agreement to the contrary, the indemnifiedparties specified in this Section 5.1 shall be third party beneficiaries of this Section 5.1. The provisionsof this Section 5.1 are intended to be for the benefit of each such person to whom this Section 5.1applies (and, in the case of each director of the KPE GP, for the benefit of such director in hisindividual capacity) and his or her heirs. The obligations of the Group Partnerships under thisSection 5.1 shall not be terminated or modified in such a manner as to adversely affect any such personto whom this Section 5.1 applies without the express written consent of such affected person.

(g) If any of the Group Partnerships or their successors or assigns shall (i) consolidate with ormerge into any person and shall not be the continuing or surviving person in such consolidation ormerger or (ii) transfer all or substantially all of its assets to any other persons, then, and in each suchcase, proper provisions shall be made so that the successors and assigns of the Group Partnerships shallassume the obligations of the Group Partnerships set forth in this Section 5.1.

(h) The Group Partnerships or their successors or assigns shall be entitled to repayment of allapplicable expenses advanced to any person pursuant to this Section 5 if it is ultimately determined bya non-appealable judgment that such person is not entitled to indemnification hereunder with respectto the matter for which any such expenses were advanced.

(i) The obligations of the Group Partnerships set forth in this Section 5 shall be joint and several.

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6. CONDITIONS PRECEDENT

6.1 Conditions. The respective obligations of each party to consummate the US Listing shall besubject to the satisfaction at or prior to the Closing Date of each of the following conditions:

(a) US Listing. The Controlling Partnership Units to be issued to KPE pursuant toSection 4.1 of this Agreement shall have been authorized for listing on the relevant UnitedStates stock exchange, subject to official notice of issuance.

(b) Registration Statement Effectiveness. The Registration Statement shall have becomeeffective under the Securities Act and/or Exchange Act, as applicable, without anyrequirement that the Controlling Partnership or any of its affiliates become subject toregulation under the Investment Company Act, no stop order suspending the effectiveness ofthe Registration Statement shall have been issued and no proceedings for that purpose shallhave been initiated or threatened by the SEC.

(c) No Injunctions or Restraints; Illegality. No order, injunction, judgment, award ordecree issued by any Governmental Entity of competent jurisdiction or other legal restraint orprohibition preventing the consummation of the US Listing and/or the Distribution shall be ineffect. No law, statute, rule, ordinance or regulation shall have been enacted, entered,promulgated or enforced by any Governmental Entity which prohibits or makes illegal theconsummation of the US Listing and/or the Distribution.

(d) Contribution Transactions. The Contribution Transactions shall have beenconsummated in accordance with Section 4.1, except for any deviations thereto permittedunder Section 8.3 and any other deviations thereto which would not reasonably be expected tohave an adverse impact in more than an insignificant respect on KPE, the ControllingPartnership or the holders of the KPE Common Units.

(e) Delivery of Letters. KPE shall have received the ‘‘comfort’’ letter and the ‘‘negativeassurance’’ letter contemplated by Section 4.8 of this Agreement, each in form and substancereasonably satisfactory to KPE.

7. TERMINATION

7.1 Termination. This Agreement may be terminated and the transactions contemplated herebymay be abandoned at any time prior to the Closing by mutual written consent of the ControllingPartnership and KPE.

7.2 Effect of Termination. In the event of termination of this Agreement and the abandonmentof the transactions contemplated hereby pursuant to Section 7.1, this Agreement shall forthwith becomevoid and have no effect, and no party or any of their respective affiliates, employees or representativesshall have any liability of any nature whatsoever under this Agreement, or in connection with thetransactions contemplated by this Agreement, except that (i) this Section 7.2 (Effect of Termination)and Section 8 (General Provisions) shall survive any termination of this Agreement and (ii) neitherKPE, the Controlling Partnership nor the Group Partnerships shall be relieved or released from anyliabilities or damages arising out of its willful or intentional breach of any provision of this Agreement.

8. GENERAL PROVISIONS

8.1 Nonsurvival of Representations, Warranties and Agreements. None of the representations,warranties, covenants and agreements in this Agreement or in any officer’s certificate deliveredpursuant to this Agreement, including any rights arising out of any breach of such representations,warranties, covenants, and agreements, shall survive the Closing, except for those covenants and

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agreements contained in Section 4.1(e), Section 4.4, Section 4.6, Section 4.9, Section 4.13, Section 5 andSection 8.

8.2 Expenses. All costs and expenses incurred by the Controlling Partnership, the ControllingPartnership GP, KPE or the KPE GP in connection with this Agreement and the transactionscontemplated hereby shall be paid by the Group Partnerships.

8.3 Change in Law.

(a) To the extent there is a change in law relating to the taxation of (i) the income of KKR FundHoldings L.P., or (ii) an entity that is a ‘‘publicly traded partnership’’ pursuant to Section 7704 of theInternal Revenue Code of 1986, as amended, the Controlling Partnership shall have the right to electto effect the transactions described herein in such manner as the Controlling Partnership in itsreasonable discretion, after consultation with KPE, deems to be the most beneficial taking intoconsideration such changes in law; provided that no alteration shall be made to the manner in whichthe transactions described herein will be effected in response to such a change in law to the extent suchalteration would reasonably be expected to have an adverse impact in more than an insignificantrespect on KPE, the Controlling Partnership or the holders of the KPE Common Units (other than anyadverse impact resulting from any change in law), without the consent by KPE, which consent shall notbe unreasonably withheld or delayed. Furthermore, the Controlling Partnership shall have the right toelect to effect the transactions described herein in such manner as the Controlling Partnership in itsreasonable discretion, after consultation with KPE, deems to be necessary in order to permit theControlling Partnership following the Contribution Transactions to be treated as a continuation of KPEfor U.S. Federal income tax purposes; provided that no alteration shall be made to the manner in whichthe transactions described herein will be effected in order to permit such treatment to the extent suchalteration would reasonably be expected to have an adverse impact in more than an insignificantrespect on KPE, the Controlling Partnership or the holders of the KPE Common Units, without theconsent by KPE, which consent shall not be unreasonably withheld or delayed.

(b) Each of the Controlling Partnership and KPE shall use its reasonable best efforts to effect theUS Listing, the Contribution Transactions and the Dissolution Transactions in a manner such thatholders of KPE Common Units will recognize no income, gain or loss for United States federal incometax purposes; provided that to the extent there is a change in law so that the US Listing, theContribution Transactions or the Dissolution Transactions may not be effected as currentlycontemplated without recognition by holders of KPE Common Units of income, gain or loss for UnitedStates federal income tax purposes, then each of the Controlling Partnership and KPE shall usereasonable best efforts to effect the transactions in a manner that attempts to minimize the recognitionof income or gain for United States federal income tax purposes by the holders of KPE Common Unitsexcept to the extent that (i) the transactions and resulting structure results in an adverse impact inmore than an insignificant respect to the Controlling Partnership, its subsidiaries or Holdings, or(ii) the Controlling Partnership and KPE agree there are other considerations that outweigh therecognition of income or gain for United States federal income tax purposes by the holders of KPECommon Units.

8.4 Notices. All notices and other communications hereunder shall be in writing and shall bedeemed duly given (a) on the date of delivery if delivered personally, or by facsimile, uponconfirmation of receipt, (b) on the first business day following the date of dispatch if delivered by arecognized next-day courier service, or (c) on the fifth business day following the date of mailing ifdelivered by registered or certified mail, return receipt requested, postage prepaid. All noticeshereunder shall be delivered as set forth below, or pursuant to such other instructions as may bedesignated in writing by the party to receive such notice:

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if to the Controlling Partnership or the Group Partnerships, to:

KKR & Co. L.P.9 W. 57th Street, Suite 4200New York, NY 10019Attention: David J. SorkinFacsimile: (212) 750-0003

with a copy to (which shall not constitute notice):

Simpson Thacher & Bartlett LLP425 Lexington AvenueNew York, NY 10017Attention: Alan M. Klein

Joseph H. KaufmanFacsimile: (212) 455-2502

if to KPE, to:

KKR Private Equity Investors, L.P.P.O. Box 255Trafalgar Court, Les BanquesSt. Peter Port, Guernsey GY1 3QLChannel IslandsAttention: Christopher LeeFacsimile: +44.1481.745.074

with a copy to (which shall not constitute notice):

Bredin Prat130 rue du Faubourg Saint Honore75008 ParisFranceAttention: Patrick Dziewolski

Benjamin KanovitchFacsimile: +33 (0)1.42.89.10.73

and

Cravath, Swaine & Moore LLPCityPoint | One Ropemaker StreetLondon EC2Y 9HRUKAttention: George StephanakisFacsimile: +44 (0)207 860 1150

and

Cravath, Swaine & Moore LLP825 Eighth AvenueNew York, NY 10019Attention: Sarkis JebejianFacsimile: (212) 474-3700

8.5 Interpretation. The words ‘‘hereof,’’ ‘‘herein’’ and ‘‘hereunder’’ and words of similar importwhen used in this Agreement shall refer to this Agreement as a whole and the schedules hereto andnot to any particular provision of this Agreement, and Section references are to this Agreement unless

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otherwise specified. Whenever the words ‘‘include,’’ ‘‘includes’’ or ‘‘including’’ are used in thisAgreement, they shall be deemed to be followed by the words ‘‘without limitation.’’ The word ‘‘or’’shall be inclusive and not exclusive. The table of contents and headings contained in this Agreementare for reference purposes only and shall not affect in any way the meaning or interpretation of thisAgreement. This Agreement shall be construed without regard to any presumption or interpretationagainst the party drafting or causing any instrument to be drafted. All schedules accompanying thisAgreement and all information specifically referenced in any such schedule form an integral part of thisAgreement, and references to this Agreement include references to them. The term ‘‘affiliate’’ has themeaning given to it in Rule 12b-2 of the Exchange, and the term ‘‘person’’ has the meaning given to itin Sections 3(a)(9) and 13(d)(3) of the Exchange Act. Whenever this Agreement requires KPE or theControlling Partnership to take, or not take, any action, such requirement shall be deemed to includean undertaking on the part of the KPE GP or the Controlling Partnership GP, as the case may be, tocause KPE or the Controlling Partnership to take, or not take, such action.

8.6 Amendment; Waiver. Subject to compliance with applicable law, this Agreement may beamended by the parties hereto, by a written instrument authorized and executed on behalf of theparties hereto (provided that in the case of KPE in addition to any other requirement under applicablelaw, any such amendment shall be valid only if approved by all of the Independent Directors). At anytime prior to the Closing, each party hereto may, to the extent legally allowed, (a) extend the time forthe performance of any of the obligations or other acts by the other parties hereto, (b) waive anyinaccuracies in the representations and warranties by the other parties hereto contained herein or inany document delivered pursuant hereto and (c) waive compliance by the other parties hereto with anyof the agreements or conditions contained herein. Any agreement on the part of a party hereto to anysuch extension or waiver shall be valid only if set forth in a written instrument signed on behalf of suchparty (provided that in the case of KPE in addition to any other requirement under applicable law, anysuch extension or waiver shall be valid only if approved by all of the Independent Directors), but suchextension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement orcondition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.Notwithstanding any other provision of this Agreement or the Purchase Agreement to the contrary, anyamendment or waiver hereto or thereto following the Closing with respect to the ControllingPartnership’s rights or obligations that survive the Closing hereunder or thereunder shall require theapproval of a majority of the independent directors of the Controlling Partnership GP.

8.7 Counterparts. This Agreement may be executed in counterparts, all of which shall beconsidered one and the same agreement and shall become effective when counterparts have beensigned by each party and delivered to the other party, it being understood that all parties need not signthe same counterpart.

8.8 Entire Agreement. This Agreement (together with the documents, schedules and theinstruments referred to herein) constitutes the entire agreement and supersedes all prior agreementsand understandings, both written and oral, among the parties with respect to the subject matter hereof.

8.9 Severability. Any term or provision of this Agreement which is determined by a court ofcompetent jurisdiction to be invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, beineffective to the extent of such invalidity or unenforceability without rendering invalid orunenforceable the remaining terms and provisions of this Agreement or affecting the validity orenforceability of any of the terms or provisions of this Agreement in any other jurisdiction, and if anyprovision of this Agreement is determined to be so broad as to be unenforceable, the provision shall beinterpreted to be only so broad as is enforceable, in all cases so long as neither the economic nor legalsubstance of the transactions contemplated hereby is affected in any manner materially adverse to anyparty.

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8.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations of anyparty hereunder shall be assigned by any of the parties hereto (whether by operation of law orotherwise) without the prior written consent of the other party; provided, however that with the priorwritten consent of KPE, which consent shall not be unreasonably withheld or delayed, the ControllingPartnership may assign all of its rights and obligations to an affiliate of the Controlling Partnership andupon such assignment the assignee will be deemed to be the Controlling Partnership and the commonunits or equivalent securities of such assignee shall be deemed to be the Controlling Partnership Unitsfor all purposes under this Agreement. Subject to the preceding sentence, this Agreement will bebinding upon, inure to the benefit of and be enforceable by the parties and their respective successorsand permitted assigns.

8.11 Third Party Beneficiaries. This Agreement (including the documents and instrumentsreferred to herein), except for the provisions of Section 4.6, Section 4.9 and Section 5, is not intendedto, and does not, confer upon any person other than the parties hereto any rights or remedieshereunder.

8.12 Further Assurances. The Controlling Partnership, Holdings and KPE each agrees to executeand deliver such other documents or agreements and to use their respective reasonable best efforts totake such other actions as may be reasonably necessary or desirable for the implementation of thisAgreement and the consummation of the transactions contemplated hereby.

8.13 Actions of KPE. The parties agree that, in accordance with Article 22(3) of the articles ofincorporation of the KPE GP, during the period from the date of this Agreement until the earlier ofthe Closing and the termination of this Agreement in accordance with the terms hereof, theIndependent Directors, acting based on the affirmative vote of a majority of the Independent Directors,shall be entitled to implement on behalf of KPE the transactions contemplated by this Agreement, toexercise the rights of KPE under this Agreement and to enforce this Agreement against the ControllingPartnership and/or Holdings. The parties hereto further agree that (i) KPE shall not be deemed tohave breached this Agreement unless such breach was due to the taking of any action, or failure totake any action, by the Independent Directors and (ii) the Controlling Partnership shall be deemed tohave breached this Agreement if the Controlling Partnership or any of its affiliates (other than KPE orthe KPE GP) takes any action, or fails to take any action, that causes KPE to breach this Agreement;provided that if the taking of such action, or failure to take such action, would not reasonably havebeen expected to cause KPE to breach this Agreement, the Controlling Partnership shall not bedeemed to have breached this Agreement as a result of the taking of, or failure to take, such actionand the Controlling Partnership shall have no liability to KPE as a result of the taking of, or failure totake, such action.

8.14 Actions of the Controlling Partnership. The parties hereto agree that, following the ClosingDate, the independent directors of the Controlling Partnership GP shall have the right to enforce theControlling Partnership’s rights under Section 5(b) against the Group Partnerships and theorganizational documents of the Controlling Partnership and the Controlling Partnership GP shallprovide for such right.

8.15 Governing Law. This Agreement shall be governed and construed in accordance with thelaws of the State of New York.

8.16 Submission to Jurisdiction. Each party irrevocably submits to the jurisdiction of (a) theSupreme Court of the State of New York, New York County, and (b) the United States District Courtfor the Southern District of New York, for the purposes of any suit, action or other proceeding arisingout of this Agreement or any transaction contemplated hereby. Each party agrees to commence anyaction, suit or proceeding relating hereto either in the United States District Court for the SouthernDistrict of New York or, if such suit, action or other proceeding may not be brought in such court forreasons of subject matter jurisdiction, in the Supreme Court of the State of New York, New York

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County. Each party irrevocably and unconditionally waives any objection to the laying of venue of anyaction, suit or proceeding arising out of this Agreement or any transaction contemplated hereby in(i) the Supreme Court of the State of New York, New York County, or (ii) the United States DistrictCourt for the Southern District of New York, and hereby further irrevocably and unconditionally waivesand agrees not to plead or claim in any such court that any such action, suit or proceeding brought inany such court has been brought in an inconvenient forum. Each party further irrevocably consents tothe service of process out of any of the aforementioned courts in any such suit, action or otherproceeding by the mailing of copies thereof by mail to such party at its address set forth in thisAgreement, such service of process to be effective upon acknowledgment of receipt of such registeredmail; provided that nothing in this Section 8.16 shall affect the right of any party to serve legal processin any other manner permitted by law. The consent to jurisdiction set forth in this Section 8.16 shallnot constitute a general consent to service of process in the State of New York and shall have no effectfor any purpose except as provided in this Section 8.16. The parties agree that a final judgment in anysuch suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit onthe judgment or in any other manner provided by law.

8.17 Enforcement. The parties agree that irreparable damage would occur in the event that anyof the provisions of this Agreement were not performed in accordance with their specific terms on atimely basis or were otherwise breached. It is accordingly agreed that the parties shall be entitled to aninjunction or other equitable relief to prevent breaches of this Agreement and to enforce specificallythe terms and provisions of this Agreement in any court identified in Section 8.16, this being inaddition to any other remedy to which they are entitled at law or in equity.

8.18 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES TRIAL BYJURY IN ANY JUDICIAL PROCEEDING DIRECTLY INVOLVING ANY MATTERS (WHETHERSOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY TRANSACTIONCONTEMPLATED HEREBY.

8.19 Effectiveness. This Agreement shall be effective, and the provisions hereof shall becomeoperative, upon the occurrence of the Effective Time (as defined in the Purchase Agreement) and noparty shall be required to commence performance hereunder until the Effective Time.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as ofthe date first above written.

KKR & CO. L.P.

By: KKR MANAGEMENT LLC, its generalpartner

By:Name:Title:

KKR PRIVATE EQUITY INVESTORS, L.P.

By: KKR GUERNSEY GP LIMITED, its generalpartner (Registration No. 44666)

By:Name:Title:

KKR FUND HOLDINGS L.P.

By: KKR Group Holdings L.P., its general partner

By: KKR Group Limited, its general partner

By:Name:Title:

KKR MANAGEMENT HOLDINGS L.P.

By: KKR Management Holdings Corp., its generalpartner

By:Name:Title:

KKR HOLDINGS L.P. (solely for purposes ofSection 4.7 and Section 8.12)

By: KKR Holdings GP Limited, its generalpartner

By:Name:Title:

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19JUL200701040995

Appendix C

Opinion of Citigroup Global Markets Limited

July 19, 2009

The Board of Directors and the Independent Directors of the Board of Directors of KKRGuernsey GP Limited, acting in its capacity as general partner of KKR Private Equity Investors, L.P.P.O. Box 255Trafalgar Court, Les BanquesSt. Peter Port, Guernsey, GY1 3QLChannel Islands

Members of the Board of Directors and the Independent Directors of the Board of Directors of KKRGuernsey GP Limited:

You have requested our opinion as to the fairness, from a financial point of view, to KKR PrivateEquity Investors, L.P., a Guernsey limited partnership (‘‘KPE LP’’), of the Consideration (as definedbelow) to be received by KPE LP for the sale of all of the limited partner interests (the ‘‘LP Interests’’)in KKR PEI Investments, L.P., a Guernsey limited partnership (the ‘‘Acquired Partnership’’), and all ofits other assets as contemplated by the Purchase Agreement (as defined below). As more fullydescribed in the Amended and Restated Purchase and Sale Agreement (the ‘‘Purchase Agreement’’) tobe entered into by and among (1) KKR & Co. L.P., a Delaware limited partnership (‘‘KKR’’),(2) KPE LP (acting through its general partner, KKR Guernsey GP Limited, a Guernsey companylimited by shares (the ‘‘GP’’)), (3) KKR PEI Associates, L.P., a Guernsey limited partnership, acting inits capacity as the general partner of the Acquired Partnership, (4) KKR Group Holdings L.P., aCayman Islands exempted limited partnership (‘‘KKR Group’’) (acting through its general partner, KKRGroup Limited, a Cayman Islands exempted limited company), and such other parties as are identifiedtherein, (i) KKR Group will purchase and KPE LP will sell all of its assets, including the LP Interests,(ii) KKR Group will assume all of the liabilities of KPE LP, and (iii) in consideration for such sale, theKPE LP will receive a number of common units representing limited partnership interests of KKRGroup (‘‘KKR Group Common Units’’) that represent 30% of the pro forma equity in the combinedbusiness of KKR and KPE LP (the ‘‘Consideration’’), which, following the completion of thetransactions contemplated by the Purchase Agreement, will be the only significant asset of KPE LP(collectively, the ‘‘Transaction’’). In addition, as a result of the closing of the Transaction, approximately40% of the carried interest from KKR Group will be allocated to the principals and other professionalsof KKR and its affiliates, although this percentage may fluctuate over time.

In arriving at our opinion, we reviewed a draft dated July 19, 2009 of the Purchase Agreement andthe exhibits thereto, including the draft announcement press release, and we held discussions withcertain senior officers, directors and other representatives and advisors of KPE LP or GP and certainsenior officers and other representatives and advisors of KKR concerning the businesses, operationsand prospects of KPE LP and KKR. We examined certain publicly available business and financialinformation relating to KPE LP and KKR, as well as certain financial information and other datarelating to KPE LP, and certain financial forecasts (on a standalone and pro forma basis) and otherinformation relating to KKR and KKR Group, which were provided to or discussed with us by therespective managements of KPE LP and KKR, as applicable. We have not received any financialforecasts from KPE LP, other than the range of preliminary net asset value as of June 30, 2009 (the‘‘Preliminary NAV’’). Therefore, we have not performed a discounted cash flow analysis with respect toKPE LP. We reviewed the financial terms of the Transaction as set forth in the Purchase Agreement inrelation to, among other things: current and historical market prices and trading volumes of KPE LP

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common units and current and historical net asset values of KPE LP; the historical financial and otheroperating data of KPE LP; the historical earnings and other operating data of KKR; certain financialforecasts (on a standalone and pro forma basis) relating to KKR and KKR Group; and thecapitalization and financial condition of KPE LP and KKR. We considered, to the extent publiclyavailable, the control premia of certain other transactions that we considered relevant in evaluating theTransaction and analyzed certain financial, stock market and other publicly available informationrelating to the businesses of other companies whose operations we considered relevant in evaluatingthose of KPE LP and KKR. In addition to the foregoing, we conducted such other analyses andexaminations and considered such other information and financial, economic and market criteria as wedeemed appropriate in arriving at our opinion. The issuance of our opinion has been authorized by ourfairness opinion committee.

In rendering our opinion, we have assumed and relied, without independent verification, upon theaccuracy and completeness of all financial and other information and data publicly available orprovided to or otherwise reviewed by or discussed with us (including KPE LP’s Preliminary NAV andfinancial forecasts (on a standalone and pro forma basis) relating to KKR and KKR Group) and uponthe assurances of the managements of KPE LP and KKR that they are not aware of any relevantinformation that has been omitted or that remains undisclosed to us. Based on discussions with themanagement of KPE LP, we have assumed that KPE LP’s net asset value as of June 30, 2009 to bereported by KPE LP on or before August 30, 2009 will be within the range of the Preliminary NAV.With respect to financial information and other data relating to KPE LP’s Preliminary NAV, and thefinancial forecasts and other information and data provided to or otherwise reviewed by or discussedwith us relating to KKR, we have been advised by the respective managements of KPE LP and KKR,as applicable, that such information and data were reasonably prepared on bases reflecting the bestcurrently available estimates and judgments of the respective managements of KPE LP and KKR.

We have assumed, with your consent, that the Transaction will be consummated in accordance withthe terms of the Purchase Agreement, without waiver, modification or amendment of any materialterm, condition or agreement and that, in the course of obtaining the necessary regulatory or thirdparty approvals, consents and releases for the Transaction, no delay, limitation, restriction or conditionwill be imposed that would have an adverse effect on KPE LP, KKR or KKR Group or thecontemplated benefits of the Transaction. We also have assumed that, from and after the closing of theTransaction, 40% of the carried interest from KKR Group will be allocated to the principals and otherprofessionals of KKR and its affiliates. Representatives of KPE LP have advised us, and we furtherhave assumed, that the final terms of the Purchase Agreement and the exhibits thereto will not varymaterially from those set forth in the drafts reviewed by us. We also have assumed, with your consent,that the Transaction will be treated as a tax-free reorganization for federal income tax purposes.

Our opinion, as set forth herein, relates to the relative values of KPE LP and KKR. We are notexpressing any opinion as to what the value of the KKR Group Common Units actually will be whenissued pursuant to the Transaction or the price at which the KKR Group Common Units (or anyinstruments for or into which such units may be exchanged or converted) may trade at any time. Wehave not made or been provided with an independent evaluation or appraisal of the assets or liabilities(contingent or otherwise) of KPE LP or KKR nor have we made any physical inspection of theproperties or assets of KPE LP or KKR. We do not express any opinion as to any tax or otherconsequences that might result from the Transaction, nor does our opinion address any legal, tax,regulatory or accounting matters (including any opinion with respect to tax consequences ondistributions made by KKR Group or its affiliates before or after the Transaction), as to which weunderstand that KPE LP obtained such advice as it deemed necessary from qualified professionals. Wewere not requested to, and we did not, solicit third party indications of interest in the possibleacquisition of all or a part of KPE LP, nor were we requested to consider, and our opinion does notaddress, the underlying business decision of KPE LP to effect the Transaction, the relative merits of the

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Transaction as compared to any alternative business strategies that might exist for KPE LP or the effectof any other transaction in which KPE LP might engage (including the transaction contemplated by theoriginal Purchase and Sale Agreement dated as of July 27, 2008 among KPE LP and the other partiesthereto). We also express no view as to, and our opinion does not address, the fairness (financial orotherwise) of the amount or nature or any other aspect of any compensation to any officers, directorsor employees of any parties to the Transaction, or any class of such persons, relative to theConsideration. Our opinion is necessarily based upon information available to us, and financial, stockmarket and other conditions and circumstances existing, as of the date hereof. As you are aware, thecredit, financial and stock markets are experiencing unusual volatility and we express no opinion orview as to any potential effects of such volatility on KKR or KPE LP or the contemplated benefits ofthe Transaction.

Citigroup Global Markets Limited has acted as financial advisor to KPE LP (acting throughits GP) in connection with the Transaction and will receive a fee for such services, a significant portionof which is contingent upon the consummation the Transaction. We and our affiliates in the past haveprovided, and currently provide, services to KPE LP and KKR unrelated to the Transaction, for whichservices we and such affiliates have received and expect to receive compensation, including, withoutlimitation, (i) providing extensive financial advisory, capital markets and lending services to KKR, itsaffiliates or its portfolio companies in various transactions and proposed transactions, (ii) having a rolein relation to KKR’s filed and now withdrawn initial public offering in 2007, (iii) acting as lead arrangeron a $1 billion revolving credit facility for KPE LP in 2007 and (iv) acting as joint global coordinatorand bookrunner for KPE LP’s initial public offering in 2006. KKR has also committed to us that wewill have a role in a future initial public offering of KKR, which may occur if the Transaction is notconsummated. In addition, in the event of a primary offering by KKR Group following consummationof the Transaction, KKR has indicated to us that we may have a role in such offering. In the ordinarycourse of our business, we and our affiliates may actively trade or hold the securities of KPE LP andKKR or its affiliates for our own account or for the account of our customers and, accordingly, may atany time hold a long or short position in such securities. In addition, we and our affiliates (includingCitigroup Inc. and its affiliates) may maintain relationships with KPE LP, KKR and their respectiveaffiliates.

Our advisory services and the opinion expressed herein are provided solely for the information ofthe Board of Directors and the Independent Directors of the Board of Directors of GP, acting in itscapacity as general partner of KPE LP in their evaluation of the proposed Transaction, and our opinionis not intended to be and does not constitute a recommendation to any unit holder as to how such unitholder should vote or act on any matters relating to the proposed Transaction.

Based upon and subject to the foregoing, our experience as investment bankers, our work asdescribed above and other factors we deemed relevant, we are of the opinion that, as of the datehereof, the Consideration is fair, from a financial point of view, to KPE LP.

Very truly yours,

/s/ Citigroup Global Markets Limited

CITIGROUP GLOBAL MARKETS LIMITED

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13JUN200810284931

Appendix D

Opinion of Lazard Freres & Co. LLC

LAZARD FRERES & CO. LLC30 ROCKEFELLER PLAZANEW YORK, NY 10020PHONE 212-632-6000www.lazard.com

July 19, 2009

The Independent Directors of the Board of Directors of KKR Guernsey GP Limited, acting in itscapacity as general partner of KKR Private Equity Investors, L.P.P.O. Box 255Trafalgar Court, Les BanquesSt. Peter Port, Guernsey, GY1 3QLChannel Islands

Dear Independent Directors of the Board of Directors of KKR Guernsey GP Limited:

We understand that (1) KKR Management LLC, a Delaware limited liability company, acting in itscapacity as the general partner of KKR & Co. L.P., a Delaware limited partnership (‘‘KKR’’), and itsaffiliates, (2) KKR Group Limited, a Cayman Islands exempted limited company, acting in its capacityas the indirect general partner of KKR Group Holdings L.P. (‘‘KKR Group’’), a Cayman Islandsexempted limited partnership, (3) KKR Guernsey GP Limited, a Guernsey company limited by shares(‘‘GP’’), acting in its capacity as the general partner of KKR Private Equity Investors, L.P., a Guernseylimited partnership (‘‘KPE LP’’), and (4) KKR PEI Associates, L.P., a Guernsey limited partnership,acting in its capacity as the general partner of KKR PEI Investments, L.P., a Guernsey limitedpartnership (the ‘‘Investment Partnership’’) and such other parties identified in the Agreement, asdefined below, propose to enter into an Amended and Restated Purchase and Sale Agreement, datedas of July 19, 2009 (the ‘‘Agreement’’).

Pursuant to the Agreement, among other things, (i) KKR Group will purchase and KPE LP willsell all of KPE LP’s limited partner interests in the Investment Partnership and all of its other assets,(ii) KKR Group will assume all of KPE LP’s liabilities and (iii) as consideration for such sale, KPE LPwill receive a number of newly issued common units representing limited partner interests of KKRGroup (‘‘KKR Group units’’ and, such number of units so issuable, the ‘‘Consideration’’) representing30% of the pro forma equity in the combined asset management business of KKR and the assets andliabilities of KPE LP (collectively, the ‘‘Transaction’’). As a result of the closing of the Transaction,KPE LP’s only significant assets will be the KKR Group units that it received in the Transaction. Inaddition, as a result of the closing of the Transaction, approximately 40% of the carried interest fromKKR Group will be allocated to the principals and other professionals of KKR and its affiliates,although this percentage may fluctuate over time. The terms and conditions of the Transaction aremore fully set forth in the Agreement.

You have requested our opinion as of the date hereof as to the fairness, from a financial point ofview, to KPE LP of the Consideration to be paid to KPE LP in the Transaction as contemplated by theAgreement.

In connection with this opinion, we have:

(i) reviewed the financial terms and conditions of the draft dated July 19, 2009 of theAgreement and the exhibits thereto, including the draft announcement press release;

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(ii) analyzed certain publicly available business and financial information relating to KPE LPand KKR;

(iii) reviewed various financial information and other data provided to us by the managementof KPE LP relating to the business of KPE LP (we have not received any financial forecasts fromKPE LP, other than a range of preliminary net asset value as of June 30, 2009 (the ‘‘PreliminaryNAV’’) as well as components thereof) and financial forecasts and other data provided to us by themanagement of KKR relating to the business of KKR and KKR Group (on a pro forma basis);

(iv) held discussions with members of the senior management, directors and otherrepresentatives and advisors of KPE LP and members of the senior management and otherrepresentatives and advisors of KKR with respect to the businesses, operations and prospects ofKPE LP and KKR, respectively;

(v) reviewed and analyzed certain financial and other public information with respect tocertain other companies in lines of business we believe to be generally relevant in evaluating thebusinesses of KPE LP and KKR, respectively;

(vi) reviewed historical stock prices and trading volumes of the common units of KPE LP andnet asset values of KPE LP; and

(vii) conducted such other financial studies as we deemed appropriate.

We have assumed and relied upon the accuracy and completeness of the foregoing information,without independent verification of such information, including all financial and other information anddata publicly available or provided to or otherwise reviewed by or discussed with us. We have notconducted any independent valuation or appraisal of any of the assets or liabilities (contingent orotherwise) of KPE LP or KKR or their respective subsidiaries or concerning the solvency or fair valueof KPE LP or KKR, and we have not been furnished with such valuation or appraisal. With respect tothe financial information and forecasts that we have reviewed, we have assumed, with the consent ofKPE LP and KKR, that they have been reasonably prepared on bases reflecting the best currentlyavailable estimates and judgments of the respective managements of KPE LP and KKR as to the futurefinancial performance of KPE LP, KKR and KKR Group, respectively. Based on discussions with themanagement of KPE LP, we have assumed that KPE LP’s net asset value as of June 30, 2009 to bereported by KPE LP on or before August 30, 2009 will be within the range of the Preliminary NAV. Weassume no responsibility for and express no view as to such forecasts and other data or the assumptionson which they are based.

Further, our opinion is necessarily based on economic, monetary, market and other conditions asin effect on, and the information made available to us as of, the date hereof. In particular, we note thatthe recent unusual volatility and values in the credit, financial and stock markets have resulted inuncertainty regarding the long-term outlook for alternative asset managers and private equity vehiclessuch that traditional long-term valuation perspectives are currently of less relevance. We assume noresponsibility for updating or revising our opinion based on circumstances or events occurring after thedate hereof. We do not express any opinion as to the price at which common units of KPE LP maytrade at any time or as to the price at which the KKR Group units (or any instruments for or intowhich such units may be exchanged or converted) may trade at any time.

In rendering our opinion, we have assumed, with your consent, that the Transaction will beconsummated in accordance with the terms of the Agreement and the related transaction documents,in each case without any waiver or modification of any material terms or conditions or amendment ofany material term, condition or agreement. We also have assumed, with your consent, that obtainingthe necessary regulatory or third party approvals and consents for the Transaction will not have anadverse effect on KPE LP, KKR or KKR Group or the contemplated benefits of the Transaction. Wefurther have assumed, with your consent, that the Transaction would be treated as tax-free for U.S.

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federal income tax purposes. We also have assumed that, from and after the closing of the Transaction,40% of the carried interest from KKR Group will be allocated to the principals and other professionalsof KKR and its affiliates. We do not express any opinion as to any tax or other consequences thatmight result from the Transaction, nor does our opinion address any legal, tax, regulatory or accountingmatters (including any opinion with respect to tax consequences on distributions made by KKR Groupor its affiliates before or after the Transaction), as to which we understand that KPE LP obtained suchadvice as it deemed necessary from qualified professionals. We express no view or opinion as to anyterms or other aspects of the Transaction (other than the Consideration to the extent expresslyspecified herein). In addition, we express no view or opinion as to the fairness of the amount or natureof, or any other aspects relating to, the compensation to any officers, directors or employees of anyparties to the Transaction, or class of such persons, relative to the Consideration or otherwise.Representatives of KPE LP have advised us, and we further have assumed, that the final terms of theAgreement and the Transaction will not vary materially from those set forth in the drafts reviewed byus.

Lazard Freres & Co. LLC is acting as investment banker to the Independent Directors of theBoard of Directors of GP in connection with the Transaction and will receive fees for our services, asubstantial portion of which is contingent upon the closing of the Transaction. We in the past haveprovided, currently are providing and in the future may provide financial advisory, capital markets, andinvestment banking services to KKR and its affiliates unrelated to the Transaction for which we havereceived and may receive compensation, including, without limitation, (i) acting as financial advisor toRockwood in its sale of Groupe Novasep, (ii) acting as financial advisor to TDC in its sale of BiteLietuva, (iii) acting as financial advisor to the steering committee of the secured creditors in connectionwith Masonite International Inc.’s Chapter 11 proceedings, (iv) acting as financial advisor to JazzPharmaceuticals Inc. and acting as placement agent in connection with an offering of its common stockand (v) acting as financial advisor to Capmark Financial Group Inc. regarding debt and capitalstructure matters. In addition, in the ordinary course of their respective businesses, affiliates of LazardFreres & Co. LLC and LFCM Holdings LLC (an entity indirectly owned in large part by managingdirectors of Lazard Freres & Co. LLC) may actively trade securities of KPE LP and KKR’s affiliatesfor their own accounts and for the accounts of their customers and, accordingly, may at any time hold along or short position in such securities. The issuance of this opinion was approved by the OpinionCommittee of Lazard Freres & Co. LLC.

In rendering our opinion, we were not authorized to, and we did not, solicit indications of interestfrom third parties regarding a potential transaction acquiring all or a part of KPE LP, nor have weparticipated in negotiation of the terms of the Transaction. In addition, we were not requested toconsider, and our opinion does not address the relative merits of the Transaction as compared to anyother transaction or business strategy in which KPE LP might engage (including the transactioncontemplated by the Purchase and Sale Agreement, dated July 27, 2008, among KPE LP and the otherparties thereto), or the merits of the underlying decision by KPE LP to engage in the Transaction.

Our engagement and the opinion expressed herein are for the benefit of the IndependentDirectors of the Board of Directors of GP and our opinion is rendered to you in connection with yourevaluation of the Transaction. Our opinion is not intended to and does not constitute arecommendation to any unitholder of KPE LP as to how such unitholder should vote or act withrespect to the Transaction or any matter relating thereto.

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Based on and subject to the foregoing, we are of the opinion that, as of the date hereof, theConsideration to be paid in the Transaction is fair, from a financial point of view, to KPE LP.

Very truly yours,

LAZARD FRERES & CO. LLC

By: /s/ ANTONIO WEISS

Antonio WeissManaging Director

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