Consentsolicitationstmt

22JUL200905111057 July 24, 2009 Dear Unitholder: On July 19, 2009, KKR Private Equity Investors, L.P. (‘‘KPE’’) entered into an amended and restated purchase and sale agreement with KKR & Co. L.P. and certain of its affiliates providing for the combination of the asset management business of KKR with the assets and liabilities of KPE as described more fully in this consent solicitation statement (the ‘‘Combination Transaction’’). Upon completion 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 to the completion of the Reorganization Transactions described in this consent solicitation statement. The Reorganization 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 the holders of KPE units to consummate the Transactions. Nevertheless, based on the extraordinary nature of the Transactions, KKR and KPE have agreed that the consummation of the Combination Transaction is conditioned upon, among other things, the consent of KPE unitholders representing at least a majority of the KPE units for which a properly submitted consent form 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, the consummation of the 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 other conditions precedent to the Combination Transaction are satisfied or waived, the closing conditions will be considered irrevocably satisfied and the effective date of the Combination Transaction will be the first day following the end of the quarter during which the conditions are satisfied or waived. If the conditions 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 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. The independent directors of the board of directors of KPE’s general partner have unanimously recommended to the board of directors that the board of directors approve the Combination Transaction. Taking into account this recommendation, the board of directors unanimously recommends that the holders of KPE units consent to the consummation of the Combination Transaction. Certain KPE unitholders have agreed to deliver consents to consummate the Combination Transaction. See ‘‘The Combination Transaction’’ and ‘‘The Consent Solicitation’’. KPE units are currently admitted to listing and trading on Euronext Amsterdam by NYSE Euronext, the regulated market of Euronext Amsterdam N.V., or Euronext Amsterdam, under the symbol ‘‘KPE’’. KPE units will continue to be listed and trade on Euronext Amsterdam immediately following the Combination Transaction and will continue to be subject to applicable restrictions on ownership and transfer.

Following the consummation of the Combination Transaction, KPE and KKR will have the right to require that the other use its reasonable best efforts to cause interests in the Combined Business to be listed and traded on the New York Stock Exchange or The NASDAQ Stock Market at a future date. If such 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 Euronext Amsterdam and KPE would subsequently be dissolved and delisted from Euronext Amsterdam. Through the attached consent solicitation statement, the general partner of KPE is soliciting your consent to consummate the Combination Transaction. In considering the Combination Transaction, you should carefully consider the matters described in the attached consent solicitation statement, including the 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 the determination of whether the required KPE unitholder consent is obtained is based only on the KPE units for which a properly submitted consent form is submitted, your failure to submit a consent form will not affect the outcome of this consent solicitation. If you hold restricted depositary units of KPE, please complete, date, sign and return, as promptly as 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. Roberts Co-Chairmen of the Board of Directors KKR Guernsey GP Limited The General Partner of KKR Private Equity Investors, L.P. This consent solicitation statement is dated July 24, 2009, and is being distributed to holders of KPE units on or about July 24, 2009.

Table of Contents Page

Questions and Answers About the Combination Transaction and the Consent Solicitation . . . . . Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distribution Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Combination Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Consent Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proposal—Approval of the Combination Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KKR Private Equity Investors, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preliminary Unaudited Pro Forma Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KKR’s Selected Historical Financial and Other Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations . KKR’S Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conflicts of Interest and Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Description of KKR Group Holdings L.P. Limited Partnership Agreement . . . . . . . . . . . . . . . . U.S. Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Material U.S. Federal Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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You should rely only on the information contained in the consent solicitation materials. Neither KKR nor KPE has authorized anyone to provide you with additional or different information. The information in the consent solicitation materials is accurate only as of the date of this consent solicitation 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 you should consider when reading the information contained herein. Prior to the completion of the Combination Transaction, KKR will complete a series of transactions, which are referred to as the Reorganization Transactions, pursuant to which KKR’s business will be reorganized into a holding company structure. The Reorganization Transactions will be completed only after unitholders representing at least a majority of the KPE units for which a properly submitted consent form is submitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates) consent to the Combination Transaction. The Combination Transaction and the Reorganization Transactions are referred 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 certain consolidated and combined entities under the common control of KKR’s senior principals, and under the common ownership of KKR’s principals and certain other individuals who have been involved in KKR’s business, who are referred to collectively as KKR’s ‘‘existing owners’’; and (2) after the Reorganization Transactions, to Group Holdings and its subsidiaries, which will continue to be under the 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 solicitation statement to KKR’s (i) ‘‘principals’’ are to KKR’s senior investment and other professionals who hold interests 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 ‘‘traditional private 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 its combined financial statements are expected to become KKR’s historical financial statements only upon completion of the Transactions. In connection with the Reorganization Transactions, KKR’s business will be reorganized under two new partnerships, or the KKR Group Partnerships, which will serve as holding companies for the Combined Business. The KKR Group Partnerships will not acquire all of the interests in the KKR Group in connection with the Transactions and, accordingly, the combined financial statements of the KKR Group may not be indicative of the results of operations and financial condition that the KKR Group Partnerships will have following the completion of the Transactions. See ‘‘Organizational Structure,’’ ‘‘Preliminary Unaudited Pro Forma Segment Information’’ and ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’ Unless otherwise indicated, references in this consent solicitation statement to the equity interests in the Combined Business, or to percentage interests in the Combined Business, reflect the aggregate equity in the KKR Group Partnerships, which will serve as holding companies for the Combined Business. References to percentage interests in the Combined Business are net of amounts that are directly allocated to KKR principals in respect of the carried interest from the Combined Business and referred to as ‘‘carry pool’’ allocations and exclude the interests in KKR’s business that will be retained by certain minority investors and not acquired by the KKR Group Partnerships, as set forth in greater detail under ‘‘Organizational Structure’’ and ‘‘The Combination Transaction’’. Such minority interests will, however, be included as noncontrolling interests in KKR’s financial statements following the completion of the Transactions. See ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of the Transactions.’’ References in this consent solicitation statement to ‘‘KPE’’ are to KKR Private Equity Investors, L.P., a Guernsey limited partnership. Unless otherwise specifically stated, references herein to units of KPE include any such units that may be represented by restricted depositary units. References in this consent solicitation statement to the ‘‘KPE Investment Partnership’’ are to KKR PEI Investments, 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 to KKR & Co. L.P., a Delaware limited partnership. In this consent solicitation statement, the terms ‘‘assets under management’’ or ‘‘AUM’’ represent the assets as to which KKR is entitled to receive a fee or carried interest. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of its traditional private equity funds and its carry-yielding co-investment vehicles plus the capital that it is entitled to call from investors in such funds and vehicles with respect to their unfunded capital commitments; (ii) the net asset 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 of outstanding tranches of structured finance vehicles that it manages. You should bear in mind that KKR’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 asset managers. KKR’s definition of AUM is not based on any definition of AUM that is set forth in the agreements 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 and KPE’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 comparable words. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated 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 Results of Operations’’. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this consent solicitation statement. Neither KPE 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 and KPE have derived from independent reports, publicly available information, various industry publications, other published industry sources and internal data and estimates. Independent reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable. Internal data and estimates are based upon information obtained from investors in KKR’s funds, trade and business organizations and other 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 information verified by any independent sources.

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QUESTIONS AND ANSWERS ABOUT THE COMBINATION TRANSACTION AND THE CONSENT SOLICITATION The questions and answers below highlight only selected information with respect to the Combination Transaction and the consent solicitation. They may not contain all of the information that may be important to you. You should read carefully this entire consent solicitation statement and any additional documents incorporated by reference or referred to in this consent solicitation statement to fully understand the 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 with KKR & Co. L.P. and certain of its affiliates providing for the combination of the asset management business of KKR with the assets and liabilities of KPE. Upon completion of the Combination Transaction, KPE would beneficially hold a 30% interest in the Combined Business and KKR’s existing owners would beneficially hold a 70% interest in the Combined Business. KPE would hold its interest through KKR Group Holdings L.P., which is referred to as ‘‘Group Holdings,’’ 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 Combination Transaction. Additional information concerning the Combination Transaction, including a summary of the amended and restated purchase and sale agreement, a discussion of the background to the Combination Transaction and a discussion of KKR’s and KPE’s reasons for engaging in the Combination 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 you hold prior to the Combination Transaction without any change and each KPE unit will indirectly represent an interest in the Combined Business. KPE, through its interests in Group Holdings, will own equity interests representing 30% of the Combined Business. Interests in the Combined Business are net of amounts that may be allocated to participants in KKR’s carry pool. KKR expects to allocate approximately 40% of the carry it receives from its funds and co-investment vehicles 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 the carry pool may exceed 40% only with the approval of a majority of the independent directors of KKR’s ultimate general partner. Upon completion of the Combination Transaction, KPE, through Group Holdings, and KKR’s existing owners, through KKR Holdings, will share ratably in the assets, liabilities, profits, losses and distributions, if any, of the Combined Business. KPE units will continue 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 solicitation statement. See in particular the sections of this consent solicitation statement entitled ‘‘Risk Factors—Risks Related to KKR’s Organizational Structure and the Transactions,’’ ‘‘The Combination Transaction,’’ ‘‘Distribution Policy’’ and ‘‘Organizational Structure—KKR Group Partnerships’’. 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 holders of 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 the record date for the consent solicitation, KKR or its affiliates controlled the consent rights with respect to approximately 3.8% of the KPE units. Since the determination of whether the required 1

KPE unitholder consent is obtained is based only on those KPE units for which a properly submitted consent form is submitted, your failure to submit a consent form will not affect the outcome of this consent solicitation. Regardless of whether or not you consent to the Combination Transaction, if the requisite consent is obtained and the Combination Transaction is subsequently consummated, KPE will receive KKR Group Partnership Units representing 30% of the Combined Business. KKR has discussed the proposed Combination Transaction with certain KPE unitholders and, in connection with such discussions, certain KPE unitholders holding in the aggregate approximately 44% of the KPE units have entered into agreements to deliver consents to consummate the Combination Transaction or advised KKR that they intend to support the Combination Transaction subject to the terms of the Combination Transaction conforming to the terms previously described to 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 and investment excellence. KKR’s franchise offers a broad range of asset management services to public and private market investors and provides capital markets solutions for the firm, its portfolio companies and clients. With offices in 13 major cities on four continents, KKR has created an integrated global platform for sourcing and making investments in multiple asset classes and throughout the capital structure. See ‘‘Summary,’’ ‘‘Risk Factors,’’ ‘‘Organizational Structure,’’ ‘‘Unaudited Pro Forma Financial Information,’’ ‘‘KKR’s Selected Historical Financial and Other Data,’’ ‘‘KKR’s Management Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘KKR’s Business,’’ ‘‘Governance’’ and the KKR financial statements and related notes 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 of KPE units? A: The board of directors of KPE’s general partner, acting upon the unanimous recommendation of the directors of KPE’s general partner who are independent of each of KPE and KKR and their affiliates under the standards of the New York Stock Exchange, who are referred to as the KPE Independent Directors, unanimously approved the entry into the amended and restated purchase and sale agreement and the transactions contemplated thereby. The board of directors of KPE’s general partner unanimously recommends that the holders of KPE units consent to the consummation of the Combination Transaction. Additional information concerning the recommendation of the board of directors of KPE’s general partner, including the reasons therefor, is included in this consent solicitation statement. See in particular the sections of this consent solicitation statement entitled ‘‘The Combination Transaction—KPE Reasons for the Combination Transaction’’ and ‘‘The Combination Transaction—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 general partner require that the Combination Transaction be approved by the affirmative vote of a majority of the KPE Independent Directors. The board of directors of KPE’s general partner authorized the KPE Independent Directors to set up their own process for evaluating the Combination Transaction and granted to the KPE Independent Directors the sole authority to negotiate for and on behalf of KPE the terms and conditions of the amended and restated purchase and sale agreement.

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Following an independent process undertaken by the KPE Independent Directors to review the Combination Transaction and the negotiation by the KPE Independent Directors of the terms and conditions of the amended and restated purchase and sale agreement, the KPE Independent Directors unanimously recommended to the board of directors of KPE’s general partner that they approve the execution of the amended and restated purchase and sale agreement and the consummation of the transactions contemplated thereby. Additional information concerning potential conflicts of interest and the role of the KPE Independent Directors is included in this consent solicitation statement. See in particular the sections of this consent solicitation statement entitled ‘‘The Combination Transaction—Background of the Combination Transaction,’’ ‘‘The Combination Transaction—Interests of Directors and Executive Officers in the Combination Transaction,’’ ‘‘Certain Relationships and Related Party Transactions,’’ and ‘‘Conflicts of Interest and Fiduciary Responsibilities.’’ Q: Will KPE units continue to trade on Euronext Amsterdam by NYSE Euronext following the Combination Transaction? A: Yes. KPE units are currently admitted to listing and trading on Euronext Amsterdam by NYSE Euronext, the regulated market of Euronext Amsterdam N.V., or Euronext Amsterdam, under the symbol ‘‘KPE’’ and will continue to be listed and trade on Euronext Amsterdam immediately following 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 to require that the other use its reasonable best efforts to cause interests in the Combined Business to be listed and traded on the New York Stock Exchange or The NASDAQ Stock Market in the future. If such listing occurs, KPE would make an in-kind distribution of its interests in the Combined Business to KPE unitholders, subject to applicable laws, rules and regulations, KPE units would cease to trade on Euronext Amsterdam and KPE would subsequently be dissolved and delisted 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 interests in KPE and KPE will continue to be managed by its general partner, which has a majorityindependent board of directors. KPE’s only asset will be its 30% interest in the Combined Business, which it will hold through Group Holdings. The KKR Managing Partner, which is the ultimate general partner of Group Holdings, will manage the business and affairs of the Combined Business, and will be governed by a board of directors that is co-chaired by KKR’s founders, who also serve as KKR’s Co-Chief Executive Officers. However, prior to a U.S. Listing, the audit committee of the general partner of KPE will have an oversight function for the financial statements of the Combined Business and the KPE Independent Directors will also have certain consent and information rights with respect to the Combined Business, including related party transactions. 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 other requirement requires the consent of the holders of KPE units to consummate the Combination Transaction. Nevertheless, based on the extraordinary nature of the transaction, KKR and KPE agreed in the amended and restated purchase and sale agreement that the consummation of the Combination Transaction would require the consent of the holders of at least a majority of the 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.

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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 the quarter during which all of the conditions to closing the Combination Transaction are first satisfied or waived. If the conditions 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 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 sale agreement, see the section of this consent solicitation statement entitled ‘‘The Combination Transaction—The Amended and Restated Purchase and Sale Agreement—Conditions to Completion 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 Combination Transaction is not satisfied or waived, or if the amended and restated purchase and sale agreement is terminated for any reason, the Combination Transaction will not be consummated, the KPE units will not represent an interest in the Combined Business and KPE’s assets will not be purchased 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 Combination Transaction (and related transactions), see ‘‘Material U.S. Federal Tax Considerations.’’ Holders of KPE units should consult their own tax advisors concerning the U.S. federal, state and local income tax and estate tax consequences of the Transactions in their particular situations, as well as 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 units to 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 to seek 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 to the holders of KPE units so that such holders can take action without the need to hold a meeting of 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 consummation of the Combination Transaction? A: For purposes of determining holders as of the record date, only transactions in KPE units which have been settled on or prior to the record date will be taken into account. Accordingly, if you have sold KPE units on or prior to the record date but the transaction has not been settled on or prior to the record date, you will be entitled to consent to the foregoing matters. If, however, you sold 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 the earlier of (i) the expiration of the consent solicitation period and (ii) the time that the consent of the holders of more than 50% of the KPE units (excluding KPE units whose consent rights are controlled by KKR or its affiliates and by any person who has informed KPE in writing that it will not submit a consent) have been obtained to approve the consummation of the Combination Transaction. The earlier of the (i) expiration of the consent solicitation period and (ii) the time that the consent of the holders of more than 50% of the KPE units (excluding KPE units whose consent rights are controlled by KKR or its affiliates and by any person who has informed KPE in writing that it will not submit a consent) have been obtained to approve the consummation of the Combination Transaction is referred to as the ‘‘Revocation Deadline’’. The condition to the Combination Transaction relating to the obtaining of unitholder consent will be deemed to be satisfied on the applicable Revocation Deadline, assuming the requisite unitholder consent has been received as of such date. Your consent may not be revoked after the Revocation Deadline. KPE will announce that the Revocation Deadline has occurred on the first business day following the date of the Revocation Deadline. If you have submitted your consent and desire to revoke it prior to the Revocation Deadline, you should contact your broker or bank and follow the instructions provided by your broker or bank. Your broker or bank may require that you inform them of your desire to revoke your consent sufficiently in advance of the Revocation Deadline in order for your revocation to be effective. KKR has discussed the proposed Combination Transaction with certain KPE unitholders and, in connection with such discussions, certain KPE unitholders holding in aggregate approximately 44% of the KPE units have entered into agreements to deliver consents to consummate the Combination Transaction or advised KKR that they intend to support the Combination Transaction subject to the terms of the Combination Transaction conforming to the terms previously described to such unitholders. If you are a holder of restricted depositary units of KPE, please see the section of this consent solicitation statement entitled ‘‘The Consent Solicitation—Holders of Restricted Depositary Units of 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 statement will 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 scheduled expiration of the consent solicitation, the consent solicitation may be extended from time to time upon the request of either KKR or KPE. However, you may not revoke your consent following the date 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 solicitation statement and the other documents incorporated by reference or referred to therein. Since your KPE units are held in ‘‘street name’’, in order to submit your consent you should contact your broker or bank and follow the instructions provided by your broker and bank. Please note that your broker or bank may require that you submit your consent instructions prior to the expiration of the consent solicitation period so that the broker or bank has sufficient time to execute your instructions 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 consent solicitation statement entitled ‘‘The Consent Solicitation—Holders of Restricted Depositary Units of KPE’’ for the procedures that should be followed in order to consent to the Combination Transaction. 5

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 KPE units that you own without instructions from you. You should instruct your broker or bank whether or not you would like to provide your consent. Since the determination of whether the required KPE unitholder consent is obtained is based only on the KPE units for which a properly submitted consent form is submitted, the failure to submit a consent form will not affect the outcome of this consent solicitation. Q: I hold restricted depositary units of KPE. Are there special procedures that I need to follow in order to provide my consent? A: Yes. If you own restricted depositary units of KPE, you will receive in the mail a consent form which should be used to instruct The Bank of New York Mellon, as Depositary, whether or not to consent to the Combination Transaction with respect to the KPE units underlying the restricted depositary units that you own as of the record date. This consent form must be returned to the Depositary no later than 5:00 p.m. (New York City time) on August 11, 2009, so that the Depositary 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 the instructions set forth on the enclosed consent form. For additional information concerning the procedures that should be followed by holders of restricted depositary units of KPE in order to consent to the Combination Transaction, please see the section of this consent solicitation statement entitled ‘‘The Consent Solicitation—Holders of Restricted Depositary Units of KPE.’’ Q: Will I be able to transfer my KPE units or RDUs following the completion of the Combination Transactions? A: KPE units and RDUs will continue to be listed and traded on Euronext Amsterdam and will also continue to be subject to a number of ownership and transfer restrictions following the completion of the Combination Transaction. For example, a U.S. resident, U.S. entity or other U.S. person may not invest in KPE units or RDUs, unless the investor is at all times a ‘‘qualified purchaser’’ as defined 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 contact KPE’s Dutch paying agent, ING Bank N.V. at +(31) (0) 20-7979-397, and if you are a holder of restricted depository units, you may contact The Bank of New York Mellon at +1 (267) 468-0786 or (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, you should contact: Innisfree M&A Incorporated 501 Madison Avenue New 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 and does 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 ‘‘Risk Factors’’ 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 and investment excellence. When KKR’s founders started the firm in 1976, they established the principles that guide KKR’s business approach today, including a patient and disciplined investment process; the alignment 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 market investors 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, having completed 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 equity expertise and strengthening its client interaction and capital markets activities. Today, with over 575 employees across the globe, KKR believes it has a preeminent global platform for sourcing 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, which provide a global platform for sourcing transactions, raising capital and carrying out capital markets activities. 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’s growth has been driven by value that it has created through its operationally focused investment approach, expansion into new lines of business, innovation in the products that it offers investors, an increased focus on providing tailored solutions to its clients, and the integration of capital markets distribution activities. KKR’s relationships with investors have provided the firm with a stable source of capital 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 to listing and trading on Euronext Amsterdam by NYSE Euronext under the symbol ‘‘KPE.’’ All of KPE’s investments are made through a lower-tier partnership, or the KPE Investment Partnership, of which KPE is the sole limited partner. KPE’s only material assets are the interests that it holds in the KPE Investment Partnership. KPE expects that its net asset value as of June 30, 2009 on a preliminary basis will 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 with KKR & Co. L.P. and certain of its affiliates providing for the combination of the asset management business of KKR with the assets and liabilities of KPE. Upon completion of the Combination Transaction, 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 are not selling any equity interests in the Transactions. The amended and restated purchase and sale agreement was unanimously approved by the board of directors of KPE’s general partner, acting upon the unanimous recommendation of directors of KPE’s general partner who are independent of each of KPE and KKR. Although there is no applicable legal, regulatory or other requirement to do so, given the extraordinary nature of the Combination Transactions KKR and KPE have agreed to condition the consummation of the Combination Transactions on KPE receiving the consent of its unitholders as set forth in this consent solicitation document. If the requisite unitholder consent is obtained, KKR will undertake Reorganization Transactions pursuant to which its asset management business will be reorganized under the KKR Group Partnerships as described under ‘‘Organizational Structure.’’ Business Segments Following the completion of the Combination Transaction, KKR expects to conduct its business through three separate business segments: private markets; public markets; and capital markets and principal activities. Private Markets KKR’s private markets segment is comprised of its global private equity and infrastructure businesses, which manage and sponsor a group of investment funds and co-investment vehicles that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions, in global private equity and infrastructure assets. These funds build on KKR’s sourcing advantage and the strong industry knowledge, operating expertise and regulatory and stakeholder management skills of KKR’s professionals, operating consultants and senior advisors to identify attractive investment opportunities and create and realize value for investors. Since KKR’s inception through March 31, 2009, KKR has raised 14 investment funds with approximately $59.3 billion of capital commitments to invest in private equity and infrastructure opportunities, often in connection with leveraged buyouts, build-ups and growth equity investments, and has sponsored a number of fee and carry paying co-investment structures that allow it to commit additional capital to transactions. As of June 30, 2009, the segment had $37.5 billion of AUM and its actively investing funds included geographically differentiated investment funds and co-investment vehicles with over $15.1 billion of unused capital commitments, providing a significant source of capital that may be deployed globally. Public Markets KKR’s public markets segment is comprised of its fixed income business, including credit and mezzanine finance businesses, as well as other businesses that invest primarily in publicly traded securities 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, high yield securities, distressed and rescue financings, private debt investments and mezzanine instruments. These funds, vehicles and accounts leverage KKR’s global investment platform, experienced investment professionals and ability to adapt its investment strategies to different market conditions to capitalize on 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 finance vehicles.

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Capital Markets and Principal Activities KKR’s capital markets and principal activities segment will combine the assets acquired from KPE with the capital markets business of KKR. KKR’s capital markets business supports the firm, its portfolio companies and clients by providing tailored capital markets advice and developing and implementing both traditional and non-traditional capital solutions for investments and companies seeking financing. Its activities consist primarily of capital markets advisory services, arranging debt and equity financing for transactions, placing and underwriting securities offerings and structuring new investment products. To allow it to carry out these activities, the firm has obtained broker-dealer licenses in the United States, Canada, the United Kingdom, Dubai, Australia and Japan and has received 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 a significant source of capital to further grow and expand KKR’s business, increase its participation in its existing portfolio of businesses 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 investment expertise of its investment professionals will provide an attractive means for growing and developing 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 the transaction will benefit KPE unitholders over the long term. KKR views the Combination Transaction as part of its continued commitment to KPE and its unitholders, who supported KKR in KPE’s initial offering and have remained committed to KKR. KKR believes that the Combination Transaction offers a 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 in all the economic benefits of KKR’s business, as compared to only participating in the capital appreciation of certain investments, and will allow KKR’s owners and KPE unitholders to share in attractive growth opportunities. By combining KKR’s business with the assets of KPE, the Combination Transaction is expected to bolster the firm’s position as one of the world’s leading alternative asset managers 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 KPE unitholders 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 expense of 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 the intellectual capital of KKR and increasing the utilization of its people. Historically, when KKR has been unable to complete a transaction, much of the work that it had completed remained unused. With KKR’s integrated efforts in private and public market investments, it has in recent years been able to leverage, where appropriate, the work and contacts of its industry teams and deploy more capital behind its ideas. KKR believes that gaining access to additional capital will better enable it to invest more 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 the firm in the same manner it has throughout its 33-year history. KKR has attracted and incentivized world-class people by allowing them to participate in its investments and by sharing economics throughout the firm. KKR believes that combining its business with the assets of KPE, while retaining a stock 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 and other stakeholders. For a discussion of the KPE Independent Directors’ reasons for recommending the Combination Transaction, 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 that as of June 30, 2009, based on preliminary unaudited information, the KPE Investment Partnership had a cash balance of approximately $810 million, approximately $940 million outstanding on its $1.0 billion five-year senior secured credit facility, and remaining capital commitments related to limited partner interests in KKR’s private equity funds of approximately $930 million. Based on preliminary unaudited information, KKR expects its assets under management as of June 30, 2009 to be approximately $50.8 billion and that its economic net income (ENI) and fee related earnings 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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Organizational Structure The following diagram illustrates the ownership and organizational structure that KKR will have upon the completion of the Transactions.

KKR Management LLC

KKR Senior Principals

GP (No Economics)

KPE Investors

KPE (Euronext Amsterdam)

KKR & Co. L.P.

KKR Holdings L.P.

KKR Principals

GP (No Economics)

LP 100%

KKR Group Holdings L.P.

KKR Management Holdings Corp.(1)

GP 30%

GP 30%

LP 70%

LP 70%

KKR Management Holdings L.P.

Management Companies Capital Markets Companies

KKR Fund Holdings L.P.

KPE Investment Partnership(3)

General Partners Funds and Co-Investments

KKR Group Partnerships

KKR Group (2)

23JUL200900115586 Notes: (1) Except for KKR Management Holdings Corp., certain of KKR’s foreign subsidiaries and certain subsidiaries 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 Group Partnerships 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 other assets 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 or waived and prior to the effective date of the Combination Transaction, KKR will complete a series of transactions, which are referred to as the Reorganization Transactions, pursuant to which KKR’s business will be reorganized under two new partnerships, which are referred to as the ‘‘KKR Group Partnerships.’’ The reorganization will involve a contribution of equity interests in KKR’s business that are held by KKR’s principals to the KKR Group Partnerships in exchange for newly issued partner interests 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 to closing the Combination Transaction are satisfied or waived on or prior to September 30, 2009, the Reorganization Transactions would occur on September 30, 2009 and October 1, 2009 would be the date 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 company would begin. Group Holdings Group Holdings, which will be wholly-owned by KPE, is the entity through which KPE will hold its interests in the KKR Group Partnerships, and Group Holdings will serve as the general partner of the KKR Group Partnerships. As is commonly the case with limited partnerships, the limited partnership agreement of Group Holdings provides for the management of KKR’s business and affairs by a general partner rather than a board of directors. KKR Management LLC, which is referred to as the ‘‘KKR Managing Partner’’ serves as the ultimate general partner of Group Holdings and the KKR Group Partnerships. The KKR Managing Partner has a board of directors that is co-chaired by KKR’s founders 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 the financial statements of the Combined Business and the independent directors of the general partner of KPE 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 held together, one partner interest in each of the KKR Group Partnerships will represent a KKR Group Partnership Unit. Upon the completion of the Transactions, KPE, through its interest in Group Holdings, will initially hold 30% of the outstanding KKR Group Partnership Units and KKR’s principals, through their interests in KKR Holdings, will initially hold 70% of the outstanding KKR Group Partnership Units. These interests will allow Group Holdings and KKR Holdings to share ratably in the assets, liabilities, profits, losses and distributions, if any, of the KKR Group Partnerships based 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 Group Partnerships and Group Holdings will serve as the general partner and parent company of those entities. Except for noncontrolling interests in KKR’s funds that are held by fund investors, interests in the general partners of 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 companies and 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, portfolio companies, capital markets transactions and other investment products; • controlling and economic interests in the general partners of KKR’s funds and the entities that are entitled to receive carry from KKR’s co-investment vehicles, which will allow KPE to share ratably in the carried interest received by them as well as any returns on investments made by or on 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 other assets of KPE, which will allow KPE to share ratably in the returns that the KPE Investment Partnership and such other assets generate. With respect to KKR’s active and future funds and co-investment vehicles that provide for carried interest, KKR intends to continue to allocate to its principals, other professionals and selected other individuals who work in these operations a portion of the carried interest earned in relation to these funds as part of its carry pool. KKR expects to allocate approximately 40% of the carry it receives from these funds and vehicles 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 the carry pool may exceed 40% only with the approval of a majority of the independent directors of the KKR Managing Partner. In connection with the Transactions, certain minority investors will retain the following additional interests 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 will not be contributed to the KKR Group Partnerships due to the fact that the general partners are not expected to receive meaningful proceeds from further realizations; • noncontrolling economic interests that will allocate to a former principal and such person’s designees an aggregate of 1% of the carried interest received by general partners of KKR’s funds and 1% of KKR’s other profits until a future date; • noncontrolling economic interests that will allocate to certain of KKR’s former principals and their designees a portion of the carried interest received by the general partners of KKR’s private equity funds that was allocated to them with respect to private equity investments made during such former principals’ previous tenure with KKR; • noncontrolling economic interests that will allocate to certain of KKR’s current and former principals all of the capital invested by or on behalf of the general partners of KKR’s private equity funds before the completion of the Transactions and any returns thereon as well as any realized carried interest distributions that are actually received but not distributed by the general partners prior to the Transactions; and • a noncontrolling economic interest that will allocate to a third party an aggregate of 2% of the equity in the KKR’s capital markets business. The interests described in the immediately preceding bullets (other than interests in the general partners of the 1996 Fund) are referred to as the Retained Interests. As of March 31, 2009, the Retained Interests, the general partners in the 1996 Fund and the carry pool allocations referred to above collectively accounted for approximately $150 million of partners’ capital. Following the completion of the Transactions, the Retained Interests will be reflected in KKR’s financial statements as 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 are expected to run-off over time, thereby increasing the interests of the KKR Group Partnerships in the entities that comprise KKR’s business.

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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 financial statements included elsewhere in this consent solicitation statement or interests in all of the entities that KKR has sponsored over time. KKR is also required to consolidate in KKR’s financial statements the funds over which it exercises substantive controlling rights and operational discretion, despite the fact that the substantial majority of the economic interests in those entities are held by third party fund investors. These interests have been allocated to such third party fund investors as noncontrolling interests in KKR’s financial statements. Except for interests in the KPE Investment Partnership that will be acquired from KPE in the Combination Transaction, KKR will not acquire any of the economic interests in KKR’s funds that are held by fund investors. For financial and other information that presents 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 and Analysis of Financial Condition and Results of Operations—Business Segments.’’ As used in this consent solicitation, references to interests in the Combined Business exclude the interests in the general partners of the 1996 Fund, the Retained Interests, the carry pool allocations and 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 to require that the other use its reasonable best efforts to cause interests in the Combined Business to be listed 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 Group Holdings units to KKR & Co. L.P., which is referred to as the ‘‘Controlling Partnership’’, in exchange for Controlling Partnership units. KKR or KPE, as the case may be, would seek a listing of the Controlling Partnership units on the New York Stock Exchange or The NASDAQ Stock Market, which would 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 business through KKR Holdings, which will own all of the outstanding KKR Group Partnership Units that KPE does not own through Group Holdings. These individuals will receive financial benefits from KKR’s business in the form of distributions and payments received from KKR Holdings and through their direct 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 paid by the firm and will be borne by KKR Holdings. The interests that these individuals hold in KKR Holdings will be subject to transfer restrictions and, except for certain interests that will vest upon completion of the transactions, will be subject to time and/or performance based vesting requirements. While employed by the firm, these individuals will also be subject to minimum retained ownership requirements that will require that they continuously hold at least 25% of their cumulatively vested interests. KKR believes that these structures will further align 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 interests in the KPE Investment Partnership held by KPE, and KKR will assume all of the liabilities of KPE, in exchange for which KPE will receive a 30% interest in the Combined Business. KKR’s principals are not selling any equity interests in the Transactions. The amended and restated purchase and sale agreement was unanimously approved by the board of directors of KPE’s general partner, acting upon the unanimous recommendation of directors of KPE’s general partner who are independent of each of KPE and KKR under NYSE Rules.

Consideration . . . . . . . . . . . . . . . . . .

Upon completion of the Combination Transaction, the holdings of KPE units by KPE unitholders will not change and KPE units will continue to be listed and traded on Euronext Amsterdam. The Combination Transaction does not involve the payment of any consideration to KPE unitholders or involve an offering of any securities to KPE unitholders. Through its interests in Group Holdings, KPE will own a number of KKR Group Partnership Units equal to the total number of KPE units outstanding, which in the aggregate will represent a 30% equity interest in the Combined Business upon completion of the Combination Transaction. KKR Holdings will own the balance of the outstanding KKR Group Partnership Units, which in the aggregate will represent a 70% interest in the Combined Business upon completion of the Combination Transaction. KKR expects to allocate approximately 40% of the carry it receives from its funds and co-investment vehicles 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 the carry pool may exceed 40% only with the approval of a majority of the independent directors of the KKR Managing Partner.

KKR Group Partnership Units . . . . .

Following the date that the conditions to closing the Combination Transaction are satisfied or waived and prior to the effective date of the Combination Transaction, KKR will complete a series of transactions, which are referred to as the Reorganization Transactions, pursuant to which KKR’s business will be reorganized under the KKR Group Partnerships. Each KKR 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 Partnership Unit. 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 their respective percentage interests in the KKR Group Partnerships.

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If the conditions 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 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. Exchange rights . . . . . . . . . . . . . . . .

In connection with the Transactions, KPE will enter into an exchange agreement with Group Holdings and KKR Holdings pursuant to which KKR Holdings and certain transferees of its KKR Group Partnership Units effectively may, up to four times each year, 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 and compliance with applicable lock-up, vesting and transfer restrictions. At Group Holdings’ election and subject to approval by a majority of the independent directors of KPE’s general partner, the KKR Group Partnerships may settle most types of exchanges of KKR Group Partnership Units with cash in an amount equal to the fair market value of the KPE units that would otherwise be deliverable in such exchanges. In the event of a U.S. listing, the U.S. listing entity will enter into similar arrangements with KKR Holdings. See ‘‘Organizational Structure—Exchange Agreement’’ and ‘‘Certain Relationships and Related Transactions—Exchange Agreement.’’

Governance . . . . . . . . . . . . . . . . . . .

Upon completion of the Combination Transaction, KPE unitholders will continue to hold interests in KPE and be governed by KPE’s limited partnership agreement, and KPE units will continue to be listed and trade on Euronext Amsterdam. KPE’s limited partnership agreement provides for the management of its business and affairs by its general partner, a Guernsey limited liability company that is owned by individuals who are affiliated with KKR, and which has a majority-independent board of directors. As limited partners, KPE unitholders may not take part in the management or control of the business and affairs of KPE and do not have any right or authority to act for or to bind KPE or to take part or interfere in the conduct or management of KPE. KPE unitholders are not entitled to vote on matters relating to KPE, 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 Combined Business that it holds through Group Holdings. The KKR Managing Partner is the ultimate general partner of Group Holdings and will manage the business and affairs of Group Holdings and the KKR Group Partnerships. KPE will not hold securities of the KKR Managing Partner. The KKR Managing Partner has a board of directors that is responsible for the

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oversight of KKR’s business and affairs as well as executive officers that are authorized to act on behalf of the KKR Managing Partner or KKR. Prior to a U.S. listing, the audit committee of the general partner of KPE will have an oversight function for the financial statements of the Combined Business and the independent directors of the general partner of KPE will have certain consent and information rights with respect to the Combined Business, including related party transactions. See ‘‘Governance—The KKR Managing Partner.’’ In particular, the independent directors of KPE’s general partner will be responsible for enforcing the rights of KPE and its unitholders under any of the exchange agreement, the tax receivable agreement, the limited partnership agreement of any KKR Group Partnership, a lock-up agreement, the KPE partnership agreement, the Controlling Partnership limited partnership agreement, limited liability company agreement of the KKR Managing Partner or limited partnership 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 limited partner of KKR Holdings, or a person who holds a partnership or equity interest in the foregoing entities. In addition to the rights afforded to the independent directors of KPE’s general partner described above, under the terms of the investment agreement to be entered into between the Controlling Partnership and KPE, prior to a U.S. listing the consent of a majority of the independent directors of KPE’s general partner will be required to approve certain related party transactions that involve an aggregate amount in excess of $20 million or would reduce the percentage of KPE’s direct or indirect equity interest in the KKR Group Partnerships. In addition, during the period following the effective date of the Combination Transaction and prior to a U.S. listing of the interests in the Combined Business, KKR may not allocate more than 40% of the carried interest earned in relation to its funds to its carry pool. During the period following a U.S. listing, KKR may only allocate more than 40% of the carried interest to its carry pool with the approval of a majority of the independent directors of the KKR Managing Partner. Transfer Restrictions . . . . . . . . . . . . .

KPE units and RDUs will continue to be subject to a number of ownership and transfer restrictions following the completion of the Combination Transaction. For example, a U.S. resident, U.S. entity or other U.S. person may not invest in KPE units or RDUs, unless the investor is at all times a ‘‘qualified purchaser’’ 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 other use its reasonable best efforts to cause interests in the

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Combined Business to be listed and traded on the New York Stock Exchange or The NASDAQ Stock Market at a future date. KKR may exercise this right following the 6-month anniversary of the date the conditions precedent to the Combination Transaction are satisfied or waived and KPE, at the discretion of the independent directors of its general partner, may exercise this right following the 12-month anniversary of the date the conditions precedent to the Combination Transaction are satisfied or waived. If such listing occurs, KPE would make an in-kind distribution of interests in the Combined Business to KPE unitholders, subject to applicable laws, rules and regulations, KPE units would cease to trade on Euronext Amsterdam and KPE would subsequently be dissolved and delisted from Euronext Amsterdam. Risk factors . . . . . . . . . . . . . . . . . . .

See ‘‘Risk Factors’’ for a discussion of risks you should carefully consider in connection with the Combination Transaction and Group Holdings units.

KKR’s principal executive offices are located at 9 West 57th Street, Suite 4200, New York, New York 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 at www.kkrprivateequityinvestors.com. The information on KKR’s and KPE’s websites is not part of this consent 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 KKR Group should be read together with ‘‘Organizational Structure,’’ ‘‘Preliminary Unaudited Pro Forma Segment Information,’’ ‘‘KKR’s Selected Historical Financial and Other Data,’’ ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and the KKR Group’s combined financial statements and related notes included elsewhere in this consent solicitation statement. KKR derived the summary historical combined financial data of the KKR Group as of December 31, 2007 and 2008 and for the years ended December 31, 2006, 2007 and 2008 from the KKR Group’s audited combined financial statements included elsewhere in this consent solicitation statement. KKR derived the summary historical combined financial data of the KKR Group as of March 31, 2008 and 2009 and for the three months ended March 31, 2008 and 2009 from the KKR Group’s unaudited condensed combined financial statements which are included elsewhere in this consent solicitation statement. The KKR Group is expected to become KKR’s predecessor for accounting purposes only upon completion of the Reorganization Transactions and its combined financial statements are expected to become KKR’s historical financial statements following the Transactions. However, KKR will not acquire 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 results of operations and financial condition that KKR will have following the completion of the Transactions. Year Ended December 31, 2006 2007 2008 ($ in thousands)

Revenues Fee Income . . . . . . . . . . . . . . . . . . . . . . . . Expenses Employee Compensation and Benefits . . . . . Occupancy and Related Charges . . . . . . . . . General, Administrative and Other . . . . . . . . Fund Expenses . . . . . . . . . . . . . . . . . . . . . Total Expenses . . . . . . . . . . . . . . . . . . . . Investment Income (Loss) Net Gains (Losses) from Investment Activities Dividend Income . . . . . . . . . . . . . . . . . . . . Interest Income . . . . . . . . . . . . . . . . . . . . . Interest Expense . . . . . . . . . . . . . . . . . . . . Total Investment Income (Loss) . . . . . . . . Income (Loss) Before Taxes . . . . . . . . . . . . Income Taxes . . . . . . . . . . . . . . . . . . . . . . Net Income (Loss) . . . . . . . . . . . . . . . . . . . . Less: Net Income (Loss) Attributable to Noncontrolling Interests . . . . . . . . . . . . Net Income (Loss) Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . .

. $

410,329 $

862,265 $

235,181 $

. . . . .

131,667 19,295 78,154 38,350 267,466

212,766 20,068 128,036 80,040 440,910

149,182 30,430 179,673 59,103 418,388

. . . . . . . .

3,105,523 714,069 210,872 (29,542) 4,000,922 4,143,785 4,163 4,139,622

1,111,572 747,544 218,920 (86,253) 1,991,783 2,413,138 12,064 2,401,074

.

3,039,677

1,598,310

. $ 1,099,945 $

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Three Months Ended March 31, 2008 2009 ($ in thousands)

68,590 $

39,070

48,064 6,538 30,703 18,232 103,537

45,542 8,885 37,403 12,928 104,758

(12,944,720) 75,441 129,601 (125,561) (12,865,239) (13,048,446) 6,786 (13,055,232)

(732,974) 4,592 25,343 (35,359) (738,398) (773,345) 888 (774,233)

(720,849) 700 27,082 (22,278) (715,345) (781,033) 1,531 (782,564)

(11,850,761)

(656,335)

(727,981)

802,764 $ (1,204,471) $ (117,898) $

(54,583)

Year Ended December 31, 2006 2007 2008 ($ in thousands)

Statement of Financial Condition Data (period end): Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling interests . . . . . . . . . . . . . . . . . . Total KKR Group partners’ capital . . . . . . . . . . Statement of Cash Flow Data: Net cash used in operating activities . . . . . . . . . Net cash (used in) provided by investing activities Net cash provided by financing activities . . . . . . . Segment Data: Assets Under Management Private Markets . . . . . . . . . . . . . . . . . . . . Public Markets . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . .

Three Months Ended March 31, 2008 2009 ($ in thousands)

$23,292,783 $32,842,796 $ 22,441,030 $34,342,014 $21,882,923 1,281,923 2,575,636 2,590,673 3,318,091 2,656,825 20,318,440 28,749,814 19,698,478 29,694,735 19,196,207 1,692,420 1,517,346 151,879 1,329,188 29,891 $ (5,531,144) $ (8,522,501) $ (2,446,156) $ (1,254,074) $ (156,829) $ (130,110) $ (112,469) $ (61,746) $ (33,221) $ 33,525 $ 5,657,952 $ 8,814,024 $ 2,434,503 $ 1,190,303 $ 178,971 $38,722,700 $42,234,800 $ 35,283,700 $46,722,200 $35,005,000 5,150,700 10,980,900 13,167,000 10,992,600 12,335,000 $43,873,400 $53,215,700 $ 48,450,700 $57,714,800 $47,340,000

Fee Related Earnings(1) Private Markets . . . . . . . . . . . . . . . . . . . . $ Public Markets . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . $

140,044 $ 49,871 189,915 $

Economic Net Income (Loss)(2) Private Markets . . . . . . . . . . . . . . . . . . . . $ 1,069,562 $ Public Markets . . . . . . . . . . . . . . . . . . . . . 34,546 Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,104,108 $

371,413 $ 62,094 433,507 $

199,216 $ 43,455 242,671 $

24,600 $ 10,655 35,255 $

44,055 (319) 43,736

775,014 $ (1,232,316) $ (123,775) $ 39,814 36,842 6,765 814,828 $ (1,195,474) $ (117,010) $

(51,769) (336) (52,105)

Other Data: Private equity dollars invested(3) . . . . . . . . . . . . $ 6,661,698 $14,854,200 $ 3,168,800 $ 1,792,300 $ 18,000 Uncalled 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 two reportable business segments. The difference between fee related earnings and income before taxes presented in accordance with GAAP is that fee related earnings represents income before taxes adjusted to: (i) include management fees earned from consolidated funds that were eliminated in consolidation; (ii) exclude expenses of consolidated funds, non-cash employee compensation charges associated with equity interests in KKR’s business, employee compensation charges relating to compensation borne by unconsolidated persons and charges 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 evaluating its two reportable business segments. Economic net income (loss) represents income before taxes for the periods presented. See ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Operating Performance Measures’’. (3) ‘‘Private equity dollars invested’’ is the aggregate amount of capital invested by KKR’s private equity funds and carry-yielding co-investment vehicles in private equity transactions. Such amounts include both capital contributed by fund investors and co-investors with respect to which KKR is entitled to a carried interest and capital contributed by KKR as the general partner of a private equity fund with respect to which it is entitled to returns generated on the invested capital. From KKR’s inception through March 31, 2009, KKR’s mature funds achieved a multiple of invested capital of 2.2x the amount of capital they invested in private equity investments. Multiples of invested capital are calculated before allocations of carried interest and payments of management fees. (4) ‘‘Uncalled private equity commitments’’ represent unfunded commitments by partners of KKR’s traditional private equity funds to contribute capital to fund the purchase price to be paid for future portfolio company investments made by the funds. Such amounts do not include capital of KPE or KKR’s fixed income funds that 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 other information contained in this consent solicitation statement in connection with a decision to consent to the Combination Transaction. Risks Related to KKR’s Business Difficult market conditions can adversely affect KKR’s business in many ways, including by reducing the value or performance of the private equity, debt and public equity investments that KKR manages or by reducing the ability of KKR’s funds to raise or deploy capital, each of which could negatively impact KKR’s net income and cash flow and adversely affect its financial condition. KKR’s business is materially affected by conditions in the financial markets and economic conditions throughout the world, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls and national and international political circumstances (including wars, terrorist acts or security operations). These factors are outside KKR’s control and may affect the level and volatility of securities prices and the liquidity and the value of investments, and KKR may not be able to or may choose not to manage its exposure to these conditions. The market conditions surrounding each of KKR’s businesses, and in particular its private equity business, had been quite favorable for a number of years. A significant portion of the investments of KKR’s private equity funds were made during this period. Market conditions, however, have significantly deteriorated as compared to prior periods. Global financial markets have recently experienced considerable declines in the valuations of equity and debt securities, an acute contraction in the availability of credit and the failure of a number of leading financial institutions. As a result, certain government bodies and central banks worldwide, including the U.S. Treasury Department and the U.S. Federal Reserve, have undertaken unprecedented intervention programs, the effects of which remain uncertain. The U.S. economy has experienced and continues to experience significant declines in employment, household wealth, and lending. These events have led to a significantly diminished availability of credit and an increase in the cost of financing. The lack of credit has materially hindered the initiation of new, large-sized transactions for KKR’s private markets segment and, together with declines in valuations of equity and debt securities, has adversely impacted KKR’s recent operating results reflected in its combined financial statements included in this consent solicitation statement. KKR expects that these events will place additional negative pressure on its operating results going forward. If conditions further deteriorate, KKR’s business could be affected in different ways. KKR’s profitability may also be adversely affected by its fixed costs and the possibility that KKR would be unable to scale back other costs within a time frame sufficient to match any decreases in net income relating to changes in market and economic conditions. KKR’s funds may be affected by reduced opportunities to exit and realize value from their investments, by lower than expected returns on investments made prior to the deterioration of the credit markets and by the fact that KKR may not be able to find suitable investments for the funds to effectively deploy capital, which could adversely affect KKR’s ability to raise new funds. In light of recent negative market and economic conditions, companies in which KKR has invested may experience decreased revenues, financial losses, credit rating downgrades, difficulty in obtaining access to financing and increased funding costs. These companies may also have difficulty in expanding their businesses and operations or be unable to meet their debt service obligations or other expenses as they become due, including expenses payable to KKR. In addition, during periods of adverse economic conditions such as the present, KKR may have difficulty accessing financial markets, which could make it even more difficult or impossible for KKR to obtain funding for additional investments and harm KKR’s AUM and operating results. The current market downturn, or a specific market dislocation, may result 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 private equity, credit and public equity investments that KKR manages. KKR is unable to predict when economic and market conditions may become more favorable. Even if such conditions do improve broadly and significantly over the long term, adverse conditions in particular sectors may cause KKR’s performance to suffer further. KKR’s earnings and cash flow are highly variable due to the nature of KKR’s business and KKR does not intend to provide earnings guidance, each of which may cause the value of interests in the Combined Business to be volatile. KKR’s earnings are highly variable from quarter to quarter due to the volatility of investment returns 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 and unrealized gains (or losses) reported by such funds, and a decline in realized or unrealized gains, or an increase in realized or unrealized losses, would adversely affect KKR’s net income. Fee income, which KKR recognizes when contractually earned, can vary due to fluctuations in AUM, the number of investment transactions made by its funds, the number of portfolio companies KKR manages and the fee provisions contained in its funds and other investment products. KKR may create new funds or investment products or vary the terms of its funds or investment products, which may alter the composition or mix of KKR’s income from time to time. KKR may also experience fluctuations in its results from quarter to quarter due to a number of other factors, including changes in the values of its funds’ 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 general economic and market conditions. Such variability may lead to variability in the value of interests in the Combined Business and cause KKR’s results for a particular period not to be indicative of its performance in future periods. It may be difficult for KKR to achieve steady growth in net income and cash flow on a quarterly basis, which could in turn lead to large adverse movements in the value of interests in the Combined Business. The timing and receipt of carried interest from KKR’s private equity funds are unpredictable and will contribute to the volatility of its cash flows. Carried interest from private equity investments depends on its funds’ performance and opportunities for realizing gains, which may be limited. It takes a substantial period of time to identify attractive private equity investment opportunities, to raise all the funds needed to make an investment and then to realize the cash value (or other proceeds) of an investment through a sale, public offering or other exit. To the extent a private equity investment is not profitable, no carried interest shall be received from KKR’s private equity funds with respect to that investment and, to the extent such investment remains unprofitable, KKR will only be entitled to a management fee on that investment. Even if a private equity investment proves to be profitable, it may be several years before any profits can be realized in cash. KKR cannot predict when, or if, any realization of investments will occur. In particular, since the latter half of 2007, the credit dislocation and related reluctance of many finance providers, such as commercial and investment banks, to provide financing have made it difficult for potential purchasers to secure financing to purchase companies in KKR investment funds’ portfolio, thereby decreasing potential realization events and the potential for carried interest. A downturn in the equity markets also makes it more difficult to exit investments by selling equity securities. If KKR were to have a realization event in a particular quarter, the event may have a significant impact on KKR’s cash flows during the quarter that may not be replicated in subsequent quarters. A decline in realized or unrealized gains, or an increase in realized or unrealized losses, would adversely affect KKR’s investment income, which could further increase the volatility of KKR’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 a contingent obligation that may require the general partner to return or contribute amounts to the fund 22

for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled. As of June 30, 2009, the amount of carried interest KKR has received, excluding carried interest received by the general partners 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 the investments in such funds been liquidated at their June 30, 2009 fair values, the contingent repayment obligation would have been approximately $224 million. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of their investment losses to KKR relative to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. Based on the fair market values as of June 30, 2009, KKR’s obligation under the net loss sharing provisions would have been approximately $258 million. If the vehicles were liquidated at zero value, the obligation under the net loss 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 distributions received 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 they receive after the Transactions pursuant to any carried interest allocated directly to them as carry pool participants. KKR will be responsible for any other clawback obligations and any amounts due under net loss sharing arrangements and will indemnify its principals for any personal guarantees that they have provided with respect to such amounts. Changes in the debt financing markets have negatively impacted the ability of KKR’s private equity funds and their portfolio companies to obtain attractive financing for their investments and have increased the cost of such financing if it is obtained, which could lead to lower-yielding investments and potentially decreasing KKR’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, have demanded higher rates, higher equity requirements as part of private equity investments, more restrictive covenants and generally more onerous terms in order to provide such financing, and in some cases are refusing to provide financing for acquisitions which would have been readily financed during the past several years. In the event that KKR’s private equity funds are unable to obtain committed debt financing for potential 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 profits that are lower than would otherwise be the case, either of which could lead to a decrease in the investment income earned by KKR. Any failure by lenders to provide previously committed financing can also expose KKR to potential claims by sellers of businesses which it may have contracted to purchase. Similarly, the portfolio companies owned by KKR’s private equity funds regularly utilize the corporate debt markets in order to obtain financing for their operations. To the extent that the current credit markets have rendered such financing difficult to obtain or more expensive, this may negatively impact the operating performance of those portfolio companies and, therefore, the investment returns on KKR’s funds.

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Adverse economic and market conditions may adversely affect KKR’s liquidity position, which could adversely affect its business operations in the future. KKR expects that its primary liquidity needs will consist of cash required to: (i) continue to grow its business, including funding capital commitments made to existing and future funds and any net capital requirements of its capital markets companies, (ii) service debt obligations, including indebtedness acquired from KPE in connection with the Combination Transaction, (iii) fund cash operating expenses, (iv) pay amounts that may become due under its tax receivable agreement with KKR Holdings; and (v) make cash distributions in accordance with its distribution policy. These liquidity requirements are significant and, in some cases, involve capital that will remain invested for extended periods of time. On a pro forma basis giving effect to the Combination Transaction, as of March 31, 2009, KKR would have had approximately $1,427.7 million of remaining unfunded capital commitments to its private equity funds, including $957.9 million of unfunded commitments acquired from KPE, and a $100 million revolving loan to KFN that had not yet been drawn. KKR’s commitments to its private equity funds will require significant cash outlays over time, and there can be no assurance that KKR will be able to generate sufficient cash flows from realizations of investments to fund them. In addition, as of March 31, 2009, KKR had $139.0 million of borrowings outstanding under its credit facilities (which exclude short-term lines of credit) and $222.3 million of cash and cash equivalents, 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 committed financings 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 current challenging credit market conditions were to continue or worsen, KKR may not be able to renew all or part of these credit facilities or find alternate sources of financing on commercially reasonable terms. In that event, KKR’s uses of cash could exceed its sources of cash, thereby potentially adversely affecting its liquidity. KKR depends on its founders and other key personnel, the loss of whose services would have a material adverse effect on its business, results and financial condition. KKR depends on the efforts, skills, reputations and business contacts of its principals, including its founders, Henry Kravis and George Roberts, and other key personnel, the information and deal flow they and others generate during the normal course of their activities and the synergies among the diverse fields of expertise and knowledge held by KKR’s professionals. Accordingly, KKR’s success will depend on the continued service of these individuals, who are not obligated to remain employed with KKR. 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 or raise additional funds in the future. KKR’s principals and other key personnel possess substantial experience and expertise and have strong business relationships with investors in KKR’s funds and other members of the business community. As a result, the loss of these personnel could jeopardize KKR’s relationships with investors in its funds and members of the business community and result in the reduction of AUM or fewer investment opportunities. For example, if any of KKR’s principals were to join or form a competing firm, its business, results and financial condition could suffer. Furthermore, the agreements governing KKR’s traditional private equity funds and certain fixed income funds managed by KKR provide that in the event certain ‘‘key persons’’ in these funds (for example, both of Messrs. Kravis and Roberts) generally cease to actively manage a fund, investors in the fund will be entitled to: (i) in the case of KKR’s traditional private equity funds, reduce, in whole or in part, their capital commitments available for further investments; and (ii) in the case of the private 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 negative impact 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’s competitors consist primarily of sponsors of public and private investment funds, business development companies, investment banks, commercial finance companies and operating companies acting as strategic buyers of businesses. KKR believes that competition for investors is based primarily 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 of investments that have been or are to be made. KKR believes that competition for investment opportunities is based primarily on the pricing, terms and structure of a proposed investment and certainty of execution. A number 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 amounts of capital, and many of them have similar investment objectives to KKR’s, which may create additional competition for investment opportunities and may reduce the size and duration of pricing 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 sources that are not available to KKR, which may create competitive disadvantages for KKR with respect to investment opportunities; • some of KKR’s competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than KKR for investments; • KKR’s competitors that are corporate buyers may be able to achieve synergistic cost savings in respect of an investment, which may provide them with a competitive advantage in bidding for an investment; • there are relatively few barriers to entry impeding the formation of new funds, including a relatively low cost of entering these businesses, and the successful efforts of new entrants into KKR’s various lines of business, including major commercial and investment banks and other financial institutions, have resulted in increased competition; • some investors may prefer to invest with an investment manager that is not publicly traded if KKR were to become publicly listed; and • other industry participants will from time to time seek to recruit KKR’s investment professionals and 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 investment returns and increased risks of loss if KKR matches investment prices, structures and terms offered by competitors. In addition, if interest rates were to rise or if market conditions for competing investment products improve and such products begin to offer rates of return superior to those achieved by its funds, the attractiveness of KKR’s funds relative to investments in other investment products could decrease. This competitive pressure could adversely affect KKR’s ability to make successful investments and 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. federal income tax laws for which no clear precedent or authority may be available. These structures also are subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis. The U.S. federal income tax treatment of KPE unitholders depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax laws for which no clear precedent or authority may be available. You should be aware that the U.S. federal income tax rules are constantly under review by persons involved in the legislative process, the Internal Revenue Service, or IRS, and the U.S. Treasury Department, frequently resulting in revised interpretations of established concepts, statutory changes, revisions to regulations and other modifications and interpretations. The present U.S. federal income tax treatment of owning units in KPE may be modified by administrative, legislative or judicial interpretation at any time, and any such action 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 be treated as a partnership that is not taxable as a corporation for U.S. federal income tax purposes, affect the tax considerations of owning a unit in KPE, change the character or treatment of portions of KPE’s income (including, for instance, the treatment of carried interest as ordinary income rather than capital gain) 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 Combination Transaction from qualifying as a partnership for U.S. federal income tax purposes. If this or any similar legislation or regulation were to be enacted and apply to KPE, it could incur a material increase in its tax 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 the amended and restated partnership agreement from time to time, without the consent of the unitholders, to address certain changes in U.S. federal income tax regulations, legislation or interpretation. In some circumstances, such revisions could have a material adverse impact on some or all unitholders. Moreover, certain assumptions and conventions will be applied in an attempt to comply with applicable rules and to report income, gain, deduction, loss and credit to unitholders in a manner that reflects such unitholders’ beneficial ownership of partnership items, taking into account variation in ownership interests during each taxable year because of trading activity. However, those assumptions and conventions may not be in compliance with all aspects of applicable tax requirements. It is possible that the IRS will assert successfully that the conventions and assumptions used by KPE do not satisfy the technical requirements of the Internal Revenue Code and/or Treasury regulations and could require that 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 Transaction from qualifying as a partnership for U.S. federal income tax purposes. If this or any similar legislation or regulation were to be enacted and apply to KPE, it could incur a material increase in its tax liability that could 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 KPE following the Combination Transaction from qualifying as a partnership for U.S. federal income tax purposes 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 investment services 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 would preclude KPE from qualifying as a partnership for U.S. federal income tax purposes, thereby increasing KPE’s tax liability, which could result in a reduction of the value of the KPE units. In addition, the U.S. Congress has recently considered other bills relating to the taxation of a partnership providing investment services. In April 2009, legislation was introduced in the U.S. Congress that was 26

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 traded partnerships, which could preclude KPE following the Combination Transaction from qualifying as a partnership for U.S. federal income tax purposes, and (ii) tax carried interest as ordinary income for U.S. federal income tax purposes, rather than in accordance with the character of income derived by the underlying fund, which is in many cases capital gain. In June 2009, legislation was introduced in the U.S. House of Representatives that would tax as corporations publicly traded partnerships that directly or indirectly derive any income from investment adviser or asset management services. In addition, the Obama administration proposed in its published revenue proposals for 2010 that the current law regarding the treatment of carried interest be changed to treat such income as income received in connection with the performance of services and subject to ordinary income tax. If the changes suggested by the administration or any of the proposed legislation was adopted, income attributable to carried interest may not meet the qualifying income requirements under the publicly traded partnership rules, which would preclude KPE from qualifying as a partnership for U.S. federal income tax purposes or KPE may otherwise not be permitted to qualify as a partnership for U.S. federal income tax purposes following the Combination Transaction, thereby increasing KPE’s tax liability, which could result 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 as effectively connected with a U.S. trade or business. If KPE were treated as a U.S. corporation it would be subject to U.S. federal income tax on all of its taxable income and to applicable state, local and other taxes. This would significantly increase KPE’s effective tax rate. The federal statutory rate for corporations is currently 35%. This could result in a reduction in the value of KPE units. In addition, if the proposed legislation is adopted, it could increase the amount of tax KKR’s principals and other professionals 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 motivate new principals and other key personnel, KKR’s business, results and financial condition could be adversely affected. KKR’s most important asset is its people, and its continued success is highly dependent upon the efforts of its principals and other professionals, and to a substantial degree on its ability to retain and motivate its principals and other key personnel and to strategically recruit, retain and motivate new talented personnel, including new principals. However, KKR may not be successful in these efforts as the 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 incentive opportunities. If legislation, such as the legislation proposed in April 2009 were to be enacted, income and gains recognized with respect to carried interest would be treated for U.S. federal income tax purposes as ordinary income rather than as capital gain. Such legislation would materially increase the amount of taxes that KKR, its principals and other professionals and possibly holders of KKR Group Partnership Units would be required to pay, thereby adversely affecting its ability to offer such attractive incentive opportunities. See ‘‘—Risks Related to U.S. Taxation’’. Upon completion of the Transactions, KKR’s principals will hold interests in KKR’s business through KKR Holdings. These individuals will receive financial benefits from KKR’s business in the form of distributions and payments received from KKR Holdings and through their direct and indirect participation in the value of KKR Group Partnership Units held by KKR Holdings. Distributions in respect of these interests may not equal the cash distributions previously received by these individuals prior to the Transactions. In addition, there is no guarantee that the confidentiality and restrictive covenant agreements to which KKR’s principals will be subject, together with KKR’s other arrangements with them, will prevent them from leaving KKR, joining KKR’s competitors or otherwise 27

competing with KKR or that these agreements will be enforceable in all cases. These agreements will expire after a certain period of time, at which point each of KKR’s principals would be free to compete against KKR and solicit investors in KKR’s funds, clients and employees. 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 amended at any time without KKR’s consent. See ‘‘Certain Relationships and Related Party Transactions—Confidentiality and Restrictive Covenant Agreements.’’ KKR strives to maintain a work environment that reinforces its culture of collaboration, motivation and alignment of interests with investors. If KKR does not continue to develop and implement the right processes and tools to manage its changing enterprise and maintain its culture, KKR’s ability to compete successfully and achieve its business objectives could be impaired, which could negatively impact 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 these systems does not operate properly or is disabled, KKR could suffer financial loss, a disruption of its businesses, liability to its funds, regulatory intervention or reputational damage. In addition, KKR operates in businesses that are highly dependent on information systems and technology. KKR’s information systems and technology may not continue to be able to accommodate KKR’s growth, and the cost of maintaining such systems may increase from its current level. Such a failure to accommodate growth, or an increase in costs related to such information systems, could have a material adverse effect on KKR. Furthermore, KKR depends on its principal offices in New York City, where most of its administrative personnel are located, for the continued operation of KKR’s business. A disaster or a disruption in the infrastructure that supports KKR’s businesses, including a disruption involving electronic communications or other services used by KKR or third parties with whom KKR conducts business, or directly affecting its principal offices, could have a material adverse impact on KKR’s ability to continue to operate its business without interruption. KKR’s disaster recovery programs 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 being contributed to the KKR Group Partnerships will not financially benefit the KKR Group Partnerships and may reduce 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, or approximately 1% of KKR’s AUM. Because KKR believes the general partners of these funds will not receive meaningful proceeds from further realizations, it will not acquire general partner interests in them in connection with the Reorganization Transactions. KKR will, however, continue to provide the funds with management and other services until their liquidation. While KKR will not receive meaningful fees for providing these services, its principals and other employees will be required to devote a portion of their time and attention to the management of those entities. The devotion of the time and attention of KKR’s principals and employees to those activities will not financially benefit the KKR Group Partnerships and may reduce the time and attention they devote to the KKR Group Partnerships’ 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 investment opportunities in new asset classes (such as infrastructure and mezzanine) and developing new types of investment structures and products (such as managed accounts and structured products). KKR has opened 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 to all of the risks and uncertainties associated with the expansion into any new line of business, including the risk that these growth initiatives will not assist KKR in achieving its objectives, will divert management’s attention from its existing businesses or place an excessive burden on its operational systems. Any failure of these initiatives to meet or exceed expectations could have an adverse effect on KKR’s results of operations. Extensive regulation of KKR’s businesses affects its activities and creates the potential for significant liabilities and penalties. The possibility of increased regulatory focus could result in additional burdens on KKR’s business. 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 is subject to regulation by governmental and self-regulatory organizations in the jurisdictions in which it operates around the world. Many of these regulators, including U.S. and foreign government agencies and self-regulatory organizations, are empowered to conduct investigations and administrative proceedings that can result in fines, suspensions of personnel or other sanctions, including censure, the issuance of cease-and-desist orders or the suspension or expulsion of applicable licenses and memberships. Even if an investigation or proceeding does not result in a sanction or the sanction imposed against KKR or its personnel by a regulator were small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm KKR’s reputation 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 on Alternative Investment Fund Managers (‘‘AIFM’’). The European Commission is seeking to adopt final legislation by the end of the 2009 with the legislation becoming law and enforceable in 2011. The Directive, if adopted in the form proposed, would apply to all AIFMs operating within the EU with more than A100 million in assets under management. AIFMs would be required to seek authorization from their home jurisdiction within the EU, which would require the disclosure of such information as fair valuation of assets, investment strategy, and markets in which investments are made on a regular basis. The Directive, if adopted, would also set a threshold for regulatory capital, allow regulators to set a threshold for leverage and create reporting obligations to companies in which a controlling stake is held. Such rules could potentially impose significant additional costs on the operation of KKR’s business 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 in comparison to EU-based investment managers and funds, KKR’s operating flexibility, fund raising and investment opportunities, as well as expose KKR to conflicting regulatory requirements in the United States and the EU. On January 29, 2009, members of the Senate proposed the Hedge Fund Transparency Act, which would apply to private equity funds, venture capital funds, real estate funds and other private investment vehicles with at least $50 million in assets under management. If enacted, the bill would require such funds to register with the SEC, maintain books and records in accordance with SEC requirements and become subject to SEC examinations and information requests in order to remain exempt from the substantive provisions of the Investment Company Act. In addition, the proposed legislation requires each fund to file annual disclosures, which would be made public, containing detailed information about the fund, most notably including the names of all beneficial owners of the fund, an explanation of the fund’s ownership structure and the current value of the fund’s assets under management. The proposed legislation also requires each fund to establish anti-money laundering programs. KKR cannot predict whether this proposed legislations will be enacted or, if enacted, what the final terms of the proposed legislation would require or the impact of such new regulations on KKR’s funds. If enacted, this proposed legislation would likely negatively impact KKR’s funds in a number of ways, including increasing the funds’ regulatory costs, imposing additional burdens on the funds’ staff, and potentially requiring the disclosure of sensitive information. In addition, KKR may be 29

adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. On July 15, 2009, the Obama administration delivered proposed legislation that, if enacted, would require advisers to hedge funds and other private pools of capital with over $30 million in assets under management to register as Investment Advisors with the SEC under the Investment Advisers Act of 1940. The proposed legislation would subject advisers to substantial regulatory reporting requirements with respect to assets, leverage, and off-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 extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which KKR conducts business. KKR regularly relies on exemptions in the United States from various requirements of the Securities Act, the Exchange Act, the Investment Company Act of 1940 (the ‘‘Investment Company Act’’), and the U.S. Employee Retirement Income Security Act of 1974, or ERISA, in conducting its asset management activities. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties whom KKR does not control. If for any reason these exemptions were to become unavailable to KKR, KKR could become subject to regulatory action or third-party claims and its business could be materially and adversely affected. See ‘‘—Risks Related to 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 restrictions could make it impractical for it to continue its business as contemplated and could have a material adverse effect on its business.’’ Lastly, the requirements imposed by KKR’s regulators are designed primarily to ensure the integrity of the financial markets and to protect investors in its funds and are not designed to protect holders of interests in the Combined Business. Consequently, these regulations often serve to limit KKR’s activities. In addition, the regulatory environment in which KKR’s fund investors operate may affect its business. For example, changes in state laws may limit investment activities of state pension plans. KKR may also be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. Kohlberg Kravis Roberts & Co. L.P. and its wholly owned subsidiary Kohlberg Kravis Roberts & Co. (Fixed Income) LLC are registered as investment advisors under the Investment Advisers Act. As registered investment advisors, these entities are subject to periodic SEC examinations and other requirements and regulations of the Investment Advisers Act, which relate to, among other things, recordkeeping and reporting requirements, disclosure requirements, limitations on agency and principal transactions between an advisor and advisory clients. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which KKR conducts business. Certain legislation has recently been adopted in Australia, Denmark, Germany, and Italy that limits the tax deductibility of interest expense incurred by companies in those countries. These measures will most likely adversely affect Danish and German portfolio companies in which KKR’s private equity funds have investments and limit the benefits of additional investments in those countries. KKR’s private equity business is subject to the risk that similar measures might be introduced in other countries in which it currently has investments or plans to invest in the future, or that other legislative or regulatory measures that negatively impact its portfolio investments might be promulgated in 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 approach in 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 private equity industry which it identified as posing particular risks (especially in relation to conflicts of interest and the prevention of market abuse). The FSA has recently reported its findings from a thematic review which explored the approach towards conflict management within private equity firms and has asked FSA-regulated firms which undertake private equity-related business to assess their conflicts policies and procedures against these findings. In addition, KKR voluntarily participates in several other transparency initiatives, including those organized by the Private Equity Council (PEC), the British Private Equity and Venture Capital Association (BVCA). the German Private Equity and Venture Capital Association (BVK), the French Venture Capital Association (AFIC), the United Nations and others. Such reporting may divert the attention of KKR’s personnel and the management teams of its portfolio companies, and may furthermore place KKR at a competitive disadvantage to the extent that KKR or its portfolio companies are required to disclose sensitive business information. If the FSA or other regulatory agencies in the United Kingdom or elsewhere were to adopt burdensome regulations with respect to the 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 professional reputation as a result of litigation allegations and negative publicity. The investment decisions KKR makes in its asset management business and the activities of its investment professionals on behalf of KKR’s portfolio companies may subject them and KKR to the risk 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’s Business—Legal Proceedings.’’ To the extent investors in KKR’s private equity funds suffer losses resulting from fraud, gross negligence, 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 and state law. Investors in KKR’s funds do not have legal remedies against KKR, the general partners of KKR’s funds, KKR’s funds, KKR’s principals or KKR’s affiliates solely based on their dissatisfaction with the investment performance of those funds. While the general partners and investment advisers to KKR’s private equity funds, including their directors, officers, other employees and affiliates, are generally indemnified to the fullest extent permitted by law with respect to their conduct in connection with the management of the business and affairs of KKR’s private equity funds, such indemnity generally does not extend to actions determined to have involved fraud, gross negligence, willful misconduct or other similar misconduct. If any lawsuits were brought against KKR and resulted in a finding of substantial legal liability, the lawsuit could materially adversely affect its business, financial condition or results of operations or cause significant reputational harm to KKR, which could seriously impact its business. KKR depends to a large extent on its business relationships and its reputation for integrity and high-caliber professional services to attract and retain investors and to pursue investment opportunities for KKR’s funds. As a result, allegations of improper conduct by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to KKR, as well as negative publicity and press speculation about KKR, its investment activities or the private equity industry in general, whether or not valid, may harm KKR’s reputation, 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 of litigation relating to claims for compensation, which may, individually or in the aggregate, be significant in amount. The cost of settling any such claims could negatively impact KKR’s business, financial condition 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 will have on the financial markets or KKR’s business. Recent developments in the U.S. and global financial markets have illustrated that the current environment is one of extraordinary and unprecedented uncertainty and instability for asset management businesses. With global credit markets experiencing substantial disruption (especially in the mortgage finance markets) and liquidity shortages, financial instability has spread globally. In response to the financial crises affecting the banking system and financial markets and going concern threats to investment banks and other financial institutions, the U.S. government enacted the Emergency 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 mortgagebacked and other securities from financial institutions for the purpose of stabilizing the financial markets. In addition, the U.S. government also recently made preferred equity investments in a number of the largest financial institutions. It is not clear what impact the various plans to attempt to stabilize the economy will have on the financial markets, including the illiquidity in the global credit markets and the extreme levels of volatility in the global equity markets. Moreover, while the details of these initiatives are subject to change, it is unclear whether KKR and/or is funds will be eligible to participate directly in these programs and, therefore, these initiatives may not directly benefit KKR. If any of KKR’s competitors are able to benefit from these programs, they may gain a significant competitive advantage over KKR. In addition, the government may decide to implement these programs in unanticipated ways that have a more direct impact on KKR’s funds or its businesses. For example, the government may decide that it will not purchase certain types of loans or securities which may make the price of those securities decline. If KKR owns such securities in its funds, such price impacts may have 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 subjecting KKR to significant legal liability and reputational harm. There is a risk that KKR’s employees could engage in misconduct that adversely affects its business. KKR is subject to a number of obligations and standards arising from its business and its authority over the assets it manages. The violation of these obligations and standards by any of KKR’s employees would adversely affect KKR’s clients and KKR. KKR’s business often requires that KKR deal with confidential matters of great significance to companies in which it may invest. If KKR’s employees were improperly to use or disclose confidential information, KKR could suffer serious harm to its reputation, financial position and current and future business relationships, as well as face potentially significant litigation. It is not always possible to detect or deter employee misconduct, and the extensive precautions KKR takes to detect and prevent this activity may not be effective in all cases. If any of KKR’s employees were to engage in misconduct or were to be accused of such misconduct, 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 investments worldwide on behalf of third-party investors and, in connection with those activities, are required to deploy KKR’s own capital in those investments. The investments of these funds and vehicles are subject to many risks and uncertainties, including those that are discussed below. In connection with the Combination Transaction, KKR will acquire the assets of KPE, including the investments of the KPE Investment Partnership, and manage those assets on KKR’s own behalf. As a result, the gains and losses on such assets will be reflected in KKR’s net income after the completion of the Combination Transaction, and the risks set forth below relating to the assets that KKR manages will directly affect its 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 to the 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 net income and cash flow would decline because the value of KKR’s AUM would decrease, which would result 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 on its 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 and KKR does not intend to provide earnings guidance, each of which may cause the value of interests in the Combined Business to be volatile.’’ Poor performance of its funds could also make it more difficult for KKR to raise new capital and investors in KKR’s funds might decline to invest in future funds KKR raises. 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 the assets in the account. While these accounts are generally subject to lock-up periods that preclude an investor from withdrawing capital for a specified period of time, a significant portion of these SMA assets are subject to a shortened lock-up period and may be withdrawn at the end of a calendar month following 30 days notice. In the event an account holder exercised this withdrawal right, KKR would be obligated to liquidate or make an in-kind distribution of the assets to the account holder, which would adversely impact the fees received by KKR with respect to such assets and could reduce the NAV of similar assets held by KKR’s other clients, which in turn would adversely impact the fees received by KKR with respect to those assets. Valuation methodologies for certain assets in KKR’s funds can be subject to significant subjectivity and the fair value of assets established pursuant to such methodologies may never be realized, which could result in significant losses for KKR’s funds. There are no readily ascertainable market prices for a substantial majority of illiquid investments of KKR’s funds. When determining fair values of investments, KKR uses the last reported market price as of the statement of financial condition date for investments that have readily observable market prices. When an investment does not have a readily available market price, the fair value of the investment represents the value, as determined by KKR in good faith, at which the investment could be sold in an orderly disposition over a reasonable period of time between willing parties other than in a forced or liquidation sale. There is no single standard for determining fair value in good faith and in many cases fair value is best expressed as a range of fair values from which a single estimate may be derived. When making fair value determinations, KKR typically uses a market multiples approach that considers a specified financial measure (such as EBITDA) and/or a discounted cash flow analysis. KKR also considers a range of additional factors that it deems relevant, including the applicability of a control 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 growth rates, terminal values, discount rates, capital structure and other factors. These valuation methodologies involve a significant degree of management judgment.

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Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted 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 of various factors, including possible illiquidity. KKR partners’ capital could be adversely affected if the values of investments that KKR records is materially higher than the values that are ultimately realized upon the disposal of the investments and changes in values attributed to investments from quarter to quarter may result in volatility in KKR’s AUM and such changes could materially affect the results of operations that KKR reports from period to period. KKR cannot assure you that the investment values that it records from time to time will ultimately be realized. KKR also cannot assure you that you will be 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 reflect the prices that would actually be obtained by KKR on behalf of the fund when such investments are realized. Realizations at values significantly lower than the values at which investments have been reflected in prior fund NAVs would result in losses for the applicable fund and the loss of potential carried interest and other fees. Also, if realizations of KKR’s investments produce values materially different 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 the value that could actually be realized because of various factors, including the possible illiquidity associated with a large ownership position, subsequent illiquidity in the market for a company’s securities, future market price volatility or the potential for a future loss in market value based on poor industry 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 events that may have a material impact on those valuations may not be reflected until the next quarterly valuation date. The historical returns attributable to KKR’s funds, including those presented in this consent solicitation statement, should not be considered as indicative of the future results of its funds or of its future results or of any returns on KKR Group Partnership Units. KKR has presented in this consent solicitation statement net and gross IRRs, multiples of invested capital 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 to returns 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 date that may never be realized, which may adversely affect the ultimate value realized from those funds’ investments; • you will not benefit from any value that was created in KKR’s funds prior to the Transactions to the 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, including negative factors arising from recent disruptions in the global financial markets that were not prevalent 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 positively influenced by a number of investments that experienced a substantial decrease in the average holding period of such investments and rapid and substantial increases in value following the dates on which those investments were made; the actual or expected length of holding periods related to investments has increased in recent periods and there can be no assurance that prior trends will re-emerge; • KKR funds’ returns have benefited from investment opportunities and general market conditions that may not repeat themselves, including favorable borrowing conditions in the debt markets that have since deteriorated significantly, thereby increasing both the cost and difficulty of financing transactions, and there can be no assurance that KKR’s current or future funds will be able 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 allocations among funds, investment strategies, geographic and industry exposure and vintage year. In addition, future returns will be affected by the risks described elsewhere in this consent solicitation statement, including risks of the industry sectors and businesses in which a particular fund invests. See ‘‘Risk Factors—Recent developments in the global financial markets have created a great deal of uncertainty for the asset management industry, and these developments may adversely affect KKR’s investments, access to leverage and overall performance.’’ Dependence on significant leverage in investments by KKR’s funds could adversely affect KKR’s ability to achieve attractive rates of return on those investments. Because many of KKR funds’ investments rely heavily on the use of leverage, KKR’s ability to achieve attractive rates of return on investments will depend on its continued ability to access sufficient sources of indebtedness at attractive rates. For example, KKR’s fixed income funds use varying degrees of leverage when making investments. Similarly, in many private equity investments, indebtedness may constitute up to 70% or more of a portfolio company’s total debt and equity capitalization, including debt that may be incurred in connection with the investment. An increase in either the general levels of interest rates or in the risk spread demanded by sources of indebtedness would make it more expensive to finance those investments. In addition, increases in interest rates could also decrease the value of fixed-rate debt investments that KKR’s funds make. Increases in interest rates could also make it more difficult to locate and consummate private equity investments because other potential buyers, including operating companies acting as strategic buyers, may be able to bid for an asset at a higher price due to a lower overall cost of capital. In addition, a portion of the indebtedness used to finance private equity investments often includes high-yield debt securities issued in the capital markets. Availability of capital from the high-yield debt markets is subject to significant volatility, and there may be times when KKR might 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. The incurrence 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 of which would be viewed by creditors as an event of default and could materially impact KKR’s ability to realize value from its investment; • give rise to an obligation to make mandatory prepayments of debt using excess cash flow, which might 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 to take advantage of growth opportunities; • limit the entity’s ability to adjust to changing market conditions, thereby placing it at a competitive 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 generate attractive returns or further growth; and • limit the entity’s ability to obtain additional financing or increase the cost of obtaining such financing, including for capital expenditures, working capital or other general corporate purposes. A leveraged company’s income and equity also tend to increase or decrease at a greater rate than would otherwise be the case if money had not been borrowed. As a result, the risk of loss associated with 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 fixed income funds regularly use and have used significant leverage to finance investments. An inability by KFN to continue to raise or utilize leverage could limit its ability to grow its business or fully execute its business strategy and KFN’s results of operations may be adversely affected. In addition, there can be no assurance that KFN will be able to refinance any of its indebtedness on commercially reasonable terms or at all. In the absence of improved operating results and access to capital resources, KFN could face substantial liquidity problems and might be required to dispose of material assets or operations to meet its debt service and other obligations. The use of leverage also poses a significant degree of risk and enhances the possibility of a significant loss in the value of the investment portfolios of certain of the fixed income funds that KKR manages. These funds may borrow money from time to time to purchase or carry securities. The interest expense and other costs incurred in connection with such borrowing may not be recovered by appreciation in the securities purchased or carried, such expenses and costs could give rise to losses, and the timing and magnitude of such losses could be accelerated or exacerbated, in the event of a decline in the market value of such securities. In connection with such borrowing, these funds may use marketable securities as collateral. Decreases in the value of such collateral or other marketable securities held by these funds may require the funds to post additional collateral in order to comply with margin, net worth maintenance and borrowing base requirements. This could adversely impact these funds’ liquidity, cash flows and capital available for investment. Gains realized with borrowed funds may cause these funds’ NAVs to increase at faster rates than would be the case without borrowings. However, if investment results fail to cover the costs of borrowings, 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 financial condition, results of operations and cash flow. The due diligence process that KKR undertakes in connection with its investments may not reveal all facts that may be relevant in connection with an investment. Before making its investments, KKR conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. The objective of the due diligence process is to identify attractive investment opportunities based on the facts and circumstances 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 an acquisition to drive operational achievement and value creation. When conducting due diligence, KKR typically evaluates a number of important business, financial, tax, accounting, environmental and legal issues 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 an assessment regarding an investment, KKR relies on resources available to it, including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process may at times be subjective with respect to newly organized companies for which only limited information is available. Accordingly, KKR cannot be certain that the due diligence investigation that it will carry out with respect to any investment opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity, including the existence of contingent liabilities. KKR also cannot be certain that its due diligence investigations will result in investments being successful or that the actual financial performance of an investment will not fall 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 may fail to realize any profits from these activities for a considerable period of time or lose some or all of the capital 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 securities for a period of time. KKR’s funds will generally not be able to sell these securities publicly unless their sale is registered under applicable securities laws, or unless an exemption from such registration is available. The ability of many of KKR’s funds to dispose of investments is heavily dependent on the public equity markets. For example, the ability to realize any value from an investment may depend upon the ability to complete an initial public offering of the portfolio company in which such investment is made. Even if the securities are publicly traded, large holdings of securities can often be disposed of only over a substantial length of time, exposing KKR’s investment returns to risks of downward movement in market prices during the intended disposition period. Accordingly, under certain conditions, KKR’s funds may be forced to either sell securities at lower prices than they had expected to realize or defer sales that they had planned to make, potentially for a considerable period of time. KKR has made and expects to continue to make significant capital investments in its current and future funds. Contributing capital to these funds is risky, and KKR may lose some or the entire principal 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 its investments. Investments made by KKR’s private equity and fixed income funds involve a number of significant 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 limited financial resources and may be unable to meet their obligations under their securities, which may be accompanied by a deterioration in the value of their equity securities or any collateral or guarantees provided with respect to their debt; • companies in which private equity and fixed income investments are made are more likely to depend on the management talents and efforts of a small group of persons and, as a result, the death, disability, resignation or termination of one or more of those persons could have a material adverse impact on their business and prospects and the investment made; • companies in which private equity and fixed income investments are made generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly 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 maintain their competitive position; and • executive officers, directors and employees of an equity sponsor may be named as defendants in litigation 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 certain complexities 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-sized investments. For example, larger transactions may be more difficult to finance and exiting larger deals may present incremental challenges. In addition, larger transactions may pose greater challenges in implementing changes in the company’s management, culture, finances or operations, and may entail greater scrutiny by regulators, labor unions and other third parties. Recently, labor unions have been more 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 capitalization private equity transaction has increased significantly, which has resulted in some of the largest private equity transactions being structured as ‘‘consortium transactions.’’ A consortium transaction involves an equity investment in which two or more other private equity firms serve together or collectively as equity sponsors. While KKR has sought to limit where possible the amount of consortium transactions in 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 investment because governance rights must be shared with the other private equity sponsors. Accordingly, KKR may not be able to control decisions relating to a consortium investment, including decisions relating to the management and operation of the company and the timing and nature of any exit, which could result in the risks described in ‘‘—KKR’s funds have made investments in companies that KKR does not control, exposing it to the risk of decisions made by others with which KKR may not agree.’’ Any of these factors could increase the risk that KKR’s larger investments could be less successful. The consequences to KKR’s investment funds of an unsuccessful larger investment could be more severe given the size of the investment. KKR’s funds have made investments in companies that KKR does not control, exposing it to the risk of decisions made by others with which KKR may not agree. KKR’s funds hold investments that include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired by KKR’s funds through trading activities or through purchases of securities from the issuer. In addition, KKR’s funds may acquire minority equity interests, particularly when sponsoring investments as part of a large investor consortium, and may also dispose of a portion of their majority equity investments in portfolio companies over time in a manner that results in the funds retaining a minority investment. Those investments will be subject to the risk that the company in which the investment is made may make business, financial or management decisions with which KKR does not agree or that the majority stakeholders or the management of the company may take risks or otherwise act in a manner that does not serve KKR’s interests. If any of the foregoing were to occur, the value of investments by KKR’s funds could decrease and KKR’s financial condition, results of operations and cash flow could suffer as a result.

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KKR expects to make investments in companies that are based outside of the United States, which may expose it 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 other securities of issuers that are based outside of the United States. A substantial amount of these investments consist of private equity investments made by KKR’s private equity funds. For example, as of March 31, 2009, approximately 38.7% of the unrealized value of the investments of those funds was attributable 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 considerations that are not typically associated with investments in companies established in the United States. These risks may include the following: • the possibility of exchange control regulations, restrictions on repatriation of profit on investments or of capital invested, political and social instability, nationalization or expropriation of assets; • the imposition of non-U.S. taxes; • less liquid markets; • reliance on a more limited number of commodity inputs, service providers and/or distribution mechanisms; • adverse fluctuations in currency exchange rates and costs associated with conversion of investment 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 value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, levels of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation 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 hedging transactions, it may be exposed to additional risks associated with such transactions. See ‘‘—Risk management 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 contractual obligation to fund capital calls when requested by KKR, which could adversely affect a fund’s operations and performance. Investors in certain of KKR’s funds make capital commitments to those funds that the funds are entitled to call from those investors at any time during prescribed periods. KKR depends on investors fulfilling their commitments when it calls capital from them in order for those funds to consummate investments and otherwise pay their obligations when due. KKR has not had investors fail to honor capital calls to any meaningful extent. Any investor that did not fund a capital call would be subject to several possible penalties, including having a significant amount of its existing investment forfeited in that fund. However, the impact of the penalty is directly correlated to the amount of capital previously invested by the investor in the fund and if an investor has invested little or no capital, for instance early in the life of the fund, then the forfeiture penalty may not be as meaningful. If investors were to fail to satisfy a significant amount of capital calls for any particular fund or funds, the operation and performance 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 their terms, 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’s investment. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a company in which an investment is made, holders of securities ranking senior to KKR’s investment would typically be entitled to receive payment in full before distributions could be made in respect of its investment. After repaying senior security holders, the company may not have any remaining assets to 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 and ratable basis in distributions that are made out of those assets. Also, during periods of financial distress or following an insolvency, the ability of KKR’s funds to influence a company’s affairs and to take actions 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 certain forms of derivative instruments to limit its exposure to changes in the relative values of investments that may result from market developments, including changes in prevailing interest rates and currency exchange rates. The scope of risk management activities undertaken by KKR varies based on the level and volatility of interest rates, prevailing foreign currency exchange rates, the types of investments that are made and other changing market conditions. The use of hedging transactions and other derivative instruments to reduce the effects of a decline in the value of a position does not eliminate the possibility of fluctuations in the value of the position or prevent losses if the value of the position declines. However, such activities can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of the position. Such transactions may also limit the opportunity for gain if the value of a position increases. Moreover, it may not be possible to limit the exposure to a market development that is so generally anticipated that a hedging or other derivative transaction cannot be entered into at an acceptable price. The success of any hedging or other derivative transactions that KKR enters into generally will depend on its ability to correctly predict market changes. As a result, while KKR may enter into such transactions in order to reduce its exposure to market risks, unanticipated market changes may result in poorer 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 in connection 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 perfect correlation between the instruments used in a hedging or other derivative transactions and the position being hedged. An imperfect correlation could prevent KKR from achieving the intended result and could give rise to a loss. In addition, it may not be possible to fully or perfectly limit KKR’s exposure against all changes in the value of its investments, because the value of investments is likely to fluctuate as 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 in certain geographic regions or asset types, which could negatively affect their performance to the extent those concentrated investments perform poorly. The governing agreements of KKR’s funds contain only limited investment restrictions and only limited 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 be exacerbated 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 equity securities and common equity securities. In certain cases, KKR may manage separate funds that invest in different parts of the same company’s capital structure. For example, KKR’s fixed income funds may invest in different classes of the same company’s debt and may make debt investments in a company that is owned by one of KKR’s private equity funds. In those cases, the interests of KKR’s funds may not always be aligned, which could create actual or potential conflicts of interest or the appearance of such conflicts. For example, one of KKR’s private equity funds could have an interest in pursuing an acquisition, divestiture or other transaction that, in its judgment, could enhance the value of the private equity investment, even though the proposed transaction would subject one of KKR’s fixed income fund’s debt investments to additional or increased risks. Similarly, KKR’s ability to effectively implement its public equity strategies may be limited to the extent that contractual obligations entered into in the ordinary course of KKR’s traditional private equity business impose restrictions on its engaging 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, for example 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 number and scope of these principal investments may increase following the completion of the Combination Transaction. In certain cases, KKR will require that a transaction or investment be approved by an independent valuation expert, be subject to a fairness opinion, be based on arms-length pricing data or be calculated in accordance with a formula provided for in a fund’s governing documents prior to the completion of the relevant transaction to address potential conflicts of interest. Such instances include principal transactions where KKR or its affiliates warehouses an investment in a portfolio company for the benefit of one or more KKR funds pending the contribution of committed capital by the investors in such KKR funds, follow-on investments by a fund other than a fund which made an initial investment in a company or transactions in which KKR arranges for a KKR fund to buy a security from, or sell a security to, another KKR fund. Appropriately dealing with conflicts of interest is complex and difficult and KKR could suffer reputational damage or potential liability if it fails, or appears 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 by KPE’s limited partnership agreement, will not control the KKR Managing Partner or vote in the election or removal 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 interests in KPE and be governed by KPE’s limited partnership agreement. KPE’s limited partnership agreement provides for the management of its business and affairs by its general partner, a Guernsey limited company that is owned by individuals who are affiliated with KKR, and which has a majorityindependent board of directors. KPE unitholders may not take part in the management or control of the business and affairs of KPE and do not have any right or authority to act for or to bind KPE or to take part or interfere in the conduct or management of KPE. KPE unitholders are not entitled to vote on 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 in Group Holdings. The KKR Managing Partner is the ultimate general partner of Group Holdings and will manage the business and affairs of Group Holdings and the KKR Group Partnerships. KPE will not hold securities of the KKR Managing Partner. The KKR Managing Partner, which serves as Group Holdings’ ultimate general partner and manages KKR’s business and affairs, is owned by KKR’s senior principals, including its founders. Pursuant to its limited liability company agreement, the KKR Managing Partner has a board of directors that will be responsible for the oversight of KKR’s business and operations. The board of directors, co-chaired by KKR’s founders, appoints the officers of the KKR Managing Partner. KPE, as a holder of interests in Group Holdings, will not control the KKR Managing 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 will be unable to influence decisions regarding KKR’s business. KPE, as a holder of interests in Group Holdings, also will not have the right to remove or expel the KKR Managing Partner as the ultimate general partner of Group Holdings for any reason, with or without cause. Therefore, unlike the shareholders of a corporation, who generally are entitled to propose the nomination of independent directors and who may conduct proxy solicitations with respect to the election of directors, KPE and its unitholders will be unable to effect a change in KKR’s management if they become dissatisfied with the KKR Managing Partner’s performance. Upon completion of the Combination Transaction, KPE’s investment objective will change from predominantly making investments in multiple KKR private equity funds and KKR portfolio companies to a single investment in KKR itself. Pursuant to the Combination Transaction, KPE will contribute all of its economic interests in the KPE Investment Partnership, which is comprised of interests in various private equity investments in KKR private equity funds and KKR portfolio companies and other investments selected by KKR, and the KPE Investment Partnership will become a wholly-owned subsidiary of the KKR Group Partnerships. Following the Combination Transaction, KPE’s only asset will be its interest in Group Holdings, 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 in addition 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 hold KPE 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 may differ significantly as compared to the period prior to the Combination Transaction. In addition, KKR will no longer be required to make reinvestments in KPE units, and KKR will be permitted to use any or all of its assets in opportunistic investments. In connection with the Combination Transaction, KPE will amend or terminate certain of its agreements, policies and procedures. See ‘‘The Combination Transaction—Amendments to KPE Agreements and Policies’’. 42

Potential conflicts of interest may arise among the KKR Managing Partner, KKR’s affiliates and KKR. The KKR Managing Partner and KKR’s affiliates have limited fiduciary duties to KKR and the holders of KKR Group Partnership Units, which may permit them to favor their own interests to the detriment of KKR and the holder of KKR Group Partnership Units. Upon completion of the Combination Transaction, KPE unitholders will continue to hold interests in KPE and KPE will continue to be managed by its general partner, which has a majority-independent board of directors. However, KPE’s only asset will be its interest in Group Holdings. The KKR Managing Partner, which is the ultimate general partner of Group Holdings, will manage the business and affairs of Group Holdings and the Combined Business, and will be governed by a board of directors 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 Managing Partner 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’s investments and dispositions, indebtedness, issuances of additional partner interests, tax liabilities and amounts of reserves, each of which can affect the amount of cash that is available for distribution to holders of KKR Group Partnership Units; • The KKR Managing Partner is allowed to take into account the interests of parties other than Group 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 general partners of KKR’s funds have fiduciary and contractual obligations to KKR’s fund investors, and such obligations may cause such affiliates to regularly take actions that might adversely affect KKR near-term results of operations or cash flow. The KKR Managing Partner would have no obligation 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 through entities that are not subject to corporate income taxation and Group Holdings will hold some of its KKR Group Partnership Units through a wholly-owned subsidiary that is taxable as a corporation, conflicts may arise between KKR’s principals and Group Holdings relating to the selection and structuring of investments; • As discussed below, the KKR Managing Partner has limited its liability and reduced or eliminated its duties, including fiduciary duties, under the Group Holdings partnership agreement, while also restricting the remedies available to holders of KKR Group Partnership Units for actions that, without these limitations, might constitute breaches of duty, including fiduciary duties. In addition, KKR has agreed to indemnify the KKR Managing Partner and its affiliates to the fullest extent permitted by law, except with respect to conduct involving bad faith, fraud or willful misconduct. By receiving Group Holdings units, KPE will have agreed and consented to the provisions set forth in the Group Holdings partnership agreement, including the 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 from causing KKR to pay it or its affiliates for any services rendered, or from entering into additional contractual arrangements with any of these entities on KKR’s behalf, so long as the terms of any such additional contractual arrangements are fair and reasonable to KKR as determined under the Group Holdings partnership agreement. The independent directors of KPE’s general partner’s board of directors will be responsible for, among other things, enforcing the rights of KPE 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 person who holds a partnership or equity interest in the foregoing entities; • The KKR Managing Partner determines how much debt KKR incurs and that decision may adversely affect its credit ratings; • The KKR Managing Partner determines which costs incurred by it and its affiliates are reimbursable by KKR; • Other than as set forth in the confidentiality and restrictive covenant agreements to which KKR’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 former personnel employed by the KKR Managing Partner are not prohibited from engaging in other businesses 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 Group Partnerships by it and its affiliates; and • The KKR Managing Partner or the KKR Managing Partner conflicts committee decides whether to retain separate counsel, accountants or others to perform services for KKR. See ‘‘Certain Relationships and Related Party Transactions’’ and ‘‘Conflicts of Interest and Fiduciary Responsibilities.’’ Certain actions by the KKR Managing Partner’s board of directors require the approval of the Class A shares of 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 senior principals. Although the affirmative vote of a majority of the directors of the KKR Managing Partner is required for any action to be taken by the KKR Managing Partner’s board of directors, certain specified actions approved by the KKR Managing Partner’s board of directors will also require the approval of a majority of the Class A shares of the KKR Managing Partner. These actions consist of the following: • the entry into a debt financing arrangement by KKR in an amount in excess of 10% of KKR’s existing long-term indebtedness (other than the entry into certain intercompany debt financing arrangements); • 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 their equity securities or (ii) have designations, preferences, rights, priorities or powers that are 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 or the limited 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 KKR Group Partnership; • the merger, sale or other combination of the partnership or any KKR Group Partnership with or into any other person; • the transfer, mortgage, pledge, hypothecation or grant of a security interest in all or substantially all of the assets of the KKR Group Partnerships; • the appointment or removal of a Chief Executive Officer or a Co-Chief Executive Officer of the KKR 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 subsidiaries or 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 Group Partnership; and • the withdrawal, removal or substitution of the KKR Managing Partner as KKR’s general partner or any person as the general partner of a KKR Group Partnership, or the transfer of beneficial ownership of all or any part of a general partner interest in the partnership or a KKR Group Partnership 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 A shares representing a majority of the total voting power of the outstanding Class A shares. While neither of them acting alone will be able to control the voting of the Class A shares, they will be able to 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 merger or 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 their limited liability company interests in the KKR Managing Partner without the approval of KPE, subject to certain restrictions as described elsewhere in this consent solicitation statement. A new general partner may not be willing or able to form new funds and could form funds that have investment objectives and governing terms that differ materially from those of KKR’s current funds. A new owner could also have a different investment philosophy, employ investment professionals who are less experienced, be unsuccessful in identifying investment opportunities or have a track record that is not as successful as KKR’s track record. If any of the foregoing were to occur, KKR could experience difficulty in making new investments, and the value of its existing investments, its business, its results of operations 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 do so 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 quarterly basis. KKR is a holding company and will have no material assets other than the KKR Group Partnership Units that KKR will hold through wholly-owned subsidiaries and will have no independent means of generating income. Accordingly, KKR intends to cause the KKR Group Partnerships to make distributions on the KKR Group Partnership Units, including KKR Group Partnership Units that KKR directly or indirectly holds, in order to provide it with sufficient amounts to fund distributions it may declare. If the KKR Group Partnerships make such distributions, other holders of KKR Group Partnership Units, including KKR Holdings, will be entitled to receive equivalent distributions pro rata based 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 KKR Managing Partner, which may change KKR’s distribution policy at any time. The KKR Managing Partner will take into account general economic and business conditions, KKR’s strategic plans and prospects, the business and investment opportunities, the financial condition and operating results, compensation expense, working capital requirements and anticipated cash needs, contractual restrictions and obligations, including payment obligations pursuant to the tax receivable agreement, legal, tax and regulatory restrictions, restrictions or other implications on the payment of distributions by KKR to the holders of KKR Group Partnership Units or by its subsidiaries to KKR and such other factors as the KKR Managing Partner may deem relevant. Furthermore, by paying cash distributions rather than investing that cash in KKR’s businesses, KKR risks slowing the pace of its growth, or not having a 45

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 may be limited, and you should expect that some or all of such distributions may be regarded as ordinary income. KPE’s intermediate holding company will be required to pay KKR’s principals for most of the benefits relating to any additional tax depreciation or amortization deductions it may claim as a result of the tax basis step-up it 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 Partnership Units from time to time pursuant to the exchange agreement with KKR Holdings. To the extent this occurs, the exchanges are, in most circumstances, expected to result in an increase in KPE’s intermediate holding company’s share of the tax basis of the tangible and intangible assets of KKR Management Holdings L.P., primarily attributable to 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 and therefore reduce the amount of income tax KPE’s intermediate holding company would otherwise be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. KPE will enter into a tax receivable agreement with KKR Holdings requiring KPE’s intermediate holding company to pay to KKR Holdings or transferees of its KKR Group Partnership Units 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediate holding company actually realizes (or is deemed to realize, in the case of an early termination payment by its 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 (or is deemed to realize) as a result of increases in tax basis that arise due to future payments under the agreement. This payment obligation will be an obligation of KPE’s intermediate holding company and not of either KKR Group Partnership. In the event that other of KPE’s current or future subsidiaries become taxable as corporations and acquire KKR Group Partnership Units in the future, or if KPE becomes taxable as a corporation for U.S. federal income tax purposes, KKR expects that each such entity will become subject to a tax receivable agreement with substantially similar terms. While the actual 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 KKR Group Partnership Units at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of its taxable income, KPE expects that as a result of the size of the increases in the tax basis of the tangible and intangible assets of the KKR Group Partnerships, the payments that KPE may be required to make to KKR Holdings will be substantial. KPE may need to incur debt to finance payments under the tax receivable agreement to the extent its cash resources are insufficient to meet its obligations under the tax receivable agreement as a result of timing discrepancies or otherwise. In particular, KPE’s intermediate holding company’s obligations under the tax receivable agreement would be effectively accelerated in the event of an early termination of the tax receivable agreement by KPE’s intermediate holding company or in the event of a change of control. In these situations, KPE’s obligations under the tax receivable agreement could have a substantial negative impact on its liquidity. Payments under the tax receivable agreement will be based upon the tax reporting positions that the Managing Partner will determine. KPE is not aware of any issue that would cause the IRS to challenge a tax basis increase. However, neither KKR Holdings nor its transferees will reimburse KPE for any payments previously made under the tax receivable agreement if such tax basis increases, or the tax 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 agreement could be in excess of the intermediate holding company’s cash tax savings. The intermediate holding company’s ability to achieve benefits from any tax basis increase, and the payments to be made under this agreement, will depend upon a number of factors, as discussed above, including the timing and amount of KPE’s future income. If KPE or KKR was deemed to be an ‘‘investment company’’ subject to regulation under the Investment Company Act, applicable restrictions could make it impractical for it to continue its business as contemplated and could have a material adverse effect on its business. A person will generally be deemed to be an ‘‘investment company’’ for purposes of the Investment Company Act if: • it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or • absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. KPE relies on applicable exemptions under the Investment Company Act so that it does not have to be registered as an investment company under the Investment Company Act. KKR believes that it is engaged primarily in the business of providing asset management services and not in the business of investing, reinvesting or trading in securities. KKR regards itself as an asset management firm and does not 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 in the first bullet point above. Further, following the completion of the Transactions, KKR will have no material assets other than its equity interest as general partner of one of the KKR Group Partnerships and its equity interest in a wholly-owned subsidiary, which in turn will have no material assets other than 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 be vested with all management and control over the KKR Group Partnerships. KKR does not believe its equity interest in its wholly-owned subsidiary or its equity interests directly or through its wholly-owned subsidiary in the KKR Group Partnerships are investment securities. Moreover, because KKR believes that the capital interests of the general partners of its funds in their respective funds are neither securities nor investment securities, KKR believes that if other exemptions to registration under the Investment 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 the Transactions would be comprised of assets that could be considered investment securities. The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. KKR intends to conduct its operations so that it will not be deemed to be an investment company under the Investment Company Act. If anything were to happen which would cause 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 capital structure, ability to transact business with affiliates (including KKR) and ability to compensate key employees, could make it impractical for KKR to continue its business as currently conducted, impair the agreements and arrangements between and among the partnership, the KKR Group Partnerships and 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 Combination Transaction or otherwise conduct KKR’s business in a manner that does not subject it to the registration and other requirements of the Investment Company Act. The satisfaction date may occur substantially in advance of the consummation of the Combination Transaction, 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 the consummation of the Combination Transaction will be deemed to be irrevocably satisfied or waived on the first date on which all of the conditions to the consummation of the Combination Transaction have been satisfied or waived, which date is referred to as the satisfaction date. If the requisite unitholder consent is obtained, it is expected that the satisfaction date will occur on or around August 14, 2009 (or an earlier date if consented to by KKR). Notwithstanding the earlier occurrence of the satisfaction date, the Combination Transaction will not be consummated until October 1, 2009. During the period from the satisfaction date until the consummation of the Combination Transaction, KPE will have no right to terminate the amended and restated purchase agreement or prevent the Combination Transaction from occurring as a result of changes in KKR’s business. Therefore, even if a material adverse effect occurs with respect to KKR’s business during this period, the Combination Transaction will still occur. KPE’s unit price may decline due to the large number of KKR Group Partnership Units that may be exchanged for KPE units. In connection with the Combination Transaction, KPE and KKR Holdings will enter into an exchange agreement pursuant to which KKR Holdings and certain of the transferees of its KKR Group Partnership Units may, up to four times each year, effectively 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. 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 2009 Equity Incentive Plan is equivalent to 15% of the number of fully diluted KKR Group Partnership Units outstanding upon completion of the Transactions, which amount may be increased each fiscal year. For a further description of the 2009 Equity Incentive Plan, including the formula for annual increases in KKR Group Partnership Units available thereunder and the restrictions on grants to KKR senior principals, see ‘‘Governance—2009 Equity Incentive Plan’’. The market price of KPE units could decline as a result of the exchange or the perception that an exchange may occur of a large number of KKR Group Partnership units for KPE units after the consummation of the Transactions. These exchanges, or the possibility that these exchanges may occur, also might make it more difficult for KPE unitholders 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 distributions to 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 taxable year consist of qualifying income, as defined in Section 7704 of the Internal Revenue Code, and that KPE 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 disposition of stocks and securities and certain other forms of investment income. KPE may not meet these requirements or current law may change so as to cause, in either event, it to be treated as a corporation 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. 48

If KPE failed to meet the qualifying income requirements or if current law were to change and it was treated as a corporation for U.S. federal income tax purposes, KPE may be treated as foreign corporation. If this were the case, KPE would be subject to U.S. federal income tax and branch profits tax 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 tax purposes it would be treated as a U.S. corporation subject to tax in the United States. If KPE were treated as a U.S. corporation for U.S. federal income tax purposes, it would pay U.S. federal, state and local income tax on its taxable income at the applicable tax rates. Distributions to you would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits of KPE would otherwise flow through to you. Because a tax would be imposed upon KPE as a corporation, its distributions to you would be substantially reduced which could cause a reduction in the value of the KPE units. Similarly, if the Controlling Partnership were at some point listed in the United States, the value of the Controlling Partnership units would also depend in part on the Controlling Partnership being treated as a partnership for U.S. federal income tax purposes. This would require the Controlling Partnership to meet the qualifying income requirements discussed above. If the Controlling Partnership failed to meet the qualifying income requirements or if current law were to change and the Controlling Partnership were treated as a corporation for U.S. federal income tax purposes, the Controlling Partnership would be treated as a U.S. corporation subject to U.S. federal, state and local income tax on its taxable income at the applicable tax rates. Distributions to holders of the Controlling Partnership units would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits of would otherwise flow through to holders of Controlling Partnership units. Because a tax would be imposed upon the Controlling Partnership as a corporation, its distributions to holders would be substantially reduced, which could cause a reduction in the value of the Controlling Partnership units. Current law may change, causing KPE (or the Controlling Partnership, if it is listed in the United States) to be treated as a corporation for U.S. federal or state income tax purposes or otherwise potentially subjecting it to entity level taxation. See ‘‘—Risks Related to KKR’s Business—Legislation has been introduced that would, if enacted, preclude KPE following the Combination Transaction from qualifying as a partnership for U.S. federal income tax purposes. If this or any similar legislation or regulation were to be enacted and apply to KPE, it could incur a material increase in its tax liability that could result in a reduction in the value of the KPE units.’’ In addition, because of widespread state budget deficits, several states are evaluating ways to subject partnerships to entity level taxation through the imposition of state income, franchise or other forms of taxation. If any state were to impose a tax upon KPE (or the Controlling Partnership, if it is listed in the United States), distributions to you would be reduced. You will be subject to U.S. federal income tax on your share of KPE’s taxable income, regardless of whether you 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 as defined in Section 7704 of the Internal Revenue Code, the entity is not required to register as an investment company under the Investment Company Act on a continuing basis, and assuming there is no change in law, KPE will be treated, for U.S. federal income tax purposes, as a partnership and not as an association or a publicly-traded partnership taxable as a corporation (see ‘‘—Risks Related to KKR’s Business—Legislation has been introduced that would, if enacted, preclude KPE following the Combination Transaction from qualifying as a partnership for U.S. federal income tax purposes. If this or any similar legislation or regulation were to be enacted and apply to KPE, it could incur a material increase 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 income taxation 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 is otherwise subject to tax on a flow through basis) for each of KPE’s taxable years ending with or within the 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 income or 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 investment company, or a PFIC, or entities treated as partnerships for U.S. federal income tax purposes, may produce taxable income prior to the receipt of cash relating to such income, and holders of KPE units that are U.S. taxpayers may be required to take such income into account in determining their taxable income. In the event of an inadvertent termination of the partnership status for which the IRS has granted limited relief, each holder of KPE units may be obligated to make such adjustments as the IRS may require to maintain KPE’s status as a partnership. Such adjustments may require the holders of KPE units to recognize additional amounts in income during the years in which they hold such units. In addition, because of KPE’s methods of allocating income and gain among holders of KPE units, you may 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 tax liability in any given year that is attributable to its investment in KPE, no assurances can be made that this will be the case. Accordingly, each holder should ensure that it has sufficient cash flow from other sources 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 they did not share in the economic appreciation inherent in such assets. Generally, KPE and its intermediate holding company will be allocated taxable gains and losses recognized by the KKR Group Partnerships based upon its percentage ownership in each Group Partnership. While gains and losses inherent in the assets as of the date they are contributed to the Group Partnership will be allocated to the partner who contributed such assets, gains and losses inherent in assets owned by a partnership, including KPE Investment Partnership, whose partnership interests, rather than assets, are contributed to the Group Partnership will be allocated pro rata to the partners of the Group Partnership. In some circumstances, under the U.S. federal income tax rules affecting partners and partnerships, the taxable gain or loss allocated to a unitholder may not correspond to that unitholder’s share of the economic appreciation or depreciation in the particular asset. This is primarily an issue of the timing of the payment of tax, rather than a net increase in tax liability, because the gain or loss allocation would generally be expected to be offset as a unitholder sold units. Holders of Controlling Partnership units following a listing in the United States would generally be subject to similar tax consequences as those discussed here with respect to holders of KPE units. KPE may hold or acquire certain investments through an entity classified as a PFIC or CFC for U.S. federal income tax purposes. Certain of KPE’s investments may be in foreign corporations or may be acquired through a foreign subsidiary that would be classified as a corporation for U.S. federal income tax purposes. Such an entity may be a PFIC for U.S. federal income tax purposes. Similarly, if the Controlling Partnership is listed in the United States, following such listing, it may hold certain investments in foreign corporations or may acquire investments through a foreign subsidiary that may be treated as PFICs. In addition, it may hold 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 indirect interest in a PFIC or CFC. These investments may produce taxable income prior to the receipt of cash relating 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 may be 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—Controlled Foreign Corporations.’’ Non-U.S. persons face unique U.S. tax issues from owning KPE units that may result in adverse tax consequences to them. KPE may be, or may become, engaged in a U.S. trade or business for U.S. federal income tax purposes, including by reason of investments in U.S. real property holding corporations, in which case some 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 be subject 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 connected with such trade or business and any other income treated as ECI, and would be subject to U.S. federal income tax at regular U.S. tax rates on any such income (state and local income taxes and filings may also apply in that event). Non-U.S. holders that are corporations may also be subject to a 30% branch profits tax on their distributions of such income. In addition, certain income from U.S. sources that is not ECI allocable to non-U.S. holders will be reduced by withholding taxes imposed at the highest effective applicable tax rate. Similarly, if the Controlling Partnership lists in the United States and becomes engaged in a U.S. trade or business for U.S. federal income tax purposes, including by reason of investments in U.S. real property holding corporations, some portion of its income would be treated as ECI with respect to non-U.S. holders of Controlling Partnership units. If this were the case, such non-U.S. holders would generally be subject to the same consequences as described above with respect to 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 of owning 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 taxes that are imposed by the various jurisdictions in which KPE does business or owns property now or in the future, even if the holders of the KPE units do not reside in any of those jurisdictions. Holders of KPE units may be required to file state and local income tax returns and pay state and local income taxes in some or all of these jurisdictions. Further, holders of KPE units may be subject to penalties for failure 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 not rendered an opinion on the state or local tax consequences of owning KPE units. Similarly, holders of Controlling Partnership units following a listing in the United States may be required to file state and local income tax returns and pay state and local income taxes in some or all of these jurisdictions and generally 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 will be treated as a corporation for U.S. federal income tax purposes; such corporation will be liable for significant taxes and may create other adverse tax consequences, which could potentially adversely affect the value of the KPE units. In light of the publicly-traded partnership rules under U.S. federal income tax laws and other requirements, KPE will hold its interest in certain of the KKR businesses through an intermediate holding company, which will be treated as a corporation for U.S. federal income tax purposes. This intermediate holding company will be liable for U.S. federal income taxes on all of its taxable income and 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 to successfully reallocate deductions or income of the related entities conducting KKR’s business. The tax liability that any such intermediate holding company will incur has not been calculated. These additional taxes have not applied to KPE’s or KKR’s existing owners in its organizational structure in effect before the Combination Transaction and will not apply to KKR’s existing owners following the Combination Transaction until they exchange their Group Partnership units. In addition, certain assets and liabilities of KPE will be contributed to the intermediate holding company before being contributed to KKR Management Holdings L.P. The basis of certain assets contributed to the intermediate holding corporation may be reduced under the Internal Revenue Code which could result in greater gain (or less 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 efforts to cause interests in the Combined Business 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 conditions precedent to the Combination Transaction are satisfied or waived and KPE, at the discretion of the independent directors of its general partner, may exercise this right following the 12-month anniversary of the date the conditions precedent to the Combination Transaction 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 for Controlling Partnership units. KKR or KPE, as the case may be, would seek a listing of the Controlling Partnership units, which would represent equity interests in the Combined Business. Such listing would not require further action or consent by KPE unitholders. If such listing occurs, KPE would make an in-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 would subsequently be dissolved and delisted from Euronext Amsterdam. There can be no assurance that such listing will occur in the above time periods or at all. If the listing of the Controlling Partnership units does occur and the Controlling Partnership becomes a public entity in the United States, the Combined Business 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 and sustaining growth may strain KKR’s resources. If the Controlling Partnership becomes a public company in the U.S., it will be subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, and requirements of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. These requirements may place a strain on KKR’s systems and resources. The Exchange Act will require that KKR file annual, quarterly and current reports with respect to its business and financial condition. The Sarbanes-Oxley Act will require that KKR maintain effective disclosure controls and procedures and internal controls over financial reporting, which are discussed below. In order to maintain and improve the effectiveness of KKR’s disclosure controls and procedures, significant resources and management oversight will be required. KKR will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. In addition, sustaining KKR’s growth will also require KKR to commit additional management, operational and financial resources to identify new professionals to join the firm and to maintain appropriate operational and financial systems to adequately support expansion. These activities may divert management’s attention from other business concerns, which could have a material adverse effect on KKR’s business, financial condition, results of operations and cash flows. KKR will also incur costs that it has not previously incurred for director fees, investor relations expenses, expenses for compliance with the Sarbanes-Oxley Act and rules of the SEC 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 with Section 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 subject to the reporting requirements of the Exchange Act for a specified period of time. Accordingly, KKR has not determined whether or not its existing internal controls over financial reporting systems comply with Section 404. The internal control evaluation required by Section 404 will divert internal resources and will take a significant amount of time, effort and expense to complete. If it is determined that KKR is not in compliance with Section 404, KKR will be required to implement remedial procedures and re-evaluate its internal control over financial reporting. KKR may experience higher than anticipated operating expenses as well as higher independent auditor and consulting fees during the implementation of these changes and thereafter. Further, KKR may need to hire additional qualified personnel in order for it to comply with Section 404. If KKR is unable to implement any necessary changes effectively or efficiently, its operations, financial reporting or financial results could be adversely affected and KKR could obtain an adverse report on internal controls from its independent registered public accountants. The Controlling Partnership, as a limited partnership, would qualify for some exemptions from the corporate governance and other requirements of the New York Stock Exchange or The NASDAQ Stock Market if it should become listed in the U.S. The Controlling Partnership is a limited partnership and as a result would qualify for exceptions from certain corporate governance and other requirements of the rules of the New York Stock Exchange or The NASDAQ Stock Market if it should become listed in the U.S. Pursuant to these exceptions, limited partnerships may elect not to comply with certain corporate governance requirements of the New York Stock Exchange or The NASDAQ Stock Market, including the requirements: (i) that the listed company have a nominating and corporate governance committee that is composed entirely of independent directors; and (ii) that the listed company have a compensation committee 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 the same protections afforded to equity holders of entities that are subject to all of the corporate governance 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 the limited partners of the Controlling Partnership Upon completion of the Transactions, KKR Holdings will own 70% of the KKR Group Partnership Units. Due to the foregoing, upon completion of a U.S. listing, KKR’s principals would generally have sufficient voting power to determine the outcome of those few matters that may be submitted for a vote of the holders of Controlling Partnership units, including a merger or consolidation of KKR, a sale of all or substantially all of the assets of KKR and amendments to the Controlling Partnership partnership agreement that may be materially adverse to holders of Controlling Partnership units. In addition, following a U.S. listing the Controlling Partnership partnership agreement would contain provisions that enable KKR to take actions that would materially and adversely affect all holders of Controlling Partnership units or a particular class of holders of Controlling Partnership units upon the majority vote of all outstanding voting units, and since more than a majority of KKR’s voting units will be controlled by KKR principals upon completion of the Transactions, KKR’s founders will have the ability to take actions that could materially and adversely affect the holders of Controlling Partnership units 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 in the Controlling Partnership limited partnership agreement stating that any Controlling Partnership units held by a person that beneficially owns 20% or more of any class of Controlling Partnership units then outstanding (other than the KKR Managing Partner or its affiliates, or a direct or subsequently approved transferee of the KKR Managing Partner or its affiliates) cannot be voted on any matter. The Controlling Partnership’s partnership agreement also contains provisions limiting the ability of the holders of Controlling Partnership units to call meetings, to acquire information about KKR’s operations, and to influence the manner or direction of KKR’s management. The Controlling Partnership’s partnership agreement also does not restrict the KKR Managing Partner’s ability to take actions that may result in KKR being treated as an entity taxable as a corporation for U.S. federal (and applicable state) income tax purposes. Furthermore, holders of Controlling Partnership units would not be entitled to dissenters’ rights of appraisal under the Controlling Partnership limited partnership agreement or applicable Delaware law in the event of a merger or consolidation, a sale of substantially all of KKR’s assets or any other transaction or event. The amended and restated partnership agreement of the Controlling Partnership will contain provisions that reduce or eliminate duties (including fiduciary duties) of the KKR Managing Partner and limit remedies available to unitholders for actions that might otherwise constitute a breach of duty. It will be difficult for unitholders to successfully challenge a resolution of a conflict of interest by Managing Partner or by its conflicts committee. The amended and restated partnership agreement of the Controlling Partnership will contain provisions that require holders of Controlling Partnership units to waive or consent to conduct by the KKR Managing Partner and its affiliates that might otherwise raise issues about compliance with fiduciary duties or applicable law. For example, the Controlling Partnership’s partnership agreement will provide that when the KKR Managing Partner is acting in its individual capacity, as opposed to in its capacity as the KKR Managing Partner, it may act without any fiduciary obligations to holders of Controlling Partnership units, whatsoever. When the KKR Managing Partner, in its capacity as its general 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 or advisable,’’ then the KKR Managing Partner or the conflicts committee will be entitled to consider only such 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 any holder of Controlling Partnership units and will not be subject to any different standards imposed by the Controlling Partnership’s partnership agreement, the Delaware Revised Uniform Limited Partnership 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, KKR and holders of Controlling Partnership units will only have recourse and be able to seek remedies against the KKR Managing Partner if the KKR Managing Partner breaches its obligations pursuant to the Controlling Partnership’s partnership agreement. Unless the KKR Managing Partner breaches its obligations pursuant to the Controlling Partnership’s partnership agreement, KKR and holders of Controlling Partnership units will not have any recourse against the KKR Managing Partner even if the KKR 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 Controlling Partnership’s partnership agreement, the Controlling Partnership’s partnership agreement provides that the KKR Managing Partner and its officers and directors will not be liable to KKR or holders of Controlling Partnership units, for errors of judgment or for any acts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that the KKR Managing Partner or its officers and directors acted in bad faith or engaged in fraud or willful misconduct. 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 might constitute breaches of duty including fiduciary duties. Whenever a potential conflict of interest exists between KKR and the KKR Managing Partner, the KKR Managing Partner may resolve such conflict of interest. If the KKR Managing Partner determines that its resolution of the conflict of interest is on terms no less favorable to KKR than those generally being provided to or available from unrelated third parties or is fair and reasonable to KKR, taking into account the totality of the relationships between KKR and the KKR Managing Partner, then it will be presumed that in making this determination, the KKR Managing Partner acted in good faith. A holder of Controlling Partnership units seeking to challenge this resolution of the conflict of interest would bear the burden of overcoming such presumption. This is different from the situation with Delaware corporations, where a conflict resolution by an interested party would be presumed to be unfair 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 KKR Managing Partner, the resolution will be conclusively deemed to be fair and reasonable to KKR and not a breach by the KKR Managing Partner of any duties it may owe to KKR or holders of Controlling Partnership units. This is different from the situation with Delaware corporations, where a conflict resolution 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 Controlling Partnership unit, you will be treated as having consented to the provisions set forth in the Controlling Partnership’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 under applicable state law. As a result, unitholders will, as a practical matter, not be able to successfully challenge an informed decision by the conflicts committee. See ‘‘Conflicts of Interest and Fiduciary Responsibilities.’’ The potential requirement for the Controlling Partnership to convert its financial statements from being prepared in conformity with accounting principles generally accepted in the United States of America to International 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 the future 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 a worldwide basis. These standards are published by the London-based International Accounting Standards Board (‘‘IASB’’) and are more focused on objectives and principles and less reliant on detailed rules than U.S. GAAP. Today, there remain significant and material differences in several key areas 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 equivalent guidance in IFRS does not exist. The adoption of IFRS is highly complex and would have an impact on many aspects and operations of the Controlling Partnership, including but not limited to financial accounting 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 a multi-year period would be required for this conversion. The Controlling Partnership’s common unit price may decline due to the large number of common units eligible for future sale and for exchange. In connection with a U.S. listing, the Controlling Partnership and KKR Holdings will enter into an exchange agreement pursuant to which KKR Holdings and certain of the transferees of its KKR Group Partnership Units may, up to four times each year, effectively exchange KKR Group Partnership Units held 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 Controlling Partnership may issue additional Controlling Partnership units pursuant to its Controlling Partnership Equity Incentive Plan. The total number of Controlling Partnership units which may initially be issued under the Controlling Partnership Equity Incentive Plan is equivalent to 15% of the number of fully diluted Controlling Partnership units outstanding as of the effective date of the plan, less the number of awards made pursuant to the 2009 Equity Incentive Plan. See ‘‘U.S. Listing—Controlling Partnership Equity Incentive Plan’’. The amount may be increased each year to the extent that KKR issues additional equity. The market price of Controlling Partnership units could decline as a result of the exchange or the perception that an exchange may occur of a large number of KKR Group Partnership units for Controlling Partnership units. These exchanges, or the possibility that these exchanges may occur, also might make it more difficult for holders of Controlling Partnership units to sell Controlling Partnership 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 the aggregate are expected to constitute substantially all of the cash earnings of its asset management business each year in excess of amounts determined by the KKR Managing Partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and 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 is expected to consist of (i) its fee related earnings after deducting non-cash items and certain other adjustments and (ii) all carry distributions received from its funds which have not been allocated as part of its carry pool as described under ‘‘Orgaizational Structure.’’ KKR’s distribution policy reflects its belief that distributing substantially all of the cash earnings of its asset management business will provide transparency for holders of its interests and impose on KKR an investment discipline with respect to the businesses and strategies that it pursues. Assuming the effective date of the Combination Transaction is October 1, 2009, KKR expects that its first quarterly distribution will be paid in the first quarter of 2010 in respect of the period from October 1, 2009 through December 31, 2009. Because KPE will make its investment in KKR through a holding company structure and the applicable holding companies do not own any material cash-generating assets other than their direct and indirect holdings in KKR Group Partnership Units, distributions to you will be funded in the following manner: • First, the KKR Group Partnerships will make distributions to holders of KKR Group Partnership Units, including the holding companies through which KPE invests, in proportion to their percentage interests in the KKR Group Partnerships; • Second, the holding companies through which KPE invests will distribute to KPE the amount of any distributions that they receive from the Group Partnership, after deducting any applicable taxes, and • Third, KPE will distribute to holders of KPE units the amount of any distributions that KPE receives from its holding companies through which it invests. The actual amount and timing of distributions will be subject to the discretion of the KKR Managing Partner’s board of directors, and there can be no assurance that distributions will be made as intended or at all. In particular, the amount and timing of distributions will depend upon a number of factors, including, among others, KKR’s available cash and current and anticipated cash needs, including funding of investment commitments and debt service and repayment obligations; general economic and business conditions; KKR’s strategic plans and prospects; KKR’s results of operations and financial condition; KKR’s capital requirements; legal, contractual and regulatory restrictions on the payment of distributions by KKR or its subsidiaries, including restrictions contained in its debt agreements, and such other factors as the board of directors of the KKR Managing Partner considers relevant. 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 Managing Partner determines that the taxable income of the relevant partnership will give rise to taxable income for its partners. The KKR Group Partnerships will make tax distributions only to the extent distributions from such partnerships for the relevant year was otherwise insufficient to cover such tax liabilities. Generally, these tax distributions will be computed based on an estimate of the net taxable income of the relevant partnership allocable to a partner multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual 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 received by 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 Partnership Units 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 withholding tax imposed on KKR. There can be no assurance that, for any particular KPE unitholder, such distributions 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 received significant distributions from its funds. In addition, KKR has historically made cash distributions to its senior 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 Discussion and Analysis of Financial Condition and Results of Operations Expenses—Employee Compensation and Benefits—Expense.’’ Prior to the completion of the Combination Transaction, the KKR Group is expected to make one or more cash and in-kind distributions to certain of its existing owners. Such distributions are expected to consist of substantially all available cash-on-hand, certain accrued receivables of its management companies and capital markets subsidiaries and certain personal property (consisting of non-operating assets) 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 management fees that are payable in respect of future periods, the after-tax amount of any management fees that may be required to be returned to investors before a carried interest may be paid and any other amounts that are necessary to provide the Combined Business with sufficient working 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 and accrued receivables of the management companies and the book value of such personal property at the time the Combination Transaction 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 with KKR & Co. L.P. and certain of its affiliates providing for the combination of the asset management business of KKR with the assets and liabilities of KPE. Upon completion of the Combination Transaction, KPE would beneficially own a 30% interest in the Combined Business, which would be held through Group Holdings. The remaining 70% interest in the Combined Business will be beneficially owned by KKR’s existing owners and will be accounted for in KKR’s consolidated financial statements as noncontrolling interests. KKR’s combined financial statements include the general partner of the KPE Investment Partnership, which has historically consolidated the KPE Investment Partnership as its primary beneficiary. In connection with the Combination Transaction, the KKR Group Partnerships 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 the Combination Transaction. Legal Requirements and Consent Solicitation The KPE partnership agreement provides that KKR may enter into and consummate a transaction with KPE provided that the terms of the transaction are permitted by and approved in accordance with the provisions of the memorandum and articles of association of KPE’s general partner. The memorandum 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 preapproved transactions) 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 KPE Board, 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 of KPE, may not take part in the management or control of the business and affairs of KPE. While not required 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 will be asked to consent to the Combination Transaction. The decision to voluntarily undertake a consent solicitation was made based on the extraordinary nature of the transaction. If unitholders holding at least a majority of the KPE units for which a properly submitted consent form is submitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates) consent to the Combination Transaction and the other conditions precedent in the amended and restated purchase and sale agreement are satisfied or waived, KKR and KPE will hold a closing of the Combination Transaction as soon as reasonably practicable thereafter. As of the record date for the consent solicitation, KKR or its affiliates controlled the consent rights with respect to approximately 3.8% of the KPE units. Trading of KPE units will continue on Euronext Amsterdam. The effective date of the Combination Transaction will be the first day following the end of the quarter during which the conditions to closing the Combination Transaction are satisfied or waived, and such date will be the effective date for financial and tax reporting purposes. If conditions 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 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. 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 for this purpose is considered to be at 5:30 p.m. (Amsterdam time), except that it is 5:00 p.m. (New York City time) for the holders of RDUs.

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KPE’s general partner expects to distribute this consent solicitation statement to KPE unitholders on 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 at 5:30 p.m. (Amsterdam time) on August 14, 2009, or such later date and time as mutually agreed by KKR and KPE. Please note that your broker or bank may require that you submit your consent instructions prior to the expiration of the consent solicitation period so that the broker or bank has sufficient time to execute your instructions on your behalf in advance of the expiration time. Since the determination of whether the required KPE unitholder consent is obtained is based only on these KPE units for which a properly submitted consent form is submitted, your failure to submit a consent form will not affect the outcome of this consent solicitation. In addition to soliciting consents by mail, KPE’s general partner and its officers, employees and agents may solicit consents in person, by telephone or otherwise. KPE also expects to request that brokers, banks and other nominees solicit consents from their principals, and KPE may be required to pay such brokers, banks and nominees certain expenses they incur for those activities. Innisfree M&A Incorporated, 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 unit held. The approval of the consummation of the Combination Transaction requires the consent of the holders of at least a majority of the KPE units on the record date 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 March 31, 2009, KPE had 204,902,226 units outstanding. KPE unitholders may revoke their 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 consent rights are controlled by KKR or its affiliates and by any person who has informed KPE in writing that it will not submit a consent) have been obtained to approve the consummation of the Combination Transaction. Based upon information available to KPE as of the date of this consent solicitation statement and the application of the standard in the immediately preceding sentence, KPE unitholders will not be able to revoke their consent after the consent of an aggregate of 90,357,886 KPE units approving the consummation of the Combination Transaction have been properly completed and properly submitted. The earlier of the (i) expiration time and (ii) the time that consents of more than 50% of the KPE units (excluding KPE units whose consent rights are controlled by KKR or its affiliates and by any person who has informed KPE in writing that it will not submit a consent) have been 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 has discussed the proposed Combination Transaction with certain KPE unitholders and, in connection with such discussions, certain KPE unitholders holding in aggregate approximately 44% of the KPE units have entered into agreements to deliver consents to consummate the Combination Transaction or advised KKR that they intend to support the Combination Transaction subject to the terms of the Combination Transaction conforming to the terms previously described to such unitholders. Neither the organizational documents of KPE nor applicable law entitle KPE unitholders to exercise 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-ended collective investment scheme. KPE has provided written notice regarding the Combination Transaction to the Guernsey Financial Services Commission, and must provide additional notices in the event of any further material changes with respect to KPE. KPE units are admitted to trading and listed on Euronext Amsterdam. As a result thereof, KPE is subject to Dutch securities laws and regulations and supervision by the Authority for the Financial Markets in the Netherlands. 60

Background of the Combination Transaction On July 3, 2007, KKR filed with the SEC a registration statement for a proposed initial public offering of KKR & Co. L.P. common units. The registration statement related to an aggregate amount of $1.25 billion of KKR & Co. L.P. common units and KKR expected to use the net proceeds from the offering to grow its business, to make additional capital commitments to its funds and portfolio companies, and for general corporate purposes. KKR filed two amendments to the registration statement in the second half of 2007 to update the financial information presented in the registration statement and to respond to comments from the staff of the SEC. KKR initially expected to complete the proposed offering during the fourth quarter of 2007. Beginning in late June 2007, the United States experienced considerable turbulence in the housing and sub-prime mortgage markets. Debt and equity markets came under pressure in the latter part of 2007 as concerns about an economic slowdown were factored into valuations. In addition, debt and equity underwriting declined meaningfully in the second half of 2007 and into 2008. In light of these factors, KKR, in consultation with its advisors, evaluated market conditions and alternative transaction structures. In the first half of 2008 KKR developed a proposal to combine its asset management business and the assets of KPE in an all-stock transaction. KKR believed the transaction would bolster KKR’s position as a leading global asset manager and more fully align KKR’s economic and strategic interests with those of KPE’s unitholders. The proposed transaction would also address concerns relating to the trading price of KPE’s units, which traded at a substantial discount to its NAV, and result 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 ‘‘KPE Board’’), Messrs. Kravis and Roberts presented an initial proposal from KKR to combine KKR’s asset management business with the assets of KPE in an all-stock transaction. In particular, under such proposal KKR would have acquired all of the assets of KPE and the consideration offered to the holders of units (including the holders of depositary units) of KPE would have consisted of 20% of the equity 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 would become publicly listed on the New York Stock Exchange. In addition, following completion of the proposed 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 proposed transaction and therefore, under the organizational documents of KPE’s general partner, the transaction would require the affirmative vote of a majority of the Independent Directors of the KPE Board (the ‘‘KPE Independent Directors’’). As a result, Messrs. Christopher Hill, Remmert Laan and G´ erard Lamarche, the then serving KPE Independent Directors, requested that the KPE Board grant the KPE Independent Directors the authority to retain one or more financial advisors and legal counsel to assist them in evaluating the proposed transaction. Following the June 12 meeting, the KPE Independent Directors formed a working group referred to as the KPE Independent Directors Steering Committee, which became a forum for regular coordination, updates and discussions among the KPE Independent Directors and their advisors with respect to the evaluation of the proposed transaction. The KPE Independent Directors decided to appoint 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 KPE Independent Directors gave consideration to their qualifications, their ability to render their services to the KPE Independent Directors and KPE independently of KKR and its affiliates, and their experience and expertise in the areas of business engaged in by KKR and KPE and in transactions of the type contemplated by the proposed transaction. The KPE Independent Directors decided to retain Citigroup Global Markets Limited, which is referred to as Citi, as sole financial advisor to KPE and Lazard Fr` eres & 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 Advisors were set by the KPE Independent Directors without interference by KKR, and the engagement of the KPE Advisors was subsequently unanimously approved by the full KPE Board. The KPE Independent Directors also established guidelines relating to their evaluation and decision-making process regarding the proposed transaction. The guidelines provided the KPE Independent Directors with the sole authority to, among other things: set up their own operating procedures (including participation in meetings, timing and pace of the decision-making process); select their advisors and determine the terms and conditions of such advisors’ engagement; negotiate, directly or through the KPE Advisors, the terms of the proposed transaction for and on behalf of KPE; and recommend that the KPE Board approve or decline to approve the proposed transaction or approve it conditional upon certain amendments to its terms. The guidelines were unanimously approved by the full KPE Board. Concurrently with the review and discussions regarding the proposed transaction, on or about June 20, 2008, KPE and one of KKR’s affiliates executed a confidentiality agreement and additional confidentiality agreements were executed with the various KPE Advisors. Following the execution of these confidentiality agreements, the KPE Advisors, on behalf of KPE, commenced their review of the KKR business. During the period from June 20, 2008 through July 27, 2008, the KPE Advisors held numerous conversations with the advisors of KKR regarding the proposed transaction and KKR’s business and they negotiated certain terms of the proposed transaction with KKR and its advisors. The KPE Advisors reported regularly to the KPE Independent Directors and discussed their findings, the progress of their analysis and related issues among each other and with the KPE Independent Directors on 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 Independent Directors 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 of KKR & Co. L.P. common units by providing for the delivery of between 0% and 6% of additional equity in the Combined Business (or the equivalent amount of cash) on the third anniversary of the closing date in certain circumstances. On July 13, 2008, KKR submitted an additional revision to the proposal, which provided that the consideration offered would be increased from 20% to 21% of KKR’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 the KPE Independent Directors, unanimously approved the execution, delivery and performance of, and the consummation of the proposed transaction. Following the KPE Board meeting, KKR and KPE executed 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 its general partner in exchange for a 21% equity interest in the Combined Business and contingent value interests, (ii) the 21% equity interest would be represented by limited partnership units distributed to KPE unitholders and listed on the New York Stock Exchange and (iii) KPE would be dissolved and delisted from Euronext Amsterdam (the ‘‘2008 proposal’’). In the second half of 2008, world markets and economies rapidly deteriorated, leading to among the worst full-year market and economic performance levels experienced since the 1930s. Equity markets across North America, Europe and Asia declined significantly, with a broad-based sell-off across a wide range of regions and sectors. In the United States, a GDP decline in the fourth quarter of 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 further pressured already stressed market pricing. Taking into account the impact of the dramatic changes in the financial world and markets since July 2008, during this period and continuing into 2009, KKR and the KPE Independent Directors engaged 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 Independent Directors requested additional due diligence to review the then current condition of KKR in order to permit the KPE Independent Directors to continue their evaluation of the advisability of the 2008 proposal in light of financial and market conditions. The KPE Independent Directors also requested an analysis of KPE’s liquidity situation for the upcoming years under various stress situations, as well as an evaluation of sources of additional liquidity. The KPE Independent Directors reviewed this analysis with Citi and Lazard. Continuing into 2009, the KPE Independent Directors, in consultation with Citi and Lazard, requested additional refinements of this analysis. On January 12, 2009, KPE announced that Mr. Lamarche had resigned from the KPE Board for personal reasons, and on June 19, 2009, KPE announced that Mr. Dieter Rampl had joined the KPE Board, as a KPE Independent Director. As part of KKR’s and the KPE Independent Directors’ ongoing evaluation, in March 2009, KKR and the financial advisors of the KPE Independent Directors surveyed certain large unitholders to assess their views on the 2008 proposal. KKR and the KPE Independent Directors’ financial advisors did not find strong support for the 2008 proposal. In light of market conditions and the response from unitholders, on April 24, 2009, KPE and KKR announced that they had extended to August 31, 2009 from April 27, 2009 the date by which the pending acquisition of all of the assets and liabilities of KPE by KKR was required to be completed before 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 discussions and negotiations with certain KPE unitholders about the state of its business and that of KPE and the current interest level of those unitholders in a combination transaction. On May 31, 2009, in advance of those discussions, KKR publicly released an updated presentation regarding its business and thereafter held discussions with certain KPE unitholders. During those discussions, the KPE unitholders suggested that under certain circumstances they would consider consenting to a combination transaction. In June 2009, after informing the KPE Independent Directors of these discussions, KKR proposed to such unitholders on a confidential basis a revised transaction pursuant to which the consideration offered to KPE would consist of 27% of the equity interests in the combined business of KKR and KPE, with no CVI, and 40% of the carried interest from the combined business would be allocated to KKR’s carry pool. Certain unitholders negotiated with KKR to increase the percentage of equity interests to be offered to KPE. In connection with these discussions, the KPE unitholders agreed to keep these discussions and the revised proposal confidential and not to trade their KPE units until the revised proposal 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 was publicly announced on the same day. Under the terms of the 2009 proposal, as compared to the 2008 proposal, 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 from 21% to 30% and the CVIs would be eliminated. KKR executives would retain the remainder of the equity and approximately 40% of the carried interest from the Combined Business would be allocated to KKR’s carry pool. In addition, under the 2009 proposal, KPE would retain its listing on Euronext Amsterdam 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 NASDAQ Stock Market after the passage of a specified time period. KKR informed the KPE Independent Directors that, based on its discussions and negotiations, holders of approximately 44% of KPE’s outstanding 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 the date by which the pending acquisition of all of the assets and liabilities of KPE by KKR was required to be completed before either party may, subject to certain conditions, terminate the 2008 purchase and sale agreement, and KPE consented to the submission by KKR to the SEC of an application requesting the 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 full KPE Board in connection with the 2008 proposal, from June 23, 2009 through July 19, 2009, the KPE Independent Directors met regularly among themselves and with the KPE Advisors to evaluate and discuss the financial and other terms of the 2009 proposal and the structure of the combined entity following the consummation of the Combination Transaction, both in the context of the KPE Independent Directors Steering Committee and through various additional meetings, communications and discussions on specific topics. During this period, the KPE Advisors updated their due diligence review of the KKR business which they had conducted in connection with the evaluation by the KPE Independent Directors of the 2008 proposal. During this same period, the KPE Independent Directors met with the KPE financial advisors, Citi and Lazard, on numerous occasions to receive financial advice. On July 8, 2009, representatives of KKR presented to the KPE Independent Directors and representatives 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, circulated an initial draft of the amended and restated purchase and sale agreement for the Combination Transaction, which was then followed by the initial drafts of the forms of ancillary agreements and other 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 the amended and restated purchase and sale agreement and the various other agreements and documents relating to the structure of the combined group following the consummation of the 2009 proposal and the potential future U.S. listing. During the week of July 13, KKR provided the KPE Independent Directors and KPE legal advisors with copies of agreements with, or other written indication from, various KPE unitholders representing 44% of the outstanding units stating an intention to execute consents in favor of, or otherwise support, the 2009 proposal. On July 19, 2009, KKR submitted to the KPE Independent Directors a revised version of the amended and restated purchase and sale agreement and its various exhibits, which reflected extensive discussions with the KPE Advisors. On July 19, 2009, the KPE Independent Directors met to consider the 2009 proposal as set forth in 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 respective oral opinions, confirmed by the delivery of their respective written opinions, that as of July 19, 2009 and based upon and subject to the assumptions made, matters considered and limitations on the scope of review undertaken by each of them, the consideration to be received by KPE in the transaction was fair, from a financial point of view, to KPE. See ‘‘—Opinions of Financial Advisors.’’ Bredin Prat and Cravath, Swaine & Moore LLP also delivered a presentation with respect to (i) the process followed by and 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 the amended and restated purchase and sale agreement until the completion of the Combination Transaction. The KPE Independent Directors unanimously recommended to the Board that the Board approve the 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 unanimously recommended to the Board that the Board recommend that the unitholders of KPE consent to the consummation of the transactions contemplated by the amended and restated purchase and sale agreement. 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, unanimously approved the execution, delivery and performance of, and the consummation of the transactions contemplated 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 purchase and 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, its conclusion that the transaction will benefit KPE unitholders over the long term. The Combination Transaction provides KPE unitholders with a new opportunity to participate in all the economic benefits of KKR’s business, as compared to only participating in the capital appreciation of certain investments, and will allow KKR’s owners and KPE unitholders to share in attractive growth opportunities. The Combination Transaction will more fully align the interests of KKR’s owners and KPE unitholders as they all will own the equity in the same business and share in the same income streams. KPE will gain broad exposure to all of KKR’s activities and will no longer bear the expense of fees and carry on their investments, which are currently paid out of KPE’s assets. In addition, KKR believes that combining its business with the assets of KPE, while retaining a stock exchange listing and a potential listing on the New York Stock Exchange or The NASDAQ Stock Market, 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 and other stakeholders. By combining the capabilities and brand with those of acquired companies, KKR believes that it will be well positioned to create significant value for its investors and other stakeholders. Becoming a public entity will provide KKR with a currency that it may use to pursue attractive opportunities, including acquisitions, as they arise. KPE Reasons for the Combination Transaction In evaluating the Combination Transaction and in the course of reaching these decisions, the KPE Independent Directors consulted with the KPE Advisors and considered a variety of factors that they believed supported their decisions, including the factors described below. In light of the number and variety of factors considered in connection with their evaluation of the Combination Transaction, the KPE Independent Directors did not consider it practicable or possible, and did not attempt, to quantify or otherwise assign relative weights to the specific factors that they considered in reaching their determination. Rather, the KPE Independent Directors viewed their evaluation as being based on the totality of the information and the factors presented to and considered by them and the analyses and the 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 rather includes the principal factors considered by the KPE Independent Directors. Certain information included in the following discussion is forward-looking in nature and, therefore, should be read in light of the factors discussed under ‘‘Cautionary Note Regarding Forward-Looking Statements.’’ 65

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 received by KPE, consisting of equity interests representing 30% of the Combined Business, upon completion of the Combination Transaction; • their familiarity with the business, management, operations, financial condition, business strategy and prospects of KKR, as well as the risks involved in achieving those prospects, legislative risks and 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 Independent Directors and to the KPE Board of Directors on July 19, 2009, to the effect that, as of the date of such opinion and based upon and subject to the assumptions made, the matters considered and the limitations on the scope of the review undertaken by Citi as set forth in Citi’s written opinion, the consideration to be received by KPE in the Combination Transaction is fair, from a financial point of view, to KPE; • the presentation by Lazard, as well as the written opinion of Lazard, delivered to the KPE Independent Directors on July 19, 2009, to the effect that, as of the date of such opinion and based upon and subject to the assumptions made, the matters considered and the limitations on the scope of the review undertaken by Lazard as set forth in Lazard’s written opinion, the consideration to be received by KPE in the Combination Transaction is fair, from a financial point of view, to KPE; • their expectation that, following the consummation of the Combination Transaction, the economic and strategic interests of KKR will be more fully aligned with those of the KPE unitholders 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 directly participate in all of the economics and resources of KKR’s business, including by receiving a share of the income streams (including fees and a percentage of the carry) generated by such business and, unlike KPE’s current returns, the returns on the investments made by KKR will not 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 by KKR for the 2009 proposal, including the copies of agreements with, or other written indications from, various KPE unitholders representing 44% of the outstanding units stating an intention to execute consents in favor of or otherwise support the Combination Transaction; • the apparent lack of strong support for the 2008 proposal among certain large unitholders of KPE; • the fact that the financial terms of the Combination Transaction were improved as a result of KKR’s discussions and negotiations with unitholders; • the fact that the percentage of future carried interest allocated to KKR’s principals and other professionals cannot exceed 40% without the consent of a majority of the KPE Independent Directors prior to the closing of a U.S. listing, and without the approval of a majority of the independent 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 restated purchase and sale agreement is likely to be obtained promptly, as a result of which the Combination 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 stand alone strategy in light of current global financial and economic conditions, the market outlook for KPE and KPE’s prospects; • the unfavorable market reaction to the inclusion of the CVIs included as part of the 2008 proposal; • their belief that the Combination Transaction would address potential liquidity issues that KPE might otherwise experience on a stand alone basis; • their expectation that, while currently KPE principally benefits only from KKR’s private equity business, following the completion of the Combination Transaction, KPE will benefit from KKR’s increasingly diversified asset management business, which comprises the private equity business 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 and that KPE will therefore continue to participate in the future returns of the existing and future investments of the KPE Investment Partnership; • their expectation that growth opportunities will arise for KPE from KKR’s expansion into new lines of business, such as the contemplated development of infrastructure and mezzanine funds, managed accounts and KKR’s capital markets business, which opportunities would not have otherwise been available to KPE; • KKR’s intention to make regular distributions of cash earnings related to its asset management business, in comparison to KPE, which currently only makes cash distributions in an amount generally expected to be sufficient to permit KPE unitholders in the United States to fund their estimated 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 consummation of the Combination Transaction, including: • the fact that, consistent with the procedures implemented in connection with the 2008 proposal and in accordance with the authority then granted by the KPE Board, the KPE Independent Directors continued to follow their own process for evaluating the Combination Transaction and to have the sole authority to negotiate for and on behalf of KPE 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 assistance from their own separate financial and legal advisors; • the fact that the KPE Independent Directors had ultimate authority to recommend to the KPE 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 Directors as independent of KKR and qualified to provide fairness opinions on the Combination Transaction, that the KPE Independent Directors are of the opinion that the terms of the Combination Transaction are not likely to result in any material prejudice to the KPE unitholders and that, therefore, the Combination Transaction meets the arm’s length requirement of the Guernsey Authorised Closed-Ended Investment Scheme Rules 2008; • the fact that other than customary fees payable to the KPE Independent Directors (that were not contingent on the KPE Independent Directors recommendation of the Combination Transaction), the KPE Independent Directors will not receive any consideration in connection with the Combination Transaction; and

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• the fact that the completion of the Combination Transaction is conditioned upon the affirmative consent to the Combination Transaction of KPE unitholders representing at least a 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 consent rights 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 Combination Transaction, each of KKR and KPE will have the ability to seek a listing of KPE’s equity interests in the Combined Business on the New York Stock Exchange or The NASDAQ Stock Market, and the belief that, following a U.S. listing, KPE unitholders would benefit from increased liquidity; and • KKR’s proposed governance arrangements for the entities comprising the Combined Business and the resulting protections afforded to KPE, as a unitholder of KKR, which arose in part from negotiations among the KPE Independent Directors and their legal advisors and KKR and its legal 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, KKR is not permitted to (i) enter into any amendment to certain significant agreements governing 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 a materially disproportional impact on KPE or (ii) subject to specified exceptions, enter into any related-party transactions that involve more than $20 million or would dilute KPE’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 Partner would be comprised of a majority of directors who meet the independence standards for service on a board of directors pursuant to the Exchange Act and the applicable listing standards of the New York Stock Exchange or The NASDAQ Stock Market, as applicable, as well as Messrs. Kravis and Roberts. The KPE Independent Directors also considered a number of uncertainties, risks and other potentially negative factors associated with the Combination Transaction, including: • the fact that, with respect to KKR’s active and future funds and co-investment vehicles that provide for carried interest in the Combined Business, under the terms of the 2008 proposal all of such carried interest earned in relation to these funds would have been allocated pro rata to the equity holders in the Combined Business, while under the terms of the Combination Transaction KKR intends to allocate to its principals and other professionals up to 40% of such carried interest and the remainder of the carried interest pro rata to the equity holders in the Combined Business, which percentage may, prior to a U.S. Listing, be increased only with the approval of a majority of the KPE Independent Directors and may, after the U.S. Listing, be increased only with the approval of the majority of the independent directors of the KKR Managing Partner; • the fact that difficult market conditions, including access to capital and financing, have negatively impacted KKR’s net income, cash flow, liquidity and financial condition and could continue to do so; • the fact that recent disruption in the credit, financial and stock markets have resulted in uncertainty 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 to provide earnings guidance, which may increase the volatility of the trading price of KPE’s common units following the Combination Transaction; • the fact that KKR’s intermediate holding company will indirectly hold, among other things, an interest in KKR’s fee operating business and will be taxed as a corporation under U.S. federal income 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 affirmative consent to the Combination Transaction of KPE unitholders representing at least a majority of the KPE units for which a properly submitted consent form is submitted, in comparison to the 2008 proposal, which was conditioned upon the affirmative consent of KPE unitholders representing at least a majority of all outstanding KPE units, in both cases, excluding from both the numerator and the denominator the common units whose consent rights are controlled by KKR or its affiliates and the fact that unitholder consents will cease to be revocable and the requisite unitholder consent will be deemed to have been received upon the receipt of the consent of the holders of at least a majority of all outstanding KPE units, excluding from both the numerator and the denominator the common units whose consent rights are controlled by KKR or its affiliates and any common units whose consent rights are controlled by a person who has informed KPE in writing that it will not submit a consent form in response to this consent solicitation; • the fact that as a result of the Combination Transaction, the interests held by the KPE unitholders would be transferred from a business investing in assets to a business that is also engaged in asset management; • the fact that, unlike the 2008 proposal, the equity interests in the Combined Business issued to KPE will not be listed in the U.S. immediately after the completion of the combination of KPE’s assets and KKR’s asset management business; • the fact that KPE unitholders will have no right to demand appraisal of the fair value of their KPE units under Guernsey, Dutch or any other law, even if they do not consent to the Combination Transaction; • the fact that KPE is not a party to the arrangements pursuant to which the interests in KKR Holdings held by KKR’s principals will be subject to vesting and transfer restrictions and accordingly, 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 corporate level tax; • the risk of pending legislation in the United States and the European Union that might result in KKR becoming subjected to increased and more burdensome regulation in a number of areas affecting KKR’s business and organization; • the fact that, because the conditions to the completion of the Combination Transaction will be deemed to be irrevocably satisfied or waived on the first date on which all of the conditions set forth in the amended and restated purchase and sale agreement have been satisfied or waived though the effectiveness of the Combination Transaction is not expected to occur until October 1, 2009, the closing of the Combination Transaction may occur despite the occurrence of certain events subsequent to the satisfaction date which otherwise would have resulted in the failure of the conditions set forth in the amended and restated purchase and sale agreement to be satisfied;

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• the risk that the Combined Business may be responsible for a portion of the clawback obligations and net loss sharing amounts in respect of past carried interest paid to KKR’s principals and other professionals; • the risk that the Combination Transaction may not be tax free for KPE unitholders in jurisdictions other than the United States; • the fact that KPE’s unitholders will not control the KKR Managing Partner or vote to elect or remove its directors; • the fact that the KKR Managing Partner and its affiliates have only limited fiduciary responsibilities, which may permit them to favor their own interests to the detriment of KPE and its 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 and sale agreement, the KPE Independent Directors considered the fact that Citi and Lazard have not committed to update their respective opinions with respect to the 2009 proposal to take into account circumstances or events occurring after the date on which those opinions were issued. In recommending the Combination Transaction, the KPE Independent Directors believed that the potential uncertainties, risks and other potentially negative factors mentioned above were offset by the potential benefits that the KPE Independent Directors expect the KPE unitholders to receive as a result 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 sole financial 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 that Citi evaluate the fairness, from a financial point of view, to KPE of a number of common units representing limited partnership interests of Group Holdings to be received in the Combination Transaction (collectively referred to as, the ‘‘Consideration’’). On July 19, 2009, at a meeting of the KPE Independent Directors, Citi rendered an oral opinion, which was confirmed by delivery of a written opinion dated the same date, to the effect that, as of such date and based upon and subject to the assumptions made, matters considered and limitations on the scope of review undertaken by Citi as set 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 this consent solicitation statement as Appendix C and is incorporated herein by reference. You are urged to read Citi’s opinion carefully and in its entirety. Citi’s opinion was provided to the KPE Board and the KPE Independent Directors in connection with their evaluation, from a financial point of view, of the Consideration to be received by KPE in the Combination Transaction. Citi’s opinion does not address the underlying business decision of KPE to effect the Combination Transaction, the relative merits of the Combination Transaction as compared to any alternative business strategies that might exist for KPE or the effect of any other transaction in which KPE might engage (including the transaction contemplated by the previous purchase and sale agreement, dated as of July 27, 2008, by and among KPE and the other parties thereto) and does not constitute a recommendation to any holder of KPE units as to how such holder of KPE units should consent to, or how such holder of KPE units should act on, any matters relating to the proposed Combination Transaction. Citi did not express any opinion 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 or into 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 advisory services in connection with the Combination Transaction an aggregate fee of $12 million, a significant portion of which is payable upon consummation of the Combination Transaction. KPE also has agreed to reimburse Citi for reasonable travel and other transaction-related expenses incurred by Citi in performing its services, including reasonable fees and out-of-pocket expenses of Citi’s outside legal counsel, and to indemnify Citi and related persons against liabilities, including liabilities under the federal securities laws, arising out of its engagement (other than liabilities finally judicially determined to result from the bad faith or gross negligence of Citi or such persons); provided, however, that the maximum amount of fees of Citi’s outside counsel (other than with respect to indemnification) to be reimbursed by KPE shall be A200,000. Citi and its affiliates in the past have provided, and currently provide, services to KPE and KKR unrelated to the Combination Transaction, for which services Citi and such affiliates have received and expect to receive compensation. These services include (i) providing extensive financial advisory, capital markets and lending services to KKR, its affiliates or its portfolio companies in various transactions and proposed transactions, (ii) acting as joint global coordinator and bookrunner for KPE’s initial public offering in 2006, (iii) acting as lead arranger on a $1 billion revolving credit facility for KPE in 2007 and (iv) having a role in relation to KKR’s filed and now withdrawn initial public offering in 2007, and KKR has informed Citi that it would have a role in any future initial public offering of KKR in the event that the Combination Transaction does not occur. In addition, in the event of a primary offering by Group Holdings following consummation of the Combination Transaction, KKR has indicated to Citi that it may have a role in such offering. In addition, Citi and its affiliates have provided services to portfolio companies of KKR and KPE, for which they have received compensation. In the ordinary course of its business, Citi and its affiliates may actively trade or hold the securities of KPE and KKR or 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 their respective affiliates. The KPE Independent Directors selected Citi to provide certain financial advisory services in connection with the Combination Transaction (i) based on Citi’s familiarity with and knowledge of KKR’s business and structure resulting, in particular, from Citi’s role in relation to the filed and now withdrawn initial public offering of KKR in 2007, and (ii) in light of Citi’s undertakings in its engagement letter with KPE that (x) its past and existing relationships with KKR and its affiliates would not preclude Citi from acting independently of KKR and its affiliates and in the best interest of KPE and the KPE Independent Directors in rendering its services for the purposes of the Combination Transaction, (y) in preparing and rendering any work product in connection with the KPE Independent Directors’ role in recommending the key terms for the Combination Transaction, Citi would act in the best interests of KPE and the KPE Independent Directors and would act independently of and will not be influenced by KKR or any of its affiliates, and (z) during the term of its engagement, without the consent of the KPE Independent Directors, Citi would not provide M&A advisory services or new debt or equity financing services to KKR in connection with the Combination Transaction or any other similar extraordinary transaction involving a combination of the businesses of KPE and KKR, and Citi would not accept any fees in respect of such matters from KKR or any of its affiliates except, for the avoidance of doubt, for any reimbursement of expenses incurred in connection with the filed and withdrawn initial public offering of KKR in 2007. Citi is an internationally recognized investment banking firm engaged in, among other things, the valuation 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 and unlisted securities, private placements and valuations for estate, corporate and other purposes. Opinion of Lazard Fr`eres & Co. LLC KPE (acting through its general partner, KKR Guernsey GP Limited) retained Lazard to perform financial advisory services for the KPE Independent Directors in connection with the Combination Transaction and, if requested, to render an opinion to the KPE Independent Directors as to the fairness, from a financial point of view, to KPE of a number of common units representing limited partnership 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 Directors received an oral opinion from Lazard, which oral opinion was subsequently confirmed by delivery of a written opinion dated the same date, to the effect that, as of the date of its opinion and subject to the assumptions made, matters considered and limitations on the scope of review undertaken by Lazard as set forth in its opinion, the Consideration to be paid in the Combination Transaction was fair, from a financial point of view, to KPE. The full text of the Lazard opinion is attached as Appendix D to this consent solicitation statement and is incorporated herein by reference. The description of the Lazard opinion set forth in this consent solicitation statement is qualified in its entirety by reference to the full text of the Lazard opinion set forth as Appendix D. You are urged to read the Lazard opinion in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Lazard in connection with the opinion. We encourage you to read 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 to any other transaction or business strategy in which KPE might engage (including the transaction contemplated by the previous purchase and sale agreement, dated July 27, 2008 (the ‘‘previous purchase and sale agreement’’), among KPE and the other parties thereto) or the merits of the underlying decision by KPE to engage in the Combination Transaction, and is not intended to and does not constitute a recommendation to any holder of KPE units as to whether such holder of KPE units should consent to, or how such holder of KPE units should act with respect to, the Combination Transaction 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 Lazard as of, the date of the Lazard opinion. In particular, Lazard notes that the recent unusual volatility and values in the credit, financial and stock markets have resulted in uncertainty regarding the long-term outlook for alternative asset managers and private equity vehicles such that traditional long-term valuation perspectives are currently of less relevance. Lazard assumes no responsibility for updating or revising 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 any time or as to the price at which the Group Holdings units (or any instruments for or into which such units may be exchanged or converted) may trade at any time. Lazard’s opinion and financial analyses were not the only factors considered by the KPE Independent Directors in their evaluation of the Combination Transaction and should not be viewed as determinative 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 the previous purchase and sale agreement and has agreed to pay to Lazard a fee of $5 million, which amount will become payable upon the consummation of the Combination Transaction, in connection with 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 expenses incurred in connection with Lazard’s engagement, including with respect to travel costs and fees of outside legal counsel, and to indemnify Lazard and related parties against liabilities, including liabilities under the federal securities laws, arising out of its engagement (other than liabilities finally judicially determined 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 with respect to such indemnification) to be reimbursed by KPE shall not exceed A100,000 without the consent (which shall not be unreasonably withheld) of the KPE Independent Directors. The KPE Independent Directors selected Lazard to provide certain financial advisory services to the 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 of interest that it has with respect to its engagement, and (y) did not believe that its past and existing relationships with KKR and its affiliates would impact the ability of Lazard to act or preclude Lazard from acting independently of KKR and its affiliates (other than KPE) in rendering its services to the KPE 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 a potential transaction acquiring all or a part of KPE, nor has Lazard participated in negotiation of the terms of the Combination Transaction. Lazard in the past has provided, is currently providing and in the future may provide financial advisory, capital markets, and investment banking services to KKR and its affiliates unrelated to the Combination Transaction for which it has received and may receive compensation, including, without limitation, (i) acting as financial advisor to Rockwood in its sale of Groupe Novasep, (ii) acting as financial advisor to TDC in its sale of Bit´ e Lietuva, (iii) acting as financial advisor to the steering committee of the secured creditors in connection with Masonite International Inc.’s Chapter 11 proceedings, (iv) acting as financial advisor to Jazz Pharmaceuticals Inc. and acting as placement agent in connection with an offering of its common stock, and (v) acting as financial advisor to Capmark Financial Group Inc. regarding debt and capital structure matters. Lazard and its affiliates have provided 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 LFCM Holdings LLC (an entity indirectly owned in large part by managing directors of Lazard Fr` eres & Co. LLC) may actively trade securities of KPE, KKR or their respective affiliates for their own accounts and for the accounts of their customers and, accordingly, may at any time hold a long or short position in such securities. The issuance of Lazard’s opinion was approved by Lazard’s opinion committee. Lazard is an internationally recognized investment banking firm and is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, leveraged buyouts, 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 KPE Board approve the execution, delivery and performance of the amended and restated purchase and sale agreement and the consummation of the transactions contemplated thereby. Taking into account this recommendation, the KPE Board unanimously approved the entry into the amended and restated purchase 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 and restated purchase and sale agreement. The following summary is qualified in its entirety by reference to the 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 consent solicitation statement and is incorporated herein by reference in order to provide you with information regarding 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 purchase and sale agreement were made only for purposes of the amended and restated purchase and sale agreement and as of specific dates and may be subject to more recent developments, were solely for the benefit of the parties to the amended and restated purchase and sale agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating risk between the parties to the amended and restated purchase and sale agreement instead of establishing these matters as facts, and may apply standards of materiality in a way that is different 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 as characterizations of the actual state of facts or condition of KKR or KPE or any of KKR or its respective subsidiaries or affiliates. KKR expects to complete the Combination Transaction on October 1, 2009, if KPE has received the consent of KPE unitholders holding at least a majority of the KPE units for which a properly submitted consent form is submitted (excluding from the numerator and denominator KPE units whose consent rights are controlled by KKR and its affiliates) and all other conditions to the completion of the Combination Transaction have been satisfied or waived. The requisite unitholder consent will be deemed to be obtained, and the condition relating thereto will be deemed to be satisfied, if the consent of holders of at least a majority of the KPE units outstanding (excluding from the numerator and the denominator any KPE units whose consent rights are controlled by KKR or its affiliates and any KPE units whose consent rights are controlled as of the applicable record date by a person who has informed 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 be irrevocably satisfied or waived on the first date on which all of the conditions set forth in the amended and restated purchase and sale agreement have been satisfied or waived, which is referred to as the satisfaction date; provided that in no event will the satisfaction date be prior to August 14, 2009 unless the Controlling Partnership has consented to an earlier satisfaction date. The transfer of assets and assumption of liabilities contemplated by the amended and restated purchase and sale agreement will not be effected until 12:01 am Eastern Time, on October 1, 2009 or, in the event the satisfaction date has not occurred on or prior to October 1, 2009, 12:01 am Eastern Time on the first day of KKR’s fiscal quarter immediately succeeding the fiscal quarter in which the satisfaction date occurs which is referred to as the effective time (provided that in the event that the Controlling Partnership and KKR Holdings have not performed certain of their obligations under the amended and restated purchase and sale agreement during the period from the satisfaction date to the effective time in the manner required by the amended and restated purchase and sale agreement, the effective time will not occur without the consent of KPE). Therefore, notwithstanding the occurrence of the satisfaction date, the beneficial 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 the assets, 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 or waiver 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 form is properly submitted (excluding from the numerator and the denominator the KPE units whose consent rights are controlled by KKR or its affiliates) shall have consented to the Combination Transaction 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 or commission or other governmental authority or instrumentality, legislative body or self-regulatory organization of competent jurisdiction, which is referred to together as a governmental entity, or other legal restraint or prohibition preventing the consummation of the Combination Transaction shall be in effect; and • no law, statute, rule, ordinance or regulation shall have been enacted, entered, promulgated or enforced by any governmental entity that prohibits or makes illegal the consummation of the Combination Transaction. Additional Conditions to KKR’s Obligations The obligation of the Controlling Partnership and its affiliates to complete the Combination Transaction is also subject to the satisfaction or waiver on the satisfaction date of the following additional conditions: • the representations and warranties of KPE set forth in the amended and restated purchase and sale agreement must be true and correct as of the date of the amended and restated purchase and sale agreement and (except to the extent such representations and warranties are expressly limited 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 a material adverse effect on the KPE Investment Partnership; • KPE must have performed in all material respects all of its obligations required to be performed by it under the amended and 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 have been any effect, event, change, occurrence or development that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the KPE Investment Partnership; and • each of the investment agreement, the exchange agreement and the tax receivable agreement shall 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 or waiver on the satisfaction date of the following additional conditions: • the Controlling Partnership’s representation and warranties set forth in the amended and restated purchase and sale agreement relating to the accuracy and conformity to applicable legal requirements of the press release issued in connection with the announcement of the amended and restated purchase and sale agreement must be true and correct as of the date of the amended and restated purchase and sale agreement, except where the failure to be so true and correct, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on the holders of KPE units; • the Controlling Partnership’s other representations and warranties and the representations and warranties of KKR Holdings and Group Holdings set forth in the amended and restated purchase and sale agreement must be true and correct as of the date of the amended and restated purchase and sale agreement and (except to the extent such representations and warranties are expressly limited 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 a material adverse effect on Group Holdings (in the case of the Controlling Partnership’s and Group Holdings’ representations and warranties) or KKR Holdings (in the case of the representations and warranties of KKR Holdings), in each case after giving effect to the Reorganization Transactions, but in the case of Group Holdings, excluding the KPE Investment Partnership and its subsidiaries; • the Controlling Partnership, Group Holdings and KKR Holdings must each have performed in all material respects all of the obligations required to be performed by each under the amended and 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 have been any effect, event, change, occurrence or development that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the holders of KPE units; and • each of the investment agreement, the exchange agreement, the tax receivable agreement, the amended limited partnership agreement of Group Holdings, the amended limited partnership agreements for each of the KKR Group Partnerships and the lock-up agreements shall have been 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 ‘‘material adverse effect’’ means, with respect to any person (other than the holders of KPE units), a material adverse effect on the business, results of operations or financial condition of such person and any person (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’s funds), taken as a whole, and, with respect to the holders of KPE units, a material adverse effect on the overall economic value to be received as of the date of the amended and restated purchase and sale agreement by KPE as a result of the Combination Transaction, taken as a whole. For purposes of determining 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 material proportion of KPE units will be disregarded. In addition, in determining whether a material adverse effect 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; 76

• changes in the financial or securities markets generally, except to the extent the referenced person, taken as a whole, together with any person (other than the KPE Investment Partnership and its subsidiaries in the case of Group Holdings) whose financial results are consolidated with such person is materially disproportionately affected thereby as compared with other participants in 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 sale agreement; • the commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism; • 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 (other than the KPE Investment Partnership and its subsidiaries in the case of Group Holdings) whose financial results are consolidated with such person is materially disproportionately affected thereby as compared with other participants in the applicable industry or industries in which any such persons operate; • changes in law, rules, regulations, GAAP or interpretations thereof, except to the extent the referenced person, taken as a whole, together with any person (other than the KPE Investment Partnership and its subsidiaries in the case of Group Holdings) whose financial results are consolidated with such person is materially disproportionately affected thereby as compared with other 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 KPE that are directed by the Controlling Partnership or any of its affiliates including KPE’s general partner or KPE, acting through KPE’s general partner, except for such actions or omissions of KPE 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 identified above shall not include, and in determining whether a material adverse effect has occurred or would reasonably 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, 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 in the amended and restated purchase and sale agreement and summarized above are satisfied and to consummate the transactions contemplated by the amended and restated purchase and sale agreement as promptly as practicable. However, neither KKR nor KPE are required to take, or agree to take, any action if the taking of such action would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Group Holdings or KPE, as applicable. No Solicitations of Alternative Transactions The amended and restated purchase and sale agreement contains provisions prohibiting KPE from seeking 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 reasonably be expected to, facilitate the making by any person of an acquisition proposal, as described below, or any inquiry or proposal that could reasonably be expected to lead to an acquisition proposal;

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• participate in any discussions or negotiations regarding an acquisition proposal or any inquiry that 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 otherwise cooperate with or take any action to knowingly facilitate any proposal that constitutes or could reasonably be expected to lead to an acquisition proposal; or • enter into any letter of intent, memorandum of understanding or other agreement or understanding relating to, or that could reasonably be expected to lead to, an acquisition proposal. For purposes of the amended and restated purchase and sale agreement, the term ‘‘acquisition proposal’’ means any inquiry, proposal or offer, whether or not conditional, from any person other than the Controlling Partnership or its affiliates relating to any direct or indirect acquisition of (i) any interests 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 to the satisfaction date (or the effective time of the Combination Transaction in the case of the termination 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, award or decree or takes any other action permanently enjoining, restraining or otherwise prohibiting the Combination Transaction and such order, injunction, judgment, award, decree or other action shall have become final and non-appealable; however, the right to so terminate the agreement will not be available to a party who has not used its reasonable best efforts to cause such 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 properly submitted consent form is submitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates) to consummate the Combination Transaction is not obtained prior to the expiration of the consent solicitation (and the expiration date is not extended); however the right to so terminate the amended and restated purchase and sale agreement will not be available to any party whose failure to fulfill any of its obligations under the amended and restated purchase and sale agreement has been a principal cause of the failure of such consent to be obtained; • if the satisfaction date has not occurred on or before October 31, 2009; however, the right to so terminate the amended and restated purchase and sale agreement will not be available to a party whose failure to fulfill any of its obligations under the amended and restated purchase and sale agreement has been the cause of, or resulted in, the failure of the Combination Transaction to be completed by that date; or • subject to a cure right under certain circumstances, if any of the mutual conditions or any of the conditions to a party’s obligations to completion of the Combination Transaction become incapable of being satisfied on or before October 31, 2009; however, the right to so terminate the amended and restated purchase and sale agreement will not be available to any party that is then in breach of any representation, warranty, covenant or agreement that would cause any of the mutual conditions or any of the other party’s conditions to completion of the Combination Transaction 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 has agreed that, during the period from the date of the amended and restated purchase and sale agreement until the effective time of the Combination Transaction, except as expressly contemplated or permitted by 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, and will cause Group Holdings and each of the entities whose financial results will be consolidated with Group Holdings upon the consummation of the Reorganization Transactions (other than KKR’s consolidated funds and the KPE Investment Partnership), which is referred to as the consolidated persons, to conduct their respective businesses in all material respects in the usual, regular and ordinary course. In addition to the above agreements regarding the conduct of business generally, subject to certain exceptions, the Controlling Partnership has agreed to the following specific restrictions: • the Controlling Partnership shall not, and shall not permit any consolidated person to, amend its organizational documents in any manner that would adversely affect the holders of KPE units in any material respect; • the Controlling Partnership shall not, and shall not permit any consolidated person to, change accounting 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) to Group 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 its affiliates but only to the extent such grants do not, and will not, reduce the percentage of KPE’s direct or indirect ownership percentage of the KKR Group Partnerships to below 30% of the outstanding KKR Group Partnership Units, (C) issuances not involving securities of the Controlling Partnership or Group Holdings to third parties pursuant to an arms-length transaction, (D) issuances not involving securities of the Controlling Partnership or Group Holdings to persons who will hold a direct or indirect equity interest in KKR Holdings following the Reorganization Transactions so long as any equity interests so issued will constitute interests contributed to the Combined Business or (E) redemptions or repurchases of equity securities or interests or options, warrants or rights relating thereto or securities convertible into or exchangeable therefor from former or departing employees, members, partners, or consultants of any 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 a consolidated person; • the Controlling Partnership shall not, and shall not permit any consolidated person to, enter into a related party transaction as such term is defined in Item 404(a) of Regulation S-K under the Securities Act other than any such transaction the terms of which are no less favorable to the Controlling Partnership, or the consolidated person, as applicable, than those that would be available 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, enhanced severance, vesting acceleration or certain other benefits as a result of the Reorganization Transactions or any other compensation or benefits that are related to, contingent upon, or the value 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 any indebtedness for borrowed money or guarantee any such indebtedness; and • the Controlling Partnership shall not take, and shall not permit any consolidated person to commit or agree to take, any of the foregoing actions that the Controlling Partnership or such consolidated persons are prohibited from taking pursuant to the restrictions relating to the conduct of the Controlling Partnership’s business in the amended and restated purchase and sale agreement. Notwithstanding the foregoing, the Controlling Partnership and the consolidated persons are not prohibited or otherwise prevented from expanding their existing businesses or entering new lines of business in the asset management or financial services industries. Prior to the completion of the Combination Transaction, the KKR Group is expected to make one or 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) the preparation by KPE and the Controlling Partnership of this consent solicitation document, (ii) the Controlling Partnership using its reasonable best efforts to complete the Reorganization Transactions in the manner contemplated by the amended and restated purchase and sale agreement and (iii) the use by KKR Holdings of its reasonable best efforts to take, or cause to be taken, such actions as are necessary so that upon completion of the Combination Transaction, all of the interests in the KPE Investment 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 exchange for 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 an arms-length transaction shall not be deemed outstanding for the purposes of calculating Group Holdings’ 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 KPE Independent Directors may change their recommendation to the KPE Board in response to any material events or circumstances, if the KPE Independent Directors have concluded in good faith, after consultation with, and taking into account the advice of, their outside legal counsel, that had such material events or circumstances occurred and/or been known to the KPE Independent Directors prior to the date of the amended and restated purchase and sale agreement, the KPE Independent Directors would, in compliance with their fiduciary duties under applicable law, not have recommended, or would have modified the terms of their recommendation, to the KPE Board that the KPE Board approve the amended and restated purchase and sale agreement and the transactions contemplated by the amended and 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 if approved by all of the KPE Independent Directors. At any time prior to the completion of the Combination Transaction, each party may: • extend the time for the performance of any of the obligations or other acts of the other party provided 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 the amended and restated purchase and sale agreement or in any document delivered by the other party 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 the amended and restated purchase and sale agreement. Expenses All costs and expenses incurred in connection with the amended and restated purchase and sale agreement shall be paid by the party incurring such costs and expenses, except that, if the consummation of the Combination Transaction occurs, (i) all costs and expenses incurred by KPE or its general partner shall be paid by Group Holdings and (ii) all other costs and expenses incurred in connection with the amended and restated purchase and sale agreement shall be paid by one or more consolidated persons in which KPE directly or indirectly has a 30% economic interest (it being understood that KKR Group Partnership Units that are issued to third parties pursuant to an arm’s length transaction and any interests that allocate carried interest to KKR’s carry pool shall not be deemed 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 the date of the amended and restated purchase and sale agreement until the earlier of the effective time of the Combination Transaction and the termination of the amended and restated purchase and sale agreement, the KPE Independent Directors, acting based on the affirmative vote of a majority of the KPE Independent Directors, will be entitled to implement on behalf of KPE the transactions contemplated by the amended and restated purchase and sale agreement, to exercise the rights of KPE under the amended and restated purchase and sale agreement and to enforce the amended and restated purchase and sale agreement against the Controlling Partnership, Group Holdings or KKR Holdings. Representations and Warranties The amended and restated purchase and sale agreement contains representations and warranties made 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 and restated purchase and sale agreement between the parties and are subject to qualifications and limitations agreed by the parties in connection with negotiating the terms of the agreement. In addition, certain representations and warranties were made as of a specified date, may be subject to contractual standards of materiality different from what may be viewed as material to unitholders or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. The Controlling Partnership, Group Holdings, KKR Holdings and KPE have made representations and warranties in the amended and restated purchase and sale agreement relating to, among other things: • organization and similar organizational matters; • authorization of the amended and restated purchase and sale agreement and absence of conflicts; and • consents and approvals. In addition, the Controlling Partnership and Group Holdings have made representations and warranties in the amended and restated purchase and sale agreement relating to: • financial statements; 81

• 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 sale agreement will expire upon the closing of the Combination Transaction and none of such representations and warranties or any rights arising out of any breach thereof, will survive the closing of the Combination Transaction. Indemnification and Insurance The amended and restated purchase and sale agreement provides that, for a period of six years after completion of the Combination Transaction (or until such earlier time that comparable provisions of the investment agreement described below become effective), the KKR Group Partnerships will indemnify each present and former director and officer of the general 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 as directors or officers of the general partner of KPE or taken by them at the request of KPE or the general partner of KPE. In addition, the amended and restated purchase and sale agreement also provides that the KKR Group Partnerships will indemnify the Controlling Partnership, Group Holdings, KPE, each present and former director and officer 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 Independent Directors that is furnished by or on behalf of the KPE Independent Directors) to which any of them may become subject under the Securities Act, 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 alleged untrue statement of a material fact contained in this consent solicitation statement, the press release issued in connection with the execution of the amended and restated 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 transactions contemplated by the amended and restated purchase and sale agreement, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 82

The amended and restated purchase and sale agreement also provides that, from the effective time until the occurrence of the closing contemplated by the investment agreement described below, KPE shall maintain directors’ and officers’ liability insurance for the benefit of the directors and officers and former directors and officers of the general partner of KPE containing at least the same coverage as the 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 insurance coverage to $100 million and (ii) KPE shall not be permitted to expend annually in excess of an agreed upon cap of the premium currently paid by it, and if the annual premium exceeds that amount, then KPE 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 investment agreement. The following summary is qualified in its entirety by reference to the complete text of the form of investment agreement. It is a condition to the Combination Transaction that the parties enter into the investment agreement in substantially the form attached hereto as Appendix B, which is expected to occur on the satisfaction date. The form of investment agreement is incorporated by reference herein in order to provide you with information regarding 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 investment agreement are made only for purposes of the investment agreement and as of specific dates and may be subject to more recent developments, are solely for the benefit of the parties to the investment agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating risk between the parties to the investment agreement instead of establishing these matters as facts, and may apply standards of materiality in a way that is different 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 as characterizations of the actual state of facts or condition of KKR or KPE or any of KKR’s respective subsidiaries or affiliates. U.S. Listing The investment agreement provides that the Controlling Partnership and KPE each have the right to require that the other use its reasonable best efforts to cause KPE to contribute its units representing limited partner interests in Group Holdings to KKR in exchange for an equivalent number of Controlling Partnership units and, in connection therewith, the Controlling Partnership units received by 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 is permitted to deliver such notice at any time after 6 months following the date of the investment agreement, and KPE is permitted to deliver such notice at any time after 12 months following the date of the investment agreement. If an election notice is delivered, the Controlling Partnership will, after promptly advising and consulting with KPE, be entitled in its sole discretion to take any and all actions that it deems necessary or appropriate in order to effectuate the U.S. listing and any transactions ancillary thereto, including selecting the stock exchange on which to effect the U.S. listing and determining whether to appoint one or more dealer managers or information agents in connection therewith 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, the Controlling Partnership is required to prepare a registration statement on such form as the Controlling Partnership in consultation with its legal counsel shall determine to be appropriate under the Exchange Act and, if applicable, the Securities Act for the Controlling Partnership Units to be issued to, and distributed by, KPE pursuant to the investment agreement and to have the registration statement declared effective by the SEC as promptly as practicable. The investment agreement also contains a covenant that requires the Controlling Partnership and KPE to use their respective reasonable best efforts to complete the U.S. listing and the actions ancillary thereto in the manner contemplated by the investment agreement, provided that neither party is required to take any action if the taking of such action would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Controlling Partnership. Consent Rights From the date of the investment agreement until the closing of the U.S. listing (which is referred to 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 any amendment to certain agreements if in the Controlling Partnership’s reasonable judgment the entering into such amendment, is or will result in a conflict of interest or would have a materially disproportional impact on KPE or (ii) subject to specified exceptions, engage in certain related-party transactions. In addition, upon the Controlling Partnership’s request, the KPE Independent Directors are required to review any other transaction that the Controlling Partnership submits to them for the purposes of determining whether a conflict of interest exists with respect to such transaction and that such 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 in compliance with the respective organizational documents, such transaction will not be void or voidable as a result of any conflict of interest existing between the parties to such transaction and neither the Controlling Partnership nor any of its affiliates will have any liability to KPE, any affiliate thereof, or any person that has an equity interest in KPE, the Controlling Partnership or any of its affiliates as a result 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 the Controlling Partnership’s rights directly or through one or more entities controlled by the Controlling Partnership, 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 KPE Independent Directors will be required to approve certain related party transactions that involve an aggregate amount in excess of $20 million or would reduce the percentage of KPE’s direct or indirect equity interest in the KKR Group Partnerships, and (z) upon reasonable notice the Controlling Partnership has agreed to take, or cause to be taken, all actions necessary to provide the audit committee of the board of directors of the general partner of KPE or the KPE Independent Directors with access during normal business hours to the books, personnel, and records of the members of the Controlling Partnership and the consolidated persons, and any financial statements generated therefrom, 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 good faith with KPE to take such actions as may be reasonably necessary or advisable to comply with the financial 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 to effect the transactions contemplated by the investment agreement in a different manner in response to certain changes of law relating to tax or to permit the Controlling Partnership to be treated as a continuation of KPE for U.S. federal income tax purposes provided that no alteration may be made to the extent such alteration would reasonably be expected to have an adverse impact in more than an insignificant respect on KPE, the Controlling Partnership or the holders of KPE units, without the consent of KPE, which consent may not be unreasonably withheld or delayed. In addition, each of the Controlling 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 that holders of KPE units will recognize no income, gain or loss for U.S. federal income tax purposes provided that to the extent there is a change in law so that such transactions may not be effected as currently 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 use reasonable best efforts to effect the transactions in a manner that attempts to minimize the recognition of income or gain for U.S. federal income tax purposes except to the extent that (i) the transactions and resulting structure results in an adverse impact in more than an insignificant respect to the Controlling Partnership, its subsidiaries or KKR Holdings or (ii) the Controlling Partnership and KPE have agreed that there are other considerations that outweigh the recognition of income or gain for U.S. federal income tax purposes by the holders of KPE units. The Controlling Partnership is also permitted to assign all of its rights and obligations under the investment agreement to an affiliate of the Controlling Partnership with the prior consent of KPE, which may not be unreasonably withheld or delayed. Dissolution Transactions As of, or as promptly as practicable after, the U.S. listing, KPE will take, and the Controlling Partnership will cause the directors of the KPE Board who are not KPE Independent Directors to authorize all actions necessary or advisable to, among other things, (i) distribute the Controlling Partnership units to the holders of KPE units, (ii) cause the KPE units to be delisted from, and to cease to be traded on, Euronext Amsterdam by NYSE Euronext, the regulated market of Euronext Amsterdam N.V. and (iii) cause KPE to be dissolved and liquidated by its general partner acting as liquidator, 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 of each of the following conditions: • the Controlling Partnership units to be issued to KPE shall have been authorized for listing on the New York Stock Exchange or The NASDAQ Stock Market (subject to official notice of issuance); • the registration statement relating to the Controlling Partnership units to be issued to, and distributed 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 affiliates become subject to regulation under the Investment Company Act and (ii) no stop order suspending the effectiveness of the registration statement has been issued and no proceedings for 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 legal restraint or prohibition preventing the consummation of the U.S. listing and or the distribution of 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 exchange for Controlling Partnership units; and • KPE shall have received a customary comfort letter and negative assurance letter relating to information contained in the registration statement relating to the Controlling Partnership units to 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 Controlling Partnership 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 unit appreciation right equals or exceeds the closing price per KPE unit on Euronext Amsterdam on the final trading day of KPE units will be cancelled without the payment of any consideration in respect thereof and (ii) each other outstanding unit appreciation right will be converted into a fully vested unit appreciation right, on the same terms and conditions that were applicable under such unit appreciation right, with respect to a number of Controlling Partnership units equal to the number of KPE units subject to such unit appreciation right immediately prior to the closing of the U.S. listing with an exercise price per Controlling Partnership unit equal to the per unit exercise price for such unit appreciation right and any such converted unit appreciation right and all obligations with respect thereto 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 the general 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 as directors or officers of the general partner of KPE or taken by them at the request of KPE or the general partner of KPE. In addition, the investment agreement also provides that the KKR Group Partnerships will indemnify the Controlling Partnership, KPE, each present and former director and officer 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 Securities Act, 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 alleged untrue statement of a material fact contained in the registration statement relating to the Controlling Partnership units to be issued to, and distributed by KPE or any other document issued by the Controlling Partnership, KPE or any of their respective affiliates in connection with, or otherwise relating to, the U.S. listing, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The investment agreement also provides that the Controlling Partnership will, subject to an agreed upon premium cap, obtain directors’ and officers’ liability insurance for the benefit of the directors and officers (and former directors and officers) of the general partner of KPE which will (i) be effective for a period from the date of the dissolution of KPE through and including the date that is six years after such date, (ii) cover claims arising out of or relating to any action, statement or omission of such directors 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 the general partner of KPE in connection therewith) to the same extent as the directors and officers of the KKR Managing Partner acting in their capacities as the directors and officers of the general partner of KPE are insured with respect thereto, and (iii) contain a coverage limit of $100 million and coverage terms 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 by mutual written consent of KKR and KPE. Amendment; Waiver The investment 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 if approved by all of the KPE Independent 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 party provided for in the investment agreement; • waive any inaccuracies in the representations and warranties of the other party contained in the investment agreement or in any document delivered by the other party pursuant to the investment agreement; and • waive compliance by the other party with any of the agreements or conditions contained in the investment agreement. Amendments to KPE Agreements and Policies In connection with the consummation of the Combination Transaction, certain amendments will be made to the existing organizational documents of KPE’s general partner and the KPE Investment Partnership and to certain other agreements to which KPE is a party and certain other policies of KPE to reflect the fact that in connection with the consummation of the Combination Transaction, certain amendments will be made to the existing organizational documents of KPE’s general partner and the KPE Investment Partnership and to certain other agreements to which KPE is a party and certain other policies of KPE to reflect the fact, following the Combination Transaction, (i) KPE’s sole asset will be its equity interest in the Combined Business, (ii) the limited partner interests held by KPE in the KPE Investment Partnership will be contributed to the Combined Business, (iii) KPE investors will no longer pay management fees and carry on their investment and (iv) except with respect to certain matters described under ‘‘Conflicts of Interest and Fiduciary Duties,’’ the Combined Business and any investments that it makes will be overseen and managed by the KKR Managing Partner rather than the general partner of KPE. These changes include (a) a termination of KPE’s current investment agreement that requires KKR to acquire common units of KPE with the proceeds of certain cash distributions 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 and financial results and (d) a grant of permission to invest any assets in opportunistic investments, subject to certain tax considerations. Lock-Up Agreement In addition to the transfer restrictions that individuals who hold interests in KKR Holdings are subject to, KKR Holdings and certain other KKR entities have agreed that, without the prior written consent 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, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any KKR Group Partnership Units or any securities convertible into or exercisable or exchangeable for KKR Group Partnership Units; or (ii) enter into any swap or other arrangement that transfers to another, in whole or 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 Partnership Units 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 interests reflecting the fact that the KKR senior principals will retain control over the KPE Investment Partnership. Since the financial statements of the KPE Investment Partnership are already included in the historical combined financial statements, this transaction will have the effect of reallocating income and equity to KKR that was previously attributable to noncontrolling interests. However, the ownership of 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 will be reflected as an equity transaction and no gain or loss will be recognized in net income. The carrying amount of the historical noncontrolling interest attributable to KPE will be reduced to zero with an offsetting amount recognized as a component of equity in the consolidated financial statements of KKR. Additionally, the carrying amount of the KPE Investment Partnership will not be changed as a result of the acquisition of these noncontrolling interests. See ‘‘Preliminary Unaudited Pro Forma Segment 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 be deemed to have the following interests relating to the Combination Transaction: • KKR and affiliated entities hold beneficial ownership of approximately 3.8% of KPE’s outstanding units; • Pursuant to KKR’s services agreement with KPE, KKR is entitled to receive a management fee based upon the aggregate amount of KPE’s equity; • The services agreement with KPE requires KPE to indemnify KKR and its affiliates with respect to all losses or damages arising from acts not constituting bad faith, willful misconduct or gross negligence; • 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 a carried interest or incentive distribution right, which entitles KKR to receive a portion of the profits generated by the investment; • Pursuant to KKR’s license agreement with KPE, KKR has granted KPE and certain related entities 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, including Messrs. Kravis and Roberts, holds the general partner interest in the KPE Investment Partnership.

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In addition to being directors and executive officers of the KKR Managing Partner, Messrs. Kravis and 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 the following interests relating to the Combination Transaction: • The amended and restated purchase and sale agreement provides that each present and former director of the KPE Board will be indemnified as described above under ‘‘—The Amended and Restated Purchase and Sale Agreement—Indemnification and Insurance’’; • The amended and restated purchase and sale agreement provides that KPE will maintain directors’ and officers’ liability insurance for the benefit of the directors and officers of KPE’s general partner; and • The KPE Independent Directors receive ongoing fees for service in such capacity and, in connection with the Combination Transaction, the KPE Independent Directors will also be entitled to receive customary fees that are not contingent on their recommendation of the Combination Transaction. However, none of the KPE Independent Directors holds an equity interest in KPE. Finally, the chief financial officer of KPE’s general partner is KKR’s employee and may be deemed to have each of the following interests described above (other than those specifically attributable only to the KPE Independent Directors). In addition, certain of KKR’s employees who provide services to KPE are entitled to indemnification under the amended and restated purchase and sale agreement and hold KPE unit appreciation rights in an amount less than 1% of the aggregate KPE units outstanding which will become fully vested and immediately exercisable upon the consummation of the Combination Transaction.

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THE CONSENT SOLICITATION General The consent of the holders of KPE units is being sought to consummate the Combination Transaction. 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 for this purpose is considered to be 5:30 p.m. (Amsterdam time), except that it is 5:00 p.m. (New York City time) 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 other requirement requires the consent of the holders of KPE units. Nevertheless, based on the extraordinary nature of the transaction, KKR and KPE agreed in the amended and restated purchase and sale agreement that the consummation of the Combination Transaction would require the consent of the holders of at least a majority of the 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, which is referred to as the requisite unitholder consent. As of the record date for the consent solicitation, KKR or its affiliates controlled the consent rights with respect to approximately 3.8% of the KPE units. Obtaining the requisite unitholder consent is a condition to completion of the Combination Transaction. If the requisite unitholder consent is not obtained, the Combination Transaction will not be completed. The conditions to the consummation of the Combination Transaction, including the obtaining of the requisite unitholder consent, will be considered irrevocably satisfied on the first date on which all of the conditions have been satisfied or waived and the effective date of the Combination Transaction will be the first day following the end of the 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 of the KPE Independent Directors, unanimously approved the amended and restated purchase and sale agreement and the consummation of the transactions contemplated thereby. The board of directors of KPE’s general partner unanimously recommends that the holders of KPE units consent to the consummation 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 the Combination Transaction that may be different from, or in addition to, the interests of holders of KPE units. See ‘‘The Combination Transaction—Interests of Directors and Executive Officers in the Combination Transaction’’. Delivery of Consents Consents must be received by 5:30 p.m. (Amsterdam time) on August 14, 2009, or, if the expiration time is extended, such later time. Since your KPE units are held in ‘‘street name’’ through a broker or bank, in order to submit your consent you must contact your broker or bank and follow the instructions provided by your broker or bank. Please note your broker or bank may require you to provide your instructions prior to the expiration time in order to allow sufficient time to execute the consent on your behalf. If you do not instruct 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 your broker 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 in order to provide your consent. Expiration Time and Tabulation The consent solicitation is currently scheduled to expire at 5:30 p.m. (Amsterdam time) on August 14, 2009. You should contact your broker or bank and follow the instructions provided by your broker or bank to ensure your consent is delivered in advance of the expiration time. If the requisite unitholder consent has not been obtained by the scheduled expiration of the consent solicitation, the consent solicitation may be extended from time to time upon the request of either KKR or KPE. If the expiration time is extended, KPE will announce the new expiration time no later than the first business day following the date on which the expiration time would have otherwise occurred. Under the terms of the amended and restated purchase and sale agreement, each of KKR and KPE has the right to terminate the amended and restated purchase and sale agreement if the requisite unitholder consent is not 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 consent solicitation 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 by KKR or its affiliates and by any person who has informed KPE in writing that it will not submit a consent) have been obtained to approve the consummation of the Combination Transaction. The earlier of the (i) expiration time and (ii) the time that consents of the holders of more than 50% of the KPE units (excluding from the numerator and denominator KPE units whose consent rights are controlled by KKR or its affiliates and by any person who has informed KPE in writing that it will not submit a consent) have been obtained to approve the consummation of the Combination Transaction is referred to as the ‘‘Revocation Deadline’’. Your consent may not be revoked after the Revocation Deadline. The condition to the Combination Transaction relating to the obtaining of unitholder consent will be deemed to be satisfied on date of the the applicable Revocation Deadline, assuming the requisite unitholder consent has been received as of such date. KPE will announce that the Revocation Deadline has occurred on the first business day following the date of the Revocation Deadline. If you desire to revoke your consent prior to the Revocation Deadline, you should contact your broker or bank and follow the instructions provided by your broker or bank. 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 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 be used to instruct The Bank of New York Mellon, as Depositary, as to whether or not you wish to consent to the Combination Transaction with respect to the KPE units underlying the restricted depositary units that you own as of the record date. This consent form must be returned to the Depositary by no later than 5:00 p.m. (New York City time) on August 11, 2009 so that the Depositary 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 the instructions set forth on the consent 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 of the Combination Transaction with respect to the KPE units underlying your restricted depositary units of KPE. If you do not instruct the Depositary on whether or not you would like to consent, the Depositary will not have the discretion to provide consent on your behalf. If you fail to return a properly submitted consent form to the Depositary or fail to properly instruct the Depositary by telephone or over the Internet prior to 5:00 p.m. (New York City time) on August 11, 2009, it will not affect the outcome of this consent solicitation. Amendment/Waiver KPE and KKR expressly reserve the right, in their sole discretion, to waive any condition to the Combination Transaction and/or amend or modify any of the terms of the amended and restated purchase and sale agreement and/or the Combination Transaction. To the extent a waiver, modification or amendment is not material and adverse to the holders of KPE units, as determined by the board of directors of KPE’s general partner, any consents submitted prior to any such waiver, modification or amendment will continue to be valid and will not be affected by any such waiver, modification or amendment. In the event a waiver, modification or amendment is material and adverse to the holders of KPE units, as determined by the board of directors of KPE’s general partner, holders of KPE units whose consents have been submitted prior to such waiver, modification or amendment will be notified as 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’s general partner and its officers, employees and agents may solicit consents in person, by telephone or otherwise. No director, officer or employee of the general partner of KPE will be specifically compensated for these activities. KPE also intends to request that brokers, banks and other nominees solicit consents from their principals, and KPE will pay the brokers, banks and other nominees certain expenses they incur for those activities. Innisfree M&A Incorporated, a proxy soliciting firm, has been retained 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 with KKR 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 in the 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 of the interests of the KPE Investment Partnership and any other assets acquired from KPE to the KKR Group Partnerships in exchange for KKR Group Partnership Units. Certain of these KKR Group Partnership Units will be held through an intermediate holding company that will be taxable as a corporation for U.S. federal income tax purposes. These KKR Group Partnership Units will initially provide KPE, through its interests in Group Holdings, with a 30% economic interest in each of the KKR Group Partnerships and allow it to share ratably in the assets, liabilities, profits, losses and distributions, if any, of the KKR Group Partnerships. The balance of the KKR Group Partnership Units will be held by KKR’s existing owners through their interests in KKR Holdings and will be accounted for in KKR’s consolidated financial statements as noncontrolling interests. KKR’s combined financial statements include the general partner of the KPE Investment Partnership, which has historically consolidated the KPE Investment Partnership as the primary beneficiary. In connection with the Combination Transaction, the KKR Group Partnerships will acquire all outstanding noncontrolling interests in the KPE Investment Partnership, which will become a wholly-owned subsidiary of the KKR Group Partnerships. The Combination Transaction is conditioned upon, among other things, the consent of KPE unitholders representing at least a majority of the KPE units for which a properly submitted consent form 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, the consummation 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 of the KPE Independent Directors, unanimously approved the entry into the amended and restated purchase and sale agreement and the transactions contemplated thereby. The board of directors of KPE’s general partner recommends that the holders of KPE units consent to the approval of the consummation of the Combination Transaction.

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ORGANIZATIONAL STRUCTURE The following diagram illustrates the ownership and organizational structure that KKR will have immediately after the completion of the Transactions.

KKR Management LLC

KKR Senior Principals

GP (No Economics)

KPE Investors

KPE (Euronext Amsterdam)

KKR & Co. L.P.

KKR Holdings L.P.

KKR Principals

GP (No Economics)

LP 100%

KKR Group Holdings L.P.

KKR Management Holdings Corp.(1)

GP 30%

GP 30%

LP 70%

LP 70%

KKR Management Holdings L.P.

Management Companies Capital Markets Companies

KKR Fund Holdings L.P.

KPE Investment Partnership(3)

General Partners Funds and Co-Investments

KKR Group Partnerships

KKR Group (2)

23JUL200900115586 Notes: (1) Except for KKR Management Holdings Corp., certain of KKR’s foreign subsidiaries and certain subsidiaries 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 Group Partnerships 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 other assets 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 and consolidated entities that operated under the common control of KKR’s senior principals and were under the common ownership of KKR’s principals and other existing owners. These entities, which comprised 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, portfolio companies, capital markets transactions and other investment products; • the general partners of the 1996 Fund, the European Fund, the Millennium Fund, the European Fund II, the 2006 Fund, the Asian Fund, the European Fund III, the KPE Investment Partnership, the entities that are entitled to receive carry from KKR’s principal protected private equity product and the entities that are entitled to receive carry from KKR’s co-investment vehicles, which receive carried interest from private equity investments that are made through such entities as well as returns on investments made by or on behalf of the general partners alongside fund investors; • the general partners of certain fixed income funds managed by KKR, which control the operations of such funds; and • the consolidated subsidiaries of the foregoing. The KKR Group is expected to become KKR’s predecessor for accounting purposes and its financial statements are expected to become KKR’s historical financial statements only upon completion of the Reorganization Transactions, which will take place only if unitholders representing at least a majority of the KPE units for which a properly submitted consent form is submitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates) consent to the Combination Transaction. Because the legal entities that comprise the KKR Group are under the common control of KKR’s senior principals and will be under their common control following the completion of the Reorganization Transactions, KKR will account for the Reorganization Transactions as a transfer of interests under common control. Certain portions of the Transactions, however, will be accounted for as acquisitions of noncontrolling interests as described under ‘‘Preliminary Unaudited Pro Forma Segment Information.’’ KKR Group Partnerships Following the date that the conditions to closing the Combination Transaction are satisfied or waived and prior to the effective date of the Combination Transaction, KKR will complete the Reorganization Transactions, 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 by KKR’s principals to the KKR Group Partnerships in exchange for newly issued partner interests 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 Partnership Unit. Upon the completion of the Transactions, KPE, through its interest in Group Holdings, will initially hold 30% of the outstanding KKR Group Partnership Units and KKR’s principals, through their interests in KKR Holdings, will initially hold 70% of the outstanding KKR Group Partnership Units. 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 their respective 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 Group Partnerships and Group Holdings will serve as the general partner of those entities. Except for the noncontrolling interests in KKR’s funds that are held by fund investors, interests in the general partners of 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 companies and 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, portfolio companies, capital markets transactions and other investment products; • controlling and economic interests in the general partners of KKR’s funds and the entities that are entitled to receive carry from KKR’s co-investment vehicles, which will allow KPE to share ratably in the carried interest received by them as well as any returns on investments made by or on 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 other assets 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 carried interest, KKR intends to continue to allocate to its principals, other professionals and selected other individuals who work in these operations a portion of the carried interest earned in relation to these funds as part of its carry pool. KKR expects to allocate approximately 40% of the carry it receives from these funds and vehicles 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 the carry pool may exceed 40% only with the approval of a majority of the independent directors of the KKR Managing Partner. In connection with the Transactions, certain minority investors will retain the following additional interests 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 will not be contributed to the KKR Group Partnerships due to the fact that the general partners are not expected to receive meaningful proceeds from further realizations; • noncontrolling economic interests that will allocate to a former principal and such person’s designees an aggregate of 1% of the carried interest received by general partners of KKR’s funds and 1% of KKR’s other profits until a future date; • noncontrolling economic interests that will allocate to certain of KKR’s former principals and their designees a portion of the carried interest received by the general partners of KKR’s private equity funds that was allocated to them with respect to private equity investments made during such former principals’ tenure with KKR; • noncontrolling economic interests that will allocate to certain of KKR’s current and former principals all of the capital invested by or on behalf of the general partners of KKR’s private equity funds before the completion of the Transactions and any returns thereon as well as any realized carried interest distributions that are actually received but not distributed by the general partners prior to the Transactions; and • a noncontrolling economic interest that will allocate to a third party an aggregate of 2% of the equity in the KKR Group’s capital markets business. The interests described in the immediately preceding bullets (other than interests in the general partners of the 1996 Fund) are referred to as the Retained Interests. As of March 31, 2009, the Retained Interests, the general partners in the 1996 Fund and the carry pool allocations referred to above 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 statements as 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 are expected to run-off over time, thereby increasing the interests of the KKR Group Partnerships in the entities 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 financial statements included elsewhere in this consent solicitation statement or interests in all of the entities that KKR has sponsored over time. In addition, as described elsewhere in this consent solicitation statement, KKR is required to consolidate in KKR’s financial statements the funds over which it exercises substantive controlling rights and operational discretion, despite the fact that the substantial majority of the economic interests in those entities are held by third party fund investors. These interests have been allocated to such third party fund investors as noncontrolling interests in KKR’s financial statements. Except for interests in the KPE Investment Partnership that will be acquired from KPE in the Combination Transaction, KKR will not acquire any of the economic interests in KKR’s funds that are held by fund investors. See ‘‘Organizational Structure’’ and ‘‘The Combination Transaction.’’ For financial and other information that presents 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 and Analysis of Financial Condition and Results of Operations—Business Segments.’’ Group Holdings Group Holdings, of which KPE will be the sole limited partner, is the entity through which KPE will hold its interests in the KKR Group Partnerships, and Group Holdings will directly or indirectly serve as the general partner of the KKR Group Partnerships. As is commonly the case with limited partnerships, the limited partnership agreement of Group Holdings provides for the management of KKR’s business and affairs by a general partner rather than a board of directors. The KKR Managing Partner 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 Group Holdings provides for the management of KKR’s business and affairs by a general partner rather than a board of directors. The KKR Managing Partner serves as the ultimate general partner of Group Holdings and the KKR Group Partnerships. The KKR Managing Partner has a board of directors that is co-chaired by KKR’s founders 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. The KKR Managing Partner will not have any economic interest in the Controlling Partnership other than a single limited partnership unit. KPE unitholders do not hold securities of the KKR Managing Partner and are not entitled to vote in the election of its directors or other matters affecting its governance. Only those persons holding limited liability company interests in the KKR Managing Partner will be entitled to vote in the election or removal of its directors, on proposed amendments to its charter documents or on other matters that require approval of its equity holders. See ‘‘Governance’’ and ‘‘U.S. Listing—The KKR Managing Partner.’’ KKR Holdings Upon completion of the Transactions, KKR’s principals will hold interests in KKR’s business through KKR Holdings, which will own all of the outstanding KKR Group Partnership Units that KPE does 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 their direct 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 paid by the firm and will be borne by KKR Holdings. The interests that these individuals hold in KKR Holdings will be subject to transfer restrictions and, except for interests held by its founders and approximately 33% of the interests held by other executives, will be subject to vesting requirements. The transfer restrictions period will last for a minimum of (i) one year with respect to one-half of the interests vesting on a vesting date and (ii) two years with respect to the other one-half of the interests vesting on such vesting date. For interests that are 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 rules requiring 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 ranging from 6 months to 3 years, approximately 43% of the unvested interests will time vest over a 5 year period and approximately 18% of the unvested interests will be subject to both performance-based vesting and time-based vesting. Interests that are subject to performance-based vesting and time-based vesting may vest over a period of up to 8 years. Vesting of certain transfer restricted interests will be subject to the holder not being terminated for cause and complying with the terms of his or her confidentiality and restrictive covenant agreement during the transfer restrictions period. See ‘‘Governance—Confidentiality and Restrictive Covenant Agreements.’’ The transfer and vesting restrictions 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 the combined company to grant equity based awards to junior employees, support staff, consultants and other personnel not covered above. While the form and amount of awards to be granted under the plan have not yet been determined, they will be made and funded by KKR Holdings and will not dilute KPE’s interests in the Combined Business at closing. KKR Holdings expects that these awards will be subject 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 for employees, consultants, directors, officers and senior advisors. The plan will contain customary terms for equity incentive plans for U.S. publicly traded asset managers and will allow for the issuance of various forms of awards, including restricted equity awards, unit appreciation rights, options and other equity based awards. The plan will be administered by the board of directors of the KKR Managing Partner. See ‘‘Governance—2009 Equity Incentive Plan’’. Exchange Agreement In connection with the Combination Transaction, KPE and KKR Holdings will enter into an exchange agreement pursuant to which KKR Holdings and certain of the transferees of its KKR Group Partnership Units may, up to four times each year, effectively 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. At the election of the KKR Group Partnerships and subject to approval by a majority of the independent directors of KPE’s general partner, the KKR Group Partnerships may settle most types of exchanges of KKR Group Partnership Units with cash in an amount equal to the fair market value of the KPE units that would otherwise be deliverable in such exchanges. If the KKR Group Partnerships elect to settle an exchange of KKR Group Partnership Units with cash from operations (rather than sales of securities), the net assets of the KKR Group Partnerships 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 that KPE has outstanding following the exchange. As a result of the cancellation of the KKR Group Partnership Units that are acquired in the exchange, KPE’s percentage ownership of the KKR Group Partnerships will increase and KKR Holdings’ percentage ownership will decrease. Upon completion of a listing of the interests in the Combined Business in the United States, the Controlling Partnership and 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 transfer restrictions and vesting requirements that, unless waived, modified or amended, will limit the ability of KKR’s principals to cause KKR Group Partnership Units to be exchanged under the exchange agreement so long as the applicable vesting and transfer restrictions apply. The general partner of KKR Holdings, 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 agreement that KKR will enter into with KKR Holdings, exchanges cannot be effected for 180 days after the completion of the Combination Transaction, subject to certain exceptions. Tax Receivable Agreement The acquisition by KPE’s intermediate holding company of KKR Group Partnership Units from KKR Holdings or transferees of its KKR Group Partnership Units from time to time pursuant to the exchange agreement may result in an increase in KPE’s intermediate holding company’s share of the tax basis of the tangible and intangible assets of KKR Management Holdings L.P., primarily attributable to 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 and therefore reduce the amount of tax KPE’s intermediate holding company would otherwise be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions 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 Units effectively 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. Under certain circumstances, transferees of KKR Group Partnership Units will have the right to exchange their KKR Management Holdings L.P. units in a tax-free manner, thus not resulting in an increase in tax basis. KPE will enter into a tax receivable agreement with KKR Holdings requiring KPE’s intermediate holding company to pay to KKR Holdings or transferees of its KKR Group Partnership Units 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediate holding company actually realizes (or is deemed to realize, in the case of an early termination payment by its 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 (or is deemed to realize) as a result of increases in tax basis that arise due to future payments under the agreement. Although KKR is not aware of any issue that would cause the IRS to challenge a tax basis increase, neither KKR Holdings, KPE nor their transferees will reimburse KKR for any payments previously made under the tax receivable agreement if such tax basis increase, or the benefits of such increases, were successfully challenged by the IRS. See ‘‘Certain Relationships and Related Party Combination Transaction—Tax Receivable Agreement.’’ In the event that other of KPE’s current or future subsidiaries become taxable as corporations and acquire KKR Group Partnership Units 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. Upon completion of a listing of the interests in the Combined Business in the United States, the Controlling Partnership and KKR 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 financial statements of KPE, the consolidated financial statements of the KPE Investment Partnership and the related notes included on KPE’s website www.kkrprivateequityinvestors.com as well as ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and ‘‘The Combination Transaction’’. KPE KKR Private Equity Investors, L.P. is a Guernsey limited partnership that seeks to create long-term value 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 is comprised of: (i) KKR’s private equity funds (the European Fund, the Millennium Fund, the 2006 Fund, the European Fund II, the Asian Fund, the European Fund III), (ii) co-investments in 13 portfolio companies of KKR’s private equity funds, (iii) three negotiated equity investments, (iv) an investment in a fixed income fund that KKR manages and (v) temporary investments. KPE is subject to the supervision of Guernsey Financial Services Commission and market supervision by the Authority for the Financial Markets in the Netherlands. KPE is governed by its general 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 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 that as of June 30, 2009, based on preliminary unaudited information, the KPE Investment Partnership had a cash balance of approximately $810 million, approximately $940 million outstanding on its $1.0 billion five-year senior secured credit facility, and remaining capital commitments related to limited partner interests in KKR’s private equity funds of approximately $930 million. KPE had 204,550,001 outstanding units for all periods before March 31, 2008 and 204,902,226 outstanding units as of March 31, 2008 and for all periods thereafter. KPE’s NAV per unit for the following eight quarters was as follows(1):

100

$30.00

$26.12

$25.77

$24.36

$23.02

$25.00

$22.25 $18.85

$20.00 $12.78

$15.00

$12.82

$10.00 $5.00 6/30/07

9/30/07

12/31/07

3/31/08

6/30/08

9/30/08

12/31/08

3/31/09 23JUL200922122891

(1) Represents the NAV net of distributions paid. KPE has paid the following distributions since its formation in April 2006: Payment Date

Cash Distribution Paid per Common Unit

December 15, 2006 September 17, 2007

$0.19 0.24

Record Date

December 1, 2006 August 31, 2007

$0.43 The KPE Investment Partnership’s net assets were comprised of the following, with amounts in thousands, as of March 31, 2009: Net Assets

Private equity investments: Co-investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Private equity funds . . . . . . . . . . . . . . . . . . . . . . . . . . Negotiated equity investments . . . . . . . . . . . . . . . . . . Temporary investments . . . . . . . . . Non-private equity fund investment Revolving credit agreement . . . . . . Long-term debt . . . . . . . . . . . . . . Other, net(1) . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

$1,220,469 1,162,992 667,857 3,051,318 638,444 58,482 (926,193) (350,000) 160,186

. . . . .

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allocation of net assets to the general partner . . . . . . . . Allocation of net assets to KPE . . . . . . . . . . . . . . . . . . .

$2,632,237 $

Percent of Total

46.3% 44.2 25.4 115.9 24.3 2.2 (35.2) (13.3) 6.1 100.0%

5,645 2,626,592

0.2% 99.8

$2,632,237

100.0%

(1) Other, net included a receivable of $200.4 million related to the sale of certain interests in 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 on Euronext 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 the Combination Transaction, and July 23, 2009, the most recent trading day for which that information was available as of the date of this consent solicitation statement. Date

KPE Closing Price

June 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5.50 $6.50

The following table sets forth, for the periods indicated, the high and low closing sale prices per KPE unit as reported on Euronext Amsterdam. KPE Units High Low

Calendar Quarter

2008 First Quarter . . . . . . . . . . . . . . . . . . Second Quarter . . . . . . . . . . . . . . . . Third Quarter . . . . . . . . . . . . . . . . . Fourth Quarter . . . . . . . . . . . . . . . . 2009 First Quarter . . . . . . . . . . . . . . . . . . Second Quarter . . . . . . . . . . . . . . . . Third Quarter (through July 23, 2009)

. . . .

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. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

$18.40 $15.03 $13.90 $ 8.78

$11.45 $12.75 $ 9.40 $ 2.10

.................... .................... ....................

$ 3.50 $ 6.00 $ 6.50

$ 1.97 $ 2.88 $ 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 regulatory disclosure reports regarding their beneficial ownership of KPE units, KPE is unable to determine with reasonable 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 investment funds 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 vehicles and 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 for the year ended December 31, 2008 and the three months ended March 31, 2009 and the preliminary unaudited pro forma statement of financial condition segment information as of March 31, 2009 give effect to the KFI Transaction, the Reorganization Transactions and the Combination Transaction, as if such transactions had been completed as of January 1, 2008 with respect to the preliminary unaudited pro forma statements of operations segment information and as of March 31, 2009 with respect to the preliminary unaudited pro forma statement of financial condition segment information. This preliminary unaudited pro forma segment information is based on historical segment information of the KKR Group and historical financial information of KPE and the KPE Investment Partnership. The adjustments described in the accompanying notes are based on information that is currently available and determinable and on assumptions that management believes are reasonable in order to reflect, on a pro forma basis, the impact of the transaction aspects described herein on the historical segment financial information of the KKR Group. This preliminary unaudited pro forma segment information is included for informational purposes only and is preliminary in nature due to the fact that not all information relating to the Reorganization Transactions and the Combination Transaction is currently available and determinable. This information does not purport to show the pro forma impact of any transactions or arrangements relating to the Reorganization Transactions and the Combination Transaction other than those specifically described herein or the pro forma impact of any transactions or arrangements on the financial condition of the reportable business segments of the KKR Group or the combined statements of financial condition and statements of income of the KKR Group presented in accordance with GAAP. In addition, this information does not purport to show the actual segment or financial statement results that the KKR Group would have had if the Reorganization Transactions and the Combination Transaction had occurred on the date indicated, or had KKR operated as a public company during the periods presented, or for any future period. This preliminary unaudited pro forma segment information is subject to change as additional information concerning the Reorganization Transactions and the Combination Transaction becomes available or determinable. This information will also differ from any pro forma financial information of the KKR Group that gives effect to the impact of the Reorganization Transactions and the Combination Transaction on the face of the combined financial statements of the KKR Group that are presented in accordance with GAAP. See ‘‘Reconciliation of Segment Reporting to Financial Statement Reporting and Net Income,’’ ‘‘Basis of Presentation,’’ and ‘‘Notes to Preliminary Unaudited Pro Forma Segment Information—Transactions and Adjustments Excluded from Pro Forma Presentation.’’ You are cautioned 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 historical combined financial statements will be the historical financial statements of KKR following the completion of the Reorganization Transactions and the Combination Transaction. In accordance with GAAP, the historical combined financial statements of the KKR Group consolidate a number of funds that are sponsored by the KKR Group, including the KPE Investment Partnership, despite the fact that the KKR Group has only a minority economic interest in those entities. The consolidated funds consist of those funds in which the KKR Group holds a general partner or managing member interest that gives it substantive controlling rights over such funds as well as the KPE Investment Partnership in which 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 to as the ‘‘Consolidated Entities.’’ As a result of the consolidation of the Consolidated Entities, the combined financial statements of the KKR Group reflect the assets, liabilities, revenues, expenses and cash flows of the Consolidated Entities on a gross basis. The majority of the economic interests in the Consolidated Entities, which are held by third-party investors, are reflected as noncontrolling interests. Substantially all of the management fees and certain other amounts that the KKR Group earns from the Consolidated Entities are eliminated in combination. However, because those amounts are earned from noncontrolling interest holders, the KKR Group’s allocable share of the net income from the Consolidated Entities is increased by the amounts eliminated. Accordingly, the consolidation of the Consolidated Entities does not have an effect on the amounts of net income attributable to KKR Group or to KKR Group’s partners’ capital. While the consolidation of the Consolidated Entities does not have an effect on the amounts of net income attributable to KKR Group or partners’ capital reported by the KKR Group, the consolidation does significantly impact other aspects of the combined financial statement presentation of the KKR Group. This is due to the fact that the assets, liabilities, income and expenses of the Consolidated Entities are reflected on a gross basis while the allocable share of those amounts that are attributable to noncontrolling interest holders are reflected as single line items. The single line items in which the assets, liabilities, income and expense attributable to noncontrolling interest holders are recorded consist of ‘‘noncontrolling interests’’ which are included in the equity section of the statements of financial condition and ‘‘net income attributable to noncontrolling interests’’ in the statements of operations. Segment Information The historical segment financial information of the KKR Group is presented as supplemental disclosure for the reportable business segments of the KKR Group in accordance with Statement of Financial Accounting Standards No. 131, ‘‘Disclosures about Segments of an Enterprise and Related Information.’’ This standard is based on a management approach, which requires segment presentation based on the financial reporting used by management to make operating decisions, assess performance and allocate resources. The KKR Group has historically operated through two reportable business segments: Private Markets and Public Markets. Subsequent to the Reorganization Transactions and the Combination Transaction, KKR expects to operate through three reportable segments as described in ‘‘Notes to Preliminary Unaudited Pro Forma Segment Information—KKR Group Segment Information.’’ Management of the KKR Group makes operating decisions, assesses performance and allocates resources based on financial and operating data and measures that are presented without giving effect to the consolidation of any of the Consolidated Entities. As a result, unlike the reporting in the combined financial statements of the KKR Group, the KKR Group’s segment reporting does not give effect to the consolidation of the Consolidated Entities. The exclusion of the Consolidated Entities in segment reporting results in: (i) the inclusion of management fees and incentive fees in fee income that would otherwise be eliminated in combination, (ii) the exclusion of investment income and expenses and the exclusion of corresponding charges and credits that are attributable to noncontrolling interests held by third-party investors in the Consolidated Entities, (iii) the exclusion of assets and liabilities that are attributable to noncontrolling interests held by third-party investors and (iv) the exclusion of equity that is accounted for as noncontrolling interests. All inter-segment transactions are eliminated in the segment presentation. Given the differences between the combined financial statement presentation and the segment reporting of the KKR Group, the preliminary unaudited pro forma segment information presented in

104

this document, including the adjustments described in the accompanying notes, will differ from pro forma financial information of the KKR Group that gives effect to the impact of the Reorganization Transactions and the Combination Transaction and related adjustments on the KKR Group’s combined financial statements. This preliminary unaudited pro forma segment information should not be considered as a substitute for pro forma financial information of the KKR Group that gives effect to the impact of the Reorganization Transactions and the Combination Transaction and related adjustments on the KKR Group’s combined financial statements or for the combined financial statements 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 the management companies for the KKR Group’s Public Markets segment other than certain noncontrolling interests that allocated 35% of the net income generated by the parent company to the noncontrolling interest holders. On May 30, 2008, the KKR Group entered into an agreement to acquire all of these noncontrolling interests for cash consideration in the KFI Transaction. As a result of the KFI Transaction, the KKR Group now owns all of the equity interests in the parent of the management companies for its Public Markets segment and is entitled to 100% of the net income and cash flows generated by the management companies. Reorganization Transactions Prior to the completion of the Combination Transaction, KKR will complete the Reorganization Transactions 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 by KKR principals to the KKR Group Partnerships in exchange for KKR Group Partnership Units. No cash will be received in connection with such exchanges. KKR principals will hold their KKR Group Partnership Units through KKR Holdings. As a result of the Reorganization Transactions, certain minority investors will retain the following interests 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 will not be contributed to the KKR Group Partnerships due to the fact that the general partners are not expected to receive meaningful proceeds from further realizations; • noncontrolling economic interests that will allocate to a former principal and such person’s designees an aggregate of 1% of the carried interest received by general partners of KKR’s funds and 1% of KKR’s other profits until a future date; • noncontrolling economic interests that will allocate to certain of KKR’s former principals and their designees a portion of the carried interest received by the general partners of KKR’s private equity funds that was allocated to them with respect to private equity investments made during such former principals’ tenure with KKR; • noncontrolling economic interests that will allocate to certain of KKR’s current and former principals all of the capital invested by or on behalf of the general partners of KKR’s private equity funds before the completion of the Transactions and any returns thereon as well as any realized carried interest distributions that are actually received but not distributed by the general partners prior to the Transactions; and • a noncontrolling economic interest that will allocate to a third party an aggregate of 2% of the equity 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 1996 Fund described above will no longer be reflected in the combined financial statements of the KKR

105

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 other noncontrolling economic interests described in the immediately preceding bullets, which are referred to as ‘‘Retained Interests,’’ are currently reflected in partners’ capital of the KKR Group, but will be accounted for as noncontrolling interests in the combined financial statements subsequent to the completion 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 income attributable to noncontrolling interests in the statements of operations. The allocable share of equity attributable to the Retained Interests will be accounted for as noncontrolling interests in the equity section of the statement of financial condition. In addition, with respect to KKR’s active and future funds and co-investment vehicles that provide for carried interest, KKR intends to continue to allocate to its principals, other professionals and selected other individuals who work in these operations, a portion of the carried interest earned in relation to these funds as part of its carry pool. KKR expects to allocate approximately 40% of the carry it receives from its funds and co-investment vehicles 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 the carry pool may exceed 40% only with the approval of a majority of the independent directors of the KKR Managing Partner. The allocable share of income and expense attributable to these interests will be accounted for as net income attributable to noncontrolling interests in the preliminary unaudited pro-forma segment information. The allocable share of equity attributable to these interests will be accounted for as noncontrolling interests in the preliminary unaudited pro forma segment information. Combination Transaction In connection with the Combination Transaction, KKR will acquire all of the assets and liabilities of KPE, including its interests in the KPE Investment Partnership, and KPE will receive KKR Group Partnership Units representing a 30% interest in the Combined Business. Units in one of the KKR Group Partnerships will be held through an intermediate holding company that will be taxable as a corporation for U.S. federal, state and local income tax purposes. See Note (II) under ‘‘Transactions and Adjustments Excluded from Pro Forma Presentation.’’ The balance of the KKR Group Partnership Units will be held by current KKR principals through their interests in KKR Holdings and will be accounted 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 segment information are in thousands ($000’s). KKR Group Total Reportable Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Three Months Ended March 31, 2009 Total Adjustments Reportable for KFI and Segments Reorganization Historical Transactions Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$139,723

$

Employee Compensation and Benefits . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . .

45,542 50,445

(6,304)(d) (79)(a)

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .

95,987

(6,383)

Adjustments for Combination Transaction

—

$

$ 131,491

—(h) 1,733(f)(g)(h)

39,238 52,099

1,733

91,337

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Loss attributable to noncontrolling interests . . . . . . .

43,736 (95,930) (89)

Economic Net (Loss) Income . . . . . . . . . . . . . . . . . . . .

$ (52,105)

$ 65,796

Total Assets . . . . . . . . . . . Total Liabilities . . . . . . . . . Noncontrolling Interests . . . KKR Group Partners’ Capital

$298,857 259,084 9,883 29,890

$ (69,522)(a) $3,960,571(f)(g)(h) $4,189,906 (8,173)(d) 1,339,940(f)(g)(h) 1,590,851 81,165(b) 26,208(h)(i) 117,256(j) (142,514)(a)(b)(d) 2,594,423(f)(g)(h)(i) 2,481,799(j)

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. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

6,383 10,241(a) (49,172)(b)

(8,232)(g)(h)

Total Reportable Segments As Adjusted

(9,965) 17,383(f)(h) 75(h)(i) $

7,343

40,154 (68,306)(f) (49,186)(j) $

21,034(j)

KKR Group Private Markets Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Three Months Ended March 31, 2009 Private Adjustments Markets for KFI and Segment Reorganization Historical Transactions $

Adjustments for Combination Transaction

—

Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$127,795

Employee Compensation and Benefits . . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . .

39,416 44,324

(5,577)(d) (79)(a)

(2,249)(h) (1,093)(h)

31,590 43,152

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83,740

(5,656)

(3,342)

74,742

44,055 (95,913) (89)

Economic Net (Loss) Income . . . . . . . . . . . . . . . . . . . . .

$ (51,769)

$ 65,073

$ (1,708)

Total Assets . . . . . . . . . . . Total Liabilities . . . . . . . . . Noncontrolling Interests . . . KKR Group Partners’ Capital

$245,814 249,893 9,883 (13,962)

$ (69,522)(a) (7,333)(d) 80,718(b) (142,907)(a)(b)(d)

$ 1,902(f)(g)(h) $ 178,194 (15,834)(h) 226,726 2,483(h)(i) 93,084(j) 15,253(f)(g)(h)(i) (141,616)(j)

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

107

(5,042) 5,132(f)(h) 1,798(h)(i)

$ 119,411

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Loss attributable to noncontrolling interests . . . . . . . . . . . .

5,656 10,241(a) (49,176)(b)

$ (8,384)(g)(h)

Private Markets Segment As Adjusted

44,669 (80,540) (47,467)(j) $ 11,596(j)

KKR Group Public Markets Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Three Months Ended March 31, 2009 Public Adjustments Markets for KFI and Segment Reorganization Historical Transactions Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$11,928

Employee Compensation and Benefits . . . . . . . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,126 6,121

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,247

Adjustments for Combination Transaction

$ —

Public Markets Segment As Adjusted

$(39)(g)

(727)(d) — (727)

— —

5,399 6,121

—

11,520

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income attributable to noncontrolling interests . . . . . . . . . . . .

(319) (17) —

Economic Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (336)

$ 723

$(39)

$

Total Assets . . . . . . . . . . . . Total Liabilities . . . . . . . . . Noncontrolling Interests . . . . KKR Group Partners’ Capital

$53,043 9,191 — 43,852

$ — (840)(d) 447(b) 393(b)(d)

$(12)(g) — — (12)(g)

$53,031 8,351 447(j) 44,233(j)

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

727 — 4(b)

$11,889

(39) — —(i)

369 (17) 4(j) 348(j)

KKR Group Capital Markets & Principal Activities Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Three Months Ended March 31, 2009 Capital Markets & Principal Activities Segment Historical(e) Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Employee Compensation and Benefits . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income attributable to noncontrolling interests . . . . . .

—

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

108

191(h)

$

191 2,249 2,826

9,965

—

(4,890)

5,075

(9,965) 17,417(f) —

— — —

5,081 (5,166)(f)(h) (1,723)(h)(i)

$3,971,684(f) 1,339,952(f) — 2,631,732(f)

. . . .

$

2,249(h) (7,139)(g)(h)

Total Assets . . . . . . . . . . . . Total Liabilities . . . . . . . . . . Noncontrolling Interests . . . . KKR Group Partners’ Capital

. . . .

— — —

$

. . . .

$

— 9,965(f)

Economic Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments Adjustments for KFI and for Reorganization Combination Transactions Transaction

Capital Markets & Principal Activities Segment As Adjusted

7,452

(4,884) 12,251 (1,723)(j)

$

—

$ 1,638

$

9,090(j)

$

— — — —

$(13,003)(f)(g)(h) 15,822(g)(h) 23,725(h)(i) (52,550)(f)(g)(h)

$3,958,681 1,355,774 23,725(j) 2,579,182(j)

KKR Group Total Reportable Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Year Ended December 31, 2008 Total Adjustments Reportable for KFI and Segments Reorganization Historical Transactions Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

639,604

$

—

Employee Compensation and Benefits . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . .

149,182 247,751

(37,184)(d) (411)(a)

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .

396,933

(37,595)

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income (Loss) attributable to noncontrolling interests . .

242,671 (1,431,761) 6,384

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . .

$(1,195,474)

37,595 117,405(a) (684,513)(b)(c) $ 839,513

Adjustments for Combination Transaction $

(43,057)(g)(h)

Total Reportable Segments As Adjusted $

596,547

—(h) 25,460(f)(g)(h)

111,998 272,800

25,460

384,798

(68,517) (2,299,594)(f)(h) (23,681)(h)(i) $(2,344,430)

211,749 (3,613,950) (701,810)(j) $(2,700,391)(j)

KKR Group Private Markets Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Year Ended December 31, 2008 Private Markets Segment Historical Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

563,536

Adjustments for KFI and Reorganization Transactions —

$(59,151)(g)(h)

Employee Compensation and Benefits . . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . .

136,807 227,513

(32,264)(d) (411)(a)

(7,094)(h) (5,820)(h)

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .

364,320

(32,675)

Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Loss attributable to noncontrolling interests . . . . . . . .

199,216 (1,431,569) (37)

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(1,232,316)

109

$

Adjustments for Combination Transaction

32,675 117,405(a) (678,574)(b) $ 828,654

(12,914) (46,237) 78,783(f)(h) 30,650(h)(i) $ 1,896

Private Markets Segment As Adjusted $

504,385 97,449 221,282 318,731 185,654 (1,235,381) (647,961)(j)

$ (401,766)(j)

KKR Group Public Markets Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Year Ended December 31, 2008 Public Adjustments Markets for KFI and Segment Reorganization Historical Transactions Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$76,068

Employee Compensation and Benefits . . . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income attributable to noncontrolling interests . . . . . . . . Economic Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . .

Public Markets Segment As Adjusted

—

$(2,117)(g)

$73,951

12,375 20,238

(4,920)(d) —

— —

7,455 20,238

32,613

(4,920)

—

27,693

43,455 (192) 6,421

4,920 — (5,939)(b)(c)

$36,842

$

Adjustments for Combination Transaction

$10,859

(2,117) — (21)(i)

46,258 (192) 461(j)

$(2,096)

$45,605(j)

KKR Group Capital Markets & Principal Activities Segment Pro Forma Information After Adjustments for the KFI Transaction, the Reorganization Transactions and the Combination Transaction Year Ended December 31, 2008 Capital Markets & Principal Activities Segment Historical(e) Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Employee Compensation and Benefits . . . . . . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . . . . . .

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . .

$

—

$ 18,211(h)

$

18,211

— 68,517(f)

— —

7,094(h) (37,237)(g)(h)

7,094 31,280

68,517

—

(30,143)

38,374

(68,517) (2,304,387)(f) —

— — —

48,354 (73,990)(f)(h) (54,310)(h)(i)

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . Fee Related Earnings . . . . . . . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Loss attributable to noncontrolling interests . . . . . . .

—

Adjustments Adjustments for KFI and for Reorganization Combination Transactions Transaction

Capital Markets & Principal Activities Segment As Adjusted

$(2,372,904)

110

$

—

$ 28,674

(20,163) (2,378,377) (54,310)(j) $(2,344,230)(j)

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 York and Menlo Park, California. Its franchise offers a broad range of asset management services to public and private market investors and provides capital markets solutions for the firm, its portfolio companies and clients. With respect to certain funds that it sponsors, the KKR Group commits to contribute a specified 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’s investments. The KKR Group earns ongoing management, advisory and incentive fees for providing investment management, advisory and other services to its funds, co-investment vehicles, managed accounts and portfolio companies, and it generates transaction-specific advisory income from capital markets transactions. It earns additional investment income from investing its own capital alongside its investors and from the carried interest it receives from funds and co-investment vehicles. A carried interest entitles the sponsor of a fund to a disproportionate share of the investment gains that are generated on third-party capital that is invested. Following the completion of the Transactions, KKR’s net income will also reflect returns on assets acquired from KPE. The historical combined financial statements of the KKR Group include the results of eight of the KKR Group’s private equity funds (including the KPE Investment Partnership) and two of the KKR Group’s fixed income funds (the ‘‘KKR Funds’’) and the general partners and management companies of those funds. The KKR Group operates as a single professional services firm and carries out its business activities under the ‘‘KKR’’ brand name. The entities comprising the KKR Group are under the common control of the senior principals of the KKR Group, who are actively involved in the KKR Group’s operations and management. For management reporting purposes, the KKR Group has historically operated through two reportable business segments: Private Markets and Public Markets. Within its private market segment on a historical basis, the KKR Group conducted capital markets activities. However, the size and scope of 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 KPE Investment Partnership and our capital markets activities will be accounted for by KKR as a separate reportable 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 the preliminary unaudited pro forma segment information of KKR. • The Private Markets segment is comprised of KKR’s global private equity and infrastructure businesses, which manage and sponsor a group of investment funds and co-investment vehicles that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions, in global private equity and infrastructure assets. These funds build on KKR’s sourcing advantage and the strong industry knowledge, operating expertise and regulatory and stakeholder management skills of KKR’s professionals, operating consultants and senior advisors to identify attractive investment opportunities and create and realize value for investors. • The Public Markets segment is comprised of KKR’s fixed income and mezzanine finance businesses, as well as other businesses that invest primarily in publicly traded securities. Through these businesses, KKR manages a number of investment funds, structured finance vehicles and 111

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, distressed and rescue financings, private debt investments and mezzanine instruments. These funds, vehicles and accounts leverage KKR’s global investment platform, experienced investment professionals and ability to adapt its investment strategies to different market conditions to capitalize 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 from KPE with the capital markets business of KKR. KKR’s capital markets business supports the firm, its portfolio companies and clients by providing tailored capital markets advice and developing and implementing both traditional and non-traditional capital solutions for investments and companies seeking financing. Its activities consist primarily of capital markets advisory services, arranging debt and equity financing for transactions, placing and underwriting securities offerings and structuring new investment products. The assets that KKR will acquire from KPE are expected to provide the combined business with a significant source of capital to further grow and expand KKR’s business, increase its participation in its existing portfolio of businesses 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 investment expertise of its investment professionals will provide an attractive means for growing and developing 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 allocates resources based on financial and operating data and measures that are presented without giving effect to the consolidation of any of the Consolidated Entities. As a result, unlike the reporting in the combined financial statements of the KKR Group, the KKR Group’s segment reporting does not give effect to the consolidation of the Consolidated Entities. See ‘‘Basis of Presentation.’’ Economic net income (‘‘ENI’’) and fee related earnings (‘‘FRE’’) are key performance measures used by management. ENI is a measure of profitability for the Company’s reportable segments and represents income before taxes less net income attributable to noncontrolling interests, non-cash employee compensation charges associated with equity interests in the KKR business, any compensation borne by KKR Holdings, and certain non-cash amortization charges. FRE represents income before taxes adjusted to: (i) exclude the expenses of consolidated funds, non-cash employee compensation charges associated with equity interests in the KKR Group’s business, and any compensation borne by KKR Holdings; (ii) include management fees earned from consolidated funds that were eliminated in consolidation; (iii) exclude investment income; and (iv) exclude amortization of intangibles assets. These measures are used by management in making resource deployment and other operational decisions. 2. Adjustments for the Reorganization Transactions Because the legal entities that comprise the KKR Group are under the common control of the senior principals and will be under the common control of the senior principals following the completion of the Reorganization Transactions, the Reorganization Transactions will be accounted for as a transfer of interests under common control. Accordingly, KKR will carry forward into its combined financial statements the value of assets, liabilities and noncontrolling interests in the combined entities recognized 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 general partners of the 1996 Fund, because the KKR Group Partnerships will not acquire an interest in those general partners in connection with the Reorganization Transactions due to the fact that the general partners 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 net profits generated on the fund’s investments, subject to certain requirements. The funds also pay management fees to the KKR Group in exchange for management and other services. Subsequent to the 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 the elimination of $411 of expenses and $117,405 of investment loss for the year ended December 31, 2008 and $79 of expenses and $10,241 of investment loss for the three months ended March 31, 2009. As of March 31, 2009, the elimination of the financial results of the general partners of the 1996 Fund resulted in the elimination of $69,522 of total segment assets and a corresponding reduction in partners’ capital. While the management fee paid by the 1996 Fund is eliminated as an inter-company transaction in the combined financial statements of the KKR Group, it is not eliminated in the historical segment information of the KKR Group due to the fact that segment results are presented without giving effect to the consolidation of the Consolidated Entities. Accordingly, no pro forma adjustments have been made to management fees or fee income related to the 1996 Fund for the periods indicated. (b) This amount has been adjusted to reflect the inclusion of additional noncontrolling interests representing the Retained Interests, as well as the inclusion of 40% of carried interest allocated to KKR principals and other individuals who participate in its carry pool. Because capital investments made by or on behalf of the general partners of the KKR Group’s private equity funds following the completion of the Reorganization Transactions and the Combination Transaction will be held by the KKR Group Partnerships, no pro forma adjustments have been made to the pro forma statements of operations segment information to eliminate the financial results of any capital investments made on or after January 1, 2008. See ‘‘Reorganization Transactions—Conversion into a Holding Partnership Structure’’ for a description of the Retained Interests. For the year ended December 31, 2008 and the three months ended March 31, 2009, the inclusion of the Retained Interests not relating to capital invested by or on behalf of the general partners of the KKR Funds since January 1, 2008, as well as the inclusion of 40% of carried interest allocated to KKR principals and other individuals who participate in its carry pool impacted net loss attributable to noncontrolling 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 by corresponding inverse amounts. On a pro forma basis as of March 31, 2009, the inclusion of the noncontrolling economic interests that will allocate: (i) to a former principal 1% of the carried interest received by the general partner of KKR’s funds and 1% of KKR’s other profits, (ii) to certain of KKR’s former principals and their designees a portion of the carried interest received by the general partner of KKR’s private equity funds 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 the general 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, $0 and $0 in the Public Markets segment, respectively. Partners’ capital was impacted by corresponding inverse amounts. The Retained Interests, as well as the 40% of carried interest allocated to KKR principals and other individuals who participate in its carry pool discussed above include the impact of any amounts allocable from the adjustments in footnotes (c) and (d). (c) This amount has been adjusted to reflect the KFI Transaction, which resulted in the elimination of net income attributable to noncontrolling interests that previously allocated 35% of the ENI generated by the management companies of the Public Markets segment to holders of such interests. The elimination of these noncontrolling interests reduced net income attributable to noncontrolling interests by $(6,421) for the year ended December 31, 2008. ENI was impacted during such period by a corresponding inverse amount. There were no such adjustments as of and for the three months ended March 31, 2009. (d) This amount has been adjusted to reflect the exclusion of certain profit-based cash amounts that were previously paid by KKR, but which will no longer be borne by KKR following the Transactions, and the inclusion of certain base salaries that KKR will pay its principals following the Transactions in accordance with its compensation program. Following the Transactions, KKR principals will receive (i) financial benefits from KKR’s business in the form of distributions and payments received from KKR Holdings and through their direct and indirect participation in the value of KKR Group Partnership Units held by KKR Holdings, and (ii) annual cash compensation in the form of payments 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, these arrangements resulted in a net decrease in employee compensation and benefits of $32,264 and $5,577 in 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 in the Private Markets segment and Public Markets segment, respectively, and increased partners’ capital by corresponding inverse amounts. See Note (I) under ‘‘Transactions and Adjustments Excluded from Pro Forma Presentation’’ for information relating to certain, largely non-cash, employee compensation and benefits expenses that will be recorded in KKR’s financial statements following the Reorganization Transactions 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 by KKR in a separate reportable business segment referred to as the Capital Markets and Principal Activities segment. Accordingly, the results of such business have been presented separately under such caption 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 financial results of the KPE Investment Partnership and KPE, (ii) the elimination of carried interest allocated from certain investments in limited partner interests of the KPE Investment Partnership to the general partners of Consolidated Entities in the KKR Group Partnerships and (iii) the elimination of amounts allocated 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 the KPE Investment Partnership will be wholly-owned by the KKR Group Partnerships and included within the Capital Markets and Principal Activities segment. For the year ended December 31, 2008 and the three months ended March 31, 2009: (i) the inclusion of 100% of the historical financial results of the KPE Investment Partnership and KPE increased the investment loss of the Capital Markets and Principal Activities segment by $2,304,387 and increased 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 Activities segment by $68,517 and $9,965, respectively, (ii) the elimination of carried interest allocated from certain investments in limited partner interests of the KPE Investment Partnership to the general partners of the Consolidated Entities in the KKR Group Partnerships reduced investment loss of the Private Markets segment by $69,861 and $3,849, respectively, and impacted the Capital Markets and Principal Activities segment by corresponding amounts, and (iii) the elimination of amounts allocated to the general partner of the KPE Investment Partnership pursuant to its capital interest reduced investment loss of the Private Markets segment by $4,793 for year ended December 31, 2008 and increased 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 KPE Investment 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) the elimination of carried interest allocated from certain investments in limited partner interests of the KPE Investment Partnership to the general partners of Consolidated Entities in the Group Partnership increased total assets of the Private Markets segment by $31,262 and decreased total assets of the Capital Markets and Principal Activities segment by a corresponding amount, and (iii) the elimination of amounts allocated to the general partner of the KPE Investment Partnership pursuant to its capital interest reduced total assets of the Private Markets segment by $5,645. Except as noted above, each of these adjustments impacted partners’ capital by corresponding inverse amounts in their respective segments. (g) This amount has been adjusted to reflect the elimination of the management and incentive fees 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 of KKR in an amount to be determined following the Combination Transaction, the payments will be eliminated as inter-segment transactions because the KPE Investment Partnership will be wholly-owned by the KKR Group Partnerships and included within the Capital Markets and Principal Activities segment. For the year ended December 31, 2008 and the three months ended March 31, 2009, the elimination 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, respectively and 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 services agreements with the KKR Group reduced total assets of the Private Markets segment, the Public Markets 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. 115

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 respective segments. (h) These amounts have been adjusted to reflect the inclusion of KKR’s capital markets activities in 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 Private Markets 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 and benefits expense by $7,094 and $2,249, respectively, (iii) increased other operating expenses by $5,820 and $1,093, respectively, (iv) increased investment loss by $4,129 for the year ended December 31, 2008 and 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. The equivalent captions within the Private Markets segment were impacted by corresponding inverse amounts. As of March 31, 2009, the inclusion of our capital markets activities in KKR’s Capital Markets and Principal 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 equivalent captions within the Private Markets segment were impacted by corresponding inverse amounts and each of 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, 2009 impacted net loss attributable to noncontrolling interests by $30,613 and $1,709 in the Private Markets segment, 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 periods was impacted by corresponding inverse amounts. As of March 31, 2009, the inclusion of these noncontrolling interests impacted noncontrolling interests by $12,366 in the Private Markets segment and $13,842 in the Capital Markets and Principal Activities segment. (j) Following the completion of the Combination Transaction, 70% of economic net income and partners’ capital will be allocated to noncontrolling interests representing the KKR Group Partnership Units that will be indirectly held by KKR principals through KKR Holdings. For the year ended December 31, 2008 and the three months ended March 31, 2009, the noncontrolling interests described above would impact net loss attributable to noncontrolling interests by $(281,236) and $8,117 in the Private 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. ENI would be impacted during such periods by corresponding inverse amounts resulting in ENI allocable to KKR Group of $(120,530) and $3,479 in the Private Markets segment, respectively, $13,681 and $104 in the Public Markets segment, respectively, and $(703,269) and $2,727 in the Capital Markets and Principal Activities segment, respectively. As of March 31, 2009, the noncontrolling interests described above would impact noncontrolling interests 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 in each respective segment would be impacted by corresponding inverse amounts, resulting in KKR Group partners’ 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. 116

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 Preliminary Unaudited Pro Forma Segment Information. 4. Transactions and Adjustments Excluded from Pro Forma Presentation (I) Following the Reorganization Transactions and the Combination Transaction, KKR principals will receive financial benefits from KKR’s business in the form of distributions or payments received from KKR Holdings and through their direct or 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 paid by the firm and will be borne by KKR Holdings. A portion of the interests in KKR Holdings that will entitle KKR principals to participate in the value of KKR Group Partnership Units held by KKR Holdings will be subject to vesting and a portion of the distributions or payments made to such individuals from KKR Holdings will be subject to discretionary allocation. The above arrangements are expected to give rise to periodic employee compensation and benefits charges in the consolidated financial statements of KKR, despite the fact that substantially all of the economic consequences of such arrangements will be borne solely by KKR principals. Except for any cash-settled awards that may be granted under KKR’s equity incentive plan, in the future, these employee compensation and benefits charges will consist of non-cash charges. No pro forma adjustments have been made to reflect these charges, because management’s segment reporting excludes the impact of non-cash employee compensation charges associated with equity interests in the KKR business as well as any compensation borne by KKR Holdings. No pro forma adjustments have been made to reflect the possibility of cash charges associated with grants of cash-settled awards under KKR’s equity incentive plan, because no awards will be made under the equity incentive plan in connection with the Transactions. Adjustments for the various employee compensation charges described above would be included, however, in any pro forma financial information giving effect to the impact of the Reorganization Transactions and the Combination Transaction on the face of the combined financial statements of the KKR Group. (II) The preliminary unaudited pro forma segment information presents ENI, which as previously described, is a measure of profitability that represents income before taxes less net income attributable to noncontrolling interests, non-cash employee charges associated with equity interests in the KKR business, any compensation borne by KKR Holdings, and certain non-cash amortization charges. The KKR Group has historically operated as a group of partnerships for U.S. federal income tax purposes and, in the case of certain entities located outside the United States, corporate entities for foreign income tax purposes. Because most of the entities in the KKR Group are taxed as partnerships, the income of the KKR Group generally has been allocated to, and the resulting tax liability generally has been borne by, partners and the KKR Group is not currently taxed at the entity level in the United States, other than unincorporated business tax in New York City. Accordingly, income tax provisions reflected in the KKR Group’s historical combined financial statements primarily have been attributable to the New York City unincorporated business tax and foreign income taxes imposed on certain entities located outside the United States. Following the Reorganization Transactions and the Combination Transaction, the KKR Group Partnerships and their subsidiaries will continue to operate as partnerships for U.S. federal income tax purposes and, in the case of certain entities located outside the United States, corporate entities for foreign income tax purposes. Accordingly, those entities will continue to be subject to New York City 117

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 Group Holdings will be held through an intermediate holding company that will be taxable as a corporation for U.S. federal income tax purposes. As a result of such holding structure, we expect that the earnings of Management Holdings units will be subject to a blended federal, state and local effective tax rate of approximately 43% under current law as of March 31, 2009. This rate has been estimated based on the holding structure immediately following the completion of the Transactions and could fluctuate based on factors including but not limited to changes in applicable tax law, changes in structure, and changes in the jurisdictions where the Company conducts its business activities. Accordingly, Group Holdings will record a provision for its current and deferred income tax expense in its combined statements of operations and current and deferred tax assets or tax liabilities on its combined statements of financial condition in accordance with GAAP. As noted above, an adjustment has been made to record the historical financial results of the KPE Investment Partnership in the Capital Markets and Principal Activities segment. Although 100% of those historical financial results have been recorded in that segment, the Reorganization Transactions and the Combination Transaction will cause a portion of the KPE Investment Partnership’s assets to be contributed to, and held indirectly by, the intermediate holding company. The determination of which KPE Investment Partnership assets will be contributed to the intermediate holding company is based upon several factors including business, tax and regulatory considerations, as well as the composition, value and adjusted tax bases of the KPE Investment Partnership’s assets at the time of the Combination Transaction. Because any of these factors is subject to 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 the intermediate 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 differ from those assets which will ultimately be contributed to the intermediate holding company, the pro forma tax impact of those assets upon the intermediate holding company may not be illustrative of the actual tax position of the intermediate holding company. Accordingly, no pro forma adjustment for income taxes has been presented in the above financial statements. (III)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 a contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled. As of June 30, 2009, the amount of carried interest KKR has received, excluding carried interest received by the general partners 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 the investments in such funds been liquidated at their June 30, 2009 fair values, the contingent repayment obligation would have been approximately $224 million. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s 118

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 to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. Based on the fair market values as of June 30, 2009, KKR’s obligation under the net loss sharing provisions would have been approximately $258 million. If the vehicles were liquidated at zero value, the obligation under the net loss 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 distributions received 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 they receive after the Transactions pursuant to any carried interest allocated directly to them as carry pool participants. KKR will be responsible for any other clawback obligations and any amounts due under net loss sharing arrangements and will indemnify its principals for any personal guarantees that they have provided with respect to such amounts. (IV)KKR and KPE will incur various expenses to complete the Reorganization Transactions and the Combination Transaction. These expenses include fees and expenses of the financial advisors, legal and 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 Reorganization Transactions and the Combination Transaction, filing fees with regulatory bodies, listing fees and other miscellaneous costs. No pro forma adjustments have been made to reflect these expenses due to the fact that they currently are not objectively determinable. (V) Following the Reorganization Transactions and the Combination Transaction, KKR may incur costs associated with being a publicly traded entity that exceed those already incurred by KPE. Such costs may include new or increased expenses for such items as insurance, directors’ fees, accounting work, legal advice, investor relations and compliance with applicable regulatory requirements, including costs associated with periodic or current reporting obligations relating to the Combined Company. No pro forma adjustments have been made to reflect such costs due to the fact that they currently are not objectively determinable. (VI)Prior to the completion of the Combination Transaction, the KKR Group is expected to make one or more cash and in-kind distributions to certain of its existing owners. Such distributions are expected to consist of substantially all available cash-on-hand, certain accrued receivables of its management companies and capital markets subsidiaries and certain personal property (consisting of non-operating assets) 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 management fees that are payable in respect of future periods, the after-tax amount of any management fees that may be required to be returned to investors before a carried interest may be paid and any other amounts that are necessary to provide the Combined Business with sufficient working 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 and accrued receivables of the management companies and the book value of such personal property at the time 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 as of and for the years ended December 31, 2004, 2005, 2006, 2007 and 2008 and as of March 31, 2009 and 2008 and for the three months ended March 31, 2008 and 2009. KKR derived the selected historical combined data of the KKR Group as of December 31, 2007 and 2008 and for the years ended December 31, 2006, 2007 and 2008 from the audited combined financial statements included elsewhere in this consent solicitation statement. KKR derived the selected historical combined data of the KKR Group as of March 31, 2009 and for the three months ended March 31, 2008 and 2009 from the condensed predecessor combined financial statements included elsewhere in this consent solicitation statement. 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 combined financial 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 substantially the same basis as the KKR Group’s audited combined financial statements and include all adjustments that KKR considers necessary for a fair presentation of KKR’s combined financial position and results of operations for all periods presented. KKR will not acquire 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 results of operations and financial condition that KKR will have following the completion of the Transactions. You should read the following data together with the ‘‘Organizational Structure,’’ ‘‘Preliminary Unaudited Pro Forma Segment Information,’’ ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and the KKR Group’s combined financial statements and related notes included elsewhere in this consent solicitation statement.

2004 Statements of Operations Data: Revenues Fee income . . . . . . . . . . . . . . . . . $ 183,462 $ Expenses Employee compensation and benefits Occupancy and related charges . . . . General, administrative and other . . Fund expenses . . . . . . . . . . . . . .

Year Ended December 31, 2005 2006 2007 ($ in thousands) 232,945 $

2008

Three Months Ended March 31, 2008 2009 ($ in thousands)

410,329 $

862,265 $

235,181 $

68,590 $

39,070

. . . .

69,956 10,688 36,931 16,470

79,643 13,534 54,336 20,778

131,667 19,295 78,154 38,350

212,766 20,068 128,036 80,040

149,182 30,430 179,673 59,103

48,064 6,538 30,703 18,232

45,542 8,885 37,403 12,928

Total expenses . . . . . . . . . . . . . . .

134,045

168,291

267,466

440,910

418,388

103,537

104,758

3,026,396 14,611 54,060 (524)

2,984,504 729,926 27,166 (697)

3,105,523 714,069 210,872 (29,542)

1,111,572 (12,944,720) 747,544 75,441 218,920 129,601 (86,253) (125,561)

(732,974) 4,592 25,343 (35,359)

(720,849) 700 27,082 (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 . . . . . . . . Income taxes . . . . . . . . . . . . . . . .

3,143,960 6,265

3,805,553 2,900

4,143,785 4,163

2,413,138 12,064

(13,048,446) 6,786

(773,345) 888

(781,033) 1,531

Net Income (loss) . . . . . . . . . . . . . Less: Net income (loss) attributable to noncontrolling interests . . . . .

3,137,695

3,802,653

4,139,622

2,401,074

(13,055,232)

(774,233)

(782,564)

2,358,458

2,870,035

3,039,677

1,598,310

(11,850,761)

(656,335)

(727,981)

Investment Income (Loss) Net gains (losses) from investment activities . . . . . . . . . . . . . . . Dividend income . . . . . . . . . . . . Interest income . . . . . . . . . . . . Interest expense . . . . . . . . . . . .

. . . .

. . . .

Net income (loss) attributable to KKR group . . . . . . . . . . . . . . $ 779,237 $ Statement of Financial Condition (period end): Total assets . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . Noncontrolling interests . . . . . . Total partners’ capital . . . . . . . .

. . . .

. . . .

932,618 $ 1,099,945 $

802,764 $ (1,204,471) $ (117,898) $

. $9,701,478 $13,369,412 $23,292,783 $32,842,796 $ 22,441,030 . 313,672 418,778 1,281,923 2,575,636 2,590,673 . 8,352,342 11,518,013 20,318,440 28,749,814 19,698,478 . 1,035,464 1,432,621 1,692,420 1,517,346 151,879

120

(54,583)

34,342,014 $21,882,923 3,318,091 2,656,825 29,694,735 19,196,207 1,329,188 29,891

KKR MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the combined financial statements 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 position of the KKR Group, which is expected to become the predecessor of the Combined Business for accounting purposes upon the completion of the Reorganization Transactions. There can be no assurance that the Reorganization Transactions will be consummated or that the other conditions to the Combination Transaction will be satisfied or waived. While the historical combined financial statements of the KKR Group are expected to become the historical financial statements of the Combined Business following the completion of the Transactions, the data does not give effect to the Transactions and is not necessarily representative of the future results and financial condition of the Combined Business. See ‘‘Organizational Structure’’ and ‘‘Preliminary Unaudited Pro Forma Segment Information.’’ In addition, this discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including those described under ‘‘Cautionary Note Regarding Forward-Looking Statements’’ and ‘‘Risk Factors.’’ Actual results 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 and investment excellence. When KKR’s founders started the firm in 1976, they established the principles that guide KKR’s business approach today, including a patient and disciplined investment process; the alignment 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 market investors 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, having completed 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 equity expertise and strengthening its client interaction and capital markets activities. Today, with over 575 employees across the globe, KKR believes it has a preeminent global platform for sourcing 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, which provides a global platform for sourcing transactions, raising capital and carrying out capital markets activities. 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’s growth has been driven by value that it has created through its operationally focused investment approach, expansion into new lines of business, innovation in the products that it offers investors, an increased focus on providing tailored solutions to its clients, and the integration of capital markets distribution activities. KKR’s relationships with investors have provided the firm with a stable source of capital for investments, and KKR anticipates that they will continue to do so. As a global alternative asset manager, KKR earns ongoing management, advisory and incentive fees for providing investment management, advisory and other services to its funds, co-investment vehicles, managed accounts and portfolio companies, and it generates transaction-specific advisory income from capital markets transactions. It earns additional investment income from investing its own capital 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 investment gains that are generated on third-party capital that is invested. Following the completion of the Transactions, 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 with KKR & Co. L.P. and certain of its affiliates providing for the combination of the asset management business of KKR with the assets and liabilities of KPE. Upon completion of the Combination Transaction, KPE would beneficially hold a 30% interest in the Combined Business and KKR’s existing owners would beneficially hold a 70% interest in the Combined Business. KKR’s existing owners are not selling any equity interests in the Transactions. KPE is a Guernsey limited partnership that is admitted 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 only material assets are the interests that it holds in the KPE Investment Partnership. KPE had a net asset value of approximately $2.6 billion as of March 31, 2009. Business Segments Historically, KKR has operated through two reportable business segments for management reporting purposes: private markets and public markets (formerly referred to as private equity and fixed income). Within its private markets segment, KKR has also conducted capital markets activities. In connection with the Combination Transaction, KKR will acquire all of the assets of KPE, including its interests in the KPE Investment Partnership. It intends to manage these assets with its capital markets business and to account for the combined operations as a newly reported business segments referred to as capital markets and principal activities. For the historical periods presented in this consent solicitation document, segment information is presented based on KKR’s current segment presentation in accordance with GAAP. Private Markets KKR’s private markets segment is comprised of its global private equity and infrastructure businesses, which manage and sponsor a group of investment funds and co-investment vehicles that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions, in global private equity and infrastructure assets. These funds build on KKR’s sourcing advantage and the strong industry knowledge, operating expertise and regulatory and stakeholder management skills of KKR’s professionals, operating consultants and senior advisors to identify 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 with approximately $59.3 billion of capital commitments to invest in private equity and infrastructure opportunities, often in connection with leveraged buyouts, build-ups and growth equity investments, and has sponsored a number of fee and carry paying co-investment structures that allow it to commit additional capital to transactions. As of June 30, 2009, the segment had $37.5 billion of AUM and its actively investing funds included geographically differentiated investment funds and co-investment vehicles with over $15.1 billion of unused capital commitments, providing a significant source of capital that may be deployed globally. During the year ended December 31, 2008 and the three months ended March 31, 2009, the segment generated approximately $1.2 billion and $51.8 million of economic net loss, respectively.

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Public Markets KKR’s public markets segment is comprised of its fixed income business, including credit and mezzanine finance businesses, as well as other businesses that invest primarily in publicly traded securities 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, high yield securities, distressed and rescue financings, private debt investments and mezzanine instruments. These funds, vehicles and accounts leverage KKR’s global investment platform, experienced investment professionals and ability to adapt its investment strategies to different market conditions to capitalize on 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 management company 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 that allocated 35% of the net income generated by the parent to certain of its executives on an annual basis. On May 30, 2008, KKR acquired all of these outstanding interests in order to further integrate its operations, enhance the existing collaboration among its investment professionals and accelerate the growth of its business. This transaction is referred to as the ‘‘KFI Transaction.’’ As a result of the KFI Transaction, KKR now owns 100% of the equity interests in the parent and is entitled to all of the net income 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 KPE with the capital markets business of KKR. KKR’s capital markets business supports the firm, its portfolio companies and clients by providing tailored capital markets advice and developing and implementing both traditional and non-traditional capital solutions for investments and companies seeking financing. Its activities consist primarily of capital markets advisory services, arranging debt and equity financing for transactions, placing and underwriting securities offerings and structuring new investment products. To allow it to carry out these activities, the firm has obtained broker-dealer licenses in the United States, Canada, the United Kingdom, Dubai, Australia and Japan and has received 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 a significant source of capital to further grow and expand KKR’s business, increase its participation in its existing portfolio of businesses 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 investment expertise of its investment professionals will provide an attractive means for growing and developing this asset base over time. On a pro forma basis giving effect to the completion of the Combination Transaction, KKR’s capital markets and principal activities segment would have had net assets 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 the United States, Europe, Asia and elsewhere in the world. Although the diversity of its operations and product lines has allowed KKR to generate attractive returns in different business climates, business conditions characterized by low or declining interest rates and strong equity markets generally provide a more positive environment for it to generate attractive returns on existing investments. KKR may benefit, however, from periods of market volatility and disruption which allow it to use its large capital base and experience with troubled companies and distressed securities to make investments at attractive prices and on favorable terms.

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Beginning in late June 2007, the United States experienced considerable turbulence in the housing and sub-prime mortgage markets, which had a significant negative impact on other fixed income markets. Equity markets came under pressure in the latter part of 2007 as concerns of an economic slowdown were factored into valuations. As a result of reduced liquidity and greater volatility, several commercial and investment banks and hedge funds significantly reduced the carrying value of some of their fixed income holdings, threatening general market liquidity. The effects of these events eventually became more far-reaching and pervasive. Global financial markets have experienced considerable declines in the valuations of equity and debt securities, an acute contraction in the availability of credit and the failure of a number of leading financial institutions. As a result, certain government bodies and central banks worldwide, including the U.S. Treasury Department and the U.S. Federal Reserve, have undertaken unprecedented intervention programs, the effects of which remain uncertain. Deteriorating conditions in fixed income markets deterred lenders from committing to new senior loans and high yield debt. Debt underwriting declined meaningfully beginning in the second half of 2007 and the backlog resulting from pending private equity-led transactions reached record levels. This backlog, 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, the volume of new private equity acquisitions declined significantly in the second half of 2007, 2008 and the first quarter of 2009. Recently announced private equity-led acquisitions have mostly been smaller in sizes, with less leverage and less favorable terms for the debt provided, all of which has had a significant impact on the private equity industry and KKR’s business. The duration of current conditions in the credit and high-yield debt markets is unknown. World markets and economies continued to deteriorate in 2008, leading to some of the worst full-year market and economic performance levels experienced since the 1930s. In the United States, a GDP decline in the fourth quarter of 3.8% represented the greatest decline in more than 25 years. A combination of asset pricing declines and investor withdrawals reduced the value of equity and fixed income mutual fund and hedge fund holdings globally. In addition to concerns over weak economic trends, a combination of de-levering by institutional investors and a need for liquidity further pressured already stressed market pricing. Equity markets across North America, Europe and Asia declined in a range 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 second half as demand declines caused excess supply. High yield credit spreads widened by 1,100 basis points during the year. Global economies weakened further in the first quarter of 2009, with several developed nations officially 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 first 12-month decline in over 50 years. Credit trends worsened across most consumer and commercial asset classes. Overall, market performance in the first quarter of 2009 was more variable as compared to the fourth quarter of 2008. Government intervention in the United States, Europe and Asia has continued in 2009. Several financial and other institutions have required government support in the form of guarantees or capital injections, although some institutions have made arrangements to end the assistance they originally received. Other initiatives have been taken to potentially stimulate lending, consumer spending and the functioning of debt capital markets were announced during the first quarter of 2009. The dollar amount of stimulus spending announced by governments worldwide is unprecedented. While some financial institutions have announced that they will repay government support they have received, the effectiveness of the above measures is still unknown. The external shocks to the financial services industry have, and likely will continue, to reshape the competitive 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 holding companies. Lenders continue to severely restrict commitments to new debt, limiting industry-wide leveraged acquisition activity levels in both corporate and real estate markets. General acquisition activity has continued to decline, which has had a significant impact on several of KKR’s investment businesses. The duration of current economic and market conditions is unknown. KKR’s businesses are materially 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 attract capital and investors, secure investment opportunities, obtain financing for transactions, consummate investments and deliver attractive investment returns. These factors are impacted by a number of market conditions, including: • The strength and competitive dynamics of the alternative asset management industry, including the amount of capital invested in, and withdrawn from, alternative investments. KKR’s share of the capital that is allocated to alternative assets depends on the strength of KKR’s investment performance relative to the investment performance of its competitors. The amount of capital that it attracts and its investment returns directly affect the level of its AUM, which in turn affects the fees, carried interest and other amounts that it earns in connection with its asset management activities. • The strength and liquidity of debt markets. KKR’s private equity funds use debt financing to fund portfolio company acquisitions, while its fixed income funds make significant investments in debt instruments and, in some cases, use varying degrees of leverage to enhance returns and fund working capital. As a result, KKR’s business generally benefits from strong and liquid debt markets that support its funds’ investment activities, although periods of market volatility and disruption may create attractive investment opportunities, particularly for fixed income funds. As discussed under the caption ‘‘—Business Environment’’ above, significant deterioration in the debt markets that began in the third quarter of 2007 has had a negative impact on KKR’s business. Among other effects, these developments have increased the cost and difficulty of financing leveraged buyout transactions—thereby significantly reducing private equity activity— and impacted valuations and returns of fixed income funds. Increases in rates and spreads could further impact returns by making debt financing less readily available and more expensive for private equity investments and adversely impacting the values of existing fixed income investments. A reduction in leverage ratios or more restrictive covenants and other credit terms could also negatively impact KKR’s business. • The strength and liquidity of equity markets. Strong equity market conditions enable KKR’s private equity funds to increase the value of and to effect realizations of their portfolio company investments. Equity market conditions also affect the carried interest that KKR receives. After a prolonged period of positive performance and liquidity, equity markets have recently experienced considerable 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 declines in employment, household wealth, and lending, which may further negatively impact equity markets. Although certain government bodies and central banks worldwide, including the U.S. Treasury Department and the U.S. Federal Reserve, have undertaken unprecedented intervention programs aimed at, among other things, stabilizing equity markets, the effects of these programs remain uncertain. As a result of these negative market conditions, it has become more 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 earlier periods. • Market volatility. Volatility within the debt and equity markets increases both the opportunities and 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, may affect the performance of KKR’s funds. Historical trends in these markets are not necessarily indicative of KKR’s future performance. Recently, volatility in the equity markets and disruptions in the debt markets have made it more challenging to profit from investments. If these conditions continue, their negative impact on KKR’s business may become more pronounced. For a more detailed description of the manner in which economic and financial market conditions may 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 a long-term view. Both in building and expanding its business and in determining the types of investments to make, KKR has focused on the best outcomes for its business, investors and stakeholders measured over a period of years rather than on short-term financial performance. However, KKR’s results of operations are affected by the timing of investments and changes in the value of investments, each of which may vary significantly over the short-term. KKR intends to maintain its long-term focus after the Transactions and as it pursues its strategic growth 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 portfolio companies are earned pursuant to multi-year contracts, other amounts that it earns, such as transaction-specific advisory fees, incentive fees and carried interest, are subject to significant variability based on transaction volume and size, as well as investment performance. KKR does not intend to permit the short-term perspectives to influence its business approach, its operational, strategic or investment decisions, its duties or commitments to investors or its focus on creating value over the long-term. Impact of the Transactions The KKR Group is expected to become the predecessor of the Combined Business for accounting purposes and its historical combined financial statements are expected to become the historical financial 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 other conditions to the Combination Transaction will be satisfied or waived. The entities comprising the KKR Group are under the common control of the firm’s senior principals. Because the legal entities that comprise the KKR Group are under the common control of the firm’s senior principals and will continue to be under their common control following the completion of the Transactions, KKR will account 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 historical financial statements of the Combined Business following the completion of the Transactions as described 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 the completion of the Transactions: • KKR will deconsolidate both the 1996 Fund and the fund’s general partners, because the KKR Group Partnerships will not acquire an interest in those general partners in connection with the Transactions; • KKR will include noncontrolling interests that will allocate to a former principal and such person’s designees an aggregate of 1% of the carried interest received by general partners of the KKR 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 and their designees a portion of the carried interest received by the general partners of the private equity funds that was allocated to them with respect to private equity investments made during such former principals’ tenure with KKR; • KKR will include noncontrolling interests that will allocate to certain of its current and former principals all of the capital invested by or on behalf of the general partners of the private equity funds before the completion of the Transactions and any returns thereon as well as any realized carried interest distributions that are actually received but not distributed by the general partners prior to the Transactions; • KKR will include noncontrolling interests representing the KKR Group Partnership Units that KKR Holdings will hold in the KKR Group Partnerships, which interests will allocate to KKR Holdings 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 by the general partners of the private equity funds with respect to private equity investments made prior to the Transactions and a potentially variable percentage of the carried interest received by the general partners of the private equity funds with respect to private equity investments made after the Transactions; • KKR will make one or more cash and in-kind distributions to certain of its existing owners prior to the completion of the Transactions representing substantially all available cash-on-hand, certain accrued receivables of its management companies and capital markets subsidiaries and certain personal property (consisting of non-operating assets) of the management company for its private equity funds; and • KKR will record a provision for corporate income taxes on the income of the intermediate holding company through which KPE will hold its interest in one of the KKR Group Partnerships, 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 will become 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 Investment Partnership is consolidated in KKR’s combined financial statements, the Combination Transaction will be accounted for as an acquisition of noncontrolling interests in a consolidated entity with the KKR Group being treated as the accounting acquirer. Such acquisition will result in the elimination of consolidated amounts attributable to KPE unitholders that were previously recorded in KKR’s combined financial statements as net loss (income) attributable to noncontrolling interests (statement of operations) and noncontrolling interests (statement of financial condition), which in turn will impact the 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’s private markets segment, the corresponding expense previously incurred by the KPE Investment Partnership 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 management company 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 that allocated 35% of the net income generated by the parent to certain of its executives on an annual basis. On May 30, 2008, KKR acquired all of these outstanding interests in order to further integrate its operations, enhance the existing collaboration among its investment professionals and accelerate the growth of its business. This transaction is referred to as the ‘‘KFI Transaction.’’ As a result of the KFI Transaction, KKR now owns 100% of the equity interests in the parent and is entitled to all of the net income and related cash flows generated by the public markets segment. While not part of the Transactions, on May 30, 2008, KKR completed the KFI Transaction pursuant to which it acquired noncontrolling interests in the subsidiary through which KKR operates its public markets businesses. These noncontrolling interests allocated 35% of the net income generated by the subsidiary to certain of its executives on an annual basis. The KFI Transaction is accounted for as an acquisition of noncontrolling interests using the purchase method of accounting with the KKR Group being treated as the accounting acquirer. As a result of the KFI Transaction, KKR now owns 100% of the equity interests in its public markets business and is entitled to all of the net income and related cash flows generated by the segment. KKR expects to amortize certain finite-lived intangibles recognized in connection with the acquisition over their estimated useful lives, which will give rise to periodic 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 and related historical data included in this consent solicitation statement are not necessarily representative of KKR’s future results of operations and financial condition. To provide additional information illustrating the impact that the changes described above will have on KKR’s results of operations and financial condition, KKR has presented elsewhere in this consent solicitation statement unaudited pro forma segment financial information for the year ended December 31, 2008 and as of and for the three months ended March 31, 2009. This data gives pro forma effect to the Transactions, the KFI Transaction and certain other arrangements entered into in connection therewith as if such transactions and arrangements had been completed as of January 1, 2008 with respect to the unaudited condensed pro forma statements of operations and as of March 31, 2009 with respect to the unaudited pro forma statement of financial condition. Such information has been included for informational purposes only and does not purport to reflect the results of operations or financial position that would have occurred had the transactions referred to above occurred on the dates indicated. See ‘‘Preliminary Unaudited Pro 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 the predecessor combined financial statements of the KKR Group notwithstanding the fact KKR holds only a 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 member interest 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 the primary beneficiary. With respect to its consolidated funds, KKR generally has operational discretion and control over the funds and investors do not hold any substantive rights that would enable them to impact the funds’ ongoing governance and operating activities. As noted above, in connection with the Transactions, the KKR Group will deconsolidate the 1996 Fund, but will continue to consolidate the other consolidated funds that are currently consolidated in its combined financial statements. Those other consolidated funds consist of the European Fund, the Millennium Fund, the European Fund II, the 2006 Fund, the Asian Fund, the European Fund III, the KPE Investment Partnership and certain fixed income funds. Except for interests in the KPE Investment Partnership, KKR will not acquire any of the economic interests in such entities that are held by third party investors. In the case of the KPE Investment Partnership, KKR will acquire all of the interests in the entity that are held by KPE and such entity will become a wholly-owned subsidiary as 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 and manages, 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 flows of the consolidated fund on a gross basis. The majority of the economic interests in the consolidated fund, which are held by third party investors, are reflected as noncontrolling interests. Substantially all of the management fees and certain other amounts that KKR earns from the consolidated fund are eliminated 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 amounts eliminated. Accordingly, the consolidation of the consolidated fund does not have an effect on the amounts 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 net income attributable to partners’ capital that the KKR Group reports, the consolidation does significantly impact other aspects of KKR’s combined financial statement presentation. This is due to the fact that the assets, liabilities, income and expenses of the consolidated fund are reflected on a gross basis while the allocable share of those amounts that are attributable to noncontrolling interests are reflected as single line items. The single line items in which the assets, liabilities, income and expense attributable to noncontrolling interests are recorded are captioned as noncontrolling interests in the statement of financial condition and net income attributable to noncontrolling interests in the statement of operations. Segment Results The KKR Group presents the results of its reportable business segments in accordance with Statement of Financial Accounting Standards No. 131, ‘‘Disclosures about Segments of an Enterprise and Related Information.’’ See ‘‘—Business Segments.’’ This standard is based on a management approach, which requires segment presentation based on internal organization and the internal financial reporting 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 based on financial and operating data and measures that are presented without giving effect to the consolidation of any of the funds that it manage. As a result, unlike the reporting in the predecessor combined financial statements, the KKR Group’s segment reporting does not give effect to the consolidation of any funds. The exclusion of consolidated funds in segment reporting results in the inclusion of management fees and incentive fees in fee income that would otherwise be eliminated in combination, the exclusion of investment income and expenses that are attributable to noncontrolling interests held by third-party investors and the exclusion of net income attributable to noncontrolling interests. See ‘‘—Combined Results—Impact of the Consolidation of KKR’s Funds on the Presentation of Investment Income’’ and ‘‘—Key Financial Measures—Segment Operating and Performance Measures.’’ 129

Key Financial Measures Revenues Fee Income Combined fee income consists primarily of ongoing management, advisory and incentive fees it earns from providing investment management, advisory and other services to its funds, managed accounts and portfolio companies as well as transaction-specific advisory income from capital markets transactions. These fees are based on the contractual terms of the management and other agreements that KKR enters into with its funds, managed accounts and portfolio companies. A substantial portion of advisory fees earned in connection with managing portfolio companies are shared with fund investors. 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 who hold noncontrolling interests in the consolidated funds, net income attributable to KKR Group is increased 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 combined basis, 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 base salaries 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-based bonus component, employee compensation and benefits expense generally fluctuates based on our overall financial performance. Employee compensation and benefits expense is not borne by fund investors and is not offset by credits attributable to our fund investors’ noncontrolling interests in consolidated funds. Such expenses have grown in recent periods as a result of the expansion of KKR’s business, which has increased the number of its salaried employees. Unlike other personnel, compensation expense relating to senior principals has not been historically reflected for services they have provided. Instead, those individuals have relied on cash distributions that they have received on their equity interests in the firm. Because those cash distributions have been paid to senior principals in their capacities as owners of a business, the distributions have been accounted for as distributions of partners’ capital rather than employee compensation and benefits expense and, accordingly, have not been reflected as employee compensation and benefits expense in our statements of operations. Upon completion of the Transactions, KKR’s principals will in aggregate receive the majority of their financial benefits from KKR’s business in the form of distributions and payments received from KKR Holdings and through their direct and indirect participation in the value of KKR Group Partnership Units held by KKR Holdings. While KKR employees, including its senior principals, will receive base salaries from KKR following the Transactions, certain profit-based cash amounts that were previously paid by KKR to its principals will no longer be paid by KKR and will be borne by KKR Holdings. Although KKR will not bear the economic costs of those payments, it expects to record certain non-cash compensation charges in its financial statements reflecting them. It also expects to record 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 it receives from its funds and co-investment vehicles 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 the carry pool may exceed 40% only with the approval of a majority of the independent directors of KKR’s ultimate general partner. Subsequent to the completion of the Transactions, this allocation of investment income to principals and their designees under this arrangement is expected to be reflected as employee compensation and benefits expense in KKR’s combined financial statements prepared under GAAP. General, Administrative and Other Expense General, administrative and other expense consists primarily of professional fees paid to legal advisors, accountants, senior advisors and consultants; insurance costs; travel and related expenses; communications and information services; depreciation and amortization charges and other general and operating expenses. These expenses have increased in recent years due to overhead resulting from the expansion and growth of KKR business and fees paid to KKR’s senior advisors that are based in part on returns generated by KKR’s investments General, administrative and other expense is not borne by fund investors and are not offset by credits attributable to fund investors’ noncontrolling interests in consolidated funds. Fund Expenses Fund expenses consist primarily of costs incurred in connection with potential investments that do not result in completed transactions (such as travel expenses, professional fees and research costs) and other costs associated with administering private equity funds. A substantial portion of fund expenses are borne by fund investors. Investment Income (Loss) KKR recognizes investment income with respect to carried interests in investments of private equity funds, capital invested by or on behalf of the general partners of funds and the noncontrolling interests that third party fund investors hold in consolidated funds. Grants of restricted equity interests that the firm has historically received from KFN in respect of the management services have been included in investment income when vested. When the equity interests vest, these interests are reflected as investments on the statement of financial condition and investment income or loss is thereafter recognized in connection with changes in their fair value and any dividends or distributions paid on the shares. Net Gains (Losses) from Investment Activities New gains from investment activities consist primarily of the unrealized and realized gains and losses on investments that are made by funds. Unrealized gains or losses result from changes in the fair value of these investments during a period. Upon disposition of an investment, previously recognized unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period. While this reversal generally does not affect the amount of net gains that are recognized from investment activities, it does impact the cash flows recorded. See ‘‘—Critical Accounting Policies—Fair Value of Investments.’’ Dividend Income Dividend income consists primarily of the dividends and distributions that private equity funds receive 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 significant portfolio company transactions. Interest Income Interest income consists primarily of interest that is paid on KKR’s cash balances, the fixed income instruments in which consolidated funds invest and, to a lesser extent, interest payments that private equity funds are paid when they provide bridge financing to a portfolio company in connection with a portfolio company acquisition. Interest Expense Interest expense consists primarily of interest that is payable by funds or their general partners in connection with indebtedness that they incur to finance investments. A significant portion of KKR’s historical interest expense relates to long-term indebtedness that is used by fixed income funds to leverage their investments and indebtedness incurred by KPE under its credit agreement. KKR’s traditional private equity funds do not incur debt at the fund level, although some private equity funds have made investments in consolidated special purpose vehicles that use leverage to enhance returns of structured minority investments. The balance of KKR’s interest expense historically has consisted of short-term borrowings that are used by the general partners of private equity funds and the firm’s management companies and capital markets companies for working capital purposes. KKR maintains two primary credit agreements with separate financial institutions, which provide additional sources of long-term liquidity. Following the completion of the Transactions, all of KPE’s indebtedness will be included in the indebtedness of the KKR 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 is allocable to carried interests and capital investments is not readily shown in the accompanying combined financial statements. Instead, the portion of investment income that is allocable to carried interests and capital investments, after allocating amounts to noncontrolling interests, is reflected in net income attributable to KKR Group. Because the substantial majority of KKR’s funds are consolidated and because KKR holds only a minority economic interest in its funds’ investments, its allocable share of its funds’ investment income is significantly less than the total amount of investment income presented in the accompanying combined financial statements. Income Taxes KKR has historically operated as a group of partnerships for U.S. federal income tax purposes and, in the case of certain entities located outside the United States, corporate entities for foreign income tax purposes. Because most of these entities are taxed as partnerships, the firm’s income is generally allocated to, and the resulting tax liability is generally borne by, its principals and KKR generally are not taxed at the entity level. The income taxes included in the accompanying predecessor combined financial statements are attributable to the New York City unincorporated business tax and foreign income taxes imposed on certain entities located outside the United States. Following the Transactions, the KKR Group Partnerships and some of their subsidiaries will operate as partnerships for U.S. federal income tax purposes and, in the case of certain entities located outside the United States, corporate entities for foreign income tax purposes. Accordingly, those entities will continue to be subject to New York City unincorporated business taxes or foreign income taxes, as the case may be. In addition, the intermediate holding company through which KPE will hold its 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 will be reflected in KKR’s future results. Net Income Attributable to Noncontrolling Interests Net income attributable to noncontrolling interests represents the ownership interests that unaffiliated 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 net income attributable to noncontrolling interests. Historically, the amount of net income attributable to noncontrolling interests has been substantial and has resulted in significant charges and credits in the statements 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 interests allocated 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 public markets 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 in KKR’s capital markets business. On May 30, 2008, KKR acquired all outstanding noncontrolling interests in its public markets segment and now owns 100% of the entity. In connection with the Combination Transaction, KKR will similarly acquire all outstanding noncontrolling interests in the KPE Investment Partnership, which will become a wholly-owned subsidiary of the firm. While these acquisitions will reduce the noncontrolling interests that are included in KKR’s consolidated statement of financial condition and the related charges and credits for such items previously recorded in its combined statement of operations, KKR expects to continue to recognize substantial net income attributable to noncontrolling interests following the completion of the Transactions, and such items will continue to give rise to significant charges and credits in its statements of operations. In particular, upon completion of the Transactions, KKR expects that noncontrolling interests will consist of: • noncontrolling interests that will allocate to a former principal and such person’s designees an aggregate 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 a portion of the carried interest received by the general partners of the private equity funds with respect 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 the capital invested by or on behalf of the general partners of the private equity funds before the completion of the Transactions and any returns thereon; • KKR will include noncontrolling interests representing the KKR Group Partnership Units that KKR Holdings will hold in the KKR Group Partnerships, which interests will allocate to KKR Holdings 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 the equity 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 carried interest. KKR calculates its AUM as of any date as the sum of: (i) the fair value of the investments of its traditional private equity funds and its carry-yielding co-investment vehicles and other KKR sponsored investment vehicles plus the capital that it is entitled to call from investors in such funds and vehicles with respect to their unfunded capital commitments; (ii) the net asset 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 of outstanding tranches of structured finance vehicles that it manages. As a result of raising new funds with sizeable capital commitments, 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 the extent that increases in AUM consist of permanent capital, the related increases in fee income would be 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 the investment period (typically the first six years of a fund’s life) and thereafter on the cost basis of the fund’s investments, which causes the fees to be reduced over time as investments are liquidated. As of March 31, 2009, approximately 68.9% of the AUM in KKR’s traditional private equity funds were associated 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 business segments. The difference between fee related earnings and income before taxes presented in accordance 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 associated with equity interests in KKR’s business and employee compensation charges relating to compensation borne by unconsolidated persons; (ii) include management fees earned from consolidated funds that were eliminated in consolidation; (iii) exclude investment income; (iv) exclude amortization of intangibles assets; and (v) exclude net income attributable to noncontrolling interests. See ‘‘—Combination Transaction—Capital Markets and Principal Activities.’’ KKR believes such adjustments are meaningful because management makes operating decisions and assesses the performance of KKR’s business based on financial and operating metrics and data that are presented without 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 related earnings, which consist primarily of management, advisory and incentive fees earned from all of KKR’s funds, managed accounts, portfolio companies, capital markets transactions and other investment products. Subsequent to the Transactions, KKR will continue to focus on growing its fee related earnings and use segment fee related earnings levels to make operating decisions and assess the performance 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 making operating 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) exclude non-cash employee compensation charges associated with equity interests in KKR’s business and employee compensation charges relating to compensation borne by KKR Holdings, and (iii) exclude charges relating to the amortization of intangible assets. Because the accompanying predecessor combined financial statements do not include any significant non-cash employee compensation charges associated with equity interests in KKR’s business, employee compensation charges relating to compensation borne by unconsolidated persons or any significant charges relating to the amortization of intangible assets or deferred financing costs, ENI is the equivalent of income before taxes, less amortization of intangible assets, for the historical periods presented. See ‘‘Preliminary Unaudited Pro Forma Segment Information.’’ Combination Transaction; Capital Markets and Principal Activities Segment In connection with the Combination Transaction, the KPE Investment Partnership will become a wholly-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 be considered a consolidated fund, the acquisition will result in the elimination of management fees from KKR’s fee related earnings previously recorded by KKR’s private markets segment. While the acquisition will therefore impact the results of KKR’s private markets segment, including reported levels of fee related earnings and ENI, KKR will report new financial results relating to the net assets acquired, including investment income and expense, in KKR’s Capital Markets and Principal Activities segment following the Combination Transaction. Private Equity Dollars Invested Private equity dollars invested is the aggregate amount of capital invested by KKR’s private equity funds 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 which KKR is entitled to a carried interest and capital contributed by it as the general partner of a private equity fund with respect to which it is entitled to profits generated on the invested capital. KKR uses private equity dollars invested as a measure of the productivity of its investment activities and as an indicator of potential returns that KKR may realize in future periods from its current private equity investments. From KKR’s inception through March 31, 2009, its first eleven traditional private equity funds (representing all of KKR’s private equity funds that have invested at least 36 months) achieved a multiple 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 years ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2009 and 2008. You should read this discussion in conjunction with the information included under ‘‘—Basis of Financial Presentation—Combined Results’’ and the predecessor combined financial statements and related notes included elsewhere in this consent solicitation statement. For a more detailed discussion of the factors that 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 the years ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2008 and 2009. Year Ended December 31, 2006 2007 2008 ($ in thousands)

Three months ended March 31, 2008 2009 ($ in thousands)

Revenues Fee income . . . . . . . . . . . . . . . . . . $

410,329 $

862,265 $

235,181 $

68,590 $

39,070

Expenses Employee compensation and benefits . . . . . . . . . . . . . . . . . . Occupancy and related charges . . General, administrative and other Fund expenses . . . . . . . . . . . . . .

. . . .

131,667 19,295 78,154 38,350

212,766 20,068 128,036 80,040

149,182 30,430 179,673 59,103

48,064 6,538 30,703 18,232

45,542 8,885 37,403 12,928

Total expenses . . . . . . . . . . . . . . .

267,466

440,910

418,388

103,537

104,758

. . . .

Investment Income (Loss) Net gains (losses) from investment activities . . . . . . . . . . . . . . . . . . Dividend income . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . .

. . . .

3,105,523 714,069 210,872 (29,542)

1,111,572 (12,944,720) 747,544 75,441 218,920 129,601 (86,253) (125,561)

(732,974) 4,592 25,343 (35,359)

(720,849) 700 27,082 (22,278)

Total investment income (loss) . . .

4,000,922

1,991,783

(12,865,239)

(738,398)

(715,345)

Income (loss) before taxes . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . .

4,143,785 4,163

2,413,138 12,064

(13,048,446) 6,786

(773,345) 888

(781,033) 1,531

Net Income (loss) . . . . . . . . . . . . . . Less: Net income (loss) attributable to noncontrolling interests . . . . . . . . . . . . . . . . .

4,139,622

2,401,074

(13,055,232)

(774,233)

(782,564)

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)

Assets under management (period end) . . . . . . . . . . . . . . . . . . . . . . . . $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 due to a $16.6 million decrease in transaction fees resulting from the absence of fee-generating investments during the first quarter of 2009 compared to two transaction-fee generating private equity investments during the first quarter of 2008 with a total transaction value of $3.5 billion. In addition, management fees relating to these funds decreased $3.8 million primarily due to the unfavorable financial performance of certain fixed income funds resulting from adverse credit market conditions as well as reduced base management fee rates for all investor classes for certain fixed income funds. These adverse conditions resulted in increases in net realized and unrealized losses on investments, derivatives and foreign exchange at certain fixed income funds consistent with those experienced in the broader credit 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 new KKR 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 to an increase in general and administrative expenses of $6.7 million primarily as a result of an increase in expenses at KKR’s public markets segment reflecting the growth of that segment as well as an increase in professional fees associated with the growth of KKR’s private equity funds. Additionally, occupancy and 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 office space. Offsetting these increases was a decrease in employee compensation and benefits of $2.5 million reflecting lower incentive compensation in connection with less favorable financial performance when compared to the prior period partially offset by the hiring of additional personnel after March 31, 2008 in connection with the expansion of KKR’s business. Additionally, fund expenses decreased $5.3 million primarily as a result of a decrease in transaction related expenses attributable to unconsummated transactions 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 $732.9 million for the three months ended March 31, 2008. The following is a summary of the components of net losses from investment activities: Three months ended March 31, March 31, 2009 2008 ($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Losses from Sales of Investments and Realization of Gains . . . . . . . . . . . . . . . . . . . . Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains from Sales of Investments and Realization of Losses . . . . . . . . . . . . . . . . . . . Unrealized Gains from Changes in Fair Value . . . Unrealized Losses from Changes in Fair Value . .

......

$

28,368

$

173,757

...... ......

(16,499) (124,889)

(162,194) (11,483)

...... ...... ......

115,234 683,273 (1,406,336)

4,600 792,099 (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 was primarily attributable to a decrease in net unrealized losses of $270.9 million resulting primarily from lower overall decreases in the market value of KKR’s investment portfolio. These decreases were partially 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 unfavorable variance in realization activity from the prior period of $258.8 million. Substantially all of KKR’s net losses 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 generally earned in connection with sales of significant operations or other restructuring transactions undertaken by KKR’s portfolio companies resulting in available cash that is distributed to KKR’s private equity funds. During the three months ended March 31, 2009, KKR received $0.6 million of dividends from one portfolio company and an aggregate of $0.1 million of comparatively smaller dividends from other investments. During the three months ended March 31, 2008, KKR received $4.0 million of dividends from two portfolio companies and an aggregate of $0.6 million of comparatively smaller dividends from other 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 an increase of $11.0 million in income earned from higher average cash balances at KKR’s traditional private equity funds. Offsetting this increase were decreases of $7.8 million at KPE following the deployment of a greater percentage of its cash to investments, and $1.5 million at KKR’s management companies 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 borrowings were $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 to the prior period. Approximately $15.1 million of the overall decrease was attributable to decreased borrowings at KPE and leveraged structures used by KPE and KKR’s traditional private equity funds to enhance returns on certain assets. Offsetting these decreases were increases at KKR’s management company and capital markets business of $2.0 million reflecting an increased level of borrowings during the period. Loss Before Taxes Due to the factors described above, loss before taxes was $781.0 million for the three months ended March 31, 2009, an increase of $7.7 million compared to loss before taxes of $773.3 million for the 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 ended March 31, 2009, an increase of $71.6 million compared to net loss attributable to noncontrolling interests of $656.3 million for the three months ended March 31, 2008. The increase reflects a higher proportion of private equity losses allocated to noncontrolling interests during the first quarter of 2009 under 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%, from March 31, 2008. The decrease was due primarily to $12.7 billion of net unrealized losses resulting from changes 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 finance vehicles 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 offset by an increase in the capital commitments to the European Fund III of $0.9 billion, a $0.5 billion increase associated with the formation of new KKR sponsored investment vehicles, and a $2.4 billion increase associated with capital managed on behalf of third party investors at KKR’s public markets segment. 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 transaction value during the period. During the year ended December 31, 2008, KKR completed four transaction fee-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 transaction value of $141.6 billion during the year ended December 31, 2007. In addition, management and incentive fees relating to KFN decreased $27.9 million primarily as a result of KFN experiencing adverse credit market conditions. These adverse conditions resulted in significant increases in net realized and unrealized losses on investments, derivatives and foreign exchange at KFN consistent with those experienced in the broader credit markets. These increased losses resulted in KFN not achieving certain benchmark returns and other performance targets compared to the prior period when such returns and targets had been met. Offsetting these decreases was a $41.8 million increase in monitoring fees reflecting an increase in the average monitoring fee received as well as the receipt of a non-recurring $15.0 million advisory fee from one of KKR’s portfolio companies. During the year ended 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 million during the year ended December 31, 2007. In addition, fee income relating to KKR’s capital markets business increased $18.2 million as a result of its formation in late 2007, and management fees at KKR’s credit strategy funds increased $0.8 million primarily as a result of increased assets under management 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 million decrease in employee compensation and benefits resulting from a decrease in incentive compensation in connection with less favorable financial performance when compared to the prior period, offset by increases relating to the hiring of additional personnel after December 31, 2007 in connection with the expansion of KKR’s business. Additionally, fund expenses decreased $20.9 million primarily as a result of a decrease in transaction related expenses that were attributable to unconsummated transactions during 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 markets business 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 new offices in Beijing, Sydney, Houston and Washington, D.C. subsequent to December 31, 2007 as well as an 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, a decrease of $14.0 billion compared to net gains from investment activities of $1.1 billion for the year

139

ended December 31, 2007. The following is a summary of the components of net gains (losses) from investment activities: Year ended December 31, December 31, 2008 2007 ($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Losses from Sales of Investments and Realization of Gains . . . . . . . . . . . . . . . . . . . . Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains from Sales of Investments and Realization of Losses . . . . . . . . . . . . . . . . . . . Unrealized Gains from Changes in Fair Value . . . Unrealized Losses from Changes in Fair Value . .

.....

$

446,856

$ 1,885,562

..... .....

(345,477) (193,446)

(1,709,601) (328,461)

..... ..... .....

101,402 2,681,711 (15,635,766)

255,720 4,732,096 (3,723,744)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(12,944,720) $ 1,111,572

The overall decrease in net gains (losses) from investment activities from the prior period was primarily attributable to a net decrease in changes in unrealized gains (losses) of $12.8 billion resulting primarily from decreases in the market value of KKR’s investment portfolio and to a lesser extent a decline in net realized gains of $1.3 billion resulting primarily from a lower level of sales activity during the period. Substantially all of KKR’s net gains (losses) from investment activities are related to its private 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 generally earned in connection with sales of significant operations or other restructuring transactions undertaken by KKR’s portfolio companies resulting in available cash that is distributed to KKR’s private equity funds. During the year ended December 31, 2008, KKR received $74.2 million of dividends from two portfolio companies and an aggregate of $1.2 million of comparatively smaller dividends. During the year ended December 31, 2007, KKR received $717.7 million of dividends from eight portfolio companies and an aggregate of $29.8 million of comparatively smaller dividends from four portfolio companies. 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 attributable to the deconsolidation, during the second quarter of 2007, of one of the structured finance vehicles managed by KKR as well as a decrease of $66.6 million in interest income earned from cash management activities at KPE following the deployment of a greater percentage of its cash to investments. Cash management activities resulting in lower cash balances at KKR’s management companies resulted in a decrease in interest income of $7.3 million. Offsetting these decreases were increases in income earned from cash management activities at KKR’s traditional private equity funds of $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 borrowings were $2.2 billion and $1.5 billion for the year ended December 31, 2008 and 2007, respectively. The increase was primarily attributable to increased borrowings at KPE and leveraged structures used by KPE and KKR’s traditional private equity funds to enhance returns on certain assets which collectively resulted in the recognition of $61.2 million of additional interest expense. In addition, interest expense increased at KKR’s management company and capital markets business by $9.8 million. This increase was 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 in connection with credit agreements entered into in early 2008 of $4.7 million. These increases were offset by a decrease of $31.7 million in KKR’s public markets segment resulting primarily from the deconsolidation, during the second quarter of 2007, of one of the structured finance vehicles managed by KKR. Income (Loss) before Taxes Due to the factors described above, loss before taxes was $13.0 billion for the year ended December 31, 2008, a decrease of $15.4 billion compared to income before taxes of $2.4 billion for the year 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 ended December 31, 2008, a decrease of $13.5 billion compared to income attributable to noncontrolling interests of $1.6 billion for the year ended December 31, 2007. The decrease primarily reflects net losses attributable to noncontrolling interests, which were driven by the overall changes in the components 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%, from December 31, 2007. The decrease was due primarily to the $12.7 billion of net unrealized losses resulting from changes in the market values of KKR’s portfolio companies in its private markets segment, a $1.8 billion decrease in the capital relating to one fixed income fund and certain structured finance vehicles that KKR manages, and $0.6 billion of distributions from KKR’s traditional private equity funds comprised of $0.5 billion of realized gains and $0.1 billion of original cost. These decreases were offset by the formation of the European Fund III, which received $6.4 billion of capital commitments from fund investors during 2008 and $4.0 billion increase associated with capital managed on 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 to a $425.1 million increase in transaction fees earned in KKR’s private markets segment, which was attributable to a significant increase in the total value of private equity transactions completed during 2007 relative to 2006. During 2007, KKR completed 13 transaction fee-generating private equity investments with a total combined value of $141.6 billion, compared to 11 transaction 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 greater proportion of the overall transaction 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 of 2006, and incentive fees relating to certain of KKR’s fixed income funds increased $9.7 million resulting primarily from the receipt of such fees beginning late in the second quarter of 2006. The remainder of the 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 portfolio companies paying monitoring fees as well as an increase in the average monitoring fee received. During the twelve months ended December 31, 2007, KKR had 40 portfolio companies that were paying an average 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 were decreases in management and incentive fees received from KFN of $8.4 million primarily as a result of KFN not achieving certain benchmark returns and other performance targets compared to the prior period 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 million increase in employee compensation and benefits expense resulting from higher incentive compensation reflecting KKR’s improved financial performance during 2007 as well as the hiring of additional personnel during the year ended December 31, 2007 in connection with the continued expansion of KKR’s business. In addition, general, administrative and other expenses increased $49.9 million resulting from the growth of KKR’s business, and included increases in professional fees, travel and entertainment expenses and to a lesser extent the opening of KKR’s Tokyo office and the formation of KPE in the second quarter of 2006. Fund expenses increased $41.7 million as a result of a $20.8 million increase in expenses incurred in KKR’s private markets segment in connection with the organization of newly formed funds and the placement of limited partner interests in such funds as well as an increase in transaction related expenses of $12.6 million that were attributable to unconsummated transactions during the period. 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. Net Gains from Investment Activities Net gains from investment activities were $1.1 billion for the year ended December 31, 2007, a decrease of $2.0 billion, or 64.5%, from the year ended December 31, 2006. The following is a summary of the components of net gains from investment activities: Year Ended December 31, December 31, 2007 2006 ($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Losses from Sales of Investments and Realization of Gains . . . . . . . . . . . . . . . . . . . Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains from Sales of Investments and Realization of Losses . . . . . . . . . . . . . . . . . . . Unrealized Gains from Changes in Fair Value . . Unrealized Losses from Changes in Fair Value . .

.......

1,885,562

3,380,548

....... .......

(1,709,601) (328,461)

(2,891,770) (135,617)

....... ....... .......

255,720 4,732,096 (3,723,744)

138,873 3,435,690 (822,201)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,111,572

$3,105,523

The overall decrease in net gains from investment activities from the prior period was primarily attributable 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 equity investments. 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 earned in connection with sales of significant operations or other restructuring transactions undertaken by KKR’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 an aggregate of $29.8 million of comparatively smaller dividends from four portfolio companies. During 2006, 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 attributable to 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 management companies. This increase was offset by $42.7 million of decreases in interest income earned from cash management activities at KPE following the deployment of a greater percentage of its cash to investments. 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 borrowings were $1.5 billion and $0.6 billion for the years ended December 31, 2007 and 2006, respectively. The increased interest expense was primarily attributable to borrowings at KPE and leveraged structures used by KPE and KKR’s traditional private equity funds to enhance returns on certain assets, which collectively 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 were formed in the fourth quarter of 2006. These increases were offset by a $12.7 million decrease in interest expense at the general partners of KKR’s traditional private equity funds resulting from a decrease 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 ended December 31, 2007, a decrease of $1.4 billion, or 46.7%, from the year ended December 31, 2006. The decrease primarily reflects a reduction in the total investment income attributable to noncontrolling interests, which was driven by the overall changes in the components of investment income described above.

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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, which received $4.0 billion of capital commitments from fund investors during the first half of 2007, an increase in the capital commitments to the 2006 Fund of $1.5 billion during 2007 (bringing total capital commitments in the 2006 Fund to $17.6 billion as of December 31, 2007), a $1.4 billion increase associated with the formation of carry-yielding co-investment vehicles and KKR’s principal protected private equity product, $0.9 billion of net unrealized gains resulting from changes in the market values of KKR’s portfolio companies in its private markets segment and a $5.8 billion increase in the capital relating to one fixed income fund and structured finance vehicles that KKR manages. These increases offset $4.3 billion of distributions from KKR’s traditional private equity funds comprised of $2.6 billion of realized gains and $1.7 billion of original cost. Segment Analysis The following is a discussion of the results of KKR’s two reportable business segments for the years ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2008 and 2009. You should read this discussion in conjunction with the information included under ‘‘—Basis of Financial Presentation—Segment Results’’ and the predecessor combined financial statements and related notes included elsewhere in this consent solicitation statement. Private Markets Segment The following tables set forth information regarding the results of operations and certain key operating metrics for KKR’s private markets segment for the years ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2008 and 2009. Three months ended March 31, 2008 2009 ($ in thousands)

Year Ended December 31, 2006 2007 2008 ($ in thousands)

Fee income Management fees . . . . . . . . . . . . . . . . $ Advisory fees . . . . . . . . . . . . . . . . . . .

181,371 $ 172,950

231,527 $ 537,126

426,005 $ 137,531

78,833 $ 37,740

103,802 23,993

Total fee income . . . . . . . . . . . . . . . $

354,321 $

768,653 $

563,536 $

116,573 $

127,795

Expenses Employee compensation and benefits . . Other operating expenses . . . . . . . . . . .

92,950 121,327

187,540 209,700

136,807 227,513

43,412 48,561

39,416 44,324

Total expenses . . . . . . . . . . . . . . . . .

214,277

397,240

364,320

91,973

83,740

Fee related earnings . . . . . . . . . . . . . . . . Investment income (loss) . . . . . . . . . . . . .

140,044 929,518

371,413 403,601

199,216 (1,431,569)

24,600 (148,310)

44,055 (95,913)

Income (loss) before taxes . . . . . . . . . . . . (Loss) Income Attributable to Noncontrolling Interests . . . . . . . . . . . .

1,069,562

775,014

(1,232,353)

(123,710)

(51,858)

—

—

(37)

Economic net income (loss) . . . . . . . . . . $ 1,069,562 $

65

775,014 $ (1,232,316)$ (123,775)$

(89) (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 $

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18,000

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 ended March 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 result of (i) an increase of $22.2 million relating to the formation of the European III fund which began earning fees in the second quarter of 2008; (ii) a decrease of $11.3 million in connection with the movement of the European II fund from the investment period to the post-investment period which has the effect of reducing the management fee rate; (iii) an increase of $13.8 million associated with a reduction in accrued management fee refunds attributable to a decline in the performance of certain of KKR’s private equity funds; and (iv) an increase of $7.3 million associated with a reduction in waived management 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 a decrease in fees at KPE in connection with a decline in NAV as well as lower invested capital at certain of KKR’s older private equity funds. In addition, monitoring fees increased $4.3 million reflecting a lower level of credits earned by the limited partners under fee sharing arrangements in KKR’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 during the first quarter of 2009 compared to two transaction fee-generating private equity investments during the first quarter of 2008 with a total transaction value of $3.5 billion. Additionally, 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. Expenses Expenses in KKR’s private markets segment were $83.7 million for the three months ended March 31, 2009, a decrease of $8.2 million, or 9.0%, from the three months ended March 31, 2008. The decrease was primarily due to a $4.0 million decrease in employee compensation and benefits resulting from a decrease in incentive compensation in connection with less favorable financial performance when compared to the prior period, partially offset by the hiring of additional personnel after March 31, 2008 in connection with the expansion of KKR’s business. Additionally, fund expenses decreased $5.3 million primarily as a result of a decrease in transaction related expenses attributable to unconsummated transactions during the period reflecting a lower level of transaction activity. Partially offsetting these decreases were increases in occupancy and related charges 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 office space. Fee Related Earnings Due primarily to the increase in fee income described above, fee related earnings in KKR’s private markets 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 $1.8 million. The following is a summary of the components of net loss from investment activities: Three months ended March 31, March 31, 2009 2008 ($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Losses from Sales of Investments and Realization of Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains from Sales of Investments and Realization of Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains from Changes in Fair Value . . . . . . . . . . . Unrealized Losses from Changes in Fair Value . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

462

$ 38,658

(349) (1,317)

(37,319) —

1,298 55,129 (149,553)

— 123,329 (275,778)

$ (94,330) $(151,110)

The lower level of investment loss from the prior period of $56.8 million was primarily attributable to a decrease in net unrealized losses of $96.3 million resulting primarily from lower overall decreases in the market value of KKR’s investment portfolio. These decreases were partially offset by realization activity that represented a net loss in the first quarter of 2009 of $0.8 million and a net gain in the first quarter of 2008 of $38.7 million resulting in a net unfavorable variance in realization activity from the prior period of $39.5 million. Carried interest represented a loss of $(69) million and $(133) million of total investment loss for the three months ended March 31, 2009 and 2008, respectively. KKR’s allocated share of dividends decreased $1.0 million as a result of fewer dividends as well as a lower average 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 during the first quarter of 2008. This $3.4 million variance was due primarily to increased borrowings as well as lower average cash balances. Economic Net Loss Economic net loss in KKR’s private markets segment was $51.8 million for the three months ended March 31, 2009, a decrease of $72 million compared to economic net loss of $123.8 million for the three months ended March 31, 2008. The reduced investment loss described above was the main contributor 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 net unrealized losses resulting from changes in the market values of KKR’s portfolio companies in KKR’s private markets segment and $0.4 billion of distributions from KKR’s traditional private equity funds comprised of $0.3 billion of realized gains and $0.1 billion of original cost. These decreases were offset by an increase in the capital commitments to the European Fund III of $0.9 billion and a $0.5 billion increase 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, a decrease of $1.8 billion, or 99.0%, from the three months ended March 31, 2008. The decrease was due to 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 capital commitments 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 ended December 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 markets segment of $457.3 million resulting from a lower combined completed transaction value during the period. During the year ended December 31, 2008 KKR completed four transaction fee-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 transaction value of $141.6 billion during the year ended December 31, 2007. Offsetting these decreases was an increase in management fees relating to KKR’s private equity funds of $194.5 million. The increase was primarily due to the net result of (i) an increase of $100.6 million relating to the formation of the European III fund which began earning fees in the second quarter of 2008 as well as a full year of fees in 2008 relating to the Asian Fund formed in mid-2007; (ii) a decrease of $21.3 million in connection with the movement of the European II fund from the investment period to the post-investment period which has the effect of reducing the management fee rate; (iii) an increase of $59.3 million associated with a reduction in accrued management fee refunds attributable to a decline in the performance of certain of KKR’s private equity funds; and (iv) an increase of $66.6 million associated with a reduction in waived management 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 to a decrease in fees at KPE in connection with a decline in NAV as well as lower invested capital at certain of KKR’s older private equity funds. In addition, monitoring fees increased $39.5 million in KKR’s private markets segment reflecting an increase in the average monitoring fee received and fee income relating to KKR’s capital markets activities increased $18.2 million as a result of the formation of 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 was primarily due to a $50.7 million decrease in employee compensation and benefits resulting from a decrease in incentive compensation in connection with less favorable financial performance when compared to the prior period, offset by increases relating to the hiring of additional personnel after December 31, 2007 in connection with the expansion of KKR’s business. Additionally, Fund Expenses decreased $23.2 million as a result of a decrease in transaction related expenses that were attributable to unconsummated transactions during the period. Offsetting these decreases were increases in general and administrative expenses of $31.0 million primarily as a result of an increase in expenses at KKR’s newly formed capital markets business and an increase in professional fees reflecting the overall growth of KKR’s business. Additionally, occupancy and related charges increased $10.0 million reflecting the opening 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’s private 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 related earnings. 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 $1.8 million. The following is a summary of the components of net gains from investment activities: Year ended December 31, December 31, 2008 2007 ($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Losses from Sales of Investments and Realization of Gains . . . . . . . . . . . . . . . . . . . . Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains from Sales of Investments and Realization of Losses . . . . . . . . . . . . . . . . . . . Unrealized Gains from Changes in Fair Value . . . Unrealized Losses from Changes in Fair Value . .

......

$

80,396

$ 413,248

...... ......

(76,952) (7,571)

(352,352) (61,286)

...... ...... ......

4,121 514,250 (1,962,642)

54,051 1,025,713 (852,826)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(1,448,398) $ 226,548

The overall decrease in net gains from investment activities compared to the prior period was primarily attributable to a net decrease in changes in unrealized gains (losses) of $1.4 billion resulting primarily from net decreases in the market value of KKR’s investment portfolio and to a lesser extent a decline in net realized gains of $279.1 million resulting primarily from a lower level of sales activity during the period. KKR’s allocated share of dividends decreased $144.0 million as a result of fewer dividends 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 deferred financing costs incurred in connection with credit agreements entered into in early 2008 at KKR’s management company and capital markets business. Carried interest represented $(1.2) billion of total investment losses for the year ended December 31, 2008 and $0.3 billion of total investment income for the 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 ended December 31, 2008, a decrease of $2.0 billion compared to economic net income of $0.8 billion for the year ended December 31, 2007. The investment losses described above were the main contributors to the 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 net unrealized losses resulting from changes in the market values of KKR’s portfolio companies in its private markets segment and $0.6 billion of distributions from its traditional private equity funds comprised of $0.5 billion of realized gains and $0.1 billion of original cost. Offsetting these decreases were increases associated with the formation of the European Fund III, which received $6.4 billion of capital 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 decrease of $11.7 billion, or 78.5%, from the year ended December 31, 2007. The decrease was due primarily to a 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 remaining unused 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 ended December 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 private markets segment, which was attributable to a significant increase in the total value of private equity transactions completed during 2007 relative to 2006. During 2007, KKR completed 13 transaction fee-generating private equity investments with a total combined value of $141.6 billion, compared to 11 transaction-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 greater proportion of the overall transaction fees compared to the prior year. In addition, management fees relating to KKR’s traditional private equity funds increased $28.2 million as a result of the formation of the Asian Fund during 2007 as well as a full year of fees for the 2006 Fund, which was formed during the third quarter of 2006. Management fees relating to KPE increased $21.9 million as a result of its formation during the second quarter of 2006. The remainder of the overall increase in fee income resulted from an increase in monitoring fees reflecting an increase in the number of portfolio companies 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 increase was primarily due to a $94.6 million increase in employee compensation and benefits resulting from additional personnel hired in connection with the continued expansion of KKR’s business as well as higher 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’s business, and included increases in professional fees, travel and entertainment expenses and to a lesser extent 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 funds and the placement of limited partner interests in such funds as well as an increase in transaction related expenses of $12.6 million that were attributable to unconsummated transactions during the period. 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 ended December 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 over year 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 the December 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 $14.5 million. The following is a summary of the components of net gains from investment activities: Year Ended December 31, December 31, 2007 2006 ($ in thousands)

Realized Gains . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Losses from Sales of Investments and Realization of Gains . . . . . . . . . . . . . . . . . . . Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains from Sales of Investments and Realization of Losses . . . . . . . . . . . . . . . . . . . Unrealized Gains from Changes in Fair Value . . Unrealized Losses from Changes in Fair Value . .

.......

$ 413,248

$ 764,001

....... .......

(352,352) (61,286)

(616,317) (20,119)

....... ....... .......

54,051 1,025,713 (852,826)

30,781 812,535 (185,592)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 226,548

$ 785,289

The overall decrease in net gains from investment activities from the prior period was primarily attributable to a decline in net realized gains of $391.9 million resulting primarily from a lower level of sales 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 dividends received during 2007. Net interest income increased $19.7 million as a result of higher average cash balances at KKR’s management company during 2007 as well as a lower level of borrowing by the general partners of KKR’s traditional private equity funds. Carried interest represented $306 million and $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 ended December 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 year decrease 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%, from December 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 capital commitments to the 2006 Fund of $1.5 billion during 2007 (bringing total capital commitments in the 2006 Fund to $17.6 billion as of December 31, 2007), a $1.4 billion increase associated with the formation of carry-yielding co-investment vehicles and KKR’s principal protected private equity product and $0.9 billion of net unrealized gains resulting from changes in the market values of KKR’s portfolio companies in its private markets segment. These increases offset $4.3 billion of distributions from KKR’s traditional private equity funds comprised of $2.6 billion of realized gains and $1.7 billion of original cost.

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Private Equity Dollars Invested Private equity dollars invested were $14.9 billion for the year ended December 31, 2007, an increase of $8.2 billion, or 122.4%, from the year ended December 31, 2006. The increase reflected an increase in the number of the companies that KKR acquired, as well as an increase in the average transaction size. As of December 31, 2007, KKR’s traditional private equity funds had $11.5 billion of remaining unused capital commitments that could be called for investment in new private equity transactions. Public Markets Segment The following tables set forth information regarding the results of operations and certain key operating metrics for KKR’s public markets segment for the years ended December 31, 2006, 2007 and 2008 and the three months ended March 31, 2008 and 2009. Year Ended December 31, 2006 2007 2008 ($ in thousands)

Three months ended March 31, 2008 2009 ($ in thousands)

Fee income Management fees . . . . . . . . . . . . . . . $ Advisory fees . . . . . . . . . . . . . . . . . . . Incentive fees . . . . . . . . . . . . . . . . . .

55,994 $ 9,119 15,613

68,194 $ 11,421 23,335

62,030 $ 14,038 —

16,127 $ 3,333 —

11,928 — —

Total fee income . . . . . . . . . . . . . . $

80,726 $

102,950 $

76,068 $

19,460 $

11,928

Expenses Employee compensation and benefits . Other operating expenses . . . . . . . . . .

18,662 12,193

24,507 16,349

12,375 20,238

4,651 4,154

6,126 6,121

Total expenses . . . . . . . . . . . . . . . .

30,855

40,856

32,613

8,805

12,247

Fee related earnings (deficit) . . . . . . . . . Investment income (loss) . . . . . . . . . . . .

49,871 10,103

62,094 984

43,455 (192)

10,655 (85)

(319) (17)

Income (Loss) before taxes . . . . . . . . . . Income attributable to noncontrolling interests(1) . . . . . . . . . . . . . . . . . . . .

59,974

63,078

43,263

10,570

(336)

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 the management 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, which had previously been included within noncontrolling interests in the accompanying combined financial 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 the management companies for KKR’s public markets funds and are entitled to all of the net income and 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 ended March 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 funds resulting from adverse credit market conditions as well as reduced base management fee rates for all investor classes for the KKR Strategic Capital Funds. These adverse conditions resulted in increases in net realized and unrealized losses on investments, derivatives and foreign exchange at certain fixed income funds consistent with those experienced in the broader credit markets. Additionally, share based management 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 ended March 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 of approximately $1.5 million as a result of an increase in stock-based compensation costs and the adoption by the public markets segment of the KKR’s broader profit sharing plan. Additionally, general and administrative expenses and occupancy related costs increased approximately $1.9 million reflecting the 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 had a fee related deficit of $0.3 million for the three months ended March 31, 2009 compared to fee related 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 had an economic net loss of $0.3 million for the three months ended March 31, 2009 compared to economic 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 increase associated with capital managed on behalf of third party investors. This increase was partially offset by a decrease of $1.1 billion in capital relating to the unfavorable financial performance of certain fixed income 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 decrease was primarily due to the absence of incentive fees from certain fixed income funds in 2008 due to certain 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 an increase in assets under management, relating to one fixed income fund and certain structured finance vehicles that KKR manage as well as a $4.5 million increase associated with capital managed on behalf of 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 was driven by a decrease in employee compensation and benefits expense of $12.1 million as a result of lower 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 million and occupancy expenses of $0.5 million resulting from the overall growth in the public markets segment. Fee Related Earnings Fee related earnings in KKR’s public markets segment were $43.5 million for the year ended December 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 year decrease 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 KFN options and shares held by KKR’s public markets segment being distributed during the third quarter of 2007. 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 decrease reflects a lower level of fee related earnings in the current period as well as the purchase of the noncontrolling interests in KFI on May 30, 2008. Economic Net Income Due primarily to the reduction in fee income described above, offset by the purchase of noncontrolling interests in KFI on May 30, 2008, economic net income in KKR’s public markets segment 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 billion increase associated with capital managed on behalf of third party investors offset by a $1.8 billion decrease in the capital relating to one fixed income fund and certain structured finance vehicles that KKR 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 increase was primarily due to the formation of certain fixed income funds managed by KKR during the fourth quarter 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 the majority of the quarters in 2007 compared to the corresponding quarters in 2006. Offsetting these increases was a decrease in management fees received from KFN of $8.5 million resulting from a reduction in the amount of share-based management fees earned, which was driven by declines in KFN’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 increase was primarily due to an increase in employee compensation and benefits of $5.8 million, which was attributable to an increase in the amount of incentive compensation paid to existing personnel corresponding to increased incentive fees earned, and, to a lesser extent, the hiring of additional personnel 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 the formation 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 ended December 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 over year 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 to depreciation in the fair value of vested KFN options and shares of $6.9 million that KKR received for management services to that fund. In addition, the majority of the KFN options and shares held by KKR’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 income increased overall from the prior period, the holders of the noncontrolling interests were entitled to a lower 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 the year 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 of additional 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 capital requirements. Historically, KKR has funded investments using the capital resources of its existing owners, capital committed by its fund investors and indebtedness incurred by its funds and its portfolio companies. KKR generally has used the capital resources of its existing owners, accumulated net income from its business activities or short-term borrowings to fund its working capital requirements and to support its new business and growth initiatives. KKR has managed its historical liquidity and capital requirements by focusing on its cash flows before the consolidation of its funds and the effect of normal changes in assets and liabilities, which KKR anticipates will be settled for cash within one year. KKR’s primary cash flow activities on a deconsolidated basis involve: (i) generating cash flow from operations; (ii) funding capital commitments that KKR makes to its funds as general partners (which amounts are eliminated when KKR consolidate funds); (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 do not 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 its consolidated funds despite the fact that KKR has only a minority economic interest in those funds. The assets 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 cash flows. The primary cash flow activities of KKR’s consolidated funds involve: (i) raising capital from fund investors; (ii) using the capital of fund investors to make investments; (iii) financing certain investments 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’s consolidated funds are treated as investment companies for accounting purposes, these cash flow amounts 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 three months ended March 31, 2009 and 2008, respectively. These amounts primarily included: (i) purchases of investments by KKR’s consolidated funds, net of proceeds from sales of investments, of $9.2 million and $(1.2) billion during the three months ended March 31, 2009 and 2008, respectively; (ii) net realized (losses) gains on investments of the consolidated funds of $(96.5) million and $162.3 million during the three months ended March 31, 2009 and 2008, respectively; (iii) change in unrealized losses on investments allocable to KKR Group and noncontrolling interests of $0.6 billion and $0.9 billion for the three months ended March 31, 2009 and 2008, respectively; and (iv) loss attributable to noncontrolling interests of $0.7 billion and $0.7 billion during the three months ended March 31, 2009 and 2008, respectively. These amounts are reflected as operating activities in accordance with investment 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) million during the three months ended March 31, 2009 and 2008, respectively. KKR’s investing activities included 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 million and $(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 three months 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, reflected in its historical combined financial statements as noncontrolling interests, of $0.2 billion and $1.6 billion during the three months ended March 31, 2009 and 2008, respectively; (ii) repayment of debt obligations net of proceeds received of $18.0 million and $(0.3) billion for the three months ended March 31, 2009 and 2008, respectively; and (iii) distributions to, net of contributions by, its equity holders 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 the years 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 billion and $3.2 billion during the years ended December 31, 2008, 2007 and 2006, respectively; (iii) change in unrealized 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 billion during the years ended December 31, 2008, 2007 and 2006, respectively. These amounts are reflected as operating 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 million during the years ended December 31, 2008, 2007 and 2006, respectively. KKR’s investing activities included 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 outstanding noncontrolling 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 during the years ended December 31, 2008, 2007, and 2006, respectively. KKR’s financing activities primarily included: (i) contributions made by, net of distributions made to, the investors in KKR’s consolidated funds, 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 grow its business, including funding capital commitments made to existing and future funds and any net capital requirements of its capital markets companies, (ii) service debt obligations, including indebtedness acquired in connection with the Combination Transaction, (iii) fund cash operating expenses, (iv) pay amounts that may become due under its tax receivable agreement with KKR Holdings; 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 and net-loss sharing arrangements. See ‘‘KKR Management’s Discussion and Analysis of Financial Condition 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 capital requirements for the next 12 months. As described under ‘‘Business,’’ the agreements governing KKR’s traditional private equity funds generally require the general partners of the funds to make minimum capital commitments to the funds, which usually range from 2% to 4% of a fund’s total capital commitments at final closing. The following table presents KKR’s unfunded general partner capital commitments to its traditional private equity funds as of March 31, 2009: Original Unfunded Commitment Commitment ($ in thousands)

Private Equity Funds

2006 Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asian Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Fund III . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$375,000 100,000 293,600

$107,962 76,820 284,980

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$768,600

$469,762

In connection with the Combination Transaction, KKR will acquire the KPE Investment Partnership, which has directly or indirectly made additional capital commitments to certain of its consolidated funds. As of March 31, 2009, approximately $958 million of these capital commitments remained unfunded. Historically KKR has funded capital commitments with cash from operations that otherwise would be distributed to its owners. Following the completion of the Transactions, KKR expects to fund any capital contributions that the general partners are required to make to a fund with future operating cash flows and other sources of liquidity available to us. In connection with the Transactions, KPE will enter into an exchange agreement with Group Holdings and KKR Holdings pursuant to which Group Holdings, KKR Holdings and certain transferees of their respective KKR Group Partnership Units effectively may, up to four times each year, 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 and compliance with applicable lock-up, vesting and transfer restrictions. At KPE’s election, it may settle most types of exchanges of KKR Group Partnership Units with cash in an amount equal to the fair market value of the KPE units that would otherwise be deliverable in such exchanges. In addition, KPE and KKR Holdings will enter into a tax receivable agreement requiring KPE’s intermediate holding company to pay to KKR Holdings, KPE or transferees of their KKR Group Partnership Units 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediate holding company actually realizes (or is deemed to realize, in the case of an early termination payment by 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 under the agreement. See ‘‘Certain Relationships and Related Party Combination Transaction—Tax Receivable Agreement.’’ While the actual increase in tax basis and amount and timing of any payments under the tax receivable 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 and the amount and timing of taxable income, KKR expects that as a result of the size of the increases in the tax basis of the tangible and intangible assets of the KKR Group Partnerships, the payments that may be required to make could be substantial. KKR does not currently anticipate that these payments will impact its liquidity needs, as they generally will be made only to the extent that the intermediate holding company actually realizes cash savings as exchanges of KKR Group Partnership Units by KKR’s principals. However, the intermediate holding company’s obligations under the tax receivable agreement would be effectively accelerated upon the occurrence of an early termination of the tax receivable agreement by the intermediate holding company or certain mergers, asset sales and other forms of business combinations or other changes of control. In these situations, the obligations under the tax receivable agreement could have a substantial negative impact on KKR’s liquidity. In the event that other of KKR’s current or future subsidiaries become taxable as corporations and acquire KKR Group Partnership Units in the future, or if the Group Holdings or its subsidiaries become taxable as a corporation, for U.S. federal income tax purposes, each will become subject to a tax receivable agreement with substantially similar terms. KKR intends to make quarterly cash distributions to holders of its interests in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of its asset management business each year in excess of amounts determined by the KKR Managing Partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and 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 the cash earnings of its asset management business will provide transparency for holders of its interests and impose 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 any year until the end of such year, KKR expects that its first three quarterly distributions in respect of any given 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 its first quarterly distribution will be paid in the first quarter of 2010 in respect of the period from October 1, 2009 through December 31, 2009. Sources of Cash Following the Transactions, KKR’s principal source of cash will consist of cash and cash equivalents contributed to the KKR Group Partnerships as part of the Combination Transaction. KKR will also receive cash from time to time from: (i) its operating activities, including the management, advisory and incentive fees earned from all of its funds, managed accounts, portfolio companies, capital markets transactions and other investment products; (ii) realizations on carried interest and assets in its capital markets and principal segment; (iii) realized returns that are generated on investments that are made with 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 connection with 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. The following is a summary of the principal terms of these facilities: • In February 2008, the management company for KKR’s private equity funds entered into a credit 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 of credit. This facility has a term of three years that expires on February 2011, which may be extended through February 2013, at the option of KKR. As of March 31, 2009, $100 million was outstanding 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 2009 and was not renewed. As of March 31, 2009, $25 million was outstanding and the interest rate on such borrowings was approximately 3.3%. During April 2009, the amount outstanding was repaid. • In February 2008, the holding company for KKR’s capital markets business entered into a credit agreement with a major financial institution. The credit agreement provides for revolving borrowings of up to $700 million with a $500 million sublimit for letters of credit. This facility has a term of five years. There was $14 million outstanding under this agreement as of March 31, 2009. As of March 31, 2009, the interest rate on borrowings under this agreement was 2.1%. In March 2009, the agreement was amended to reduce the amounts available on revolving borrowings from $700 million to $500 million. • In June 2007, the KPE Investment Partnership entered into a credit agreement with a syndicate of lenders. The credit agreement provides for up to $1.0 billion of senior secured credit, subject to availability under a borrowing base determined by the value of certain investments pledged as collateral security for obligations under the agreement. The facility has a term of five years. The borrowing base is subject to certain investment concentration limitations and the value of the investments constituting the borrowing base is subject to certain advance rates based on type of investment. In October 2008, Lehman Commercial Paper Inc., an original lender under the credit agreement with an initial $75.0 million commitment, filed for bankruptcy and was responsible for funding an additional $45.6 million in commitments as of March 31, 2009. Due to Lehman’s bankruptcy, 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 million absent 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 to another existing or new lender. There can be no assurance that any lender will assume any part of Lehman’s commitment under the credit agreement. As of March 31, 2009, borrowings outstanding under this credit agreement amounted to $926.2 million. From time to time, KKR may borrow amounts to satisfy general short-term needs of the business by opening short-term lines of credit with established financial institutions. These amounts are generally repaid 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, have entered into financing arrangements in connection with specific investments with the objective of enhancing returns. Such financing arrangements include $1,146.4 million of financing provided through total return swaps and $168.5 million of financing provided through a term loan and revolving credit facility. 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 funds or its management companies. Contractual Obligations, Commitments and Contingencies In the ordinary course of business, KKR and its consolidated funds enter into contractual arrangements that may require future cash payments. The following table sets forth information relating to the anticipated future cash payments that were associated with those contractual obligations as of March 31, 2009. Type of Contractual Obligations

<1 Year

Before Consolidation of Funds: Capital commitments to traditional private equity funds(1) . . . . . . . . . . . . . . . . . . . Debt payment obligations . . . . . . . . . . . . . Interest obligations on debt . . . . . . . . . . . Lease obligations . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . After Consolidation of Funds: Equity commitments(2) . . . . . Debt payment obligations(3) . . Interest obligations on debt(3) Lease obligations . . . . . . . . . .

$469.8 25.0 1.0 29.0

$

— 100.0 1.8 51.4

$

— 14.0 0.3 41.8

$

— — — 105.8

$ 469.8 139.0 3.1 228.0

.............

$524.8

$153.2

$

56.1

$ 105.8

$ 839.9

. . . .

$

$

$

$

$

$1,462.1

$1,134.1

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

Total

. . . .

. . . .

. . . .

Payments due by Period 1 to 3 Years 3 to 5 Years >5 Years ($ in millions)

. . . .

. . . .

Total(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— 65.2 66.6 29.0

$160.8

— 100.0 174.4 51.4

$325.8

— 1,286.6 133.7 41.8

— 968.5 59.8 105.8

— 2,420.3 434.5 228.0

$3,082.8

(1) These capital commitments represent commitments by the general partners of KKR’s traditional private equity funds to contribute capital to fund a portion of the purchase price paid for each portfolio company investment made by the fund. Following the completion of the Combination Transaction, such amounts will also include capital commitments that have directly or indirectly been made by the KPE Investment Partnership to certain of KKR’s consolidated funds. As of March 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 as falling due within one year. However, given the size of such commitments and the rates at which KKR’s funds make investments, KKR expects that the capital commitments presented above will be 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 private equity funds to fund a portion of the purchase price of unconsummated portfolio company investments. KKR’s funds pay amounts due with respect to these commitments using capital contributed by fund investors and capital provided by the firm and, in the case of KKR’s larger transactions, with amounts funded by third-party co-investors. Capital that has been committed to fund 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 finance arrangements at KKR’s consolidated funds, the KKR’s Funds may be required to use a portion of these capital commitments to provide additional collateral up to the amount borrowed, plus accrued interest, upon the occurrence of certain events, including an event based on the value of the collateral and events of default. As a result of a decline in collateral value, certain funds provided 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 debt obligation, which has been calculated assuming no prepayments are made and the related debt is held until its final maturity date. Future interest rates have been calculated using rates in effect as of March 31, 2009, including both variable and fixed rates provided for by the relevant debt agreements. The amounts presented above include interest on outstanding indebtedness of: (i) $139.0 million under revolving credit facilities at KKR’s management companies and capital markets 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 private equity funds and (v) $350.0 million of indebtedness to leverage specific investments at the KPE Investment Partnership. Debt incurred to leverage a fund’s investments is entered into with the objective of enhancing returns and is not a direct obligation of the general partners of KKR’s private equity funds or KKR’s management companies. Such debt relates principally to investments in Sun Microsystems, Yageo Corporation, Harman International Industries, Incorporated and Legg Mason, Inc. The outstanding indebtedness of the KPE Investment Partnership will be acquired by KKR 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 a variety of representations and warranties and that include general indemnification obligations. The amended and restated purchase and sale agreement that KKR has entered into with KPE includes additional representations and warranties as well as certain indemnification obligations as described under ‘‘Combination Transaction.’’ KKR’s maximum exposure under the foregoing arrangements is unknown due to the fact that the exposure would relate to claims that may be made against KKR in the future. Accordingly, no amounts have been included in KKR’s combined financial statements as of March 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 a contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of their investment losses to KKR relative to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. 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 Financial Statements—Condensed Combined Financial Statements March 31, 2009 and 2008—Notes to Condensed Combined Financial Statements—March 31, 2009 and 2008.’’ KKR principals will remain responsible for any clawback obligations relating to carry distributions received 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 they receive after the Transactions pursuant to any carried interest allocated directly to them as carry pool participants. 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 they have provided with respect to such amounts. Off Balance Sheet Arrangements Other than contractual commitments and other legal contingencies incurred in the normal course of 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’s management 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 experience and 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 on changing circumstances or changes in KKR’s analyses. If actual amounts are ultimately different from those estimated, judged or assumed, revisions are included in KKR’s combined financial statements for the period in which the actual amounts become known. KKR believes the following critical accounting policies could potentially produce materially different results if KKR were to change underlying estimates, judgments or assumptions. Please see the notes to the predecessor combined financial statements included elsewhere in this consent solicitation statement for further detail regarding KKR’s critical accounting policies. Principles of Consolidation KKR’s policy is to consolidate those entities in which KKR, through its senior principals, has control, 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 a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional financial support from other parties. A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents, will absorb a majority of the VIE’s expected losses or receive a majority of the expected residual returns as a result of holding variable interests. KKR refers to all entities that are included in the accompanying combined financial statements are referred to as consolidated entities. The majority of the consolidated entities are under the common control of KKR’s senior principals and are comprised of: (i) those entities in which KKR, directly or through its senior principals, have majority 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 its consolidated funds, KKR generally have operational discretion and control, and fund investors have no substantive rights to impact ongoing governance and operating activities of the funds. KKR’s consolidated funds do not consolidate their majority-owned and controlled investments in portfolio companies. Rather, those investments are accounted for as investments and carried at fair value as described below. Noncontrolling interests represent the ownership interests held by entities or persons other than the Senior Principals. Income or loss attributable to noncontrolling interests in consolidated KKR Funds is based on the respective funds’ governing documents. Noncontrolling interests have a substantial 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 and Accounting Guide, ‘‘Investment Companies,’’ for the purposes of GAAP and, as a result, reflect their investments on KKR’s predecessor combined statement of financial condition at fair value, with unrealized gains or losses resulting from changes in fair value reflected as a component of investment income in KKR’s predecessor combined statements of operations. KKR has retained the specialized accounting of the consolidated funds pursuant to EITF Issue No. 85-12, Retention of Specialized Accounting for Investments in Consolidation. The Company accounts for its investments in accordance with FASB Statement 157 ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’). SFAS 157 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in 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 with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market 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 and reported at Fair Value in one of the following categories: Level I—Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include publicly-listed equities and publicly-listed derivatives. In addition, securities sold, but not yet purchased and options written by the KKR Private Equity Investors Master Fund are included in Level I. As required by SFAS 157, KKR does not adjust the quoted price for these investments, even in situations where KKR holds a large position and a sale could reasonably affect the quoted price. KKR classified 9.1% of total investments measured and reported at fair value as Level I at March 31, 2009. Private equity investments measured and reported at 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 or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this category include corporate bonds and loans, convertible debt indexed to publicly listed securities and certain over-the-counter derivatives. KKR classified 12.1% of total investments measured and reported at fair value as Level II at March 31, 2009. Private equity investments measured and reported at fair value as Level II at March 31, 2009 represented 10.5% of total investments. Level III—Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in this category generally include private portfolio companies held through its private equity funds and KPE. KKR classified 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, 2009 represented 78.0% of total investments. The valuation of its Level III investments at March 31, 2009 represents management’s best estimate of the amounts that KKR would anticipate realizing on the sale of these investments at such date. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. KKR’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and KKR 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 the statement of financial condition date for investments that have readily observable market prices. If no sales occurred on such day, KKR uses the ‘‘bid’’ price at the close of business on that date and, if sold short, the ‘‘asked’’ price at the close of business on that date day. Forward contracts are valued based on 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 given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. KKR generally employs two valuation methodologies when determining the fair value of a private equity investment. The first methodology is a market multiples approach that considers a specified financial measure (such as EBITDA) and recent public 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 of significant unconsolidated assets and liabilities and any favorable or unfavorable tax attributes are also considered in arriving at a market multiples valuation. The second methodology utilized is a discounted cash flow approach. In this approach, KKR will incorporate significant assumptions and judgments in determining the most likely buyer, or market participant for a hypothetical sale, which might include an initial public offering, private equity investor, strategic buyer or a transaction consummated through a combination 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 for a particular investment will generally be within the range suggested by the two methodologies, adjusted for issues related to achieving liquidity including size, registration process, corporate governance structure, 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 of KKR’s private equity investments. These unobservable pricing inputs and assumptions may differ by investment and in the application of KKR’s valuation methodologies. KKR’s reported fair value estimates could vary materially if KKR had chosen to incorporate different unobservable pricing inputs and other assumptions. Approximately 9.1%, or $1.8 billion, and 10%, or $2.1 billion, of the value of the investments in KKR’s consolidated private equity funds were valued using quoted market prices, which have not been adjusted, 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 in KKR’s consolidated private equity funds were valued in the absence of readily observable market prices as of March 31, 2009 and December 31, 2008, respectively. The majority of these investments were valued using internal models with significant unobservable market parameters and KKR’s determinations of the fair values of these investments may differ materially from the values that would have resulted if readily observable market prices had existed. Additional external factors may cause those values, and the values of investments for which readily observable market prices exist, to increase or decrease over time, which may create volatility in KKR’s earnings and the amounts of assets and partners’ 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. Upon completion of such limited procedures, Duff & Phelps, LLC concluded that the fair value, as determined by KKR, of those investments subjected to their limited procedures did not appear to be unreasonable. The limited procedures did not involve an audit, review, compilation or any other form of examination or attestation under generally accepted auditing standards. The general partners of KKR’s funds are responsible for determining the fair value of investments in good faith, and the limited 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 value of the investments. See ‘‘Private Equity Valuations and Related Data’’ for a further discussion of KKR’s private equity investment valuations. Changes in the fair value of the investments of KKR’s consolidated private equity funds may impact KKR’s results of operations as follows: • The management fees that KKR is paid by KPE are based on the approximate NAV of the fund, which in turn is impacted by the fair values of its investments. Historically, a change in the fair values of the funds’ investments during a reporting period would have affected the amount of management fees that were payable following the completion of the reporting period, but would 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 will no longer generate fee income. The management fees paid by KKR’s traditional private equity funds are calculated based on the amount of capital committed to, or invested by, the funds and are 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 by changes in the fair values of the funds investments as described under ‘‘—Key Financial Measures—Investment Income—Net Gains from Investment Activities.’’ Based on the investments of KKR’s private equity funds as of March 31, 2009, KKR estimate that an immediate 10% decrease in the fair value of the funds’ investments generally would result in a 10% immediate change in net gains from the funds’ investment activities (including carried interest when applicable), regardless of whether the investment was valued using observable market prices or internal models with significant unobservable market parameters. However, KKR estimates the impact that the consequential decrease in investment income would have on KKR’s reported amounts of income before taxes and net income would be significantly less than the amount presented above, given that a majority of the change in fair value would be attributable to noncontrolling interests in the funds. Substantially all of the value of the investments in KKR’s consolidated fixed income funds were valued 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 their respective NAVs. Accordingly, a 10% decrease in the fair value of the funds’ investments as of March 31, 2009 would have resulted in a reduction in management fees for the three months ended March 31, 2009 of $0.03 million. KFN’s base management and incentive fees are indirectly impacted by changes 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 fees for the three months ended March 31, 2009 of $0.4 million. There were no incentive fees earned at the certain 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 and the management and other fees that it receives directly from its unconsolidated funds, including both the base management fees and the incentive fees that are paid by its unconsolidated fixed income funds. These fees are based upon the contractual terms of the management and other agreements that KKR enters into with the applicable funds and portfolio companies. KKR recognizes fee income in the period during which the related services are performed and the amounts have been contractually earned in accordance with the relevant management or other agreements. Incentive fees are accrued either annually or quarterly, after all contingencies have been removed, based on performance to date versus the performance benchmark stated in the management agreement. Recognition of Investment Income Investment income consists primarily of the unrealized and realized gains on investments, dividend and interest income received from investments and foreign currency gains as reduced by unrealized and realized losses on investments, interest expense incurred in connection with investment activities and foreign currency losses on investments. Unrealized gains or losses result from changes in the fair value of KKR’s funds’ investments during a period. Upon disposition of an investment, previously recognized unrealized gains or losses are reversed and a corresponding realized gain or loss is recognized in the current period. While this reversal generally does not impact the net amounts of gains that KKR recognizes from investment activities, it affects the manner in which KKR classify its gains and losses for reporting purposes. KKR recognizes investment income with respect to its carried interests in investments of its private equity funds, the capital invested by or on behalf of the general partners of its private equity funds and the noncontrolling interests that third-party fund investors hold in its consolidated funds. A carried interest entitles KKR to a greater allocable share of the fund’s earnings from investments relative to the capital contributed by the general partner and correspondingly reduces noncontrolling interests’ attributable share of those earnings. Amounts earned pursuant to carried interests in Traditional Private Equity Funds are included as investment income in Net Gains (Losses) from Investment Activities and are earned by KKR to the extent that investment returns are positive. If these investment returns decrease or turn negative in subsequent 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 partnership agreement governing the fund as if the fund was terminated at the reporting date with the then estimated fair values of the investments realized. Due to the extended durations of the Traditional Private Equity Funds, KKR believes that this approach results in income recognition that best 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 a contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of their investment losses to KKR relative to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. For a summary of the March 31, 2009 contingent obligation amounts under the ‘‘clawback’’ 166

and ‘‘net loss sharing provisions’’ of KKR’s traditional private equity funds see ‘‘Index to Financial Statements—Condensed Combined Financial Statements March 31, 2009 and 2008—Notes to Condensed Combined Financial Statements—March 31, 2009 and 2008.’’ KKR principals will remain responsible for any clawback obligations relating to carry distributions received 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 they receive after the Transactions pursuant to any carried interest allocated directly to them as carry pool participants. KKR will be responsible for any other clawback obligations and any amounts due under net loss sharing arrangements and will indemnify its principals for any personal guarantees that they have 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’ earnings that are allocated to fund investors’ noncontrolling interests in consolidated funds. KKR recognizes investment income attributable to a carried interest in a fund to the extent that the fund’s investment returns 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 interest is subject to a clawback provision, KKR recognizes the related investment income based on the terms of the fund’s governing documents assuming that the fund was terminated on that date and that the fair value of the fund’s investments were then realized in full. Given the long durations during which KKR’s private equity funds hold investments, management believes that this approach results in income recognition that best reflects KKR’s performance in any given period as the manager of its private equity funds. Due to the consolidation of the majority of KKR’s funds, the share of KKR’s funds’ investment income that is allocable to KKR’s carried interests and capital investments is not shown in KKR’s combined financial statements. Instead, the investment income that KKR retains in its net income, after allocating amounts to noncontrolling interests, represents the portion of its investment income that is allocable to KKR. Because the substantial majority of KKR’s funds are consolidated and because KKR holds only a minority economic interest in its funds’ investments, its share of the investment income generated by its investment activities is significantly less than the total amount of investment income presented in its predecessor combined financial statements. 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 a business combination to recognize the full fair value of assets, liabilities, contractual contingencies and contingent 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 and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) applies to all transactions or other events in which the Company obtains 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, by contract alone or through the lapse of minority veto rights. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009. The Company had no such transactions for the three months ended March 31, 2009. In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51 (‘‘SFAS No. 160’’). SFAS No. 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposed to 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, except for the presentation and disclosure requirements applied retrospectively for all periods presented. KKR adopted SFAS No. 160 effective January 1, 2009 and as a result, (1) with respect to the combined statements of financial condition, noncontrolling interests have been reclassified as a component of Equity, (2) with respect to the combined statements of operations, Net Income (Loss) is now presented before 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, a rollforward column has been included for noncontrolling interests. In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (‘‘SFAS No. 161’’). SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better 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. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The adoption of SFAS No. 161 did not have a material impact on KKR’s combined financial statements. In March 2008, the EITF reached a consensus on Issue No. 07-4, Application of the Two-Class Method 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 equity distributions. EITF 07-4 is to be applied retrospectively beginning with financial statements issued in the interim periods of fiscal years beginning after December 15, 2008. The adoption of EITF 07-4 did not 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 of Intangible Assets (‘‘FSP No. 142-3’’). FSP No. 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. FSP No. 142-3 affects entities with recognized intangible assets and is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The new guidance applies prospectively to (1) intangible assets that are acquired individually or with a group of other assets and (2) both intangible assets acquired in business combinations and asset acquisitions. The adoption of FSP No. 142-3 did not have a material impact on KKR’s combined financial statements. In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (‘‘FSP FAS 157-4’’), to help constituents estimate fair value when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective for interim 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 the impact 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 of Other-Than-Temporary Impairments (‘‘FSP FAS 115-2’’) which provides new guidance on the recognition of other-than-temporary impairments of investments in debt securities and provides new presentation and disclosure requirements for other-than-temporary impairments of investments in debt and equity securities. FSP FAS 115-2 is effective for financial statements issued for interim or annual periods ending after June 15, 2009. KKR is currently evaluating the impact of FSP FAS 157-4 on its combined financial statements. In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, Interim Disclosures about Fair 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 financial instruments in interim reporting periods. Such disclosures were previously required only in annual financial statements. FSP FAS 107-1 is effective for financial statements issued for interim or annual periods 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, Subsequent Events (‘‘SFAS 165’’). SFAS 165 is intended to establish general accounting and disclosure standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. SFAS 165 is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 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 of KKR’s funds and sensitivities to movements in the fair value of their investments, including the effect that those movements have on the management fees and carried interests that KKR receives. Following the completion of the Transactions, KKR will have increased exposure to market risks as a result of the assets acquired from KPE. The fair value investments may fluctuate in response to changes in the value of securities, foreign currency exchange rates and interest rates. Although KKR’s funds share many common themes, KKR generally maintains separate investment and risk management processes for monitoring and managing market risks. In particular: • The investment process for private equity involves a detailed analysis of potential acquisitions and industry-specific investment teams are assigned to oversee the operations, strategic development, financing and capital deployment decisions of KKR’s funds’ portfolio companies. Investment decisions are subject to approval by KKR’s equity investment committee, which consists of a group of KKR’s senior principals, and portfolio company investments are monitored by its portfolio management committee, which consists of a group of KKR’s senior principals and senior advisors. • KKR’s approach to making fixed income investments focuses on creating investment portfolios that generate attractive risk-adjusted returns on invested capital, allocating capital across multiple asset classes, selecting high-quality investments that may be made at attractive prices, applying rigorous standards of due diligence when making investment decisions, subjecting investments to regular monitoring and oversight and making buy and sell decisions based on price 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 macro analysis of relative asset valuations, long-term industry trends, business cycles, interest rate expectations, credit fundamentals and technical factors to target specific industry sectors and asset classes in which to invest. KKR’s bottom-up analysis includes a rigorous analysis of the credit fundamentals and capital structure of each credit considered for investment and a thorough review of the impact of credit and industry trends and dynamics and dislocations events on such potential investment. Market Risk KKR’s consolidated funds hold investments that are reported at fair value. Net changes in the fair value of investments impact the net gains from investments in KKR’s combined statements of operations. 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 in investment 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 significantly less than the amount presented above, given that a substantial majority of the change in fair value would be allocated to noncontrolling interests. As a result of its acquisition of noncontrolling interests in the KPE Investment Partnership, the extent of such allocation to noncontrolling interests will be less in future periods. KKR’s base management fees in its private equity funds are calculated based on the amount of capital 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 income funds, KKR’s incentive fees are calculated based on the performance of a fund’s investments, which in the case of one of KKR’s fixed income funds is calculated based on the appreciation in the NAV of the fund’s investments. To the extent that base management or other amounts are calculated based on the NAV of the fund’s investments, the amount of fees that KKR may charge will be increased or decreased in direct proportion to the effect of changes in the fair value of the fund’s investments. The proportion of KKR’s management and other amounts that are based on NAV depends on the number and type of funds in existence. For a discussion of the impact of market risks on KKR’s fair value of investments, see ‘‘—Critical Accounting Policies—Fair Value of Investments.’’ Securities Market Risk KKR’s private equity funds make certain investments in portfolio companies whose securities are publicly traded. The market prices of public equities may be volatile and are likely to fluctuate due to a number of factors beyond KKR’s control. These factors include actual or anticipated fluctuations in the quarterly and annual results of such companies or of other companies in the industries in which they operate, market perceptions concerning the availability of additional securities for sale, general economic, social or political developments, industry conditions, changes in government regulation, shortfalls in operating results from levels forecasted by securities analysts, the general state of the securities markets and other material events, such as significant management changes, re-financings, acquisitions and dispositions. In addition, although KKR’s private equity funds primarily hold investments in portfolio companies whose securities are not publicly traded, the value of these investments 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 of 2009. Uncertainty regarding the magnitude of risk inherent in certain investments spread from the residential real estate market to financial markets generally. KKR’s private equity and fixed income funds 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 exposure to residential mortgage-backed securities and losses incurred in connection with such securities could adversely 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 in which their capital commitments are denominated. Those investments expose KKR and its fund investors to the risk that the value of the investments will be affected by changes in exchange rates between the currency in which the capital commitments are denominated and the currency in which the investments 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 when KKR’s funds have invested a meaningful amount of capital in currencies other than the currencies in which 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’s primary exposure to exchange rate risk relates to movements in the value of exchange rates between the 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% in the 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 from investment activities of KKR’s funds of $94.0 million. However, KKR estimate that the effect on its income before taxes and its net income from such a change would be significantly less than the amount presented above, because a substantial majority of the gain or loss would be attributable to noncontrolling 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 rate volatility, variability of spread relationships, and the effect that interest rates may have on KKR’s cash flows. KKR’s fixed income funds and the KPE Investment Partnership have outstanding indebtedness that accrues interest at variable rates. As a result, changes in interest rates affect the amount of interest payments that those funds are required to make, which may impact the earnings and cash flows of those funds. However, KKR estimates the effect on its income before taxes and its net income from such an increase would be substantially attributable to noncontrolling interests in the funds. As a result of KKR’s acquisition of noncontrolling interests in the KPE Investment Partnership, the extent of such allocation to noncontrolling interests will be less in future periods. In addition, KKR’s fixed income funds and the KPE Investment Partnership make investments in floating rate investments that are primarily financed with variable rate borrowings. Interest rates on KKR’s floating rate investments and KKR’s variable rate borrowings do not reset on the same day or with the same frequency and, as a result, KKR is exposed to basis risk with respect to index reset frequency. KKR’s floating rate investments may reprice on indices that are different than the indices that are used to price KKR’s variable rate borrowings and, as a result, KKR is exposed to basis risk with respect to repricing indices. KKR manages interest rate risk and make interest rate decisions by evaluating KKR’s projected earnings under selected interest rate scenarios. During periods of increasing interest rates KKR tends to purchase floating rate investments. KKR manage its interest rate risk using various techniques ranging from the purchase of floating rate investments to the use of interest rate derivatives. KKR generally funds its floating rate investments with variable rate borrowings with similar interest rate reset frequencies. KKR also may use interest rate derivatives to hedge the variability of cash flows associated with existing or forecasted variable rate borrowings. KKR did not use any material interest rate derivatives during any of the periods presented. Credit Risk Kohlberg Kravis Roberts & Co. L.P. is party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements. In these agreements, Kohlberg Kravis Roberts & Co. L.P. depends on these 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 enters into financial transactions to reputable financial institutions. In addition, availability of financing from financial 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 and investment excellence. When KKR’s founders started the firm in 1976, they established the principles that guide KKR’s business approach today, including a patient and disciplined investment process; the alignment 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 and private market investors and developing and implementing 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, having completed 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 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 for sourcing 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, which provide a global platform for sourcing transactions, raising capital and carrying out capital markets activities. 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’s growth has been driven by value that it has created through its operationally focused investment approach, expansion into new lines of business, innovation in the products that it offers investors, an increased focus on providing tailored solutions to its clients, and the integration of capital markets distribution activities. KKR’s relationships with investors have provided the firm with a stable source of capital for investments, and KKR anticipates that they will continue to do so. As a global alternative asset manager, KKR earns ongoing management, advisory and incentive fees for providing investment management, advisory and other services to its funds, co-investment vehicles, managed accounts and portfolio companies, and it generates transaction-specific advisory income from capital markets transactions. It earns additional investment income from investing its own capital alongside its investors and from the carried interest it receive from funds and co-investment vehicles. A carried interest entitles the sponsor of a fund to a disproportionate share of the investment gains that are generated on third-party capital that is invested. Following the completion of the Transactions, 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 its portfolio. KKR’s investment teams have deep industry knowledge and are supported by a substantial and diversified capital base, an integrated global investment platform, the expertise of operating consultants and senior advisors and a worldwide network of business relationships that provide a significant source of investment opportunities, specialized knowledge during due diligence and substantial resources for creating and realizing value for stakeholders. KKR believes that these aspects of KKR’s business will help it continue to expand and grow its business and deliver strong investment performance 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 key principles: adhere to a patient and disciplined investment process; align the firm’s interests with those of KKR’s investors and other stakeholders; and attract world-class talent for the firm and portfolio companies. Based on these principles, KKR has developed a number of strengths that differentiate it as an alternative asset manager and provide additional competitive advantages that can be leveraged to grow 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 corporate finance. With no financial services firm to model itself on and with little interest in copying an existing formula, they sought to build a firm based on principles and values that would provide a proper institutional foundation for years to come. KKR believes that its success and industry leadership has been largely attributable to the unique culture within its firm and the values that it lives by. These values 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 most complex private equity transactions worldwide; a focus on operational value creation; a strong investor base; 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 KKR attract world-class talent, raise capital, obtain access to investment opportunities and win deals. It has also provided the firm with a foundation to expand and diversify into new business lines. KKR intends to 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 a result of its internal deal generation strategies, industry expertise and global network. Across its businesses, KKR’s investment professionals are organized into industry groups and work closely with KKR’s operational consultants and senior advisors to identify businesses that the firm can grow and improve. 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 assets that will benefit from KKR’s involvement. KKR also maintains relationships with leading executives from major companies, commercial and investment banks and other investment and advisory institutions, including by its own estimate, chief executives 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 access to investments that it identifies. KKR’s reputation as a patient and long-term investor also makes it an attractive source of capital for public companies and, through its relationships with major financial institutions, 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 an integrated global platform for sourcing and making investments in multiple asset classes and throughout the capital structure. Its global and diversified operations are supported by a sizeable capital base and extensive 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 asset classes globally. As of March 31, 2009, approximately 38.7% of the unrealized value of its private equity portfolio consisted of investments made outside the United States. Although its operations span multiple continents and business lines, KKR has maintained a common culture and is focused on sharing knowledge, resources and best practices throughout its offices and across asset classes. Its investment processes are overseen by three committees that operate globally. These consist of a private equity investment committee, which reviews all investments made by its private equity funds, its fixed income investment committee, which reviews all investments made by its fixed income funds, and its portfolio management committee, which monitors the performance of its private equity investments. KKR believes that operating as a global and diversified firm that is centrally managed from the United States enhances the growth and stability of its business and helps optimize the 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 investment process through all types of economic and financial conditions, developing a track record that distinguishes the firm. From its inception through March 31, 2009, KKR’s traditional private equity funds generated a cumulative gross IRR of 25.6%, compared to the 10.5% gross IRR achieved by the S&P 500 Index over the same period. The consistency of returns is among the reasons that KKR has been successful in generating strong investor relationships and raising significant amounts of capital through 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 independent alternative asset managers in the world. Its traditional private equity funds and certain of its co-investment vehicles receive capital commitments from investors that may be called for during an investment period that typically lasts for six years and may remain invested for up to approximately 12 years. Its fixed income funds, structured finance vehicles and managed account platform include capital that is either not subject to optional redemption, has a maturity of at least 10 years or otherwise is 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 stable source 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 allowed it to raise significant amounts of capital for investment across a broad range of asset classes. Its investors consist of a diversified group of investors, including some of the largest public and private pension plans, global financial institutions, university endowments and other institutional and public market investors. Many of these investors have invested with KKR for decades across multiple funds that 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 and diversity of its investor relationships provides KKR with a significant advantage for raising capital from existing 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 financial intermediaries 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 the firm often works with the same group of financial institutions when seeking financing arrangements for transactions. KKR believes that, as a result of its repeated and consistent dealings with the major financial services firms over a long period of time and its completion of a significant number of large transactions, it is frequently one of the first parties considered for a potential transaction. KKR also believes that its relationships with financial institutions and the credibility that it has established through past successes help it obtain financing for transactions at attractive prices and with favorable terms. Alignment of Interests Since its inception, one of KKR’s fundamental philosophies has been to align the interests of the firm and its people with the interests of its investors, portfolio companies and other stakeholders. KKR achieves this by putting its own capital behind its ideas. Since KKR was founded, its people have invested or committed to invest more than $1.9 billion of their personal capital in its portfolio companies and funds, and the firm and its people have been compensated substantially based on the performance of those investments. Through the Combination Transactions, KKR and its people will hold interests in KKR’s business, resulting in an even greater alignment of interests. To ensure the firm’s interests remain aligned over the long-term, KKR’s existing owners will not receive any proceeds from the Combination Transaction and their interests in the firm will be subject to significant vesting and transfer restrictions. Creativity and Innovation KKR pioneered the development of the leveraged buyout and has worked throughout its history on creating new and innovative structures for both raising capital and making investments. KKR’s history of innovation includes establishing permanent capital vehicles for its public markets and private markets 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 ever completed. More recently, KKR’s acquisition of Energy Future Holdings (previously known as TXU) in 2007 is the largest leveraged buyout ever completed and a pioneering example of how a private equity investment 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 global alternative asset manager. KKR’s expansion outside of the United States began in 1995 when it made its first investment in Canada. Since that time, it has taken a long-term strategic approach to investing globally and has established a presence in Europe, Asia, the Middle East and Australia with multilingual and multicultural investment teams that have local market knowledge and significant business, investment and operational experience in the countries in which KKR invests. KKR believes that its global capabilities have assisted KKR in raising capital and capturing a greater number of investment opportunities, while enabling it to diversify its operations. While its operations span multiple continents and asset classes, its investment professionals are supported by an integrated infrastructure and operate under a common set of principles and business practices that are monitored by global committees. The firm operates with a single culture that rewards investment 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 transactions across multiple offices and businesses in order to take advantage of the industry-specific expertise of its investment professionals, and it holds regular meetings in which investment professionals throughout its offices share their knowledge and experiences. KKR believes that the ability to draw on the local cultural fluency of its investment professionals while maintaining a centralized and integrated global infrastructure distinguishes it from other alternative asset managers and has been a substantial contributing 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 infrastructure investment and include executives with operations, strategic consulting, risk management, liability management and finance experience. KKR has historically focused its senior-level private markets recruiting efforts on executives with significant operating experience, including former chief executive officers and chief financial officers of companies operating in a wide range of industry sectors. KKR’s public 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 and interest rate derivative instruments, structured products, real-estate investments and other forms of securities. As a group, these professionals provide KKR with a powerful global team for identifying attractive 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 20 senior advisors to provide KKR with additional operational and strategic insights. The responsibilities of senior advisors include serving on the boards of its portfolio companies, helping KKR evaluate individual investment opportunities and assisting portfolio companies with operational matters. These individuals include former chief executive officers, chief financial officers and chairmen of Fortune 500 companies, as well as other individuals who have held leading positions in major corporations and public agencies worldwide. Four of the senior advisors also participate on its portfolio management committee, 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 its effort, KKR utilizes a team of more than 40 operational professionals that operate under the name KKR Capstone and work exclusively with its investment professionals and portfolio company management teams. With executives in New York, Menlo Park, London and Hong Kong, KKR Capstone provides additional expertise for assessing investment opportunities and assisting managers of portfolio companies in defining strategic priorities and implementing operational changes. During the initial 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 and efficient capital allocation and in developing operating and financial metrics. Over time, this work shifts to identifying challenges and taking advantage of business opportunities that arise during the life of an investment.

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Global Committees KKR’s investment processes are overseen by investment and portfolio management committees that operate globally. KKR’s investment committees are responsible for reviewing and approving all investments made by their business segments; monitoring due diligence practices; and providing advice in connection with the structuring, negotiation, execution and pricing of investments. KKR’s portfolio management committee is responsible for working with its investment professionals from the date on which a private equity or fixed income investment is made until the time the investment is exited in order to ensure that strategic and operational objectives are accomplished and that the performance of the investment is closely monitored. Private Markets Through its private markets segment, KKR manages and sponsors a group of investment funds and co-investment vehicles that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions, in global private equity and infrastructure assets. These investment funds and vehicles are managed by Kohlberg Kravis Roberts & Co. L.P., a registered investment adviser, and currently consist of a number of private equity funds that have a finite life and investment period, which are referred to as traditional private equity funds, various co-investment vehicles and KPE. As of June 30, 2009, the segment had $37.5 billion of AUM and its actively investing funds included geographically differentiated investment funds and co-investment vehicles with over $15.1 billion of unused capital commitments, providing a significant source of capital that may be deployed globally. Private Equity KKR is a world leader in private equity, having raised 14 traditional private equity funds with approximately $59.3 billion of capital commitments through March 31, 2009. KKR focuses on the largest end of the private equity market, which allows it to invest in industry-leading franchises with global operations, attract world-class management teams, deploy large amounts of capital in individual transactions and optimize amounts of income that it earns on a per transaction basis. KKR’s investment approach 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 1996 Fund and subsequent traditional private equity funds by geography and industry from the time of the

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1996 Fund’s first investment through March 31, 2009. KKR believe that this data illustrates the benefits of its business approach and ability to source and invest in deals in multiple industries and geographies. Dollars Invested by Geography (1996 Fund and Subsequent Funds as of March 31, 2009)

Dollars Invested by Industry (1996 Fund and Subsequent Funds as of March 31, 2009)

Amount Invested By Country

Amount Invested By Industry

Singapore 2.7% Luxembourg 1.5% Italy 0.7%

Netherlands 5.0%

Switzerland 1.1% Taiwan 0.4%

Turkey 1.6%

Health Care 14.7% Financial Services 14.2%

America 52.0%

India 1.6%

Manufacturing 12.8%

Media 11.9% Recycling 0.9%

Energy 7.0%

Germany 10.0% Australia 1.8%

France 5.4% England 9.9%

Hotels/Leisure 2.1%

Denmark 1.5%

Canada 3.1%

Education 1.4%

Austria 1.0%

China 0.7%

Retail 12.2%

Consumer Products 3.2%

23JUL200902005522

Chemicals 1.8%

Telecom 5.3% Transportation 1.6%

Technology 10.9%

23JUL200902005757

Although the general partners of the 1996 Fund and prior funds will not be contributed to the Combined Business of KKR and KPE in connection with the Combination Transaction, the 1996 Fund was significant to KKR’s operations during the periods for which historical information has been presented in this consent solicitation statement and, accordingly, the 1996 Fund has been consolidated in 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% in North 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 industries changed 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 and co-investment vehicles, consists of approximately 50 companies with more than $200 billion of annual revenues and more than 875,000 employees worldwide. These companies are headquartered in more than 17 countries and operate in 14 general industries which take advantage of its broad and deep industry and operating expertise. Many of these companies are leading franchises with global operations, strong management teams, defensible market positions and attractive growth prospects, which KKR believes will provide benefits through a broad range of business conditions, including the current economic cycle. The following table presents information concerning the portfolio companies in KKR’s current private equity portfolio as of March 31, 2009. Company Name

Ma Anshan Modern Farming . Unisteel . . . . . . . . . . . . . . . . KKR Debt Investors S.` a r.l. . Bharti Infratel Limited . . . . . Legg Mason, Inc. . . . . . . . . .

. . . . .

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. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

Year of Investment

Industry

2008 2008 2008 2008 2008

Consumer Products Technology Financial Services Telecommunication Financial Services

. . . . .

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Region

Asia/China Singapore Various India United States

Company Name

Northgate Information Solutions Limited . . . . Alliance Boots GmbH . . . . . . . . . . . . . . . . . . Biomet, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . Dollar General Corporation . . . . . . . . . . . . . . Energy Future Holdings Corp. . . . . . . . . . . . First Data Corporation . . . . . . . . . . . . . . . . . Harman International Industries, Incorporated Laureate Education, Inc. . . . . . . . . . . . . . . . MMI Holdings Limited . . . . . . . . . . . . . . . . . ProSiebenSat.1 Media AG . . . . . . . . . . . . . . . Tarkett S.A. . . . . . . . . . . . . . . . . . . . . . . . . . Tianrui Group Cement Co., Ltd. . . . . . . . . . . U.N. Ro-Ro Isletmeleri A.S. . . . . . . . . . . . . . U.S. Foodservice, Inc. . . . . . . . . . . . . . . . . . . Yageo Corporation . . . . . . . . . . . . . . . . . . . . Aricent Inc. . . . . . . . . . . . . . . . . . . . . . . . . . AVR Bedrijven N.V. . . . . . . . . . . . . . . . . . . . BIS Industries Limited . . . . . . . . . . . . . . . . . Capmark Financial Group Inc. . . . . . . . . . . . HCA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . KION Group GmbH . . . . . . . . . . . . . . . . . . . The Nielsen Company B.V. . . . . . . . . . . . . . . NXP B.V. . . . . . . . . . . . . . . . . . . . . . . . . . . PagesJaunes Groupe S.A. . . . . . . . . . . . . . . . Seven Media Group . . . . . . . . . . . . . . . . . . . TDC A/S . . . . . . . . . . . . . . . . . . . . . . . . . . . Accellent Inc. . . . . . . . . . . . . . . . . . . . . . . . . Avago Technologies Limited . . . . . . . . . . . . . Duales System Deutschland AG . . . . . . . . . . . SunGard Data Systems, Inc. . . . . . . . . . . . . . Toys ‘R’ Us, Inc. . . . . . . . . . . . . . . . . . . . . . . A.T.U. Auto-Teile-Unger Holding GmbH . . . . Jazz Pharmaceuticals, Inc. . . . . . . . . . . . . . . . Maxeda B.V. . . . . . . . . . . . . . . . . . . . . . . . . Sealy Corporation . . . . . . . . . . . . . . . . . . . . . Visant Corporation . . . . . . . . . . . . . . . . . . . . KSL Holdings . . . . . . . . . . . . . . . . . . . . . . . . Legrand Holdings S.A. . . . . . . . . . . . . . . . . . NuVox, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . Rockwood Holdings, Inc. . . . . . . . . . . . . . . . Zhone Technologies, Inc. . . . . . . . . . . . . . . . MedCath Corporation . . . . . . . . . . . . . . . . . . PRIMEDIA Inc. . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year of Investment

Industry

Region

2008 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2005 2005 2005 2005 2005 2004 2004 2004 2004 2004 2003 2002 2000 2000 1999 1998 1989

Technology Health Care Health Care Retail Energy Financial Services Consumer Education Technology Media Manufacturing Manufacturing Transportation Retail Technology Technology Recycling Industrial Financial Services Health Care Manufacturing Media Technology Media Media Telecommunication Health Care Technology Recycling Technology Retail Retail Health Care Retail Consumer Media Hotel/Leisure Manufacturing Telecommunication Chemicals Telecommunication Health Care Media

United Kingdom United Kingdom United States United States United States United States United States United States Singapore Germany France China Turkey United States Taiwan India The Netherlands Australia United States United States Germany United States The Netherlands France Australia Denmark United States Singapore Germany United States United States Germany United States The Netherlands United States United States United States France United States United States United States United States United States

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KKR takes a long-term approach to private equity investments and measures the success of its investments over a period of years rather than months. Given the duration of its private equity investments, the firm focuses on generating large multiples of invested capital and attractive IRRs when deploying capital in private equity transactions. Since its inception, KKR has completed more than 165 private equity investments involving an aggregate transaction value of more than $425 billion. KKR has nearly doubled the value of capital that it has invested in private equity, turning $44.4 billion of capital into $77.1 billion of value. Excluding its less mature funds, KKR has more than doubled the value of capital invested, turning $31.2 billion of capital into $67.8 billion of value. Mature funds consist of funds that were formed more than 36 months prior to the valuation date. Amount Invested and Total Value All Investments As of March 31, 2009

Amount Invested and Total Value Mature Funds As of March 31, 2009

Amount Invested and Total Value—Excludes KPE

Amount Invested and Total Value—Excludes KPE

90

80

Unrealized Value $17.0

60

$44.4

50 40

Realized Value $60.1

30 20

$67.8 Unrealized Value $7.7

70 ($ in billions)

70 ($ in billions)

90

$77.1

80

60 50 $31.2

40 30

Realized Value $60.1

20 10

10 0

0

22JUL200908523850

Amount Invested

22JUL200908524025

Amount Invested

Total Value

Total Value

From its inception in 1976 through March 31, 2009, KKR’s traditional private equity funds generated a cumulative gross IRR of 25.6%, compared to the 10.5% gross IRR achieved by the S&P 500 Index over the same period, despite the cyclical and sometimes challenging environments in which it has operated. The S&P 500 Index is an unmanaged index and its returns assume reinvestment of distributions and do not reflect any fees or expenses. The table below presents information as of March 31, 2009 relating to the historical performance of each of KKR’s traditional private equity funds since inception, which it believes illustrates the benefits of its private equity approach. This data does not reflect additional capital raised since March 31, 2009 or acquisitions or disposals of investments, changes in investment values or distributions occurring after that date. You are encouraged to review the cautionary note below for a description of reasons why the future results of KKR’s private equity funds may differ from the historical results of its private equity funds. Amount Fair Value of Investments CommittedInvested Realized Unrealized Total ($ in millions)

Private Equity Fund(1)(2)

Legacy Funds 1976 Fund . . 1980 Fund . . 1982 Fund . . 1984 Fund . . 1986 Fund . . 1987 Fund . . 1993 Fund . . 1996 Fund . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

$ $ $ $ $ $ $ $

31 357 328 1,000 672 6,130 1,946 6,012

$ $ $ $ $ $ $ $

31 357 328 1,000 672 6,130 1,946 6,012

$ 537 $ 1,828 $ 1,291 $ 5,963 $ 9,081 $14,783 $ 4,129 $11,310

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$

$ $ $

— — — — — 44 5 429

$ 537 $ 1,828 $ 1,291 $ 5,963 $ 9,081 $14,827 $ 4,134 $11,739

Gross IRR*

39.5% 29.0% 48.1% 34.5% 34.4% 12.1% 23.6% 17.6%

Net IRR*

35.5% 25.8% 39.2% 28.9% 30.7% 8.9% 16.7% 12.8%

Multiple of Invested Capital**

17.1 5.1 3.9 6.0 13.5 2.4 2.1 2.0

Amount Fair Value of Investments CommittedInvested Realized Unrealized Total ($ in millions)

Private Equity Fund(1)(2)

Funds Included in Combination(3) European Fund (1999)(4) . . . . . . Millennium Fund (2002) . . . . . . . European Fund II (2005)(4) . . . . 2006 Fund (2006) . . . . . . . . . . . Asian Fund (2007) . . . . . . . . . . . European Fund III (2008)(4) . . . .

. . . . . .

. . . . . .

. . . . . .

All Funds . . . . . . . . . . . . . . . . . . . .

$ 3,085 $ 6,000 $ 5,751 $17,642 $ 3,979 $ 6,396

$ 3,085 $ 5,593 $ 5,900 $ 5,024 $ 5,751 $ 563 $12,073 — $ 925 — $ 194 —

$59,329 $44,404 $60,102

$ $ $ $ $ $

1,431 3,464 2,340 8,473 718 109

$17,013

$ $ $ $ $ $

7,024 8,488 2,903 8,473 718 109

$77,115

Gross IRR*

Net IRR*

Multiple of Invested Capital**

25.6% 18.6% 20.1% 13.4% (31.5)% (31.7)% * * * * * * 25.9%

19.4%

2.3 1.4 0.5 0.7 0.8 0.6 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 Fund was 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 when those investments will be liquidated. In the case of the 1976 Fund and the 1980 Fund, the last distributions made 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 include euro-denominated commitments of A196.5 million, A2,597.2 million and A2,934.0 million, respectively. Such amounts have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate prevailing on March 31, 2009 in the case of unfunded commitments. (4) The gross IRR, net IRR and multiple of invested capital are calculated based on KKR’s first eleven traditional private equity funds, which represent all of its private equity funds that have invested for at least 36 months prior to March 31, 2009. The 2006 Fund, the Asian Fund and the European Fund III had not invested for at least 36 months as of March 31, 2009. KKR therefore has not calculated gross IRRs, net IRRs and 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 holding period. Net IRRs are calculated after giving effect to the allocation of realized and unrealized returns on a fund’s investments to the fund’s general partner pursuant to a carried interest and the payment of any applicable management fees. Gross IRRs are calculated before giving effect to the allocation of realized and unrealized returns on a fund’s investments to the fund’s general partner or manager pursuant to a carried interest and the payment of any applicable management fees.

**

The multiples of invested capital measure the aggregate returns generated by a fund’s investments in absolute terms. Each multiple of invested capital is invested by adding together the total realized and unrealized values of a fund’s investments and dividing by the total amount of capital invested by the fund. Such amounts do not give effect to the allocation of any realized and unrealized returns on a fund’s investments to the fund’s general 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 of invested capital and attractive risk-adjusted IRRs by selecting high-quality investments that may be made at attractive prices, applying rigorous standards of due diligence when making investment decisions, implementing strategic and operational changes that drive value creation in acquired businesses, carefully monitoring investments and making informed decisions when developing investment exit strategies. KKR believes that it has achieved a leading position in the private equity industry by applying a disciplined investment approach and by building strong partnerships with highly motivated management teams 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 market positions 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 its sizeable capital base, global infrastructure and relationships with leading executives from major companies, commercial and investment banks and other investment and advisory institutions, including by its own estimate chief executives and directors of two-thirds of the companies in the S&P 500 and the Global S&P 100. Members of KKR’s global network frequently contact KKR with new investment opportunities, including a substantial number of exclusive investment opportunities and opportunities that are made available to only a very limited number of other firms, which has generated substantial deal flow for KKR. KKR also proactively pursues business development strategies that are designed to generate deals internally based on the depth of its industry knowledge and KKR’s reputation as a leading financial sponsor. To enhance its ability to identify and consummate private equity investments, KKR has organized its investment professionals in industry-specific teams that focus on the nine industry sectors in which KKR 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 work closely with KKR’s operational consultants and senior advisors to identify businesses that it can grow and improve. 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 assets that will benefit from KKR’s involvement. They possess a detailed understanding of the economic drivers, opportunities for value creation and strategies that can be designed and implemented to improve companies across the industries in which the firm invests. KKR believes that its industry-specific expertise provides it with important proprietary investment opportunities and creates a significant advantage when investing in more complex and regulated industries, such as banking, insurance and power generation and transmission. Utilizing its insights and industry contacts to access new markets or target strategic acquisitions also helps KKR when it works with management teams to develop value-creating strategies and, in some instances, can lead to additional revenue opportunities for portfolio companies. Due Diligence and the Investment Decision When an investment team determines that an investment proposal is worth consideration, the proposal 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 on the facts and circumstances surrounding an investment and to prepare a framework that may be used from the date of an acquisition to drive operational improvement and value creation. When conducting due 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 connection with the due diligence process, investment professionals spend significant amounts of time meeting with a company’s management and operating personnel, visiting plants and facilities and speaking with customers and suppliers in order to understand the opportunities and risks associated with the proposed 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 before it 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 to execute on its investment thesis, and it rigorously tracks performance through regular reporting and detailed operational and financial metrics. KKR has developed a global network of experienced managers and operating executives who assist the portfolio companies in making operational improvements and achieving growth. KKR augments these resources with operational guidance from its operating consultants, senior advisors and investment teams and with ‘‘100-Day Plans’’ that focus the firm’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 its inception through March 31, 2009, the firm has generated approximately $60.1 billion of cash proceeds from 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 structure the 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 believes that its ability to successfully realize investments is attributable in part to the strength and discipline of its portfolio management committee and the firm’s longstanding relationships with corporate buyers and 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 investment periods. Each fund is organized as a single partnership or a combination of separate domestic and overseas partnerships and each partnership is controlled by a general partner. Fund investors are limited partners who agree to contribute a specified amount of capital to the fund from time to time for use in qualifying investments during the investment period, which generally lasts up to six years depending on how quickly capital is deployed. Each fund’s general partner is generally entitled to a carried 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 a contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of their investment losses to KKR relative to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. See ‘‘KKR Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.’’ KKR principals will remain responsible for any clawback obligations relating to carry distributions received 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 they receive after the Transactions pursuant to any carried interest allocated directly to them as carry pool participants. KKR will be responsible for any other clawback obligations and any amounts due under net loss sharing arrangements and will indemnify its principals for any personal guarantees that they have provided with respect to such amounts. KKR enters into management agreements with its traditional private equity funds pursuant to which it receives management fees in exchange for providing the funds with management and other services. These management fees are calculated based on the amount of capital committed to a fund during the investment period and thereafter on the cost basis of the fund’s investments, which causes the fees to be reduced over time as investments are liquidated. These management fees are paid by fund investors, who generally contribute capital to the fund in order to allow the fund to pay the fees to KKR. KKR funds generally allocate management fees across individual investments and, as and when an investment generates returns, 20% of the allocated management fee is required to be returned to investors before a carried interest may be paid. KKR also enters into monitoring agreements with its portfolio companies pursuant to which it receives periodic monitoring fees in exchange for providing them with management, consulting and other services, and it typically receives transaction fees from portfolio companies for providing them with financial advisory and other services in connection with specific transactions. In some cases, KKR may be entitled to other potential fees that are paid by an investment target when a potential investment is not consummated. KKR’s traditional private equity fund agreements typically require it to share 80% of any advisory and other potential fees that are allocable to a fund, after reduction for expenses incurred allocable to a fund from unconsummated transactions, with fund investors in the form of a management fee reduction. These agreements typically require management fee reductions equal to 80% of the amount of the monitoring, transaction and other potential fees that are reasonably allocable to a fund. In addition, the agreements governing KKR’s traditional private equity funds enable investors in those funds to reduce their capital commitments available for further investments, on an investor-by-investor basis, in the event certain ‘‘key persons’’ (for example, both of Messrs. Kravis and Roberts) in KKR’s investment funds generally cease to actively manage the fund. While these provisions do not allow investors to withdraw capital that has been invested or cause a fund to terminate, the occurrence of a ‘‘key man’’ event could cause disruption in KKR’s business, reduce the amount of capital that it has available for future investments and make it more challenging to raise additional capital in the future. To the extent investors in KKR’s private equity funds suffer losses resulting from fraud, gross negligence, 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 their directors, officers, other employees and affiliates, are generally indemnified by the private equity funds to the fullest extent permitted by law with respect to their conduct in connection with the management of the business and affairs of KKR’s private equity funds, such indemnity does not extend to actions determined 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’s manager also invests its own capital in the fund’s investments, KKR’s private equity fund documents generally require the general partners of the 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 capital commitments at final closing. When investments are made, the general partner contributes capital to the fund based on its fund commitment percentage and acquires a 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 to KKR’s existing owners. In addition, qualifying KKR personnel typically invest their own capital in side-by-side investments with the firm’s traditional private equity funds. Side-by-side investments are investments made on the same terms and conditions as those available to the applicable fund, except that these side-by-side investments are not subject to management fees or a carried interest. KKR believes that these investments, which require its people to put their own capital at risk, are an important means of KKR’s aligning the interests of the firm with those of its investors. In connection with the Combination Transactions, the Combined Business will not be allocated any of the capital contributions made by the general partners of KKR’s funds prior to the completion of the Combination Transaction or any returns generated on those contributions. It will, however, be required to fund the general partners’ obligations with respect to future investments and will record investment income to the extent that those investments generate profits. In addition, the Combined Business will not acquire any interest in any side-by-side investments that have been made by KKR personnel. The table below presents information as of March 31, 2009 relating to general partner interests in KKR’s traditional private equity funds that will be contributed to the Combined Business. This data does not reflect acquisitions or disposals of investments, changes in investment values or distributions occurring after March 31, 2009. As of March 31, 2009 Investment Period

% Committed Commencement End Amount by General Invested Remaining Date(1) Date(1) Committed(2) Partner by Fund Realized Cost ($ in millions)

Private Equity Fund European Fund III (2008) . . . . . . Asian Fund (2007) 2006 Fund . . . . . European Fund II (2005) . . . . . . Millennium Fund (2002) . . . . . . European Fund (1999) . . . . . .

Amount

Outstanding Investments Fair Value Allocable Fair to General Value Partner(3)

. . .

3/2008 7/2007 9/2006

3/2014 7/2013 9/2012

$ 6,396.4 $ 4,000.0 $17,642.1

4.6% 2.5% 2.1%

$ 193.7 $ 925.0 $12,073.3

— $ 193.7 $ 109.2 — $ 925.0 $ 718.0 — $12,073.3 $ 8,473.2

.

10/2008

11/2011

$ 5,750.8

2.1%

$ 5,750.8 $

.

12/2002

12/2008

$ 6,000.0

2.5%

$ 5,900.4 $ 5,024.4 $ 4,908.2 $ 3,463.9

$(170.8)

.

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)

563.1 $ 5,534.4 $ 2,339.6

$ 4.9 $ 18.0 $(133.8) $

(7.6)

(1)

The commencement date represents the date on which the general partner of the applicable fund commenced investment of the fund’s capital. The end date represents the earlier of the date on which the general partner of the applicable fund was or will be required by the fund’s governing agreement to cease making investments on behalf of the fund, unless extended 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 thirdparty fund investors and the general partner. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate that prevailed on March 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 partner as a result of (i) the general partner’s capital commitment to the fund and (ii) the general partner’s right to carried interest and 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 of their investment activities in North America. These funds historically have participated in all investments that the firm sources for its European and Asian private equity funds based on allocation criteria set forth in the partnership agreements governing the funds. Commencing March 2009, the limited partnership agreement for the 2006 Fund was amended to make investing with the European and Asian private equity funds optional. In connection with the Combination Transaction, KKR will contribute to the Combined Business interests in the general partners of its two most recent global private equity funds: the Millennium Fund and the 2006 Fund. The 2006 Fund is one of the largest private 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 capital commitments 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 outstanding investments in 46 portfolio companies operating in 14 different industry sectors. These investments had a 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 in Europe, although they are permitted to make investments in other jurisdictions (but generally not the United States and Canada). In connection with the Combination Transaction, KKR will contribute to the Combined Business interests in the general partners of each of KKR’s European private equity funds: 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 the European Fund and to the European Fund II have been invested. The European Fund III received an aggregate of $6.4 billion of capital commitments as of its final closing, of which $0.2 billion had been invested 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 industry sectors 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 in the Asia-Pacific region, and KKR will contribute interests in its general partner to the Combined Business in connection with the Combination Transaction. The fund received $4.0 billion of capital commitments as of its final closing, of which $0.9 billion had been invested and $3.1 billion remained available for future investments as of March 31, 2009. The fund had outstanding investments in six portfolio companies operating in four different industry sectors as of March 31, 2009. These investments 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 with a proposal for a new fund to make additional investments in portfolio companies of the European Fund II. The new fund, which has not yet had a closing, has several features that distinguish it from KKR’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 relating to 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 overall amount 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 from further realizations, interests in the general partners will not be contributed to the Combined Business in connection with the Combination Transaction. KKR will, however, continue to provide the legacy funds with management and other services until their liquidation. While KKR does not expect to receive meaningful fees for providing these services, it does not believe that the ongoing administration of 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 recent years, creating significant opportunities to offer co-investment opportunities to both fund investors and other third parties. KKR has capitalized on this opportunity by building out its capital markets and distribution capabilities and creating new investment structures and products that allow it to syndicate a portion of the equity needed to finance acquisitions. These structures include co-investment vehicles and a principal protected private equity product, many of which entitle the firm to receive management fees and/or carry. As of March 31, 2009, KKR had $1,656.6 million of AUM in fee and/or carry-yielding products of this type. In connection with the Combination Transaction, KKR will contribute to the Combined 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 and developing economies, and believes that the global infrastructure market provides an opportunity for the firm’s unique combination of private investment, operational improvement and regulatory and infrastructure-related and stakeholder management skills. While KKR has made significant investments in infrastructure assets through its private equity funds such as ITC Holdings and DPL Inc., the firm began building out its infrastructure operations as a distinct and complementary business in 2008 in order to capitalize on the growing demand for global infrastructure investment and provide investors with 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 the significant expertise that the firm has established by managing investments in large, complex and regulated 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 infrastructure opportunities. These professionals have investment experience and backgrounds that span the sectors in which 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. By extending its platform to include a dedicated infrastructure team and applying the skill set that it has developed over its 33-year history, KKR believes that it is well-positioned to generate attractive returns and 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 track record, involves the same active management style and operational focus that it applies to private equity. The firm intends to make selective investments in infrastructure businesses and assets on a global basis where it can apply KKR’s operational and public affairs expertise to generate additional value. Investments are expected to focus on energy, waste and wastewater, transportation and telecommunications assets but may also include social infrastructure and infrastructure-related assets. KKR anticipates investing through concession agreements or by outright purchase principally in brownfield assets and may undertake greenfield projects in a minority of circumstances. The firm will generally seek to acquire majority ownership in assets or companies to insure strategic influence over the 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 publicly traded fixed income funds, structured finance vehicles and managed accounts that focus on corporate debt 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 market conditions to capitalize on 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 private 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 the commencement of operations through June 30, 2009.

($ in billions)

15

10

13.2 5

3.7 0

13.3

11.0

5.1

0.8 2004

2005

2006

2007

2008

June 30 2009 22JUL200908160199

Experience KKR launched its public markets business in August 2004. In connection with the formation of this business, the firm hired additional investment professionals with significant experience evaluating and managing debt investments, including investments in corporate loans and debt securities, structured products 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 that generate attractive risk-adjusted returns on invested capital by allocating capital across multiple asset classes, selecting high-quality investments that may be made at attractive prices, applying rigorous standards of due diligence when making investment decisions, subjecting investments to regular monitoring and oversight and making buy and sell decisions based on price targets and relative value parameters. The firm employs both ‘‘top-down’’ and ‘‘bottom-up’’ analyses when making these types of investments. Its top-down analysis involves a macro analysis of relative asset valuations, long-term industry trends, business cycles, interest rate expectations, credit fundamentals and technical factors to target specific industry sectors and asset classes in which to invest. Its bottom-up analysis includes a rigorous analysis of the credit fundamentals and capital structure of each credit considered for investment and a thorough review of the impact of credit and industry trends and dynamics and dislocation events on such potential investment. Sourcing and Selecting Investments KKR sources debt investment opportunities through a variety of channels, including internal deal generation strategies and the firm’s global network of contacts at major companies and corporate executives, commercial and investment banks, financial intermediaries, other private equity sponsors and other investment and advisory institutions. Its fixed income funds, structured finance vehicles and managed accounts are also regularly provided with opportunities to invest in debt that KKR’s portfolio companies incur in connection with KKR’s private equity investments. These opportunities may be significant. 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 KKR portfolio companies. Due Diligence and the Investment Decision Once a potential investment has been identified, KKR’s investment professionals screen the opportunity and make a preliminary determination concerning whether KKR should proceed with a due diligence investigation. When evaluating the suitability of a debt investment, KKR employs a relative value framework and subjects the investment to a rigorous credit analysis. This review considers, among other things, pricing terms, expected returns, credit structure, credit ratings, historical and projected financial data, the issuer’s competitive position, the quality and track record of the issuer’s management team, margin stability and industry and company trends. Investment professionals use the services of outside advisors and industry experts as appropriate to assist them in the due diligence process and, when relevant and permitted, leverage the knowledge and experience of KKR’s private equity professionals. A dedicated investment committee monitors all due diligence practices and must approve an investment before it may be made. Monitoring Investments KKR monitors its portfolios of debt investments using daily, quarterly and annual analyses. Daily analyses include morning market meetings, industry and company pricing runs, industry and company reports 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 actual results to projections, updates to financial models (baseline and stress cases) and reviews of portfolios of 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 operations in July 2004 to invest in a broad range of debt investments. KKR serves as the external manager of KFN under a management agreement and is entitled to receive a quarterly base management fee equal to 1.75% of KFN’s equity as defined in the agreement and a quarterly incentive fee that is generally equal to the amount by which KFN’s net income (before incentive fees and stock-based compensation expenses) 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 of one-half of its base management fees from KFN. The aggregate amount of fees otherwise payable during 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 be terminated only in limited circumstances and, except for a termination arising from certain events of cause, 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 these investments by asset class as of the date indicated. As of March 31, 2009 Amortized Cost Basis Fair Value ($ in millions)

Investment Type

Corporate loans and debt securities . . . . Marketable equity securities . . . . . . . . . . Non-marketable equity securities . . . . . . Residential mortgage-backed securities(1)

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

$8,815.3 2.5 22.8 340.3

$5,647.6 3.1 27.0 246.3

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$9,180.9

$5,924.0

(1) Amount reflects KFN’s ownership of residential mortgage-backed securities and excludes the consolidation of certain residential mortgage securitization vehicles that are consolidated by KFN as KFN is deemed the primary beneficiary of these entities. The consolidation of these residential mortgage securitization vehicles has no impact on KFN’s net assets or results of operations. KFN reported a net loss of $13.0 million, or $0.09 per diluted common share outstanding, for the three months ended March 31, 2009, as compared to net income of $14.0 million, or $0.12 per diluted common share outstanding, for the three months ended March 31, 2008, respectively. KFN reported a net loss for the year ended December 31, 2008 of $1.1 billion, or a loss of $7.68 per diluted common share outstanding, as compared to a net loss of $100.2 million, or $1.11 per diluted common share outstanding, and net income of $135.3 million, or $1.68 per diluted common share outstanding, for the years 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 an investment 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

190

raise additional capital from both new and existing investors, including investors in its private equity funds and fixed income funds. For managing these accounts, KKR is entitled to receive a fee that varies based on the nature of the investment program. Structured Finance Vehicles Beginning in 2005, KKR began managing structured finance vehicles in the form of collateralized loan obligation transactions (‘‘CLOs’’). CLOs are typically structured as bankruptcy-remote, special purpose investment vehicles which acquire, monitor and, to varying degrees, manage a pool of fixedincome assets. KFN, and the private fixed income funds (see description below), use the CLOs as long term financing for their fixed income investments and as a way to minimize refinancing risk, minimize maturity 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 debt and marketable and non-marketable equity securities. The amount of fees earned in connection with the 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 an increasingly attractive form of investment in recent years, and interest in mezzanine products has grown considerably given the favorable position of mezzanine in the capital structure and the historically attractive risk-reward characteristics of mezzanine investments. Given the debt- and equity-like characteristics of mezzanine financing, the returns that it generates and KKR’s presence in the leveraged loan market, KKR believes that expanding into mezzanine products will allow it to take advantage 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 activities of KKR with the assets acquired from KPE. Historically, KKR’s capital markets activities have been carried out within its private markets and public markets segments and have not been accounted for as a separate segment for financial reporting purposes. Following the completion of the Combination Transaction and the combination of these activities with the assets acquired from KPE, KKR expects that the results of the combined segment will be material to its operations and reported separately in its financial statements. KKR’s capital markets business supports the firm, its portfolio companies and clients by providing tailored capital markets advice and developing and implementing both traditional and non-traditional capital solutions for investments and companies seeking financing. Its activities consist primarily of capital markets advisory services, arranging debt and equity financing for transactions, placing and underwriting securities offerings and structuring new investment products. These activities capitalize on KKR’s natural sourcing advantage and global network and allow the firm to take greater control over both 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 markets platform that includes institutional placement capabilities, meaningful underwriting capacity and a team of experienced capital markets and structuring professionals with long-standing investor relationships and industry experience. To allow it to carry out these activities, the firm has obtained broker-dealer licenses in the United States, Canada, the United Kingdom, Dubai, Australia, and Japan and has received 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 its clients. These activities primarily supplement its existing capital-raising capabilities and the underwriting and advisory services that the firm’s funds and portfolio companies currently receive from large investment banks. KKR’s capital markets professionals also focus on developing new products that it believes 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 will act as additional resources for the assets acquired from KPE. Over time, KKR may expand its capital markets business and grow its capabilities in a manner that further complements the firm’s other business activities. Competition KKR competes with other alternative asset managers for both investors and investment opportunities. The firm’s competitors consist primarily of sponsors of public and private investment funds, business development companies, investment banks, commercial finance companies and operating companies acting as strategic buyers. KKR believes that competition for investors is based primarily 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 of investments that have been or are to be made. KKR believes that competition for investment opportunities is based primarily on the pricing, terms and structure of a proposed investment and certainty of execution. Some of the entities that KKR competes with as an alternative asset manager have greater financial, technical, marketing and other resources and more personnel than KKR and, in the case of some 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 of capital 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 may also have lower costs of capital and access to funding sources that are not available to KKR, which may create competitive advantages for them. In addition, some of these competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider range of investments and to bid more aggressively than KKR for investments. Strategic buyers may also be able to achieve synergistic cost savings or revenue enhancements with respect to a targeted portfolio company, which may provide them with a competitive advantage in bidding for such investments. KKR expects to compete as a capital markets business primarily with investment banks and independent broker-dealers in the United States, Europe, Asia, Australia and the Middle East and intends 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 also have similar relationships with the firm’s competitors, many or all of whom will have access to competing securities transactions, greater financial, technical or marketing resources or more established reputations than KKR. The limited operating history as a capital markets business could make it difficult for KKR to compete with established broker-dealers, participate in capital markets transactions 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 table presents information concerning the most senior executives of KKR and KKR Capstone and their

192

committee memberships as of March 31, 2009. These individuals are referred to elsewhere in this consent solicitation statement as KKR’s ‘‘senior principals.’’ Location

Henry R. Kravis . . . . . . . . . . . . . . . . . . . . . .

New York

George R. Roberts . . . . . . . . . . . . . . . . . . . .

Menlo Park

Paul E. Raether . . . . . . . . . . . . . . . . . . . . . . .

New York

Michael W. Michelson . . . . . . . . . . . . . . . . . .

Menlo Park

James H. Greene, Jr. . . . . . . . . . . . . . . . . . . Perry Golkin . . . . . . . . . . . . . . . . . . . . . . . . . Johannes P. Huth . . . . . . . . . . . . . . . . . . . . . .

Menlo Park New York London

Todd A. Fisher . . . . . . . . . . . . . . . . . . . . . . .

London

Alexander Navab . . . . . . . . . . . . . . . . . . . . . .

New York

Jacques Gara¨ıalde . . . Marc S. Lipschultz . . . Reinhard Gorenflos . . Michael M. Calbert . . Scott C. Nuttall . . . . . Joseph Y. Bae . . . . . . Brian F. Carroll . . . . . Adam H. Clammer . . Frederick M. Goltz . . Oliver Haarmann . . . . Dominic P. Murphy . . John L. Pfeffer . . . . . John K. Saer, Jr. . . . . David H. Liu . . . . . . . Ming Lu . . . . . . . . . . Kenneth W. Freeman . David J. Sorkin . . . . . Craig J. Farr . . . . . . . Simon E. Brown . . . . William J. Janetschek . Deryck C. Maughan . . James C. Momtazee . . Dean Nelson . . . . . . . Justin C. Reizes . . . . . William C. Sonneborn

London New York London Menlo Park New York Hong Kong New York Menlo Park San Francisco London London London New York Hong Kong Hong Kong New York New York New York New York New York New York Menlo Park New York Sydney San Francisco

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Committee Membership

Management Committee Private Equity Investment Committee Portfolio Management Committee Management Committee Private Equity Investment Committee Portfolio Management Committee Management Committee Private Equity Investment Committee Portfolio Management Committee Management Committee Private Equity Investment Committee — — Management Committee Private Equity Investment Committee Management Committee Private Equity Investment Committee Management Committee Private Equity Investment Committee — — Portfolio Management Committee — Management Committee Management Committee — — Fixed Income Investment Committee — — — — — — Portfolio Management Committee Management Committee — — — — — Portfolio Management Committee — Fixed Income Investment Committee

Regulation Our operations are subject to regulation and supervision in a number of jurisdictions. The level of regulation and supervision to which KKR is subject varies from jurisdiction to jurisdiction and is based on 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. The regulatory and legal requirements that apply to KKR’s activities are subject to change from time to time and may become more restrictive, which may make compliance with applicable requirements more difficult or expensive or otherwise restrict KKR’s ability to conduct its business activities in the manner in which they are now conducted. Changes in applicable regulatory and legal requirements, including changes in their enforcement, could materially and adversely affect KKR’s business and its financial condition and results of operations. As a matter of public policy, the regulatory bodies that regulate KKR’s business activities are responsible for safeguarding the integrity of the securities and financial markets and protecting investors who participate in those markets rather than protecting the interests of 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 Advisers Act and to fiduciary duties derived from these provisions which apply to KKR’s relationships with its advisory clients, including funds that KKR manages. These provisions and duties impose restrictions and obligations on KKR with respect to its dealings with its clients, including for example restrictions on agency cross and principal transactions with its clients. KKR has not registered as an investment advisor, although Kohlberg Kravis Roberts & Co. L.P. and its wholly owned subsidiary Kohlberg Kravis Roberts & Co. (Fixed Income) LLC are registered as investment advisors under the Investment Advisers Act. As registered investment advisors, they are subject to periodic SEC examinations and other requirements under the Investment Advisers Act and related regulations primarily intended to benefit advisory clients. These additional requirements relate, among other things, to maintaining an effective and comprehensive compliance program, recordkeeping and reporting requirements and disclosure requirements. The Investment Advisers Act generally grants the SEC broad administrative powers, including the power to limit or restrict an investment adviser from conducting advisory activities in the event it fails to comply with federal securities laws. Additional sanctions that may be imposed for failure to comply with applicable requirements include the prohibition of individuals from associating 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 the SEC under the Exchange Act and with the New York Securities Commission under New York state securities laws, and is a member of the Financial Industry Regulatory Authority, or FINRA. A brokerdealer is subject to legal requirements covering all aspects of its securities business, including sales and trading practices, public and private securities offerings, use and safekeeping of customers’ funds and securities, capital structure, record-keeping and retention and the conduct and qualifications of directors, 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 must maintain, 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 distributing or withdrawing its capital and subjects any distributions or withdrawals of capital by a broker-dealer to notice requirements. These and other requirements also include rules that limit a broker-dealer’s ratio of subordinated debt to equity in its regulatory capital composition, constrain a broker-dealer’s ability to 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 requirements may result in censures, fines, the issuance of cease-and-desist orders, revocation of licenses or registrations, the suspension or expulsion from the securities industry of the broker-dealer or its officers or employees or other similar consequences by regulatory bodies. United Kingdom KKR Capital Markets Limited, one of KKR’s subsidiaries, is authorized in the United Kingdom under the Financial Services and Markets Act 2000, or FSMA, and has permission to engage in a number of activities regulated under FSMA, including dealing as principal or agent and arranging deals in relation to certain types of specified investments and arranging the safeguarding and administration of assets. Kohlberg Kravis Roberts & Co. Limited, another one of KKR’s subsidiaries, is authorized in the United Kingdom under FSMA and has permission to engage in a number of regulated activities including advising on and arranging deals relating to corporate finance business in relation to certain types 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, use and safekeeping of client funds and securities, regulatory capital, record keeping, margin practices and procedures, approval standards for individuals, anti-money laundering, periodic reporting and settlement procedures. The Financial Services Authority is responsible for administering these requirements and KKR’s compliance with them. Violations of these requirements may result in censures, fines, imposition of additional requirements, injunctions, restitution orders, revocation or modification of permissions or registrations, the suspension or expulsion from certain ‘‘controlled functions’’ within the financial services industry of officers or employees performing such functions or other similar consequences. Other Jurisdictions KPE is authorized to do business in Guernsey and is subject to the ongoing supervision of the Guernsey Financial Services Commission and the Authority for the Financial Markets in the Netherlands. KKR PEI SICAR, S.` a r.l., a subsidiary of the KPE Investment Partnership, is a soci´ et´ e d’investissement en capital a` risque, regulated by the Luxembourg Commission de Surveillance du Secteur 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 with certain types of investors located in Ontario, Canada. KKR Capital Markets Japan Limited, a jointstock corporation, is a certified Class 2 broker-dealer registered under the Japanese Financial Instruments and Exchange Law of 2007. One of KKR’s fixed income funds is currently regulated as a mutual fund by the Cayman Islands Monetary Authority. As a regulated mutual fund, the fund is required to comply with certain registration, filing, information delivery and notice requirements and is subject to the ongoing supervision of the Cayman Islands Monetary Authority. The Cayman Islands Monetary Authority may subject a regulated mutual fund to special audits and require the fund to provide access to information or records from time to time. Failure to comply with requests by the Cayman Islands Monetary Authority may result in substantial fines or may result in the Cayman Islands Monetary Authority applying to a court to have the fund terminated. KKR MENA Limited, a Dubai International Financial Centre company, is licensed to arrange credit or deals in investments, advise on financial products or credit, and manage assets, and is regulated by the Dubai Financial Services Authority.

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KKR Australia Pty Limited is Australian financial services licensed and is authorized to provide advice on and deal in financial products for wholesale clients, and is regulated by the Australian Securities and Investments Commission. KKR Holdings Mauritius, Ltd. is an unrestricted investment adviser authorized to manage portfolios of securities and give advice on securities transactions, and is regulated by the Financial Services Commission, Mauritius. Legal Proceedings From time to time, KKR is involved in various legal proceedings, lawsuits and claims incidental to the 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 of operations, or cash flows. In August 2008, KFN, its directors and executive officers, including certain of KKR’s current and former personnel, were named as defendants in a purported class action complaint by KFN shareholders under federal securities laws (the ‘‘Class Action’’). The suit alleges that the registration statement utilized by KFN to effectuate its restructuring plan in May 2007 was false and misleading in that it misrepresented 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 Financial Corp. An amended complaint was filed in March 2009 whereby KFN’s directors were no longer named as defendants. On April 27, 2009, KFN and the remaining individual defendants in the Class Action moved to dismiss with prejudice all of the claims in the amended complaint. The motion is 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 executive officers, including certain of KKR’s current and former personnel, as well as against KFN as nominal defendant. The suit alleges breaches of fiduciary duty, waste of corporate assets and unjust enrichment by such individuals in connection with the conduct at issue in the Class Action discussed 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 on the pleadings or KFN files 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 New York purportedly on behalf of KFN against its directors and executive officers, including certain of KKR’s current and former personnel, as well as against KFN as nominal defendant. The suit alleges breaches of fiduciary duty, waste of corporate assets and unjust enrichment by such individuals in connection 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 on the pleadings or KFN files an answer to the Class Action. In December 2007, KKR, along with 15 other private equity firms and investment banks, were named as defendants in a purported class action complaint by shareholders in certain public companies recently acquired by private equity firms. In August 2008, KKR, along with 16 other private equity firms 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 bidding process in certain going-private transactions in violation of U.S. antitrust laws and that this purported behavior suppressed the price paid by the private equity firms for the plaintiffs’ shares in the acquired companies 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 in now-consolidated shareholder derivative actions relating to one of KKR’s portfolio companies. These actions 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 plaintiffs further allege that KKR benefited from these redemptions of preferred stock at the expense of the portfolio company and that KKR usurped a corporate opportunity of the portfolio company in 2002 by purchasing shares of its preferred stock at a discount on the open market while causing the portfolio company to refrain from doing the same. In February 2008, the special litigation committee formed by the board of directors of the portfolio company, following a review of plaintiffs’ claims, filed a motion to dismiss the actions, which is still pending. In August 1999, KKR was named as a defendant in an action alleging breach of fiduciary duty and conspiracy in connection with the acquisition of one of KKR’s portfolio companies in 1995. In April 2000, the complaint in this action was amended to further allege that KKR and others violated state law 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 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 they have engaged in conduct prohibited by United States antitrust laws. KKR is fully cooperating with the DOJ’s investigation. Moreover, in the ordinary course of business, KKR is and can be both the defendant and the 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 the KKR funds.

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GOVERNANCE KPE’s General Partner Upon completion of the Combination Transaction, KPE unitholders will continue to hold interests in KPE and be governed by KPE’s limited partnership agreement. KPE’s limited partnership agreement provides for the management of its business and affairs by its general partner, a Guernsey limited liability company that is owned by individuals who are affiliated with KKR, and which has a majorityindependent board of directors. KPE unitholders may not take part in the management or control of the business and affairs of KPE and do not have any right or authority to act for or to bind KPE or to take part or interfere in the conduct or management of KPE. KPE unitholders are not entitled to vote on 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 are independent of KKR and its affiliates, as determined by the full board of directors using the standards for independence established by the New York Stock Exchange. Each member of KPE’s general partner’s board of directors is elected annually at a general meeting of shareholders of KPE’s general partner and holds office until the next annual general meeting of shareholders of KPE’s general partner or, if earlier, his or her death, resignation or removal from office. KPE unitholders are not entitled to elect the directors of KPE’s general partner. When action is to be taken at a meeting of the board of directors, subject to any requirements relating to the special approval by independent directors, the affirmative vote of two-thirds of the directors then holding office is required for any action to be taken other than with respect to matters requiring the vote of a majority of directors then holding 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 written charter. The audit committee is required to consist solely of independent directors and at least one member who is financially literate. The audit committee is responsible for assisting and advising KPE’s general partner’s board of directors with matters relating to, among other things, KPE’s accounting and financial reporting processes; the integrity and audits of its financial statements; KPE’s compliance with legal and regulatory requirements; the qualifications, performance and independence of KPE’s independent accountants; and the qualifications, performance and independence of any third party that provides valuations for KPE’s investments. Following the consummation of the Combination Transaction, the audit committee of KPE’s general partner’s board of directors will have a similar role with 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 of directors operates pursuant to a written charter. The nominating and corporate governance committee is required to consist of a majority of directors who are not independent directors and is responsible for approving the appointment by the sitting directors of a person to the office of director and for recommending a slate of nominees for election as directors at the annual general meeting of KPE’s general partner’s shareholders. The nominating and corporate governance committee is also responsible for assisting and advising KPE’s general partner’s board of directors with respect to, among other things, matters relating to corporate governance, the corporate governance of KPE’s general partner and the performance of its board of directors. The KKR Managing Partner As is commonly the case with limited partnerships, the limited partnership agreement of the Controlling Partnership provides for the management of KKR’s business and affairs by a general 198

partner rather than a board of directors. The KKR Managing Partner serves as the sole general partner of the Controlling Partnership and the ultimate general partner of the KKR Group Partnerships. The KKR Managing Partner has a board of directors that is co-chaired by KKR’s founders 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 Controlling Partnership. The KKR Managing Partner will not have any economic interest in the Controlling Partnership other than a single Controlling Partnership unit. Directors and Executive Officers The following table presents certain information concerning the board of directors and executive officers of the KKR Managing Partner. Name

Henry R. Kravis . . . . George R. Roberts . . William J. Janetschek David J. Sorkin . . . .

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65 65 46 50

Position with Managing Partner

Co-Chief Executive Officer and Co-Chairman Co-Chief Executive Officer and Co-Chairman Chief Financial Officer General Counsel

Henry R. Kravis co-founded KKR in 1976 and serves as Co-Chairman and Co-Chief Executive Officer of the KKR Managing Partner. Currently, he participates in all the investment activities of KKR’s business and serves on the Management, Private Equity Investment and Portfolio Management Committees. He is also a member of the board of directors of KPE’s general partner. Prior to founding KKR, 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 McKenna College, 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 Executive Officer of the KKR Managing Partner. Currently, he participates in all the investment activities of KKR’s business and serves on the Management, Private Equity Investment and Portfolio Management Committees. He is also a member of the board of directors of KPE’s general partner, U.S. Natural Resources, Inc. and Accel-KKR Company. Prior to founding KKR, Mr. Roberts 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 McKenna College, and a J.D. from the University of California (Hastings) Law School. William J. Janetschek joined the firm in 1997 and serves as Chief Financial Officer of the KKR Managing 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’s University 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 Managing Partner. Prior to joining us, he was a partner with Simpson Thacher & Bartlett LLP, where he was a member of that law firm’s executive committee. Mr. Sorkin was with Simpson Thacher & Bartlett LLP for 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 directors are governed by provisions of the KKR Managing Partner’s limited liability company agreement and the Delaware Limited Liability Company Act. The following description is a summary of those provisions 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 of directors will consist of directors who are affiliated with KKR. Upon a U.S. listing, a majority of the 199

KKR Managing Partner’s board of directors will be ‘‘independent’’ as that term is defined in the listing manual 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 the vote of a majority of the Class A shares of the KKR Managing Partner that are then outstanding. Each person elected as a director will hold office until a successor has been duly elected and qualified or until his or her death, resignation or removal from office, if earlier. Class A shareholders are not required to hold meetings for the election of directors with any regular frequency and may remove directors, with or without cause, at any time. All of the KKR Managing Partner’s outstanding Class A shares are held by KKR’s senior principals. Under the KKR Managing Partner’s limited liability company agreement, each Class A share is non-transferable without the consent of the holders of a majority of the Class A shares that are then outstanding and each Class A share will automatically be redeemed and cancelled upon the holder’s death, disability or withdrawal as a member of the KKR Managing Partner. Upon the completion of the Transactions, Henry Kravis and George Roberts, the KKR Managing Partner’s Co-Chairmen and Co-Chief Executive Officers, will collectively hold Class A shares representing a majority of the total voting power of the outstanding Class A shares. In addition, notwithstanding the number of Class A shares held by Messrs. Kravis and Roberts, under the KKR Managing Partner’s limited liability company agreement, Messrs. Kravis and Roberts are deemed to represent a majority of the Class A shares then outstanding for purposes of voting on matters upon which holders of Class A shares are entitled to vote. Messrs. Kravis and Roberts may, in their discretion, designate one or more holders of Class A shares to hold such voting power and exercise all of the rights and duties of Messrs. Kravis and Roberts under the KKR Managing Partner’s limited liability company agreement. While neither of them acting alone will be able to direct the election or removal of directors, they will be able to control the composition of the board if they act together. While Messrs. Kravis and Roberts historically have acted with unanimity when managing KKR’s business, they have not entered into any agreement relating 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 of funds that were formed outside of the United States. Under the KKR Managing Partner’s limited liability company agreement, the KKR Managing Partner’s board of directors will be required to inform the holders of the KKR Managing Partner’s Class B shares of any matter that is submitted to a vote of the holders of such voting interests and to cause any voting interests that KKR holds through subsidiaries to be voted in accordance with directions received from the holders of a majority of the Class B shares providing such instructions notwithstanding any other provision in the agreement to the contrary. Holders of Class B shares will have no right to participate in the management of the KKR Managing Partner or the Controlling Partnership and will not have any other rights under the KKR Managing Partner’s limited liability company agreement other than as described above. KKR’s principals, including Messrs. Kravis and Roberts, collectively hold 100% of the KKR Managing Partner’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 in which a quorum is present or by a written resolution signed by all directors then holding office. When action is to be taken at a meeting of the board of directors, the affirmative vote of a majority of the directors present at any meeting is required for any action to be taken. Upon a listing of the interests in the Combined Business, when action is to be taken at a meeting of the board of directors, the affirmative 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 the additional approval of a majority of the Class A shares of the KKR Managing Partner. These actions consist of the following: • the entry into a debt financing arrangement by KKR in an amount in excess of 10% of KKR’s existing long-term indebtedness (other than the entry into certain intercompany debt financing arrangements); • 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’s or their equity securities or (ii) have designations, preferences, rights, priorities or powers that are 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 the limited 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 Group Partnership; • the merger, sale or other combination of the Controlling Partnership or any Group Partnership with or into any other person; • the transfer, mortgage, pledge, hypothecation or grant of a security interest in all or substantially all of the assets of the KKR Group Partnerships; • the appointment or removal of a Chief Executive Officer or a Co-Chief Executive Officer of the KKR Managing Partner or the Controlling Partnership; • the termination of the employment of any officer of the Controlling Partnership or any of KKR’s subsidiaries or the termination of the association of a partner with any of KKR’s subsidiaries, in each case, without cause; • the liquidation or dissolution of the Controlling Partnership, the KKR Managing Partner or any Group Partnership; and • the withdrawal, removal or substitution of the KKR Managing Partner as the general partner or any person as the general partner of a KKR Group Partnership, or the transfer of beneficial ownership of all or any part of a general partner interest in the Controlling Partnership or a KKR 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 Managing Partner’s board of directors believes may involve a conflict of interest or would have a materially disproportional impact on KPE and to enforce the rights under certain specified agreements of KPE and its unitholders against KKR Holdings and certain of its subsidiaries or designees, or a person who holds a partnership or equity interest in the foregoing entities. In addition, 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 and approve certain related party transactions that involve an aggregate amount in excess of $20 million or would reduce the percentage of KKR’s direct or indirect equity interest in the KKR Group Partnerships. See ‘‘Conflicts of Interest and Fiduciary Responsibilities.’’ Upon a U.S. listing, KKR Managing Partner’s board of directors will establish a conflicts committee that will be responsible for reviewing specific matters that the KKR Managing Partner’s board of directors believes may involve a conflict of interest and for enforcing the rights under certain specified agreements of KKR and its unitholders against KKR Holdings and certain of its subsidiaries 201

and designees, a general partner or limited partner of KKR Holdings, or a person who holds a partnership or equity interest in the foregoing entities. The conflicts committee will also be authorized to take any action pursuant to any authority or rights granted to such committee under any such agreement or with respect to any amendment, supplement, modification or waiver to any such agreement that would purport to modify such authority or rights. The conflicts committee will determine if the resolution of any conflict of interest submitted to it is fair and reasonable to KPE and its unitholders. 2009 Equity Incentive Plan The board of directors of the KKR Managing Partner intends to adopt the KKR 2009 Equity Incentive 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 KKR Group Partnership to grant to its employees, officers, directors, consultants and other service providers and those of its respective affiliates non-qualified unit options, unit appreciation rights, restricted partnership units, deferred restricted partnership units, phantom units, phantom restricted partnership units 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 Incentive Plan. 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 2009 Equity Incentive Plan, the board of directors of the KKR Managing Partner, or the committee or subcommittee thereof to whom authority to administer the 2009 Equity Incentive Plan has been delegated, as the case may be, is referred to as the Administrator. The Administrator will determine who will receive awards under the 2009 Equity Incentive Plan, as well as the form of the awards, the number of units underlying the awards and the terms and conditions of the awards, consistent with the terms of the 2009 Equity Incentive Plan. The Administrator will have full authority to interpret and administer the 2009 Equity Incentive Plan and its determinations will be final and binding on all parties concerned. 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 Equity Incentive Plan as of the effective date of the plan is equivalent to 15% of the number of fully diluted KKR Group Partnership Units outstanding; provided that beginning with the first fiscal year after the 2009 Equity Incentive Plan becomes effective and continuing with each subsequent fiscal year occurring thereafter, the aggregate number of KKR Group Partnership Units covered by the plan will be increased, 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% of the aggregate number of KKR Group Partnership Units outstanding on the last day of the immediately preceding fiscal year of the plan sponsor minus (y) the aggregate number of KKR Group Partnership Units available for issuance under the plan as of the last day of such year, unless the Administrator should decide to increase the number of KKR Group Partnership Units covered by the plan by a lesser amount on any such date. On or after the date on which Controlling Partnership units become listed and traded on the New York Stock Exchange or The NASDAQ Stock Market, each KKR Group Partnership Unit granted under the 2009 Equity Incentive Plan shall be exchangeable for the number of Controlling Partnership units that the KKR Group Partnership Units could receive in a base exchange of one KKR Group Partnership Unit.

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Options and Unit Appreciation Rights The Administrator may award non-qualified unit options and unit appreciation rights under the 2009 Equity Incentive Plan. Options and unit appreciation rights granted under the 2009 Equity Incentive Plan will become vested and exercisable at such times and upon such terms and conditions as may be determined by the Administrator at the time of grant, but no option or unit appreciation right will be exercisable for a period of more than 10 years after it is granted. The exercise price per KKR Group Partnership Unit will be determined by the Administrator, provided that options and unit appreciation rights granted to participants who are U.S. taxpayers (i) will not be granted with an exercise price less than 100% of the fair market value per underlying KKR Group Partnership Unit on the date of grant and (ii) will not be granted unless the KKR Group Partnership Unit on which it is granted constitutes equity of the participant’s ‘‘service recipient’’ within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended. To the extent permitted by the Administrator, the exercise price of an option may be paid in cash or its equivalent, in KKR Group Partnership Units having a fair market value equal to the aggregate exercise price and satisfying such other requirements as may be imposed by the Administrator, partly in cash and partly in KKR Group Partnership Units or through net settlement in KKR Group Partnership Units. As determined by the Administrator, unit appreciation 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, phantom restricted KKR Group Partnership Units, and any other awards that are valued in whole or in part by reference 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 the Administrator determines, including without limitation the right to receive, or vest with respect to, one or more KKR Group Partnership Units (or the equivalent cash value of such units) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. The Administrator may, in its discretion, determine whether other equity-based awards 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 be made to any person who was a KKR senior principal as of the date of the execution of the amended and 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 following the effective time of the Combination Transaction, if either party has filed notice that it has elected to exercise 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 and restrictive covenant agreements with its principals that, among other things, will include prohibitions on the principals competing with KKR or soliciting certain clients or senior level employees of KKR during a restricted period following their departure from the firm. These agreements will also require personnel to protect and use the firm’s confidential 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. See ‘‘Certain Related Party Transactions—Confidentiality and Restrictive Covenant 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 Reorganization Transactions pursuant to which KKR Holdings will contribute to the KKR Group Partnerships the interests in the entities described under ‘‘Organizational Structure—Components of KKR’s Business Owned by the KKR Group Partnerships’’ in exchange for KKR Group Partnership Units. The amount of KKR Group Partnership Units that KKR’s existing owners will receive for these interests will represent 70% of the KKR Group Partnership Units that will be outstanding upon the completion of the Transactions. Prior to the completion of the Combination Transaction, the KKR Group is expected to make one or more cash and in-kind distributions to certain of its existing owners. Such distributions are expected to consist of substantially all available cash-on-hand, certain accrued receivables of its management companies and capital markets subsidiaries and certain personal property (consisting of non-operating assets) 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 management fees that are payable in respect of future periods, the after-tax amount of any management fees that may be required to be returned to investors before a carried interest may be paid and any other amounts that are necessary to provide the Combined Business with sufficient working 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 and accrued receivables of the management companies and the book value of such personal property at the time the Combination Transaction is completed. The Combination Transaction On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement with KKR & Co. L.P. and certain of its affiliates providing for the combination of the asset management business of KKR with the assets and liabilities of KPE. Upon completion of the Combination Transaction, KPE would beneficially hold a 30% interest in the Combined Business and KKR’s existing owners would beneficially hold a 70% interest in the Combined Business. KKR’s existing owners are not selling any equity interests in the Transactions. The Combination Transaction will be consummated subsequent to the completion of the Reorganization Transactions described in this consent solicitation statement. See ‘‘The Combination Transaction—The Amended and Restated Purchase and Sale Agreement.’’ KPE may enter into and consummate a transaction with KKR provided that the terms of the Combination Transaction are permitted by and approved in accordance with the provisions of the memorandum and articles of association of the managing general partner of KPE, which KKR refers to as the KPE general partner. The memorandum and articles of association of the KPE general partner provide that any transaction between KPE and KKR or KKR’s affiliates (other than certain pre-approved transactions) requires the special approval of a majority of the KPE Board’s directors who are independent of KPE, KKR and their affiliates under the standards of the NYSE in order for any action to be taken with respect thereto. Messrs. Kravis and Roberts are directors of the KPE general partner but are not independent for these purposes. On July 19, 2009, the amended and restated purchase and sale agreement was unanimously approved by the KPE Board, acting upon the unanimous recommendation of the KPE Independent Directors. Completion of the Combination Transaction is subject to approval by KPE unitholders representing at least a majority of the outstanding KPE units for which a properly submitted consent form 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 with Group Holdings and KKR Holdings, the entity through which KKR’s existing owners, including Messrs. 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, up to four times each year (subject to the terms of the exchange agreement), 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. At the election of the KKR Group Partnerships, the KKR Group Partnerships may settle exchanges of KKR Group Partnership Units with cash in an amount equal to the fair market value of KPE units that would otherwise be deliverable in such exchanges. To the extent that KKR Group Partnership Units held by KKR Holdings or its transferees are exchanged for KPE units, KKR’s interests in the KKR Group Partnerships will be correspondingly increased. Any KPE units received upon such exchange will be subject to any restrictions that were applicable to the exchanged KKR Group Partnership Units, including any applicable transfer restrictions. Upon a U.S. listing, the Controlling Partnership and KKR Holdings will enter into an exchange agreement with substantially similar terms. Interests in KKR Holdings that are held by KKR principals will be subject to significant transfer restrictions and vesting requirements that, unless waived, modified or amended will limit the ability of KKR’s principals to cause KKR Group Partnership Units to be exchanged under the exchange agreement 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’s founders, 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 exchange agreement with KKR Holdings. KKR Management Holdings L.P. intends to make an election under Section 754 of the Internal Revenue Code in effect for each taxable year in which an exchange of KKR Group Partnership Units for KPE units occurs, which may result in an increase in KKR’s intermediate holding company’s share of the tax basis of the assets of the KKR Group Partnerships at the time of an exchange of KKR Group Partnership Units. To the extent these exchanges are structured as taxable exchanges, these exchanges are expected to result in an increase in KPE’s intermediate holding company’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 otherwise have been available. This increase in tax basis may increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income tax KPE’s intermediate holding company would otherwise be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. In certain circumstances, however, holders of KKR Group Partnership Units will be permitted to exchange their units in a tax-free manner, which will not result in any increase in tax basis. KPE will enter into a tax receivable agreement with KKR Holdings requiring KPE’s intermediate holding company to pay to KKR Holdings or transferees of its KKR Group Partnership Units 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the intermediate holding company actually realizes (or is deemed to realize, in the case of an early termination payment by the 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 (or is deemed to realize) as a result of increases in tax basis that arise due to future payments under the agreement. This payment obligation is an obligation of KPE’s intermediate holding company and not of either Group Partnership. KKR expects its intermediate holding company to benefit from the 205

remaining 15% of cash savings, if any, in income tax that it realizes. In the event that other of KPE’s current or future subsidiaries become taxable as corporations and acquire KKR Group Partnership Units 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 by comparing the actual income tax liability of the intermediate holding company to the amount of such taxes that the intermediate holding company would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of the KKR Group Partnerships as a result of the exchanges of KKR Group Partnership Units and had the intermediate holding company not entered into the tax receivable agreement. The term of the tax receivable agreement will commence upon the completion of the Transactions and will continue until all such tax benefits have been utilized or expired, unless the intermediate holding company exercises its right to terminate the tax receivable agreement 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 its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including: • the timing of exchanges—for instance, the increase in any tax deductions will vary depending on the 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 KKR Group Partnerships at the time of the transaction; • the price of KKR Group Partnership Units at the time of the exchange—the increase in any tax deductions, as well as the tax basis increase in other assets, of the KKR Group Partnerships, is directly 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 (for instance, in the case of a charitable contribution or an exchange by a person who is not a resident 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 any tax benefit from the exchanges, and the timing of any such payment. If the intermediate holding company does not have taxable income aside from any tax benefit from the exchanges, it will not be required to make payments under the tax receivable agreement for that taxable year because no 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 and intangible assets of the KKR Group Partnerships, assuming no material changes in the relevant tax law and that the intermediate holding company earns sufficient taxable income to realize the full tax benefit of the increased amortization of its assets, future payments under the tax receivable agreement will be substantial. The payments under the tax receivable agreement are not conditioned upon KKR’s existing owners’ continued ownership of KKR. The intermediate holding company may terminate the tax receivable agreement at any time by making an early termination payment to KKR Holdings or its transferees, based upon the net present value (based upon certain assumptions in the tax receivable agreement) of all tax benefits that would be required to be paid by the intermediate holding company to KKR Holdings or its transferees. In addition, the tax receivable agreement provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control, the minimum obligations of the intermediate holding 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 certain assumptions, including that the intermediate holding company would have sufficient taxable income to fully utilize the increased tax deductions and increased tax basis and other benefits related to entering 206

into the tax receivable agreement. In these situations, the intermediate holding company’s obligations under the tax receivable agreement could have a substantial negative impact on its liquidity. The intermediate holding company will also have the ability to terminate the tax receivable agreement without 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 with respect to mergers, asset sales, other forms of business combinations or other changes of control, may influence the timing and amount of payments that are received by an exchanging or selling holder of partner interests in the KKR Group Partnerships under the tax receivable agreement. For example, the earlier disposition of assets following an exchange or acquisition transaction will generally accelerate payments under the tax receivable agreement and increase the present value of such payments, and the disposition of assets before an exchange or acquisition transaction will increase an existing owner’s tax liability without giving rise to any rights of an existing owner to receive payments under the tax receivable agreement. Payments under the tax receivable agreement will be based upon the tax reporting positions that the KKR Managing Partner will determine. KKR is not aware of any issue that would cause the IRS to challenge a tax basis increase. However, neither KKR Holdings nor its transferees will reimburse the intermediate holding company for any payments previously made under the tax receivable agreement if such tax basis increase, or the tax benefits the intermediate holding company claims arising from such increase, is successfully challenged by the IRS. As a result, in certain circumstances payments to KKR Holdings or its transferees under the tax receivable agreement could be in excess of the intermediate holding company’s cash tax savings. The intermediate holding company’s ability to achieve benefits from any tax basis increase, and the payments to be made under this agreement, will depend upon a number of factors, as discussed above, including the timing and amount of the intermediate holding company’s future income. Group Partnership Agreements As a result of the Reorganization Transactions, the KKR Managing Partner will be the ultimate controlling general partner of KKR Fund Holdings L.P. and KKR Management Holdings L.P. All of the business and affairs of the KKR Group Partnerships will be operated and controlled by the KKR Managing Partner, and, through the KKR Group Partnerships and their subsidiaries, the KKR Managing Partner will conduct KKR’s business. Group Holdings will have unilateral control over all of the affairs and decision making of the KKR Group Partnerships. Furthermore, the direct general partner KKR Fund Holdings L.P. and KKR Management Holdings L.P. cannot be removed. Because the KKR Managing Partner will operate and control Group Holdings, the KKR Managing Partner’s board of directors and KKR’s officers will be responsible for all operational and administrative decisions of the KKR Group Partnerships and the day-to-day management of the KKR Group Partnerships’ businesses. Pursuant to the partnership agreements of the KKR Group Partnerships, Group Holdings, as the controlling general partner of KKR Fund Holdings L.P. and KKR Management Holdings L.P., will have the right to determine when distributions will be made to the holders of KKR Group Partnership Units and the amount of any such distributions. See ‘‘Distribution Policy.’’ The partnership agreements of the KKR Group Partnerships will provide for tax distributions to the holders of KKR Group Partnership Units if the general partners of the KKR Group Partnerships determine that distributions from the KKR Group Partnerships would otherwise be insufficient to cover the tax liabilities of a holder of a KKR Group Partnership Unit. Generally, these tax distributions will be computed based on KKR’s estimate of the net taxable income of the relevant partnership allocable to a holder of a KKR Group Partnership Unit multiplied by an assumed tax rate equal to the highest effective 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 certain expenses and the character of KKR’s income). The partnership agreements of the KKR Group Partnerships authorize the general partners of the KKR Group Partnerships to issue an unlimited number of additional securities of the KKR Group Partnerships with such designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to the KKR Group Partnerships units, and which may be exchangeable for KKR Group Partnership Units. Firm Use of Private Aircraft Certain of KKR’s senior principals, including Messrs. Kravis and Roberts, own aircraft that KKR uses for business purposes in the ordinary course of its operations. They paid for the purchase of these aircraft with their personal funds and bear all operating, personnel and maintenance costs associated with their operation. The hourly rates that KKR pays for the use of these aircraft are based on current market rates for chartering private aircraft of the same type. KKR paid $7.9 million for the use of these aircraft during the year ended December 31, 2008, of which $6.0 million was paid to entities collectively 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 their capital in a fund unless the fund’s manager also invests its own capital in the fund’s investments, KKR’s private equity fund documents generally require the general partners of KKR’s traditional private equity 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 capital commitments at final closing. When investments are made, the general partner contributes capital to the fund based on its fund commitment percentage and acquires a capital interest in the investment that is not subject to a carried interest. Historically, these capital contributions have been funded with cash 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 in investments that were funded by KKR’s principals or others involved in KKR’s business prior to the Transactions. Rather, those capital interests will be allocated to KKR’s principals or others involved in KKR’s business and will be reflected in its financial statements as a noncontrolling interest to the extent that KKR holds the general partner interest in the fund. Following the completion of the Transactions, any capital contributions that KKR’s private equity fund general partners are required to make to a fund will be funded by KKR and it will be entitled to receive its allocable share of the gain thereon. In addition, KKR’s principals and certain other qualifying employees are permitted to invest and have 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 to the applicable fund, except that these side-by-side investments are not subject to management fees or a carried interest. The cash invested by KKR’s executive officers and their investment vehicles aggregated to $25.1 million for the year ended December 31, 2008. These investments are not included in the accompanying combined financial statements. Certain of these individuals also own equity interests in KFN, the KKR Strategic Capital Funds and KPE, which they hold in a personal capacity on the same terms 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 an agreement for a two-year $100.0 million standby unsecured revolving credit agreement (the ‘‘Standby Agreement’’) with KKR Financial Advisors LLC and Kohlberg Kravis Roberts & Co. (Fixed 208

Income) LLC, the parent of KKR Financial Advisors LLC. The borrowing facility matures in December 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 Financial Holdings LLC can elect to capitalize a portion of accrued interest on any loan under the agreement by adding up to 80% of the interest due and payable at a particular time in respect of such loan to the outstanding principal amount of the loan. KKR Financial Holdings LLC and its subsidiaries have the right to prepay loans under the Standby Agreement in whole or in part at any time. The Standby Agreement includes covenants, representations, warranties, indemnities and events of default that are customary 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 a contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled. As of June 30, 2009, the amount of carried interest KKR has received, excluding carried interest received by the general partners 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 the investments in such funds been liquidated at their June 30, 2009 fair values, the contingent repayment obligation would have been approximately $224 million. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of their investment losses to KKR relative to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. Based on the fair market values as of June 30, 2009, KKR’s obligation under the net loss sharing provisions would have been approximately $258 million. If the vehicles were liquidated at zero value, the obligation under the net loss 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 distributions received 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 they receive after the Transactions pursuant to any carried interest allocated directly to them as carry pool participants. KKR will be responsible for any other clawback obligations and any amounts due under net loss sharing arrangements and will indemnify its principals for any personal guarantees that they have provided with respect to such amounts. Facilities Certain of KKR’s senior principals are partners in a real-estate based partnership that maintains an ownership interest in KKR’s Menlo Park location. Payments made from KKR to this partnership aggregated $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 enter into confidentiality and restrictive covenant agreements with its principals that, among other things, will include prohibitions on the principals competing with KKR or soliciting certain clients or senior-level 209

employees of KKR and specified subsidiaries and affiliates during a restricted period following their departure from the firm. These agreements will also require personnel to protect and use the firm’s confidential 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. The restricted periods for KKR’s founders expire on the later of (i) 4 years from the closing of the Transactions and (ii) 2 years from departure from the firm. The restricted periods for KKR’s other senior 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 the firm and are subject to reduction for any ‘‘garden leave’’ or ‘‘notice period’’ that an employee serves prior 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 restricted periods 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 amended at 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 the KKR 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 Partner or its affiliates, on the one hand, and KPE and its unitholders, on the other hand, subject to the rights of the independent directors of the board of directors of KPE’s general partner described below prior to the U.S. listing, the KKR Managing Partner will resolve that conflict. The partnership agreement of Group 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 Holdings also restricts the remedies available to KPE and its unitholders for actions taken that without those limitations might constitute breaches of duty, including fiduciary duties. The limited liability company agreement of the KKR Managing Partner also contains similar provisions. Under the partnership agreement of Group Holdings, the KKR Managing Partner will not be in breach of its obligations under the partnership agreement or its duties to KPE and its unitholders if the resolution of the conflict is: • approved by the KKR Managing Partner conflicts committee (or, prior to the U.S. listing, the independent directors of KPE’s general partner), although the KKR Managing Partner is not obligated 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 being provided to or available from unrelated third parties; or • fair and reasonable to KKR, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to KKR. The KKR Managing Partner may, but, except as required under the terms of the Investment Agreement described above under ‘‘The Combination Transaction—The Investment Agreement’’, is not required 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 KKR Managing 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 directors determines that the resolution or course of action taken with respect to the conflict of interest satisfies either of the standards set forth in the third and fourth bullet points above, then it will be presumed that in making its decision the board of directors acted in good faith, and in any proceeding brought by or on behalf of any limited partner or KKR or any other person bound by the Group Holdings partnership agreement, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. Unless the resolution of a conflict is specifically provided for in the Group Holdings partnership agreement, the KKR Managing Partner or the KKR Managing Partner conflicts committee may consider any factors it determines in its sole discretion to consider when resolving a conflict. The Group Holdings partnership agreement provides that the KKR Managing Partner will be conclusively presumed to be acting in good faith if the KKR Managing Partner subjectively believes that the determination made or not made is in the best interests of Group Holdings.

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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 of KPE and its unitholders under any of the exchange agreement, the tax receivable agreement, the limited partnership agreement of any KKR Group Partnership, a lock-up agreement, the KPE partnership agreement, the Controlling Partnership limited partnership agreement or limited partnership 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 limited partner of KKR Holdings, or a person who holds a partnership or equity interest in the foregoing entities. Following a U.S. listing, the KKR Managing Partner conflicts committee will also be authorized to take any action pursuant to any authority or rights granted to such committee under any covered agreement or with respect to any amendment, supplement, modification or waiver to any such agreement 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 of the covered agreements that in the reasonable judgment of the KKR Managing Partner’s board of directors 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 described above, under the terms of the investment agreement to be entered into between the Controlling Partnership and KPE, prior to a U.S. listing the consent of a majority of the independent directors of KPE’s general partner will be required to approve certain related party transactions that involve an aggregate amount in excess of $20 million or would reduce the percentage of KPE’s direct or indirect equity interest in the KKR Group Partnerships. In addition, KKR expects to allocate approximately 40% of the carry it receives from its funds and co-investment vehicles 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 the carry pool may exceed 40% only with the approval of 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 and the KKR Group Partnerships as a fiduciary. Fiduciary duties by the KKR Managing Partner are prescribed by law and the Group Holdings partnership agreement. The Group Holdings partnership agreement contains various provisions modifying, restricting and eliminating the duties, including fiduciary duties, that might otherwise be owed by the KKR Managing Partner. Group Holdings has adopted these restrictions to allow the KKR Managing Partner or its affiliates to engage in transactions with KKR that would otherwise be prohibited by state-law fiduciary duty 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’s ability to make decisions involving conflicts of interest would be restricted. These modifications are detrimental to holders of Group Holdings units because they restrict the remedies available to holders of 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 into account the interests of third parties in addition to Group Holdings’ interests when resolving conflicts of 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 Group Holdings L.P. limited partnership agreement upon the completion of the Combination Transaction and is qualified in its entirety by reference to all of the provisions of the amended and restated Group Holdings limited partnership agreement. Because this description is only a summary of the expected terms of the amended and restated Group Holdings limited partnership agreement, it does not contain all of the information that you may find important. The General Partner KKR Group Limited, a Cayman Islands exempted limited company, serves as the general partner and manages all of the operations and activities of Group Holdings. The general partner is authorized in general to perform all acts that it determines to be necessary or appropriate to carry out Group Holdings’ purposes and to conduct the business of Group Holdings. Purpose Under the partnership agreement, Group Holdings would be permitted to engage, directly or indirectly, in any business activity that is approved by the general partner and that lawfully may be conducted 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 to make any capital contributions. Limited Liability Assuming that a limited partner does not participate in the control of Group Holdings’ business and that he otherwise acts in conformity with the provisions of the partnership agreement, his liability under 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 Holdings for his common units plus his share of any undistributed 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 Group Holdings’ business for the purposes of the Exempted 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 the Cayman Islands to the same extent as the general partner. This liability would extend to persons who transact business with Group Holdings who reasonably believe that the limited partner is a general partner. 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 limited partner were to lose limited liability through any fault of the general partner. While this does not mean that a limited partner could not seek legal recourse, KKR knows of no precedent for this type of a claim 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 respective partner interests. See ‘‘Distribution Policy.’’ Amendment of the Partnership Agreement General Amendments to the partnership agreement may be proposed only by the general partner. To adopt a proposed amendment, other than the amendments that do not require limited partner approval discussed below, the general partner must seek approval of the holders of a majority of the outstanding voting units (as defined below) in order to approve the amendment or call a meeting of the limited partners 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 any amendment that would have a material adverse effect on the rights or preferences of any class of partner interests in relation to other classes of partner interests may be approved by the holders of at 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 any way the amounts distributable, reimbursable or otherwise payable by Group Holdings to the general partner or any of its affiliates without the consent of the general partner, which may be given or withheld in its sole discretion. The provision of the partnership agreement preventing the amendments having the effects described 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 certificate 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 place of business, the partnership’s registered agent or its registered office; (2) the admission, substitution, withdrawal or removal of partners in accordance with the partnership agreement; (3) a change that the general partner determines is necessary or appropriate for the partnership to qualify or to continue its qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or other jurisdiction or to ensure that the partnership will not be treated as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes, or permit Group Holdings to be classified as a partnership for U.S. federal income tax purposes; (4) an amendment that the general partner determines to be necessary or appropriate to address certain changes in U.S. federal, state and local income tax regulations, legislation or interpretation, or permit Group Holdings to be classified as a partnership for U.S. federal income tax purposes;

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(5) an amendment that is necessary, in the opinion of Group Holdings’ counsel, to prevent the partnership or the general partner or its directors, officers, employees, agents or trustees, from having a material risk of being in any manner subjected to the provisions of the Investment Company 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 by the 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 necessary or appropriate for the creation, authorization or issuance of any class or series of partnership securities or options, rights, warrants or appreciation rights relating to partnership securities; (8) any amendment expressly permitted in the partnership agreement to be made by the general 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 of the partnership agreement; (10) an amendment effected, necessitated or contemplated by an amendment to any partnership agreement of the KKR Group Partnerships that requires unitholders of any partnership of the KKR Group Partnerships to provide a statement, certification or other proof of evidence regarding whether such unitholder is subject to U.S. federal income taxation on the income generated by the partnership of the KKR Group Partnerships; (11) any amendment that in the sole discretion of the general partner is necessary or appropriate to reflect and account for the formation by the partnership of, or its investment in, any corporation, partnership, joint venture, limited liability company or other entity, as otherwise permitted by the partnership agreement; (12) a merger, conversion or conveyance to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the merger, conversion or conveyance other 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 to cure 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 the approval 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 any particular class of partner interests as compared to another class of partner interests) in any material respect; (2) are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal, state, local or non-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 to comply with any rule, regulation, guideline or requirement of any securities exchange on which the limited 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 splits or 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 sale agreement or the intent of the provisions of the partnership agreement or are otherwise contemplated 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 will not result in a loss of limited liability to the limited partners if one of the amendments described above under ‘‘—No Limited Partner Approval’’ should occur. No other amendments to the partnership agreement (other than an amendment pursuant to a merger, sale or other disposition of assets effected in 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 affect the limited liability of any of the limited partners under the Exempted Limited Partnership Law (2007 Revision) of the Cayman Islands. In addition, any amendment that reduces the voting percentage required to take any action must be approved by the affirmative vote of limited partners whose aggregate outstanding voting units constitute 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 the holders of at least a majority of the outstanding voting units, sell, exchange or otherwise dispose of all or 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 other disposition of all or substantially all of the assets of Group Holdings’ subsidiaries. The general partner in its sole discretion may mortgage, pledge, hypothecate or grant a security interest in all or substantially all of Group Holdings’ assets (including for the benefit of persons other than Group Holdings or its subsidiaries) without the prior approval of the holders of Group Holdings’ outstanding voting units. The general partner could also sell all or substantially all of Group Holdings’ assets under any forced sale pursuant to the foreclosure or other realization upon those encumbrances without the prior approval of the holders of Group Holdings’ outstanding voting units. If conditions specified in the partnership agreement are satisfied, the general partner may in its sole discretion convert or merge Group Holdings or any of its subsidiaries into, or convey some or all of Group Holdings’ assets to, a newly formed entity if the sole purpose of that merger or conveyance is to effect a mere change in its legal form into another limited liability entity. The unitholders will not be entitled to dissenters’ rights of appraisal under the partnership agreement or the Exempted Limited Partnership Law (2007 Revision) of the Cayman Islands in the event of a merger or consolidation, a sale 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 to continue as a partnership for U.S. federal income tax purposes, the general partner may elect to treat KKR as a corporation for U.S. federal (and applicable state) income tax purposes or may chose to effect 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 be the general partner other than by reason of a transfer of general partner interests, withdrawal of the general partner following approval and admission of a successor, or the death or the commencement of a proceeding or order of bankruptcy against the general partner after which the partners unanimously elect to continue the partnership and appoint a successor general partner, in each case in accordance with the partnership agreement. (2) an event specified in Section 15(5) of the Exempted Limited Partnership Law (2007 Revision) of the Cayman Islands relative to the General Partner; (3) the election of the general partner to dissolve Group Holdings, if approved by the holders of a majority of the outstanding voting units; (4) the entry of a decree of judicial dissolution of Group Holdings pursuant to the Exempted Limited Partnership Law (2007 Revision) of the Cayman Islands; or (5) there being no limited partners, unless Group Holdings is continued without dissolution in 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 persons to act, as liquidator. Unless Group Holdings is continued as a limited partnership, the liquidator authorized to wind up Group Holdings’ affairs will, acting with all of the powers of the general partner that the liquidator deems necessary or appropriate in its judgment, liquidate Group Holdings’ assets and apply the proceeds of the liquidation first, to discharge Group Holdings’ liabilities as provided in the partnership agreement and by law and thereafter to the limited partners pro rata according to the percentages of their respective partner interests as of a record date selected by the liquidator. The liquidator may defer liquidation of Group Holdings’ assets for a reasonable period of time or distribute assets to partners in kind if it determines that an immediate sale or distribution of all or some of Group 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 with respect to the partnership’s limited partner interests. Indemnification Under the partnership agreement, in most circumstances Group Holdings would indemnify the following 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 general partner 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 and non-appealable judgment by a court of competent jurisdiction determining that these persons acted in bad faith or engaged in fraud or willful misconduct. Group Holdings will also agree to provide this indemnification for criminal proceedings. Any indemnification under these provisions will only be out of the partnership’s assets. Unless it otherwise agrees, the general partner will not be personally liable for, or have any obligation to contribute or loan funds or assets to the partnership to enable the partnership to effectuate indemnification. Group Holdings may purchase insurance against liabilities asserted against and expenses incurred by persons for Group Holdings’ activities, regardless of whether the partnership would have the power to indemnify the person against liabilities under the partnership agreement. Right to Inspect Group Holdings’ Books and Records The partnership agreement will provide that a limited partner can, for a purpose reasonably related 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 local 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 general partner may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of which the general partner believes is not in the partnership’s best interests or which the partnership is required by law or by agreements with third parties to keep confidential.

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U.S. LISTING U.S Listing Following the consummation of the Combination Transaction, KPE and KKR Holdings will have the right to require that the other use its reasonable best efforts to cause interests in the Combined Business 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 conditions precedent to the Combination Transaction are satisfied or waived and KPE, at the discretion of the independent directors of its general partner, may exercise this right following the 12-month anniversary of the date the conditions precedent to the Combination Transaction are satisfied or waived. In connection with the listing, KKR will be entitled, in its sole discretion, to take any and all actions that it deems necessary or appropriate to effect the listing, including selecting the New York Stock Exchange or The NASDAQ Stock Market on which to list the interests and determining whether to appoint one or more dealer managers or information agents and whether to pursue a separate primary offering of the interests (on an underwritten basis or otherwise). To effect such a listing, following the Combination Transaction, KPE would contribute its interests in Group Holdings to the Controlling Partnership in exchange for Controlling Partnership units. KKR or KPE, as the case may be, would seek a listing of the Controlling Partnership units, which would represent equity interests in the Combined Business. In connection with the listing, the Controlling Partnership would prepare and file a registration statement in order to register Controlling Partnership units under U.S. securities laws, which units would be issued to, and distributed by, KPE to KPE unitholders. Each of the Controlling Partnership and KPE would use its reasonable best efforts to have the 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 registration statement is declared effective by the SEC, KPE shall disseminate the KPE partnership agreement and the registration statement (or prospectus contained therein) to the KPE unitholders. If such 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 Euronext Amsterdam and KPE would subsequently be dissolved and delisted from Euronext Amsterdam. Controlling Partnership Units Prior to listing, the Controlling Partnership would amend and restate its limited partnership agreement, which is described below under ‘‘—Description of the Amended and Restated Limited Partnership Agreement of the Controlling Partnership.’’ Holders of Controlling Partnership units would be entitled to participate in KKR distributions and exercise the rights or privileges available to limited partners under an amended and restated limited partnership agreement of the Controlling Partnership. The amended and restated limited partnership agreement would be governed under the Delaware Limited Partnership Act. KKR would be dependent upon the KKR Group Partnerships to fund any distributions KKR may make to the Controlling Partnership unitholders. Unless the KKR Managing Partner determines otherwise, the Controlling Partnership would issue all its common units in uncertificated form. The Controlling Partnership limited partnership agreement authorizes 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 the terms and conditions established by the KKR Managing Partner in its sole discretion without the approval of Controlling Partnership unitholders. In accordance with the Delaware Limited Partnership Act and the provisions of the Controlling Partnership limited partnership agreement, KKR may also issue additional partner interests that have designations, preferences, rights, powers and duties that are different 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 the Controlling Partnership limited partnership agreement, each transferee of the Controlling Partnership units will be admitted as a unitholder with respect to the Controlling Partnership units transferred when such transfer and admission is reflected in the books and records. Additionally, each transferee of Controlling Partnership units: • will represent that the transferee has the capacity, power and authority to enter into the Controlling Partnership limited partnership agreement; • will become bound by the terms of, and will be deemed to have agreed to be bound by, the Controlling Partnership limited partnership agreement; and • will give the consents, approvals, acknowledgements and waivers set forth in the Controlling Partnership limited partnership agreement. A transferee will become a substituted limited partner for the transferred Controlling Partnership units automatically upon the recording of the transfer on KKR’s books and records. The KKR Managing Partner will cause any transfers to be recorded on KKR’s books and records no less frequently than quarterly. Controlling Partnership units are securities and are transferable according to the laws governing transfers of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee 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 Partnership and the transfer agent, notwithstanding any notice to the contrary, may treat the record holder of the Controlling Partnership unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations. A beneficial holder’s rights are limited solely to those that it has against the 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 Controlling Partnership The following is a description of the expected material terms of the amended and restated limited partnership agreement of the Controlling Partnership in the event of a U.S. listing and is qualified in its entirety by reference to all of the provisions of the amended and restated limited partnership agreement of the Controlling Partnership. Because this description is only a summary of the expected terms of the amended and restated limited partnership agreement of the Controlling Partnership, it does not contain all of the information that you may find important. For additional information, you should read ‘‘—Controlling Partnership Units’’ above, ‘‘Risk Factors—Risks Related to the Potential Future Listing of the Combined Business 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 Controlling Partnership. The KKR Managing Partner would be authorized in general to perform all acts that it determines to be necessary or appropriate to carry out the Controlling Partnership’s purposes and to conduct the business of the Controlling Partnership. The KKR Managing Partner would be whollyowned 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’s business.

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Purpose Under the Controlling Partnership limited partnership agreement the Controlling Partnership would be permitted to engage, directly or indirectly, in any business activity that is approved by the KKR Managing Partner and that lawfully may be conducted by a limited partnership organized under Delaware law. Power of Attorney Each limited partner, and each person who acquires a limited partner interest in accordance with the amended partnership agreement, grants to the KKR Managing Partner and, if appointed, a liquidator, a power of attorney to, among other things, execute and file documents required for the Controlling Partnership’s qualification, continuance, dissolution or termination. The power of attorney will also grant the KKR Managing Partner the authority to amend, and to make consents and waivers under, the partnership agreement and certificate of limited partnership, in each case in accordance with the partnership agreement. Capital Contributions Controlling Partnership unitholders would not be obligated to make additional capital contributions, except as described below under ‘‘—Limited Liability.’’ The KKR Managing Partner would 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’s business within the meaning of the Delaware Limited Partnership Act and that he otherwise acts in conformity with the provisions of the partnership agreement, his liability under the Delaware Limited Partnership Act would be limited, subject to possible exceptions, to the amount of capital he is obligated to contribute to the Controlling Partnership for his common units plus his share of any undistributed 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 of the Delaware Limited Partnership Act, then the Controlling Partnership’s limited partners could be held personally liable for the Controlling Partnership’s obligations under the laws of Delaware to the same extent as the KKR Managing Partner. This liability would extend to persons who transact business with 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 provide for legal recourse against the KKR Managing Partner if a limited partner were to lose limited liability through any fault of the KKR Managing Partner. While this does not mean that a limited partner could not seek legal recourse, the Controlling Partnership knows of no precedent for this type of a claim in Delaware case law. Under the Delaware Limited Partnership Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partner interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware Limited Partnership Act provides that the fair value of property subject to liability for which recourse 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 Limited Partnership Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware Limited Partnership Act would be liable to the limited partnership for the amount of the distribution for three years. Under the Delaware Limited Partnership Act, a substituted limited partner of a limited partnership is liable for the obligations of his assignor to make contributions to the partnership, except that such person is not obligated for liabilities unknown to him at the time he became a limited partner and that could not be ascertained from the partnership agreement. Moreover, if it were determined that the Controlling Partnership were conducting business in any state without compliance with the applicable limited partnership statute, or 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 purposes of the statutes of any relevant jurisdiction, then the limited partners could be held personally liable for the Controlling Partnership’s obligations under the law of that jurisdiction to the same extent as the KKR Managing Partner. The Controlling Partnership intends to operate in a manner that the KKR Managing Partner considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners. Issuance of Additional Securities The partnership agreement would authorize the Controlling Partnership to issue an unlimited number of additional partnership securities and options, rights, warrants and appreciation rights relating to partnership securities for the consideration and on the terms and conditions established by the 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 partnership agreement, the Controlling Partnership could also issue additional partner interests that have designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to common units. Distributions Distributions will be made to the partners pro rata according to the percentages of their respective partner 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 partner approval discussed below, the KKR Managing Partner must seek approval of the holders of a majority of the outstanding voting units (as defined below) in order to approve the amendment or call a meeting of the limited partners to consider and vote upon the proposed amendment. On any matter that may be submitted for a vote of unitholders of the Combined Business, the holders of KKR Group Partnership Units will hold special voting units in the partnership that provide them with a number of votes that is equal to the aggregate number of KKR Group Partnership Units that they then hold and entitle 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 Partnership Units held by the Controlling Partnership, will initially be owned by KKR Holdings, which is owned by KKR’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 any amendment that would have a material adverse effect on the rights or preferences of any class of partner interests in relation to other classes of partner interests may be approved by the holders of at 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 any way the amounts distributable, reimbursable or otherwise payable by the Controlling Partnership to the KKR Managing Partner or any of its affiliates without the consent of the KKR Managing Partner, which may be given or withheld in its sole discretion. The provision of the partnership agreement preventing the amendments having the effects described 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 or certificate 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 place of business, the partnership’s registered agent or its registered office; (2) the admission, substitution, withdrawal or removal of partners in accordance with the partnership agreement; (3) a change that the KKR Managing Partner determines is necessary or appropriate for the partnership to qualify or to continue the Controlling Partnership’s qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or other jurisdiction or to ensure that the partnership will not be treated as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes; (4) an amendment that the KKR Managing Partner determines to be necessary or appropriate 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 provisions of the Investment Company 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 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 be necessary or appropriate for the creation, authorization or issuance of any class or series of partnership securities or options, rights, warrants or appreciation rights relating to partnership securities; (8) any amendment expressly permitted in the partnership agreement to be made by the KKR 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 of the partnership agreement; (10) an amendment effected, necessitated or contemplated by an amendment to any partnership agreement of the KKR Group Partnerships that requires unitholders of any partnership of the KKR Group Partnerships to provide a statement, certification or other proof of evidence regarding whether such unitholder is subject to U.S. federal income taxation on the income generated by the partnership of the KKR Group Partnerships; (11) any amendment that in the sole discretion of the KKR Managing Partner is necessary or appropriate to reflect and account for the formation by the partnership of, or its investment in, any corporation, partnership, joint venture, limited liability company or other entity, as otherwise permitted by the partnership agreement; (12) a merger, conversion or conveyance to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the merger, conversion or conveyance other than those it receives by way of the merger, conversion or conveyance; (13) any amendment that the KKR Managing Partner determines to be necessary or appropriate 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 agreement without the approval of any limited partner if those amendments, in the discretion of the KKR Managing Partner: (1) do not adversely affect the Controlling Partnership’s limited partners considered as a whole (or adversely affect any particular class of partner interests as compared to another class of partner interests) in any material respect; (2) are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal, state, local or non-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 to comply with any rule, regulation, guideline or requirement of any securities exchange on which the limited partner interests are or will be listed for trading; (4) are necessary or appropriate for any action taken by the KKR Managing Partner relating to 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 in connection with the U.S. listing or the intent of the provisions of the partnership agreement or are otherwise 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 an amendment will not result in a loss of limited liability to the limited partners if one of the amendments described above under ‘‘—No Limited Partner Approval’’ should occur. No other amendments to the partnership agreement (other than an amendment pursuant to a merger, sale or other disposition of assets effected in 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

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voting units, unless the Controlling Partnership obtains an opinion of counsel to the effect that the amendment will not affect the limited liability under the Delaware Limited Partnership Act of any of the limited partners. In addition to the above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of partner interests in relation to other classes of partner interests will also require the approval of the holders of at least a majority of the outstanding partner interests of the class so affected. In addition, any amendment that reduces the voting percentage required to take any action must be approved by the affirmative vote of limited partners whose aggregate outstanding voting units constitute 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 approval of the holders of at least a majority of the outstanding voting units, sell, exchange or otherwise dispose of all or substantially all of the Controlling Partnership’s 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 other disposition of all or substantially all of the assets of the Controlling Partnership’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) without the prior approval of the holders of the Controlling Partnership’s outstanding voting units. The KKR Managing Partner could also sell all or substantially all of the Controlling Partnership’s assets under any forced sale of any or all of the Controlling Partnership’s assets pursuant to the foreclosure or other realization upon those encumbrances without the prior approval of the holders of the Controlling Partnership’s outstanding voting units. If conditions specified in the partnership agreement are satisfied, the KKR Managing Partner may in its sole discretion convert or merge the Controlling Partnership or any of its subsidiaries into, or convey some or all of its assets to, a newly formed entity if the sole purpose of that merger or conveyance is to effect a mere change in its legal form into another limited liability entity. The unitholders will not be entitled to dissenters’ rights of appraisal under the partnership agreement or the Delaware Limited Partnership Act in the event of a merger or consolidation, a sale of substantially all of 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 the Controlling 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 a publicly traded partnership taxable as a corporation for U.S. federal (and applicable state) income tax purposes 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, if approved by the holders of a majority of the voting power of the partnership’s outstanding voting units; (2) there being no limited partners, unless the Controlling Partnership is continued without dissolution 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 the Delaware Limited Partnership Act; or (4) the withdrawal of the KKR Managing Partner or any other event that results in its ceasing to be the KKR Managing Partner other than by reason of a transfer of general partner interests or withdrawal of the KKR Managing Partner following approval and admission of a successor, 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 the Controlling Partnership’s outstanding voting units could also elect, within specific time limitations, to continue the partnership’s business without dissolution on the same terms and conditions described in the partnership agreement by appointing as a successor Managing Partner an individual or entity approved by the holders of a majority of the voting power of the outstanding voting units, subject to the partnership’s receipt of an opinion of counsel to the effect that (i) the action would not result in the loss of limited liability of any limited partner and (ii) neither the Controlling Partnership nor any of its subsidiaries (excluding those formed or existing as corporations) would be treated as an association taxable as a corporation or otherwise be taxable as an entity for U.S. federal income tax purposes upon the 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 one or more persons to act, as liquidator. Unless the Controlling Partnership is continued as a limited partnership, the liquidator authorized to wind up the Controlling Partnership’s affairs will, acting with all of the powers of the KKR Managing Partner that the liquidator deems necessary or appropriate in its judgment, liquidate the Controlling Partnership’s assets and apply the proceeds of the liquidation first, to discharge the Controlling Partnership’s liabilities as provided in the partnership agreement and by law and thereafter to the limited partners pro rata according to the percentages of their respective partner interests as of a record date selected by the liquidator. The liquidator may defer liquidation of the Controlling Partnership’s assets for a reasonable period of time or distribute assets to partners in kind if it determines that an immediate sale or distribution of all or some of the Controlling Partnership’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 as the KKR Managing Partner prior to December 31, 2019 without obtaining the approval of the holders of at least a majority of the outstanding voting units, excluding voting units held by the KKR Managing Partner and its affiliates, and furnishing an opinion of counsel regarding tax and limited liability matters. On or after December 31, 2019, the KKR Managing Partner may withdraw as Managing Partner 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 the foregoing, the KKR Managing Partner could withdraw at any time without unitholder approval upon 90 days’ advance notice to the limited partners if at least 50% of the outstanding common units are beneficially owned, owned of record or otherwise controlled by one person and its affiliates other than the KKR Managing Partner and its affiliates. Upon the withdrawal of the KKR Managing Partner under any circumstances, the holders of a majority of the voting power of the partnership’s outstanding voting units may elect a successor to that withdrawing Managing Partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, the partnership will be dissolved, wound up 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’s business and to appoint a successor Managing Partner. See ‘‘—Dissolution’’ above. The KKR Managing Partner may not be removed or expelled, with or without cause, by unitholders. In the event of withdrawal of a Managing Partner, the departing Managing Partner will have the option to require the successor Managing Partner to purchase the general partner interest of the departing Managing Partner for a cash payment equal to its fair market value. This fair market value will be determined by agreement between the departing Managing Partner and the successor Managing Partner. If no agreement is reached within 30 days of the KKR Managing Partner’s departure, an independent investment banking firm or other independent expert, which, in turn, may rely on other experts, selected by the departing Managing Partner and the successor Managing Partner will determine the fair market value. If the departing Managing Partner and the successor Managing Partner cannot agree upon an expert within 45 days of the KKR Managing Partner’s departure, then an expert chosen by 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 the successor Managing Partner, the departing Managing Partner’s general partner interest will automatically convert into common units pursuant to a valuation of those interests as determined by an investment banking firm or other independent expert selected in the manner described in the preceding paragraph. In addition, the Controlling Partnership will be required to reimburse the departing Managing Partner for all amounts due the departing Managing Partner, including without limitation all employeerelated liabilities, including severance liabilities, incurred for the termination of any employees employed 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 general partner interests in the partnership to an affiliate of the KKR Managing Partner, or to another entity as part of the merger or consolidation of the KKR Managing Partner with or into another entity or the transfer by the KKR Managing Partner of all or substantially all of its assets to another entity, the KKR Managing Partner may not transfer all or any part of its general partner interest in the partnership to another person prior to December 31, 2019 without the approval of the holders of at least a majority of the voting power of the partnership’s outstanding voting units, excluding voting units held by the KKR Managing Partner and its affiliates. On or after December 31, 2019, the KKR Managing Partner may transfer all or any part of its general partner interest without first obtaining approval of any unitholder. As a condition of this transfer, the transferee must assume the rights and duties of the KKR Managing Partner to whose interest that transferee has succeeded, agree to be bound by the provisions of the partnership agreement and furnish an opinion of counsel regarding limited liability matters. At any time, the members of the KKR Managing Partner may sell or transfer all or part of their limited liability company interests in the KKR Managing Partner without the approval 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 Investment Company Act, the KKR Managing Partner will have the right, which it may assign in whole or in part to any of its affiliates or to the Controlling Partnership, to acquire all, but not less than all, of the remaining limited partner interests of the class held by unaffiliated persons as of a record date to 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 is mailed; and (2) the highest cash price paid by the KKR Managing Partner or any of its affiliates acting in concert with the Controlling Partnership for any limited partner interests of the class purchased within the 90 days preceding the date on which the KKR Managing Partner first mails 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 undesirable time or price. The tax consequences to a unitholder of the exercise of this call right are the same as a sale by that unitholder of his limited partnership units in the market. See ‘‘Material U.S. Federal Tax Considerations—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 preemptive rights 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 Controlling Partnership’s limited partnership units then outstanding, record holders of limited partnership units or of the special voting units to be issued to holders of KKR Group Partnership Units on the record date will be entitled to notice of, and to vote at, meetings of KKR’s limited partners and to act upon matters 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 Controlling Partnership’s limited partnership units then outstanding, each record holder of a Controlling Partnership unit will be entitled to a number of votes equal to the number of limited partnership units held. In addition, the Controlling Partnership will issue special voting units to each holder of KKR Group Partnership Units that provide them with a number of votes that is equal to the aggregate number of KKR Group Partnership Units that they then hold and entitle them to participate in the vote on the same basis as unitholders. The Controlling Partnership refers to its Controlling Partnership units and special voting units as ‘‘voting units.’’ If the ratio at which KKR Group Partnership Units are exchangeable for Controlling Partnership units changes from one-for-one, the number of votes to which the holders of the special voting units are entitled will be adjusted accordingly. Additional limited partner interests having special voting rights could also be issued. See ‘‘—Issuance of Additional Securities’’ above. In the case of Controlling Partnership units held by the KKR Managing Partner on behalf of non-citizen assignees, the KKR Managing Partner will distribute the votes on those units in the same ratios as the votes of partners in respect of other limited partner interests are cast. The KKR Managing Partner does not anticipate that any meeting of unitholders will be called in the foreseeable future. Any action that is required or permitted to be taken by the limited partners may be taken either at a meeting of the limited partners or without a meeting, without a vote and without prior notice if consents 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 be necessary to authorize or take that action at a meeting. Meetings of the limited partners may be called by the KKR Managing Partner or by limited partners owning at least 50% or more of the voting power of the outstanding limited partner interests of the class for which a meeting is proposed. Unitholders may vote either in person or by proxy at meetings. The holders of a majority of the voting power of the outstanding limited partner interests of the class for which a meeting has been called, represented in person or by proxy, will constitute a quorum unless any action by the limited partners requires approval by holders of a greater percentage of such limited partner interests, in which case the quorum will be the greater percentage. However, if at any time any person or group (other than the KKR Managing Partner and its affiliates, or a direct or subsequently approved transferee of the KKR Managing Partner or its affiliates) acquires, in the aggregate, beneficial ownership of 20% or more of any class of the Controlling Partnership units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, determining the presence of a quorum or for other similar purposes. Controlling Partnership units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise. Status as Limited Partner By transfer of Controlling Partnership units in accordance with the partnership agreement, each transferee of units will be admitted as a limited partner with respect to the units transferred when such transfer 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 the Delaware Limited Partnership Act (which relates to the liability of a limited partner who receives a distribution of assets upon the winding up of a limited partnership and who knew at the time of such distribution 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 the determination of the KKR Managing Partner create a substantial risk of cancellation or forfeiture of any property in which the partnership has an interest because of the nationality, citizenship or other related status of any limited partner, the Controlling Partnership may redeem the common units held by that limited partner at their current market price. To avoid any cancellation or forfeiture, the KKR Managing 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 KKR Managing Partner determines, with the advice of counsel, after receipt of the information that the limited partner is not an eligible citizen, the limited partner may be treated as a non-citizen assignee. A non-citizen assignee does not have the right to direct the voting of his limited partnership units and may not receive distributions in kind upon the Controlling Partnership’s liquidation. Indemnification Under the partnership agreement, in most circumstances the Controlling Partnership would indemnify 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 any departing Managing Partner or any affiliate of partnership or its subsidiaries, the KKR Managing Partner or any departing Managing Partner; • any person who is or was serving at the request of a Managing Partner or any departing Managing Partner or any affiliate of a Managing Partner or any departing Managing Partner as an 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 a final and non-appealable judgment by a court of competent jurisdiction determining that these persons acted in bad faith or engaged in fraud or willful misconduct. The Controlling Partnership will also agree to provide this indemnification for criminal proceedings. Any indemnification under these provisions will only be out of the partnership’s assets. Unless it otherwise agrees, the KKR Managing Partner will not be personally liable for, or have any obligation to contribute or loan funds or assets to the partnership to enable the partnership to effectuate indemnification. The Controlling Partnership may purchase insurance against liabilities asserted against and expenses incurred by persons for the Controlling Partnership’s activities, regardless of whether the partnership would have the power to indemnify 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 at its principal offices or any other place designated by the KKR Managing Partner. The books would be maintained for both tax and financial reporting purposes on an accrual basis. For tax and financial reporting 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 will furnish to each partner tax information (including a Schedule K-1), which describes on a U.S. dollar basis such partner’s share of the Controlling Partnership’s income, gain, loss and deduction for the preceding taxable year. It will require longer than 90 days after the end of the fiscal year to obtain the requisite information from all lower-tier entities so that Schedule K-1s may be prepared for the Controlling Partnership. Consequently, holders of common units who are U.S. taxpayers should anticipate the need to file annually with the IRS (and certain states) a request for an extension past April 15 or the otherwise applicable due date of their income tax return for the taxable year. In addition, each partner will be required to report for all tax purposes consistently with the information provided 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 reasonably related 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 and local 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 trade secrets or other information the disclosure of which the KKR Managing Partner believes is not in the partnership’s best interests or which the partnership is required by law or by agreements with third parties 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 to adopt the KKR & Co. L.P. Equity Incentive Plan, which is referred to as the Controlling Partnership Equity Incentive Plan. The Controlling Partnership Equity Incentive Plan will be substantially similar to the 2009 Equity Incentive Plan except that (i) the total number of Controlling Partnership common units which may be issued under the Controlling Partnership Equity Incentive Plan as of the effective date of the plan will be equivalent to 15% of the number of fully diluted Controlling Partnership common units outstanding as of such date (the ‘‘Initial Plan Amount’’), provided that such number will be subject to an annual increase at the beginning of each fiscal year of KKR that begins after the effective date of the plan in an amount equal to the positive difference of 15% of the aggregate Controlling Partnership common units that are outstanding on the last day of the immediately preceding fiscal year of KKR, minus the Initial Plan Amount, and (ii) the issuance of KKR Group Partnership Units in consideration of the settlement, cancellation or termination of any awards made pursuant to the 2009 Equity Incentive Plan will reduce the total number of Controlling Partnership common units covered by and available for issuance under the Controlling Partnership Equity Incentive Plan by a number of Controlling Partnership common units equal to the number of KKR Group Partnership Units so issued multiplied by the Exchange Rate (as defined in the relevant employee exchange 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 ARE INFORMED THAT ANY TAX ADVICE CONTAINED IN THIS CONSENT SOLICITATION WAS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN AND WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAX-RELATED PENALTIES UNDER FEDERAL, STATE OR LOCAL TAX LAW. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. This summary discusses the material U.S. federal income tax considerations related to the Combination Transaction as of the date hereof. This summary does not purport to address all material U.S. federal income tax considerations related to owning KPE units prior to or following the Combination Transaction. This summary is based on provisions of the Internal Revenue Code, on the regulations promulgated thereunder and on published administrative rulings and judicial decisions, all of which are subject to change at any time, possibly with retroactive effect. This discussion is necessarily general 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 foreign corporation owned by KPE (taking into account the investor’s interest in such foreign corporation as a result of their ownership interest in KPE or otherwise) and other investors that do not own their KPE units as capital assets, may be subject to special rules. The actual tax consequences of the Combination Transaction will vary depending on your circumstances. For purposes of this discussion, a ‘‘U.S. Holder’’ is for U.S. federal income tax purposes: (1) an individual citizen or resident of the United States; (2) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (4) a trust which either (A) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (B) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. A ‘‘non-U.S. Holder’’ is a holder that is not a U.S. Holder. If a partnership holds KPE units the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding KPE units, you should consult your tax advisors. This discussion does not constitute tax 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 and local income tax and estate tax consequences in their particular situations of the Combination Transaction, 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. federal income 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 to KKR Management Holdings Corp. (‘‘Management Corp.’’), the intermediate holding company formed by 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 to Management 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, no gain or loss should be recognized by you) on the contribution of the assets and liabilities of KPE to Management 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 recognized on the transfer of property to a corporation, such as Management Corp., if the transferor is in control of the corporation immediately after the transfer, except to the extent (i) the transferor receives 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 property transferred. It is expected that under this rule, KPE (and consequently you) should not recognize gain or loss on the contribution of a portion of KPE’s assets and liabilities to Management Corp. pursuant to the Combination Transaction. • Section 721 of the Internal Revenue Code provides that generally no gain or loss is recognized by a partnership or its partners upon the contribution of property to the partnership in exchange for interests in that partnership. Therefore, KPE (and consequently you) should not recognize gain or loss on the contribution of a portion of its assets and liabilities to KKR Fund Holdings 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 receives from KPE to KKR Management Holdings L.P. in exchange for units in KKR Management Holdings L.P. pursuant to the Combination Transaction. • Regardless of whether you are otherwise required to recognize any gain or loss on the contributions described above, to the extent your indirect interest in a passive foreign investment company, or PFIC, owned by KPE is reduced as a result of the direct or indirect contribution of the PFIC to a KKR Group Partnership pursuant to the Combination Transaction, this reduction in your interest may be deemed to be a disposal of a portion of your indirect interest in the PFIC. You would be required to recognize gain, if any, on this deemed disposal. This gain would be taxable as an ‘‘excess distribution’’ for purposes of the PFIC rules and taxable at ordinary income 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 the PFIC as a ‘‘qualified electing fund,’’ or QEF, and you made the election in the later of (i) the first year in which KPE held shares in such entity or (ii) the first year in which you held KPE units, then generally you will not be required to recognize any gain on the contribution of your indirect interest in the PFIC to the KKR Group Partnerships pursuant to the Combination Transaction. KPE’s Basis in Management Corp., Unitholders’ Basis in KPE Units The basis of assets contributed to Management Corp. pursuant to the Combination Transaction may have been reduced under Section 743(b) of the Internal Revenue Code or may be required upon the contribution to be reduced under Section 362(e) of the Internal Revenue Code. Pursuant to Section 362(e), the basis of any asset contributed to Management Corp. whose adjusted tax basis exceeds 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) or Section 362(e), Management Corp. will have greater gain (and less loss) and, thus, more U.S. federal income tax, on a future disposal of these assets than it would have had if no basis adjustments had been made. Section 362(e) of the Internal Revenue Code also provides for an election that would allow KPE to reduce its basis in the shares of Management Corp. that it receives in exchange for a portion of the contributed built-in loss property rather than reduce the basis of such portion of the contributed built-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. Holders would be required to reduce their basis in their KPE units. As a result, such holders would have greater 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 partnership for U.S. federal income tax purposes is not a taxable entity and incurs no U.S. federal income tax liabilities. Similarly, Group Holdings, is intended to be treated as a disregarded entity for U.S. federal income tax purposes, will not incur any U.S. federal income tax liabilities. Each partner of a partnership is required to take into account its allocable share of items of income, gain, loss and deduction of the partnership in computing its U.S. federal income tax liability, regardless of the extent to which, or whether, it receives cash distributions from the partnership, and thus may incur income tax liabilities unrelated to (and in excess of) any distributions from the partnership. Moreover, the partnership may make certain investments that could cause the partnership, and consequently its partners, to recognize taxable income without receiving any cash. Distributions of cash by a partnership to a partner are generally not taxable unless the amount of cash distributed to a partner is in excess of the 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 income tax purposes may nonetheless be taxable as a corporation if it is a ‘‘publicly traded partnership,’’ unless an exception applies. An entity that would otherwise be classified as a partnership is a publicly traded partnership 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 equivalent thereof. Following the Combination Transaction, KPE will continue to be publicly traded. However, an exception to taxation as a corporation, referred to as the ‘‘Qualifying Income Exception,’’ exists if at least 90% of such partnership’s gross income for every taxable year consists of ‘‘qualifying income’’ and the partnership is not required to register under the Investment Company Act. Qualifying income includes certain interest income, dividends, real property rents, gains from the sale or other disposition of real property, and any gain from the sale or disposition of a capital asset or other property held for the production of income that otherwise constitutes qualifying income. Pursuant to the Combination Transaction, KPE and Group Holdings will comply with investment policies 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 as Management Corp., classified as corporations for U.S. federal income tax purposes (as discussed further below), to ensure that KPE will meet the Qualifying Income Exception in each taxable year. If KPE failed to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery, or if KPE were required to register under the Investment Company Act, KPE would be treated as if it had transferred all of its assets, subject to liabilities, to a newly formed corporation, on the first day of the year in which KPE fails to meet the Qualifying Income Exception, in return for stock in that corporation, and then 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, if Section 7874 of the Internal Revenue Code were to apply, KPE could be treated as a U.S. rather than a foreign corporation for U.S. federal income tax purposes. Depending on whether KPE were treated as 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 failure to meet the Qualifying Income Exception or otherwise, KPE’s items of income, gain, loss and deduction 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 transaction described 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. Distributions made to U.S. Holders would be treated as either taxable dividend income, which would not 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 and profits, a nontaxable return of capital, to the extent of such holder’s tax basis 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 to the 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 respect to 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 result in 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 and liquidation transaction described above generally would be tax-free to holders so long as KPE does not have 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. Holders would 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 and profits, a nontaxable return of capital, to the extent of such holder’s tax basis in their KPE units, or taxable capital gain, after the holder’s basis was reduced to zero. Dividends paid to non-U.S. Holders would be subject to U.S. withholding tax. Accordingly, treatment as a U.S. corporation could materially reduce your after-tax return and, thus, could result in a substantial reduction of the value of the KPE units. If at the end of any taxable year KPE failed to meet the Qualifying Income Exception, KPE may still qualify as a partnership if KPE is entitled to relief under the Internal Revenue Code for an inadvertent termination of partnership status. This relief would be available if: (i) the failure is cured within 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) or to pay such amounts as are required by the IRS. It is not possible to state whether KPE would be entitled to this relief in any or all circumstances. If this relief provision is inapplicable to a particular set of circumstances involving KPE, KPE will not qualify as a partnership for U.S. federal income tax purposes. Even if this relief provision applies and KPE retains its partnership status, KPE or its unitholders (during the failure period) will be required to pay such amounts as are determined by the IRS. Proposed Legislation Legislation has been introduced in the U.S. Congress that would, if enacted, preclude KPE following the Combination Transaction from qualifying for treatment as a partnership for U.S. federal income tax purposes 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 investment services partnership interest as ordinary income received for the performance of services, which would preclude KPE from meeting the Qualifying Income Exception described above. In addition, the U.S. Congress has recently considered other bills relating to the taxation of investment partnerships. In April 2009 legislation was introduced in the U.S. Congress that was 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 traded partnerships, which would require KPE to hold interests in entities earning such income through taxable subsidiary corporations (as discussed below under ‘‘—Investment Structure’’), and (ii) tax carried interest as ordinary income for U.S. federal income tax purposes, rather than in accordance with the character of income derived by the underlying fund, 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 indirectly derive any income from investment advisor or asset management services. In addition, the Obama administration proposed in its published revenue proposals for 2010 that the current law regarding the treatment of carried interest be changed to treat such income as income received in connection with the performance of services and subject to ordinary income tax. If the changes suggested by the administration or any of the proposed legislation was adopted, income attributable to carried interest may not meet the Qualifying Income Exception requirements and, therefore, KPE may be required to hold the interests in entities earning such income through a U.S. corporation or KPE may otherwise not be permitted to qualify as a partnership for U.S. federal income purposes following the Combination Transaction. The remainder of this discussion assumes that KPE and the KKR Group Partnerships will be treated 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 management services business. The income derived by KPE from such fund management services likely will not be qualifying income for purposes of the Qualifying Income Exception. Therefore, in order to meet the Qualifying Income Exception, KPE will hold its interests in the KKR Group Partnership that holds such fund management companies through an entity, Management Corp., that is treated as a corporation for U.S. federal income tax purposes. As the holder of Management Corp. common stock, KPE will not be taxed directly on the earnings of Management Corp. or the earnings of entities held through Management Corp. Rather, as a partner of KKR Management Holdings L.P., Management Corp. will incur U.S. federal income taxes on its proportionate share of any net taxable income of KKR Management Holdings L.P. Management Corp.’s liability for U.S. federal income taxes and applicable state, local and other taxes could be increased if the IRS were to successfully reallocate income or deductions of the related entities conducting KKR’s business. Distributions of cash or other property that KPE receives from Management Corp. will constitute dividends for U.S. federal income tax purposes to the extent paid from Management Corp.’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). If the amount of a distribution by Management Corp. exceeds its current and accumulated earnings and profits, such excess will be treated as a tax-free return of capital to the extent of KPE’s tax basis in the Management Corp. common stock, and thereafter will be treated as a capital gain. Such dividends and capital gains will be qualifying income for purposes of the Qualifying Income Exception. Dividends received by KPE from Management Corp. will be subject to U.S. withholding tax at a rate of 30%. You may, 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. corporation for U.S. federal income tax purposes, that corporation also would be subject to U.S. federal income tax on its income, and dividends paid by such corporation to KPE could be subject to withholding tax in the same manner as described above. Personal Holding Companies Management Corp. could be subject to additional U.S. federal income tax on a portion of its income if it is determined to be a personal holding company, or ‘‘PHC,’’ for U.S. federal income tax purposes. A U.S. corporation generally will be classified as a PHC for U.S. federal income tax purposes in a given taxable year if (i) at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain 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 by value 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, among other 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-exempt organizations will be treated as owning actually or constructively more than 50% of the value of Management 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 of Management Corp. fails the PHC gross income test, it will be a PHC. Certain aspects of the gross income test cannot be predicted with certainty. Thus, no assurance can be given that Management Corp. 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 to an additional 15% PHC tax on its undistributed PHC income, which generally includes the company’s taxable 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 ordinary income applicable to individuals (currently 35%). If Management Corp. were to become a PHC and had 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 Combination Transaction may be subject to state, local or non-U.S. taxation in various jurisdictions, including those in which KPE, its subsidiaries or such other entities transact business, own property or reside and may be required to file tax returns in some or all of those jurisdictions. For example, they may be subject to New York City unincorporated business tax. The state, local or non-U.S. tax treatment of KPE and KPE unitholders may not conform to the U.S. federal income tax treatment discussed herein. KPE may pay 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 be substantial. Any non-U.S. taxes incurred by KPE may not pass through to KPE unitholders as a credit against their U.S. federal income tax liability. Consequences to U.S. Holders of Indirect Interests in Management Holdings Corp. and the KKR Group Partnerships The following is a summary of the material U.S. federal income tax consequences that will apply to you as a U.S. Holder of indirect interests in Management Holdings Corp. and the KKR Group Partnerships following the Combination Transaction. As discussed above under the heading ‘‘Taxation of KPE, Group Holdings and the KKR Group Partnerships,’’ KPE and the Group Partnership intend to be treated as partnerships for U.S. federal income tax purposes. Group Holdings is intended to be treated as a disregarded entity for federal income tax purposes. As a result, your allocable share for U.S. federal income tax purposes of KPE’s items of income, gain, loss, deduction or credit will be governed by the limited partnership agreement for KPE if such allocations have ‘‘substantial economic effect’’ or are determined to be in accordance with your interests in KPE. Similarly, KPE’s allocable share for U.S. federal income tax purposes of the KKR Fund Holdings L.P.’s items of income, gain, loss, deduction or credit will be governed by the limited partnership agreement for KKR Fund Holdings L.P. if such allocations have substantial economic 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 the KKR 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 have substantial economic effect or are determined to be in accordance with Management Holdings Corp.’s interest 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 in accordance with your interest in KPE, and KPE’s Managing Partner intends to prepare tax returns based on such allocations. Similarly, KPE believes the allocations contained in the limited partnership agreements of the KKR Group Partnerships will have substantial economic effect or be in accordance with KPE’s interest in KKR Fund Holdings L.P. and Management Corp.’s interest in KKR Management Holdings L.P. The Managing Partner of the KKR Group Partnerships intends to prepare tax returns based on such allocations. If the IRS successfully challenges the allocations made pursuant to the KPE limited partnership agreement or the limited partnership agreements of the KKR Group Partnerships, the resulting allocations for U.S. federal income tax purposes might be less favorable than the allocations set forth in the limited partnership agreements. The characterization of an item of KPE’s income, gain, loss, deduction or credit generally will be determined at KPE’s (rather than at your) level. Similarly, the characterization of an item of KKR Fund Holdings L.P.’s income, gain, loss, deduction or credit generally will be determined at KKR Fund Holding’s (rather than KPE’s) level. Distributions KPE receives from Management Corp. will be taxable as dividend income to the extent paid out of Management Corp.’s current or accumulated earnings and profits. Dividends paid by Management Corp. to KPE will be subject to U.S. withholding tax at a rate of 30%. With respect to dividends that are allocable to your indirect interest in Management 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% through 2010 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 are corporations, subject to limitations, will be entitled to a dividends received deduction with respect to their 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 matched by a corresponding distribution of cash. In addition, special provisions of the Internal Revenue Code may 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 cash attributable to such income. Accordingly, it is possible that your U.S. federal income tax liability with respect to your allocable share of KPE’s income for a particular taxable year could exceed any cash distribution 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. The election is irrevocable without the consent of the IRS, and generally requires KPE to adjust the tax basis 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, similar adjustments 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 not be made for KKR Fund Holdings L.P., it is unlikely that KPE’s existing Section 754 election will provide 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 the basis 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 treated as corporations for U.S. federal income tax purposes. You may be subject to special rules as a result of your indirect investments in such foreign corporations, including the rules applicable to an investment in a PFIC. Management Corp. will be subject to similar rules as those described below with respect to any 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 the gross 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.’’ There are no minimum stock ownership requirements for shareholders in PFICs. Once a corporation qualifies as a PFIC it is, subject to certain exceptions, always treated as a PFIC, regardless of whether it satisfies either of the qualification tests in subsequent years. Any gain on disposition of stock of a PFIC, as well as income realized on certain ‘‘excess distributions’’ by the PFIC, is treated as though realized ratably over the shorter of your holding period in your KPE units or KPE’s holding period in the PFIC. Such gain or income is taxable as ordinary income and dividends paid by a PFIC to an individual will not be eligible 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 to treat your indirect investments in PFICs as ‘‘qualified electing funds’’ under Section 1295 of the Internal Revenue Code. Because KPE is a foreign partnership, you, and not KPE, are responsible for making such QEF elections. A QEF election is effective for the taxable year for which the election is made and all subsequent taxable years and may not be revoked without the consent of the IRS. If you make a QEF election under the Internal Revenue Code with respect to your indirect interest in a PFIC, in lieu of the foregoing treatment, you would be required to include in income each year a portion of the ordinary earnings and net capital gains of the QEF called ‘‘QEF Inclusions,’’ even if not distributed to you. Thus, you may be required to report taxable income as a result of QEF Inclusions without corresponding receipts of cash. However, you may elect to defer, until the occurrence of certain events, payment of the U.S. federal income tax attributable to QEF Inclusions for which no current distributions are received, but will be required to pay interest on the deferred tax computed by using the statutory rate of interest applicable to an extension of time for payment of tax. KPE’s tax basis in the shares of such non-U.S. entities, and your basis in your KPE units, will be increased to reflect QEF Inclusions. No portion of the QEF Inclusion attributable to ordinary income will be eligible for reduced rates of taxation. Amounts included as QEF Inclusions with respect to direct and indirect investments generally will not be taxed again when actually distributed. You should consult your tax advisors as to the manner in which QEF Inclusions affect your allocable share of KPE’s income and your basis in your KPE units. Alternatively, in the case of a PFIC that is a publicly traded foreign portfolio company, an election may 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, of the fair market value of such stock over its adjusted basis at the end of the taxable year. You may treat as ordinary loss any excess of the adjusted basis of the stock over its fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the election in prior years. KKR Fund Holdings L.P. may directly or indirectly make certain investments, including for instance 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 indirect investments 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 interests in PFICs or that such PFICs will be eligible for the ‘‘mark to market’’ election, or that as to any such PFIC 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 Revenue Code will treat all gain on a disposition by KKR Fund Holdings L.P. of shares of such entity, gain on the disposition of KPE units by you (to the extent allocable to gain on such PFIC) at a time when KPE indirectly owns shares of such entity, as well as certain other defined ‘‘excess distributions,’’ as if the gain or excess distribution were ordinary income earned ratably over the shorter of the period during which you held your KPE common units or the period during which KPE indirectly held its shares in such entity. For gain and excess distributions allocated to prior years, (i) the tax rate will be the highest in effect for that taxable year and (ii) the tax will be payable generally without regard to offsets from deductions, losses and expenses. You will also be subject to an interest charge for any deferred tax. No portion of this ordinary income will be eligible for the favorable tax rate applicable to ‘‘qualified dividend income’’ for individual U.S. persons. Investment Structure As is currently the case, following the Combination Transaction, to manage KPE’s affairs so as to meet the Qualifying Income Exception for the publicly traded partnership rules (discussed above) and comply with certain requirements in KPE’s limited partnership agreement, KPE may need to structure certain 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 that any 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 operating income, including any gain recognized on its disposal of its investments. In addition, if the investment involves U.S. real estate, gain recognized on disposition would generally be subject to U.S. federal income 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. state and local taxes because of an investment by the KKR Group Partnerships in the U.S. state or locality in which you are a resident for tax purposes or in which the KKR Group Partnerships have investments or activities. You may also be subject to tax return filing obligations and income, franchise or other taxes, including withholding taxes, in state, local or non-U.S. jurisdictions in which KKR Fund Holdings L.P. directly or indirectly invests, or in which entities in which KKR Fund Holdings L.P. directly or indirectly own interests conduct activities or derive income. Income or gains from investments held by the KKR Group Partnerships may be subject to withholding or other taxes in jurisdictions outside the United States, subject to the possibility of reduction under applicable income tax treaties. If you wish to claim the benefit of an applicable income tax treaty, you may be required to submit information to tax authorities 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 tax purposes, including by reason of KKR Fund Holdings L.P.’s direct or indirect investments in U.S. real property holding corporations, in which case some portion of KPE’s income would be treated as effectively connected income with respect to non-U.S. holders, or ‘‘ECI.’’ If a non-U.S. Holder were treated as being engaged in a U.S. trade or business in any year because of an investment by KKR Fund 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. federal income tax rates on any such income. Moreover, a corporate non-U.S. Holder might be subject to a U.S. branch profits tax on its allocable share of its ECI. Any amount so withheld would be creditable against such non-U.S. Holder’s U.S. federal income tax liability, and such non-U.S. Holder could claim a refund to the extent that the amount withheld exceeded such non-U.S. Holder’s U.S. federal income tax liability for the taxable year. Finally, if KPE were treated as being engaged in a U.S. trade or business, a portion of any gain recognized by a KPE unitholder who is a non-U.S. Holder on the sale or exchange of its KPE units, could be treated for U.S. federal income tax purposes as ECI, and hence such 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 may not be able to provide complete information related to the tax status of its investors to KKR Fund Holdings 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 dividends from a U.S. corporation through KKR Fund Holdings L.P. and its investment vehicles or from Management 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 of a U.S. real property interest or if the distribution is otherwise considered fixed or determinable annual or periodic income under the Internal Revenue Code. You may need to take additional steps to receive a credit or refund of any excess withholding tax paid on your account (taking into account any reduced rate of withholding tax you may be entitled to under an applicable tax treaty). This may include the filing of a non-resident U.S. income tax return with the IRS. Among other limitations, if you reside in a treaty jurisdiction which does not treat KPE as a pass-through entity, you may not be eligible to receive a refund or credit of excess U.S. withholding taxes paid on your account. You should consult your 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 of business in the United States; (2) is present in the United States for 183 days or more in a taxable year; or (3) is a former citizen of the United States, a foreign insurance company that is treated as holding an interest in KPE in connection with its U.S. business, a PFIC or a corporation that accumulates earnings to avoid U.S. federal income tax. You should consult your tax advisors regarding the 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 estate tax purposes, then a U.S. federal estate tax might be payable in connection with the death of such person. U.S. Holders should consult their own tax advisors concerning the potential U.S. federal estate tax 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-citizen who is not a resident of the United States is not entirely clear. If the KPE units are includable in the U.S. gross estate of such person, then a U.S. federal estate tax might be payable in connection with the death of such person. Non-U.S. Holders who are non-citizens and not residents of the United States should consult their own tax advisors concerning the potential U.S. federal estate tax consequences of owning 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 law and facts. In addition, the discussion below assumes that the Controlling Partnership adopts and complies with investment guidelines and procedures similar to those adopted by Group Holdings as discussed above. See above ‘‘—Taxation of KPE, Group Holdings and the Group Partnerships.’’ If the law and/or facts were to change prior to the Listing Transaction or if the Controlling Partnership were not to adopt or comply with the investment guidelines and procedures, the tax consequences to you of the Listing Transaction could be materially different than those described below. The remainder of this discussion assumes that there are no changes in applicable law and facts prior to the Listing Transaction and that the Controlling Partnership adopts and complies with the investment guidelines and procedures. Pursuant to the terms of the Investment Agreement, during the period starting six months following the date the conditions precedent to the Combination Transaction are satisfied, the parties will have the option to require reasonable efforts be used to cause Controlling Partnership units to be listed 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 Controlling Partnership units and make an in-kind distribution of such units to the KPE unitholders (the ‘‘Listing Transaction’’), subject to applicable laws, rules and regulations. If either party was to exercise this option, generally you should not be required to recognize gain or loss on the contribution by KPE of its interest in the Management Corp. and KKR Fund Holdings, L.P. to the Controlling Partnership in exchange for Controlling Partnership units pursuant to transaction. In addition, the receipt of Controlling Partnership units by you generally would not result in gain or loss to U.S holders and their holding period in any Controlling Partnership units they receive in exchange for their KPE units should generally 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 for U.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 the Controlling Partnership. The U.S. federal income tax consequences of owning an interest in the Controlling Partnership, except as discussed below, would generally be the same as the U.S. federal income tax consequences of owning an interest in KPE. Consequences to U.S. Holders of Indirect Interests in the KKR Group Partnerships following Listing Transaction Passive Foreign Investment Companies. As discussed above under, ‘‘—Passive Foreign Investment Companies,’’ it is possible that the KKR Group Partnerships will make investments through or in entities that are PFICs for U.S. federal income tax purposes. As is currently the case, this could result in adverse tax consequences to you. However, as discussed above, the consequences of owning an interest in a PFIC potentially can be mitigated if a QEF election or ‘‘mark-to-market’’ election is made with 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 be possible, it is expected that the Controlling Partnership would make a QEF election where possible with respect to each entity treated as a PFIC to treat such non-U.S. entity as a QEF in the first year in which the Controlling Partnership holds shares in such entity. The consequences of this election generally 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 the Controlling 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 your indirect 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 a corporation for U.S. federal income tax purposes and if more than 50% of (i) the total combined voting power of all classes of stock of the non-U.S. entity entitled to vote or (ii) the total value of the stock of the non-U.S. entity is owned by U.S. Shareholders on any day during the taxable year of such non-U.S. entity. For purposes of this discussion, a ‘‘U.S. Shareholder’’ with respect to a non-U.S. entity means a U.S. person that owns 10% or more of the total combined voting power of all classes of stock of 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’’ income reported by the Controlling Partnership. Subpart F income generally includes dividends, interest, net gain from the sale or disposition of securities, non-actively managed rents and certain other generally passive types of income. The aggregate Subpart F income inclusions in any taxable year relating to a particular CFC are limited to such entity’s current earnings and profits. These inclusions are treated as ordinary income (whether or not such inclusions are attributable to net capital gains). Thus, you may be required to report as ordinary income your allocable share of the CFC’s Subpart F income reported by the Controlling Partnership without corresponding receipts of cash and may not benefit from capital gain treatment with respect to the portion of the Controlling Partnership’s earnings (if any) attributable to 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 in your Controlling Partnership units, will be increased to reflect any required Subpart F income inclusions. Such income will be treated as income from sources within the United States, for certain foreign tax credit purposes, to the extent derived by the CFC from U.S. sources. Such income will not be 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 will not be taxable again when actually distributed. Regardless of whether any CFC has Subpart F income, any gain allocated to you as a result of the direct or indirect disposition of stock in a CFC by KKR Fund Holdings L.P. will be treated as ordinary income to the extent of your allocable share of the current or accumulated earnings and profits of the CFC. In this regard, earnings would not include any amounts previously taxed pursuant to the CFC rules. However, net losses (if any) of a non-U.S. entity owned by the Controlling Partnership that is treated as a CFC will not pass through to you. Moreover, a portion of your gain from the sale or exchange of your Controlling Partnership units may be treated as ordinary income. Any portion of any gain 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 PFIC during the time the Controlling Partnership is a U.S. Shareholder of such non-U.S. entity, you will be required to include amounts in income with respect to such non-U.S. entity pursuant to this subheading, and the consequences described under the subheading ‘‘—Passive Foreign Investment Companies’’ 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 may be subject to the PFIC rules. The interaction of these rules is complex, and you are urged to consult their 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 persons involved 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 other modifications and interpretations. No assurance can be given as to whether, or in what form, any proposals affecting KPE or KPE unitholders will be enacted. The present U.S. federal income tax treatment of owning KPE common units following the Combination Transaction may be modified by administrative, legislative or judicial interpretation at any time, and any such action may affect investments and commitments previously made. Changes to the U.S. federal income tax laws and interpretations thereof could make it more difficult or impossible to be treated as a partnership that is not taxable as a corporation for U.S. federal income tax purposes, affect or cause KKR to change the investments and commitments of the KKR Group Partnerships, affect the tax considerations of owning KPE 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 affected by any such change in, or any new, tax law, regulation or interpretation. The organizational documents of the KKR Group Partnerships and agreements permit the board of directors to modify the amended and restated operating agreement from time to time, without the consent of the unitholders, in order to address certain changes in U.S. federal income tax regulations, legislation or interpretation. In some circumstances, 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 TAX PLANNING. THE TAX MATTERS RELATING TO KPE AND KPE UNITHOLDERS ARE COMPLEX AND ARE SUBJECT TO VARYING INTERPRETATIONS. MOREOVER, THE MEANING AND IMPACT OF TAX LAWS AND OF PROPOSED CHANGES WILL VARY WITH THE PARTICULAR CIRCUMSTANCES OF EACH KPE UNITHOLDER. KPE UNITHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES OF THE TRANSACTIONS.

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INDEPENDENT AUDITORS The combined financial statements of KKR Group as of December 31, 2008 and 2007, and for each of the three years in the period ended December 31, 2008, included in this consent solicitation statement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein (which report expresses an unqualified opinion and includes explanatory paragraphs relating to investments without a readily determinable fair market value and the adoption of the presentation and disclosure requirements of FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an Amended of Accounting Research Bulletin No. 51).

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INDEX TO FINANCIAL STATEMENTS Page

KKR Group*: Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combined Financial Statements—December 31, 2008, 2007 and 2006 Combined Statements of Financial Condition as of December 31, 2008 and 2007 . . . . . . . . . . Combined Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006 . Combined Statements of Changes in Equity for the Years Ended December 31, 2008, 2007 and 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combined Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006 . Notes to Combined Financial Statements—December 31, 2008, 2007 and 2006 . . . . . . . . . . . . Condensed Combined Financial Statements—March 31, 2009 and 2008 Condensed Combined Statements of Financial Condition (unaudited) as of March 31, 2009 and December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condensed Combined Statements of Operations (unaudited) for the Three Months Ended March 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condensed Combined Statements of Changes in Equity (unaudited) for the Three Months Ended March 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condensed Combined Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Condensed Combined Financial Statements (unaudited)—March 31, 2009 and 2008 . *

F-2 F-3 F-4 F-5 F-6 F-8 F-53 F-54 F-55 F-56 F-58

The combined financial statements reflect the historical results of operations and financial position of the KKR Group for all periods presented. Accordingly, the historical financial statements do not reflect what the results of operations and financial position of the KKR Group would have been 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 and partnerships. As a result, the KKR Group’s income has generally not been subject to U.S. federal income taxes. Taxes related to income earned by partnerships represent obligations of the individual partners. Income taxes shown on the KKR Group’s historical combined statements of income are attributable to taxes incurred in non-U.S. entities and to New York City unincorporated business tax attributable to the KKR Group’s operations apportioned to New York City. Unaudited pro forma taxes based on the Reorganization Transactions are provided within the Unaudited 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 are under the common control of KKR’s senior principals and the common ownership of its existing owners, and for which there is no single holding entity. Accordingly, the KKR Group has not presented 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 of operations, changes in equity and cash flows for each of the three years in the period ended December 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 established by the Auditing Standards Board (United States) and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of 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, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement 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, the combined financial position of the KKR Group as of December 31, 2008 and 2007, and the combined results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 4 to the combined financial statements, the financial statements include investments valued at $16.3 billion (approximately 73% of total assets) and $24.4 billion (approximately 74% of total assets) as of December 31, 2008 and 2007, respectively, whose fair values have been estimated by management in the absence of readily determinable fair values. Management’s estimates are based on the factors described in Note 2. As discussed in Note 2 to the combined financial statements, the Company adopted the presentation and disclosure requirements of FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51, for all periods presented. /s/ Deloitte & Touche LLP New York, New York July 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

Assets Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . Cash and Cash Equivalents Held at Consolidated Entities Restricted Cash and Cash Equivalents . . . . . . . . . . . . . . . Investments, at Fair Value . . . . . . . . . . . . . . . . . . . . . . . Due from Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

$

198,646 965,319 50,389 20,883,519 29,889 313,268

2007

$

272,045 413,747 45,918 31,818,332 43,969 248,785

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$22,441,030

$32,842,796

Liabilities and Equity Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . .

$ 2,405,125 185,548

$ 2,020,328 555,308

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,590,673

2,575,636

Commitments and Contingencies Equity KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . .

150,634 1,245

1,507,694 9,652

Total KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . .

151,879

1,517,346

Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,698,478

28,749,814

Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,850,357

30,267,160

Total 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

235,181

$ 862,265

$ 410,329

. . . .

149,182 30,430 179,673 59,103

212,766 20,068 128,036 80,040

131,667 19,295 78,154 38,350

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

418,388

440,910

267,466

Revenues Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenses Employee Compensation and Benefits Occupancy and Related Charges . . . . General, Administrative and Other . . . Fund Expenses . . . . . . . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

Investment (Loss) Income Net (Losses) Gains from Investment Activities Dividend Income . . . . . . . . . . . . . . . . . . . . . . Interest Income . . . . . . . . . . . . . . . . . . . . . . . Interest Expense . . . . . . . . . . . . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

$

. . . .

(12,944,720) 75,441 129,601 (125,561)

1,111,572 747,544 218,920 (86,253)

3,105,523 714,069 210,872 (29,542)

Total Investment (Loss) Income . . . . . . . . . . . . . . . . . . .

(12,865,239)

1,991,783

4,000,922

(Loss) Income Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13,048,446) 6,786

2,413,138 12,064

4,143,785 4,163

Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Net (Loss) Income Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13,055,232)

2,401,074

4,139,622

(11,850,761)

1,598,310

3,039,677

$ (1,204,471) $ 802,764

$1,099,945

Net (Loss) Income Attributable to KKR Group . . . . . . . . . .

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 Group Accumulated KKR Group Other Total Partners’ Comprehensive Noncontrolling Comprehensive Capital Income (Loss) Interests Income (Loss)

Balance at January 1, 2006 . . . . . . . . . $ 1,426,487 Comprehensive Income: Net Income . . . . . . . . . . . . . . . . . Other Comprehensive Income— Currency Translation Adjustment . Net Change in Unrealized Gain on Securities Available for Sale . . . .

$ 6,134

1,099,945

$ 11,518,013

15,809

3

Total Comprehensive Income . . . . . . Capital Contributions . . . . . . . . . . . . Capital Distributions . . . . . . . . . . . . Balance at December 31, 2006 . . . . . . . Comprehensive Income: Net Income . . . . . . . . . . . . . . . . . Other Comprehensive Income— Currency Translation Adjustment .

267,117 (1,108,755) 1,684,794

7,626

802,764 2,026

Capital Distributions . . . . . . . . . . . . Balance at December 31, 2007 . . . . . . . Comprehensive Income (Loss): Net Loss . . . . . . . . . . . . . . . . . . . Other Comprehensive Income— Currency Translation Adjustment .

17,298

308,201 1,507,694

9,652

(1,204,471)

17,298

3

3

4,156,923

4,156,923 11,697,685

(5,685,627)

(6,794,382)

20,318,440

22,010,860

1,598,310

2,401,074

2,401,074

10,306

12,332

12,332

2,413,406

2,413,406

(303,888) (1,288,065)

4,139,622

11,430,568

Total Comprehensive Income . . . . . . Deconsolidation of Noncontrolling Interests . . . . . . . . . . . . . . . . . . . Capital Contributions . . . . . . . . . . . .

$ 12,950,634

3,039,677 $ 4,139,622 1,489

Total Equity

(303,888)

12,604,558

12,912,759

(5,477,912)

(6,765,977)

28,749,814

30,267,160

(11,850,761) (13,055,232) (13,055,232) (8,407)

(18)

Total Comprehensive Income (Loss) . .

(8,425)

(8,425)

$(13,063,657) (13,063,657)

Purchase of Noncontrolling Interests by KKR Group . . . . . . . . . . . . . .

(6,285)

(6,285)

Capital Contributions . . . . . . . . . . . .

103,368

3,942,547

4,045,915

Capital Distributions . . . . . . . . . . . .

(255,957)

(1,136,819)

(1,392,776)

Balance at December 31, 2008 . . . . . . . $

150,634

$ 1,245

$ 19,698,478

See notes to combined financial statements. F-5

$ 19,850,357

KKR GROUP Combined Statements of Cash Flows For the Years ended December 31, 2008, 2007 and 2006 (Dollars in Thousands) 2008

Cash Flows from Operating Activities Net (Loss) Income Attributable to KKR Group . . . . . . Adjustments to Reconcile Net (Loss) Income Attributable to KKR Group to Net Cash Used in Operating Activities: Net (Loss) Income Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Realized Gains on Investments . . . . . . . . . . . . . Change in Unrealized Losses (Gains) on Investments Attributable to KKR Group . . . . . . . . . . . . . . . . . Change in Unrealized Losses on Investments Attributable to Noncontrolling Interests . . . . . . . . . Other Non-Cash Amounts . . . . . . . . . . . . . . . . . . . . Cash Flows Due to Changes in Operating Assets and Liabilities Change in Cash and Cash Equivalents Held at Consolidated Entities . . . . . . . . . . . . . . . . . . . . . . Change in Due from Affiliates . . . . . . . . . . . . . . . . . Change in Other Assets . . . . . . . . . . . . . . . . . . . . . . Change in Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . Investments Purchased . . . . . . . . . . . . . . . . . . . . . . . Cash Proceeds from Sale of Investments . . . . . . . . . . Net Cash Used In Operating Activities . . . . . . . . . Cash Flows from Investing Activities Change in Restricted Cash and Cash Equivalents Purchase of Furniture, Equipment and Leasehold Improvements . . . . . . . . . . . . . . . . . . . . . . . . Purchase of Noncontrolling Interests . . . . . . . . . Net Cash Used in Investing Activities . . . . . . . Cash Flows from Financing Activities Distributions to Noncontrolling Interests . . . Contributions from Noncontrolling Interests . Distributions to KKR Group Partners . . . . . Contributions from KKR Group Partners . . . Proceeds from Debt Obligations . . . . . . . . . Repayment of Debt Obligations . . . . . . . . . . Deferred Financing Costs Incurred . . . . . . . Net Cash Provided By Financing Activities

. . . . . . . .

. . . . . . . .

. . . . . . . .

.

$ (1,204,471) $

2007

802,764

2006

$ 1,099,945

. .

(11,850,761) (253,410)

1,598,310 (1,557,101)

3,039,677 (3,244,931)

.

1,521,645

65,249

. .

11,676,485 2,387

380,280 (10,886)

143,243 (16,063)

(3,835)

. . .

(565,604) 14,080 87,338

1,895,148 70,728 (108,712)

(2,105,942) (65,474) (68,718)

. . . .

28,724 (3,438,323) 1,535,754 (2,446,156)

99,260 (17,847,606) 6,090,065 (8,522,501)

60,189 (9,555,635) 5,186,400 (5,531,144)

......

(4,471)

(95,406)

(108,295)

...... ...... ......

(13,104) (44,171) (61,746)

(17,063) — (112,469)

(21,815) — (130,110)

(1,136,819) 3,942,547 (250,358) 103,368 813,809 (1,018,389) (19,655) 2,434,503

(5,467,241) 12,589,477 (1,170,568) 308,201 2,602,360 (43,800) (4,405) 8,814,024

(5,675,567) 11,430,568 (1,063,530) 267,117 3,722,379 (3,023,015) — 5,657,952

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

Net Change in Cash and Cash Equivalents . . . . . . . . . . . . Cash and Cash Equivalents, Beginning of Year . . . . . . . . Cash and Cash Equivalents, End of Year . . . . . . . . . . . .

F-6

$

(73,399) 272,045 198,646 $

179,054 92,991 272,045

$

(3,302) 96,293 92,991

KKR GROUP Combined Statements of Cash Flows (Continued) For the Years ended December 31, 2008, 2007 and 2006 (Dollars in Thousands) 2008

Supplemental Disclosures of Cash Flow Information Payments for Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2007

2006

$ 70,952 $ 4,539

$ $

21,112 14,255

$16,962 $ 5,939

—

$

10,671

$10,060

$ 15,081 $ 117,497 — $ 521,428 $ 2,974

— $45,225 — — —

Supplemental Disclosure of Non-Cash Activities Non-Cash Distributions to Noncontrolling Interests . . . . . . . . . . . . Non-Cash Contributions from Noncontrolling Interests . . . . . . . . Non-Cash Distributions to KKR Group Partners . . . . . . . . . . . . . Restricted Stock Grant from Affiliate . . . . . . . . . . . . . . . . . . . . . Non-Cash Debt Financing / Purchase of Investments . . . . . . . . . . Change in Foreign Exchange on Debt Obligations . . . . . . . . . . . . Change in Foreign Exchange on Cash and Cash Equivalents Held at Consolidated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

— $ 5,599 $ 15,939 $625,000 $ (35,624)

.

$ (14,032)

Deconsolidation of Subsidiary of KKR Financial LLC: Investments, at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

$2,162,402 $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 to Noncontrolling 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 executive offices in New York and Menlo Park, California. The Company’s alternative asset management business involves sponsoring and managing investment funds that make investments worldwide in private equity and 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 in public 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 of the acquisition price for the fund’s investments. The accompanying combined financial statements of the Company include the results of eight of the 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 a single 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 and management. The accompanying combined financial statements include the accounts of the management companies, specifically Kohlberg Kravis Roberts & Co. L.P., KKR Financial Advisors LLC, KKR Strategic Capital Management, L.L.C., and KKR FI Advisors LLC, as well as the general partners of the private equity funds (collectively the ‘‘Common Control Entities’’) and their respective consolidated funds: KKR 1996 Fund, KKR European Fund, KKR Millennium Fund, KKR European Fund II, KKR 2006 Fund, KKR Asian Fund, KKR European Fund III, KKR Private Equity Investors (‘‘KPE’’) and certain of the KKR Strategic Capital Funds. KPE consists of an upper-tier limited partnership, which is referred to as the feeder fund, which makes all of its investments through a lower-tier limited partnership which is referred to as the master fund, of which the feeder fund is the sole limited partner. The accompanying combined financial statements include the general partner of the KKR Private Equity Investors master fund as well as the master fund. The general partner of the feeder fund and the feeder fund itself are not included in the accompanying combined financial statements. In addition, the general partner of an unconsolidated fund, KKR IFI GP L.P. (‘‘IFI’’), has been included in the accompanying combined financial statements. IFI is the general 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 limited liability company interests are listed on the New York Stock Exchange under the symbol ‘‘KFN.’’ KFN is managed by the Company but is not under the common control of the Senior Principals or otherwise consolidated by the Company as control is maintained by third-party investors. KFN was organized in August 2004 and completed its initial public offering on June 24, 2005. As of December 31, 2008 and 2007, 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 accounted for as trading securities (see Note 2, ‘‘Summary of Significant Accounting Policies—Management fees received 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 to exercise 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 and 2007, respectively. For management reporting purposes, the Company operates through two reportable business segments: • Private Markets—The Company’s Private Markets segment involves sponsoring and managing a group of funds and co-investment vehicles that make primarily control-oriented investments in connection with leveraged buyouts and other similar investment opportunities. These funds are managed by Kohlberg Kravis Roberts & Co. L.P. and currently consist of a number of private equity 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 a group 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 to complete secured financing transactions. Additionally, beginning in July 2008, the Company’s Public Markets segment began serving as investment manager for accounts held by large institutional investors (‘‘Separately Managed Accounts’’). The Fixed Income Funds and Separately Managed Accounts are managed by subsidiaries of Kohlberg Kravis Roberts & Co. (Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic Capital Management, L.L.C., and KKR FI Advisors LLC. The Fixed Income Funds currently consist of KFN and the KKR Strategic Capital Funds (‘‘SCF’’), which are comprised of three side-by-side private fixed income funds. Two of the three side-by-side funds in SCF have been consolidated in the accompanying combined financial statements of the Company. The third side-by-side fund is not consolidated by the KKR Group, because this fund is owned and controlled by third-party investors 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 holds the majority of the economic and voting interests. Accordingly, these structured finance vehicles are consolidated by KFN. The KKR Group holds no economic or voting interests in these structured finance vehicles. The KKR Group receives management fees for all assets managed in the Public Markets segment and incentive fees for assets managed at KFN and SCF. See Note 2, ‘‘Summary of Significant Accounting Policies,’’ to the combined financial statements for the Company’s accounting policy regarding Fee Income. During May 2007, one of the structured finance vehicles managed by the Company and its underlying net assets were redeemed at fair value and transferred to a special-purpose entity. KFN is the primary beneficiary of this special-purpose entity and, accordingly, consolidates its assets and liabilities. These assets and liabilities were previously consolidated by the Company and the corresponding results of operations were included in the statement of operations for the year ended December 31, 2007 through the date of redemption and transfer of interest. The instruments governing the Traditional Private Equity Funds provide that the funds will continue 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 Funds generally provide that those funds will continue in existence indefinitely, unless the funds are terminated earlier as provided in the applicable governing instruments. The Company has three primary sources of income: (i) fee income (consisting primarily of management, advisory and incentive fees); (ii) amounts received from the Company’s funds in the form of a carried interest or other distributions that entitle the Company to a disproportionate share of the gains generated by the funds; and (iii) investment income generated through the investment of the Company’s own capital in its funds and other proprietary investments. The KKR Funds are consolidated by the Company pursuant to accounting principles generally accepted in the United States of America (‘‘GAAP’’) as described in Note 2 ‘‘Summary of Significant Accounting Policies,’’ notwithstanding the fact that the Company has only a minority economic interest in those funds. Specifically, the general partners of the KKR Funds consolidate their respective funds and 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 a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights’’ or Financial Accounting Standards Board (‘‘FASB’’) Interpretation No. 46 (revised December 2003) ‘‘Consolidation of Variable Interest Entities—an Interpretation of ARB 51 (‘‘FIN 46R’’)’’ Consequently, the Company’s 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 of the economic interests in those funds, which are held by third-party investors, are reflected as noncontrolling interests in the accompanying combined financial statements. Substantially all of the management fees and certain other 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, the Company’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 attributable to KKR Group or KKR Group’s partners’ capital. See Note 2, ‘‘Summary of Significant Accounting Policies.’’ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Basis of Accounting—The accompanying combined financial statements are prepared in accordance 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 beneficiary of a variable interest entity (‘‘VIE’’). Hereinafter, all entities that are included in the accompanying combined financial statements are referred to as consolidated entities. The majority of the consolidated entities are under the common control of the Senior Principals and are comprised of: (i) those entities in which the Company, directly or through the Senior Principals, has majority ownership and has control over significant operating, financial and investing decisions; 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 operational discretion and control, and fund investors have no substantive rights to impact ongoing governance and operating activities of the fund. The KKR Funds do not consolidate their majority-owned and controlled investments in portfolio companies (‘‘Portfolio Companies’’). Rather, those investments are accounted for as investments and carried at fair value as described below. FASB Staff Position (‘‘FSP’’) Financial Accounting Standard (‘‘FAS’’) No. 140-4 and FIN 46R-8 provides disclosure requirements for, among other things, involvements with VIEs. Those involvements include when the Company (i) consolidates an entity because it is the primary beneficiary, (ii) has a significant 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 a fully aggregated basis. The Company’s investment strategies differ by Investment Vehicle; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of incentive and management fees. Accordingly, disaggregation of the Company’s involvement with VIEs would not provide more useful information. In the Company’s role as general partner or investment advisor, it generally considers itself the sponsor of the applicable Investment Vehicle. For certain of these Investment Vehicles, the Company is determined to be the primary beneficiary and hence consolidates such Investment Vehicle within the combined financial statements. FIN 46R requires an analysis to (i) determine whether an entity in which the Company holds a variable interest is a variable interest entity, and (ii) whether the Company’s involvement, through holding 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 the entity. Performance of that analysis requires the exercise of judgment. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and reconsiders that conclusion based on certain events. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the fund held either directly by the Company or indirectly through its related parties. The consolidation analysis under FIN 46R can generally be performed qualitatively. However, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative expected losses and expected residual returns calculation will be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective Investment Vehicle could affect an 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 as general partner to provide commitments to such funds. During 2008, the Company did not provide any support 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 the Company is not the primary beneficiary. At December 31, 2008, assets recognized in the Company’s combined 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 with certain defined liquidity requirements in its governing documents and has 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. As of December 31, 2008, the entity was in compliance with the defined liquidity requirements. See Note 11 ‘‘Commitments and Contingencies.’’ Therefore, the Company’s aggregate maximum exposure to loss was $372 as of December 31, 2008. Intercompany transactions and balances have been eliminated. Noncontrolling Interests—Noncontrolling interests represent the ownership interests in consolidated entities held by entities or persons other than our Principals. Noncontrolling interest holders 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 interests in 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 limited partners are generally allocated to the limited partners in an amount equal to 80% of the ratio of their capital 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 carried interest. Losses on a fund’s investments are generally first applied to the excess of any prior income over such losses. For the majority of the Traditional Private Equity Funds, any remaining fund losses are applied to the equity accounts of the partners in proportion to their capital contributed with respect to each individual investment, until the partners’ equity accounts have been reduced to zero. For certain other Traditional Private Equity Funds, remaining fund losses are allocated to the limited partners and general partners in a manner consistent with profits as described above. For all Traditional Private 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 that will entitle it to a disproportionate share of the gains generated by the fund’s direct investments once the fund’s capitalization costs (the ‘‘Creditable Amount’’) have been recouped as described below. This economic interest consists of: • a carried interest that generally will allocate to the general partner 20% of the gain that is realized on private equity investments that are made with fund investors’ capital after any realized 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 increase in the net asset value of all other direct investments that are made with fund investors’ capital above 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 respect to the fund’s indirect investments, which consist of investments made through other funds that the Company sponsors. However, if the KPE fund acquires a partner interest in one of the Company’s other funds from a third party, the amount of distributions that the general partner receives pursuant to its distribution right may be adjusted to reflect realized gains or losses relating to the value of the acquired 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 be entitled 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 the management companies of its Public Markets segment (‘‘KFI Transaction’’) in order to further integrate its operations, enhance existing collaboration among all of the Company’s investment professionals and to accelerate the growth of the Company’s Public Markets business. Immediately prior 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 the purchase method 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 the noncontrolling interests acquired (which approximates the fair value of the net assets acquired and which are already included in the combined statements of financial condition) to finite-lived identifiable intangible assets consisting of management, advisory, and incentive fee contracts. The Company has recorded intangible assets of $37,887 which are being amortized over an estimated useful life of ten years, based on contractual provisions that enable renewal of the contracts without 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 the Company’s Public Markets segment were included in net income. Use of Estimates—The preparation of the combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenues, expenses and investment income during the reporting periods. Such estimates include but are not limited to the valuation of Portfolio Companies owned by the KKR Funds, financial instruments owned and other matters that affect reported amounts of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the combined financial statements. Fair Value Measurements—The Company adopted FASB Statement 157 ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’) as of January 1, 2008, which among other things requires enhanced disclosures about investments that are measured and reported at fair value. SFAS 157 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in 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 with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level I—Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include publicly-listed equities and

F-13

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 by the 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 the Company 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 either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this category include corporate bonds and loans, convertible debt securities indexed to publicly listed securities and certain over-the-counter derivatives. Level III—Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in this category generally include private portfolio companies held through our private equity funds and KPE. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and it considers factors specific to the investment. Statement of Operations Measurements Fee Income—Fee income is comprised of: (i) transaction and monitoring fees received from Portfolio Companies and transaction fees from Capital Markets activities (collectively ‘‘Advisory Fees’’); (ii) management fees received from unconsolidated funds; and (iii) incentive fees received from unconsolidated funds. Such fees are based upon the contractual terms of fund management and related agreements and are recognized in the period during which the related services are performed and the amounts 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Fees Received from Unconsolidated Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Incentive Fees Received from Unconsolidated Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$176,541

$776,585

$340,007

58,640

63,568

55,756

—

22,112

14,566

Total Fee Income . . . . . . . . . . . . . . . . . . . . . . .

$235,181

$862,265

$410,329

Management fees received from consolidated and unconsolidated funds—For the Traditional Private Equity Funds, gross management fees generally range from 1% to 1.5% of committed capital during the fund’s investment period and approximately 0.75% of invested capital after the expiration of the

F-14

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. The actual 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, the Company’s allocated share of the net income from consolidated KKR Funds is increased by the amount of fees that are eliminated. Accordingly, the elimination of the fees does not have an effect on the net income 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’s equity 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 amount defined in the management agreement. Until the Creditable Amount is reached, the Company has generally agreed to reduce the amount of management fees payable by the fund in any period by any carried interest or incentive distributions that the Company or its affiliates receive during the period pursuant 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 earn certain management fees that it would be entitled to from its Traditional Private Equity Funds. The cash that would have been payable is collected from the funds’ investors and is initially included as a component of Cash and Cash Equivalents Held at Consolidated Entities. In lieu of making direct cash capital contributions, these cash collections are used to satisfy a portion of the capital commitments to which the Company would otherwise be subject as the general partner of the fund. As a result of the election to waive the fees, the Company is not entitled to any portion of these fees until the fund has achieved positive investment results. Because the ability to earn the waived fees is contingent upon the achievement of positive investment returns by the fund, the recognition of income only occurs when the contingency is satisfied. Our Traditional Private Equity Funds require the management company to refund up to 20% of any cash management fees earned from limited partners in the event that the funds recognize a carried interest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% of the management fees earned a portion thereof, a liability to the fund’s limited partners is recorded and revenue is reduced for the amount of the carried interest recognized, not to exceed 20% of the management fees earned. As of December 31, 2008, the amount subject to refund for which no liability has been recorded totaled $104.1 million as a result of certain funds not yet recognizing sufficient carried interests. The refunds to the limited partners are paid, and the liabilities relieved, at such time that the underlying investments are sold and the associated carried interests are realized. In the event that a fund’s carried interest is not sufficient to cover all or a portion of the amount that represents 20% of the earned management fees, these fees will not be refunded to the funds’ limited partners, in accordance with the respective agreements. The Company’s management agreement with KFN provides, among other things, that KFN is responsible for paying to the Company certain fees and reimbursements, consisting of a base management fee, an incentive fee and reimbursement for out-of-pocket and certain other costs and expenses 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

F-15

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 the management agreement. Effective January 1, 2009, the Company has elected to defer receipt of 50% of the monthly base management fee that would otherwise be payable by KFN until December 2009. The Company’s management agreement with KFN will automatically be renewed for successive one-year terms following December 31, 2008 unless the agreement is terminated in accordance with its terms. 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-thirds of the fund’s independent directors or by the holders of a majority of the outstanding shares of the fund’s common stock and the termination is based upon (i) a determination that the Company’s performance has been unsatisfactory and materially detrimental to the fund or (ii) a determination 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 reduce the Company’s management and incentive fees), in which case a termination fee is payable to the Company; or • the Company’s subsidiary that manages the fund experiences a ‘‘change of control’’ or the Company materially breaches the provisions of the agreement, engages in certain acts of willful misconduct or gross negligence, becomes bankrupt or insolvent or is dissolved, in which case a termination fee is not payable to the Company. None of the aforementioned events have occurred as of December 31, 2008 and the management agreement was renewed on January 1, 2009. The Company has received restricted common stock and common stock options from KFN as a component of compensation for management services to that fund. The restricted common stock and stock options vest ratably over applicable vesting periods and are initially recorded as deferred revenue at their estimated fair values at the date of grant. Subsequently, the Company re-measures the restricted common stock and stock options to the extent that they are unvested, with a corresponding adjustment to deferred revenue. Income from restricted common stock and common stock options is recognized 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 the characteristics of derivative investments. Vested stock options are recorded at estimated fair value with changes in fair value recognized in Net (Losses) Gains from Investment Activities. Both vested and unvested common stock options are valued using a Black-Scholes pricing model as of the end of each period. Vested common stock that is received as a component of compensation for management services are carried as trading securities, because the Company generally intends to distribute the common stock subsequent to vesting. Vested common stock is recorded at estimated fair value with changes in fair value recognized in Net (Losses) Gains from Investment Activities.

F-16

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 the KKR Strategic Capital Funds pursuant to which it has agreed to provide them with management and other services. Under the management agreement and, in some cases, other documents governing the individual 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 management fee that is equal to 0.1667% (or 2.0% annualized) of the net asset value of the individual fund that is allocable to those investors; and • with respect to investors who have agreed to a 60 month lock-up period, a monthly management fee that is equal to 0.1250% (or 1.5% annualized) of the net asset value of the primary fund that is allocable to those investors. The Company elected to reduce the management fee it earns under the management agreements with 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 to 0.0208% (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 the general 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 the KKR Strategic Capital Funds, was triggered whereby all investors became eligible to submit redemption requests, in full, without regard to class or lock-up period. Subsequent to December 15, 2008 all investors submitted such redemption requests. The redemptions would be payable after the board of directors (or general partner, as applicable) of the KKR Strategic Capital Funds rescinds the suspension of redemptions. The Company’s management agreement for its Separately Managed Accounts provides for management fees determined quarterly based on an annual rate of 0.5% of the fund’s equity. For purposes of calculating the management fee, equity is an amount defined in the management agreement. The Company’s management agreement for its principal protected product for private equity investments provides for management fees determined quarterly based on an annual rate of 1.25% of the fund’s equity. For purposes of calculating the management fee, equity is an amount defined in the management agreement. Incentive fees received from KFN—The Company’s management agreement with KFN provides that KFN is responsible for paying a quarterly incentive fee when the return on assets under management exceeds certain benchmark returns or other performance targets. This incentive fee is accrued quarterly, after all contingencies have been removed, based on performance to date versus the performance benchmark stated in the management agreement. Once earned, there are no clawbacks of incentive fees received from KFN. Incentive fees received from KKR Strategic Capital Funds—As part of the Company’s management agreements with the side-by-side funds comprising the KKR Strategic Capital Funds, certain of which

F-17

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 as follows: • with respect to investors who have agreed to a 25 month lock-up period, an annual incentive fee equal to 20% of the increase in the net asset value of the individual fund that is allocable to those investors above the highest net asset value at which an incentive fee has previously been received; and • with respect to investors who have agreed to a 60 month lock-up period, an annual incentive fee equal to 15% of the increase in the net asset value of the individual fund that is allocable to those investors above the highest net asset value at which an incentive fee has previously been received. The Company elected to reduce the incentive fee it earns under the management agreements with 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 in the net asset value of the individual fund above the highest net asset value at which an incentive fee has previously been received, and subject to an 8% preferred return that is retroactive to the date of original investment. These incentive fees are accrued annually, after all contingencies have been removed, based on performance to date versus the performance benchmark stated in the management agreement. Since performance 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-side funds comprising the KKR Strategic Capital Funds. Incentive fees received from consolidated KKR Strategic Capital Funds have been eliminated. However, because these amounts are funded by, and earned from, noncontrolling interests, the Company’s allocated share of the net income from consolidated KKR Funds is increased by the amount of fees that are eliminated. Accordingly, the elimination 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—The Company’s management agreement for its principal protected product for private equity investments provides for an annual incentive fee to be paid to the Company when the return on assets under management exceeds certain benchmark returns or other performance targets. This incentive fee is accrued annually, after all contingencies have been removed, based on performance to date versus the performance benchmark stated in the management agreement. Once earned, there are no clawbacks of incentive fees received under this agreement. Transaction fees received from Portfolio Companies—Transaction fees are earned by the Company primarily in connection with successful acquisitions of Portfolio Companies by private equity funds and with respect to certain other negotiated investments. Transaction fees are recorded in advisory fee income upon closing of the transaction. Fees are typically paid by Portfolio Companies on or around the closing date and generally approximate 1% of the total transaction value to which the Company is entitled 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

F-18

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 associated with investigating Portfolio Company investments that are not consummated are recorded in fund expenses 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 for services provided to Portfolio Companies and are recognized in advisory fee income as services are rendered. These fees are paid based on a fixed periodic schedule by the Portfolio Companies either in advance or in arrears and are separately negotiated for each Portfolio Company. Monitoring fees amounted 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 for services provided by its Capital Markets business and are recognized in fee income upon closing of the transaction. Fees are typically paid on or around the closing date and vary based on the nature of the transaction. Transaction fees received from Capital Market activities totaled $18,211 for the year ended December 31, 2008. Reimbursement of Transaction-Related Expenses—In connection with pursuing successful Portfolio Company investments, the Company receives reimbursement for certain transaction-related expenses. Transaction-related expenses, which are reimbursed by third parties, are deferred until the transaction is consummated and are recorded in other assets on the date the expense is incurred. The costs of successfully completed transactions are borne by the KKR Funds and included as a component of the investment’s cost basis. Subsequent to closing, investments are recorded at fair value each reporting period as described in the section below titled Investments, at Fair Value. Upon reimbursement from a third party, the cash receipt is recorded and the deferred amounts are relieved. No fee income or expense 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 expenses incurred on behalf of these entities. Billable monitoring expenses are recognized as revenue in accordance with EITF 01-14, ‘‘Income Statement Characterization of Reimbursement Received for Out of 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 fee income. These reimbursements amounted to $22,976, $24,731 and $14,799 for the years ended December 31, 2008, 2007 and 2006, respectively. Investment Income—Investment income consists primarily of unrealized and realized gains and losses on private equity investments as well as dividends and interest received primarily from the Portfolio Companies, after giving effect to interest expense incurred primarily by the Company’s Fixed Income Funds and foreign exchange gains and losses relating to mark-to-market activity on foreign exchange forward contracts, foreign currency options and interest rate swaps. The amount of investment income retained in net income attributable to the Company, after allocation to net income attributable to noncontrolling interests, represents investment income allocable to the Company resulting from earnings on its investments and its carried interest and similar distribution rights.

F-19

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 the profits generated by a fund as described below. Unrealized gains or losses result from changes in fair value of investments during the period, and are included in Net (Losses) Gains from Investment Activities. Upon disposition of an investment, previously recognized unrealized gains or losses are reversed and a realized gain or loss is recognized. Net (Losses) Gains from Investment Activities earned by the consolidated KKR Funds amounted to $(12,925,515), $1,098,173 and $3,041,318 for the years 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’s earnings from investments relative to the capital contributed by the general partner and correspondingly reduce noncontrolling interests’ allocable share of those earnings. Amounts earned pursuant to carried interests in Traditional Private Equity Funds are included as investment income in Net (Losses) Gains from Investment Activities and are earned by the general partner of those funds to the extent that investment returns are positive. If these investment returns decrease or turn negative in subsequent 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 governing the fund as if the fund was terminated at the reporting date with the then estimated fair values of the investments 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 periodic performance of the Company in the management of those funds. Carried interest recognized amounted to 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 contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the terms of the fund exceed the amount to which the general partner was ultimately entitled. As of December 31, 2008, the amount 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 the investments in such funds been liquidated at their December 31, 2008 fair values, the contingent repayment obligation would have been $380.4 million. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of their investment losses to KKR relative to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. Based on the fair market values as of December 31, 2008, KKR’s contingent repayment obligation would have been approximately $288.0 million. If the vehicles were liquidated at zero value, the contingent repayment obligation would have been approximately $1,090.3 million as of December 31, 2008.

F-20

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 to the capital contributed by the partners in the fund, the Company will not earn any carried interest in that fund until all such losses have been recovered. As losses are recovered, income is allocated in proportion to the capital contributed until the fund has reached a net positive investment return, at which time carried interest is recognized and income is allocated as described above. The performance of each fund is independent from all other funds and the losses to be recovered vary from fund to fund based 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 a formal 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. For the 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 Funds amounted 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 sharing of the income earned on its investments and carried interests in the KKR Funds. Amounts payable under such arrangements are charged to compensation expense or professional fees expense when payment 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 with original 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 at consolidated entities represents cash that, although not legally restricted, is not available to fund general liquidity needs of the Company as the use of such funds is generally limited to the investment activities of the KKR Funds. Restricted Cash and Cash Equivalents—Restricted cash and cash equivalents represent amounts that 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 equity investments, debt investments and other investments. See Note 3, ‘‘Investments,’’ for information relating to the Company’s investments. Private Equity Investments—Private equity investments consist of investments in Portfolio Companies of consolidated KKR Funds that are, for GAAP purposes, investment companies under the AICPA Audit and Accounting Guide—‘‘Investment Companies.’’ The KKR Funds reflect investments at their estimated fair values, with unrealized gains or losses resulting from changes in fair value reflected as a component of Net (Losses) Gains from Investment Activities in the combined statement of operations. Fair value is the amount at which the investments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company has

F-21

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 of Specialized Accounting for Investments in Consolidation.’’ Private equity investments that have readily observable market prices (such as those traded on a securities exchange) are stated at the last reported sales price on the statement of financial condition date. As of December 31, 2008, approximately 80% of the fair value of the Company’s private equity investments has been valued by the Company in the absence of readily observable market prices. The determination of fair value may differ materially from the values that would have resulted if a ready market had existed. For these investments, the Company generally uses a market approach and an income (discounted cash flow) approach when determining fair value. Management considers various internal and external factors when applying these approaches, including the price at which the investment was acquired, the nature of the investment, current market conditions, recent public market and private transactions for comparable securities, and financing transactions subsequent to the acquisition of the investment. The fair value recorded for a particular investment will generally be within the range suggested by the two approaches. Investments denominated in currencies other than the U.S. dollar are valued based on the spot rate of the respective currency at the end of the respective reporting period with changes related to exchange 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 as available-for-sale as the Company may sell them prior to maturity and does not hold them principally for 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 provided by independent pricing sources or dealers who make markets in such securities. Upon the sale of a security, the realized net gain or loss is computed on a specific identification basis. Substantially all unrealized gains and losses associated with available-for-sale securities are reflected in noncontrolling interests in the accompanying combined statement of financial condition. The Company monitors its available-for-sale securities portfolio for impairments. A loss is recognized when it is determined that a decline in the estimated fair value of a security below its amortized cost is other-than-temporary. The Company considers many factors in determining whether the impairment of a security is deemed to be other-than-temporary, including but not limited to, the length of time the security has had a decline in estimated fair value below its amortized cost, the amount of the unrealized loss, the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value, recent events specific to the issuer or industry, and external credit ratings and changes therein. Fixed Income Securities—Fixed income securities that are listed on a securities exchange are classified as trading securities and are valued at their last quoted sales price. Securities that are not listed 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 fixed income securities, are valued at the mean of the ‘‘bid’’ and ‘‘asked’’ prices obtained from third-party

F-22

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 are obtained from dealers or market makers. Investments where third-party values are not available are valued by the Company and the Company may engage a third-party valuation firm to assist in such valuations. Derivatives—The Company invests in derivative financial instruments, including total rate of return swaps and credit default swaps. In a total rate of return swap, the Company receives the sum of all interest, fees and any positive economic change in fair value amounts from a reference asset with a specified notional amount and pays interest on the referenced notional amount plus any negative change in fair value amounts from such asset. Credit default swaps, when purchasing protection, involve the payment of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event, such as payment default or bankruptcy. Under a credit default swap, one party acts as a guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if a credit event occurs. Derivative contracts, including total rate of return swap contracts and credit default swap contracts, are recorded at 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 in publicly traded securities represent equity securities, which are classified as trading securities and carried at fair market value. Changes in the fair market value of trading securities are reported within Net (Losses) Gains from Investment Activities in the accompanying combined statement of operations. These investments represent investments by KPE other than debt, investments in governmental bonds and other similar investments. Securities Sold, Not Yet Purchased—Whether part of a hedging transaction or a transaction in its own right, securities sold, not yet purchased, or securities sold short, represent obligations of the Company to deliver the specified security at the contracted price, and thereby create a liability to repurchase the security in the market at then prevailing prices. Short selling allows the investor to profit from declines in market prices. The liability for such securities sold short is marked to market based on the current value of the underlying security at the date of valuation 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. These transactions may involve a market risk in excess 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 its Principals, 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 derivative financial instruments primarily to manage foreign exchange risk and interest rate risk arising from certain assets and liabilities. All derivatives are recognized as either assets or liabilities in the combined statements 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. The Company 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 instruments contain credit risk to the extent that its bank counterparties may be unable to meet the terms of the agreements. The Company minimizes this risk by limiting its counterparties to major financial institutions with strong credit ratings. Fixed Assets, Depreciation and Amortization—Fixed assets consist primarily of leasehold improvements, furniture, fixtures and equipment, and computer hardware and software. Such amounts are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the assets’ estimated useful lives, which are the life of the related lease for leasehold improvements, and three to seven years for other fixed assets. Securities Sold Under Agreements to Repurchase—Transactions involving sales of securities under agreements to repurchase are accounted for as collateralized financings. The Company recognizes interest expense on all borrowings on an accrual basis. Capital Distributions—Capital distributions to Principals are generally in proportion to their equity interests and take the form of cash distributions and, in certain cases, non-cash distributions. Non-cash distributions consist primarily of shares in Portfolio Companies which have been exited as well as vested common stock and common stock options of KFN. Payment for services rendered by the Principals historically has been accounted for as distributions from partner’s capital rather than as compensation and benefits expense. As a result, the Company’s net income historically has not reflected payments for services rendered by its Principals. Comprehensive Income—Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from contributions and distributions to owners. For the Company’s purposes, comprehensive income represents Net Income, as presented in the accompanying combined statements of operations and net foreign currency translation adjustments. Foreign Currency—Foreign currency denominated assets, liabilities and operations are primarily held through the KKR Funds. Assets and liabilities relating to foreign investments are translated using the exchange rates prevailing at the end of each reporting period. Results of foreign operations are translated at the weighted average exchange rate for each reporting period. Translation adjustments are included in current income to the extent that unrealized gains and losses on the related investment are included in income, otherwise they are included as a component of accumulated other comprehensive income until realized. Foreign currency gains or losses resulting from transactions outside of the functional currency of a consolidated entity are recorded in income as incurred and were not material during the years ended December 31, 2008, 2007 and 2006. Income Taxes—No federal income taxes have been provided for by the Company in the accompanying combined financial statements as each existing partner is individually responsible for paying federal income taxes on their respective share of the reported income or loss of an entity’s income and expenses as reported for income tax purposes. However, certain consolidated entities of the Company are subject to either New York City unincorporated business tax on their trade and 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 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’s combined statements of operations. Deferred taxes are provided for the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of the deferred tax assets and establishes a valuation allowance when it is more likely than 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 a business combination to recognize the full fair value of assets, liabilities, contractual contingencies and contingent 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 and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) applies to all transactions or other events in which the Company obtains 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, by contract alone or through the lapse of minority veto rights. The adoption of SFAS No. 141(R) on January 1, 2009 did not have a material impact on the combined financial statements. In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51 (‘‘SFAS No. 160’’). SFAS No. 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposed to as a liability or mezzanine equity) and provides guidance on the accounting for transactions between an entity and noncontrolling interests. SFAS No. 160 applies prospectively as of January 1, 2009, except for the presentation and disclosure requirements which will be applied retrospectively for all periods presented. The adoption of SFAS No. 160 on January 1, 2009 did not have a material impact on the combined financial statements. In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (‘‘SFAS No. 161’’). SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better 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. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. As SFAS No. 161 only affects financial statement 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-Class Method 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 equity distributions. EITF 07-4 is to be applied retrospectively beginning with financial statements issued in the interim periods of fiscal years beginning after December 15, 2008. The adoption of EITF 07-4 on January 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 of Intangible Assets (‘‘FSP No. 142-3’’). FSP No. 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets. FSP No. 142-3 affects entities with recognized intangible assets and is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The new guidance applies prospectively to (1) intangible assets that are acquired individually or with a group of other assets and (2) both intangible assets acquired in business combinations and asset acquisitions. The adoption of FSP No. 142-3 on January 1, 2008 did not have a material impact on the combined financial statements. In June 2008, the FASB issued Staff Position EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (‘‘FSP EITF No. 03-6-1’’). FSP EITF No. 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and therefore need to be included in the earnings allocation in calculating earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF No. 03-6-1 requires entities to treat unvested share-based payment awards that have non-forfeitable rights to dividend or dividend equivalents as a separate class of securities in calculating earnings per share. This FSP is effective for fiscal years beginning after December 15, 2008; earlier application is not permitted. The adoption of FSP EITF No. 03-6-1 on January 1, 2009 did not have a material impact on the combined financial statements. In September 2008, the FASB issued FSP FAS No. 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161 (‘‘FSP FAS No. 133-1 and FIN 45-4’’). FSP FAS No. 133-1 and FIN 45-4 requires enhanced disclosures about credit derivatives and guarantees. The FSP is effective for financial statements issued for reporting periods ending after November 15, 2008. The adoption of FSP FAS No. 133-1 and FIN 45-4 on January 1, 2009 did not have 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 Asset When the Market for That Asset Is Not Active (‘‘FSP FAS 157-3’’), to help constituents measure fair value in markets that are not active. FSP FAS 157-3 is consistent with the joint press release the FASB issued with the Securities and Exchange Commission (‘‘SEC’’) on September 30, 2008, which provides general 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 had not been issued. The adoption of FSP 157-3 on January 1, 2009 did not have a material impact on the Company’s combined financial statements. In November 2008, the EITF reached a consensus on Issue No. 08-6, Equity Method Investment Accounting Considerations (‘‘EITF 08-6’’). EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. An entity is required to recognize its share of other-than-temporary impairments of equity method investments rather than test the investee’s underlying assets for impairment. Additionally, a share issuance by an equity method investee should be accounted for as if the investor sold a proportionate share of its investment, with any associated 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 the adoption 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 Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (‘‘FSP FAS 140-4 and FIN 46R-8’’). FSP FAS 140-4 and FIN 46R-8 require additional disclosures about transfers of financial assets and involvement with variable interest entities. The requirements apply to transferors, sponsors, servicers, primary beneficiaries and holders of significant variable interests in a variable interest entity or qualifying special purpose entity. FSP FAS 140-4 and FIN 46R-8 is effective for financial statements issued for reporting periods ending after December 15, 2008. FSP FAS 140-4 and FIN 46R-8 affect only disclosures and therefore did not have a material impact on the Company’s combined financial statements. In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (‘‘FSP FAS 157-4’’), to help constituents estimate fair value when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective for interimand 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 currently evaluating the impact 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 of Other-Than-Temporary Impairments (‘‘FSP FAS 115-2’’) which provides new guidance on the recognition of other-than-temporary impairments of investments in debt securities and provides new presentation and disclosure requirements for other-than-temporary impairments of investments in debt and equity securities. FSP FAS 115-2 is effective for financial statements issued for interim or annual periods ending after June 15, 2009. The Company is currently evaluating the impact of FSP FAS 115-2 on its combined financial statements. In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, Interim Disclosures about Fair 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 financial instruments in interim reporting periods. Such disclosures were previously required only in annual financial statements. FSP FAS 107-1 is effective for financial statements issued for interim or annual periods 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, Subsequent Events (‘‘SFAS 165’’). SFAS 165 is intended to establish general accounting and disclosure standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. SFAS 165 is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 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 the elimination of the concept of a qualifying special purpose entity. SFAS 167 updates FIN 46R’s approach to determination of a controlling financial interest with one focused on identifying (a) which enterprise has the power to direct the activities of a variable interest entity (VIE) and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 requires entities 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 that begins after November 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 167 may have on its combined financial statements. In July 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting 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 source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-SEC accounting literature not included in the Codification will become nonauthoritative. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 168 may have on its combined financial statements. 3. INVESTMENTS Investments, at fair value consist of the following: Fair Value December 31, 2008 2007

Private Equity Investments . . . . . . . . . . . . . . . . . . . . . . Debt Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$20,230,405 481,945 171,169

$30,743,120 563,579 511,633

$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 collateral against various financing arrangements. In addition, KPE holds limited partnership interests in our Traditional Private Equity Funds with a fair value of $1,184,958 as of December 31, 2008 that are pledged 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 December 31, 2008 2007

Private Equity Investments, at Fair Value North America Retail . . . . . . . . . . . . . . . . . . . . . . . . Financial Services . . . . . . . . . . . . . . . . Healthcare . . . . . . . . . . . . . . . . . . . . . Energy . . . . . . . . . . . . . . . . . . . . . . . . Media . . . . . . . . . . . . . . . . . . . . . . . . Technology . . . . . . . . . . . . . . . . . . . . . Education . . . . . . . . . . . . . . . . . . . . . Consumer Products . . . . . . . . . . . . . . . Chemicals . . . . . . . . . . . . . . . . . . . . . Telecom. . . . . . . . . . . . . . . . . . . . . . . Hotels/Leisure . . . . . . . . . . . . . . . . . . Manufacturing . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .

$ 2,676,801 2,632,998 2,285,506 1,412,075 1,138,520 970,409 456,061 360,398 234,436 34,946 10,179 —

$ 2,886,448 3,369,354 3,148,948 2,042,250 1,320,477 1,232,040 383,225 841,578 986,915 50,036 27,150 418,679

13.2% 13.0% 11.3% 7.0% 5.6% 4.8% 2.3% 1.8% 1.2% 0.2% 0.1% 0.0%

9.4% 11.0% 10.2% 6.6% 4.3% 4.0% 1.2% 2.7% 3.2% 0.2% 0.1% 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%

. . . . . . . .

2,103,930 1,410,686 710,611 609,955 389,832 236,672 154,810 89,060

4,244,510 2,500,052 672,061 1,301,249 426,091 472,681 539,269 1,583,525

10.4% 7.0% 3.5% 3.0% 1.9% 1.2% 0.8% 0.4%

13.8% 8.1% 2.2% 4.2% 1.4% 1.5% 1.8% 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 Locations Technology . . . . . . . . . . . . . . . . . Media . . . . . . . . . . . . . . . . . . . . Telecom . . . . . . . . . . . . . . . . . . . Financial Services . . . . . . . . . . . . Manufacturing . . . . . . . . . . . . . . Consumer Products . . . . . . . . . . . Recycling . . . . . . . . . . . . . . . . . .

. . . . . . .

1,386,984 287,638 222,795 148,655 117,240 99,208 50,000

1,313,052 590,654 — 198,729 113,579 — 80,568

6.9% 1.4% 1.1% 0.7% 0.6% 0.4% 0.2%

4.3% 1.9% 0.0% 0.6% 0.4% 0.0% 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%

Europe Manufacturing Healthcare . . . Telecom . . . . . Technology . . . Recycling . . . . Retail . . . . . . Transportation Media . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

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. . . . . . . .

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. . . . . . . .

. . . . . . .

. . . . . . . .

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. . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . . .

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. . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . .

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. . . . . . . . . . . .

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F-29

. . . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . . .

Fair Value as a Percentage of Total December 31, 2008 2007

. . . . . . . .

. . . . . . .

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 primarily on 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 of consolidated private equity funds included: (i) First Data valued at $1,514,986; (ii) Legrand S.A. valued at $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) Legg Mason valued at $1,053,059. As of December 31, 2007, investments which represented greater than 5% of the net assets of consolidated private equity funds included: (i) Legrand S.A. valued at $2,682,863; (ii) First Data valued at $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 represent equity securities. As of December 31, 2008, the aggregate amount of investments that were other than equity securities was approximately $2,016,278. As of December 31, 2007 the aggregate amount of investments that were other than equity securities was less than 5% of the net assets of consolidated private equity funds. All Portfolio Companies included in private equity investments are deemed affiliates due to the nature of the ownership interests and the Company’s ability to control, direct or substantially influence management and the operations of such Portfolio Companies. Net (Losses) Gains from Investment Activities in the combined statement of operations include net realized gains or losses from sales of investments and the net change in unrealized gains or losses resulting from changes in fair value of the Company’s private equity investments (including foreign exchange gains and losses attributable to foreign-denominated investments). The following table presents the Company’s realized and net change in unrealized gains or losses relating to its private equity investments: 2008

Realized Gains . . . . . . . . . . . . . . . . . . . . . Net Change in Unrealized Losses . . . . . . . .

Year Ended December 31, 2007

$

353,406 $1,500,283 $3,240,050 (13,333,975) (166,516) (23,535)

$(12,980,569) $1,333,767

F-30

2006

$3,216,515

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) . . . . . . . . Strategic Capital Master Fund(b) . . . Restricted Stock(a) . . . . . . . . . . . . . Derivatives . . . . . . . . . . . . . . . . . . . Vested Options . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

$353,983 126,187 1,775 — —

$147,643 402,536 8,960 2,535 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 the years ended December 31, 2008 and 2007. Net trading gains were $4,538 for the year ended December 31, 2006. (b) Represents an investment in a master investment partnership resulting from a June 2007 reorganization of SCF whereby each side-by-side fund contributed a significant portion of their loans, fixed income and corporate securities investments for an ownership interest in a master investment partnership that pools the contributed assets for the benefit of each side-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 net realized gains or losses from sales of investments and the net change in unrealized gains or losses resulting from changes in fair value of the Company’s debt investments. The following table presents the 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 . . . . . . . . . . . . . . . . . . . . . Net Change in Unrealized (Losses) Gains . . . . . . . .

$ (87,088) $ 25,616 $ 71 (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 Value December 31, 2008 2007

Government and Government Agency Bonds . . . . . . . . . . Corporate Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Municipal Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Opportunistic Investments in Publicly Traded Securities(a) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

$109,443 40,426 2,267 1,072 17,961

$ 92,889 55,066 19,699 327,497 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 $43,341 for 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 net realized gains or losses from sales of investments and the net change in unrealized gains or losses resulting from changes in fair value of the Company’s other investments. The following table presents the 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 . . . . . . . . . . . . . . . . . . . . . Net Change in Unrealized Gains (Losses) . . . . . . . .

$(70,218) $ 31,202 $ 4,810 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 fair value hierarchy levels described in Note 2 as of December 31, 2008: Assets, at fair value: December 31, 2008 Level II Level III

Level I

Total

Private Equity Investments . . . . . . . . . . . . . . . . . Debt Investments . . . . . . . . . . . . . . . . . . . . . . . Other Investments . . . . . . . . . . . . . . . . . . . . . . .

$1,908,845 1,775 153,245

$2,164,933 335,237 —

$16,156,627 144,933 17,924

$20,230,405 481,945 171,169

Total Investments . . . . . . . . . . . . . . . . . . . . . . Unrealized Gain on Foreign Exchange Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign Currency Options . . . . . . . . . . . . . . . . .

2,063,865

2,500,170

16,319,484

20,883,519

— —

84,094 45,816

— —

84,094 45,816

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,063,865

$2,630,080

$16,319,484

$21,013,429

Securities Sold, Not Yet Purchased . . . . . . . . . . . Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . Total Return Swap . . . . . . . . . . . . . . . . . . . . . . .

$

1,916 — —

$

— 12,539 4,610

$

— — —

$

1,916 12,539 4,610

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

1,916

$

17,149

$

—

$

19,065

Liabilities, at fair value:

The following table summarizes our Level III investments by valuation methodology as of December 31, 2008: Private Equity Investments

Third-Party Fund Managers . . . . . . . . . . . . . . . . . Public/Private Company Comparables and Discounted Cash Flows . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-33

—%

December 31, 2008 Debt Other Investments Investments

.9%

.1%

99.0

—

—

99.0%

.9%

.1%

Total Level III Holdings

1.0% 99.0% 100.0%

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 III inputs to determine fair value from December 31, 2007 through December 31, 2008 are as follows: Year ended December 31, 2008

Balance, December 31, 2007 . . . . Transfers In (Out) . . . . . . . . . . . Purchases (Sales), Net . . . . . . . . Realized and Unrealized (Losses)

......... ......... ......... Gains, Net

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

$24,391,146 — 1,490,883 (9,562,545)

Balance, December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,319,484

Changes in Unrealized (Losses) Gains Included in Net Losses from Investment Activities (including foreign exchange gains and losses attributable to foreign-denominated investments) Related to Investments Still Held at Reporting Date . . . . . . . . . . . . . . . . . .

$ (9,880,084)

Total realized and unrealized gains and losses recorded for Level III investments are reported in Net (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 from affiliates, and accounts payable, accrued expenses and other liabilities approximate fair value due to their short-term maturities. All investments are carried at fair value, with the exception of corporate loans, which are carried at amortized cost. The Company’s debt obligations bear interest at floating rates 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) . Foreign Currency Options (Cost: December 31, 2008, $13,736; December 31, 2007, $20,630)(b) . . . . . . . . . . . . . . . . . . . . . Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Furniture & Fixtures(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible Asset(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leasehold Improvements(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred Financing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Escrow Receivable(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 84,094

$

—

45,816 42,751 38,966 35,676 19,247 18,070 4,243 — 24,405

31,384 7,377 28,894 — 36,390 3,840 3,311 113,848 23,741

$313,268

$248,785

(a) Represents derivative financial instruments used to manage foreign exchange risk arising from certain assets and liabilities. Such instruments are measured at fair value with changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statement of operations. Fair value of Unrealized Losses on Foreign Exchange Forward Contracts for the year ended December 31, 2007 was $405,662 and was reported in Other Liabilities. The net changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statement of operations associated with these instruments was a realized gain of $40,234 and a net unrealized gain of $489,756 for the year ended December 31, 2008, and a net unrealized loss 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 is measured at fair value with changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statement of operations. The net changes in fair value associated with this instrument included gains of $30,323 ($8,998 of realized gains and $21,325 of unrealized gains) for the year ended December 31, 2008 and an unrealized gain of $10,754 for the year ended December 31, 2007. There were no such instruments during the year ended December 31, 2006. (c) Net of accumulated depreciation and amortization of $50,276 and $35,003 as of December 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 year ended 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 of an 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 31 2008 2007

Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts Payable and Accrued Expenses . . . . . . . . . . . . . . Derivative Liabilities(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsettled Investment Trades . . . . . . . . . . . . . . . . . . . . . . . Accrued Benefits and Compensation . . . . . . . . . . . . . . . . . Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities Sold Not Yet Purchased (proceeds of $1,785)(b) . Unrealized Losses on Foreign Exchange Forward Contracts . Other Liabilities(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . .

. . . . . . . . .

$ 92,618 40,125 17,149 13,183 12,889 4,656 1,916 — 3,012

$ 37,755 70,103 — — 22,159 6,541 — 405,662 13,088

$185,548

$555,308

(a) Represents derivative financial instruments used to manage credit and market risk arising from certain assets and liabilities. Such instruments are measured at fair value with changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statement of operations. The net changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statement of operations were $(24,920) ($7,771 of realized losses and $17,149 of unrealized losses) for the year ended December 31, 2008. See Note 2, ‘‘Summary of Significant Accounting Policies.’’ (b) Represents securities sold short, which are obligations of the Company to deliver a specified security at a contracted price at a future point in time. Such securities are measured at fair value with changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statements of operations. Net changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statement of operations were net gains of $12,231 ($12,364 of realized 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 to call options written of $7,290, net of $2,025 of unrealized gains. Total changes in fair value recorded in Net (Losses) Gains from Investment Activities in the accompanying combined 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 call options outstanding as of December 31, 2006. 6. DEBT OBLIGATIONS Debt obligations consist of the following: December 31, 2008 2007

Other Financing Arrangements . . . . . . . . . . . . . . . . . . . . . Revolving Credit Agreements . . . . . . . . . . . . . . . . . . . . . . Short-term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,314,911 1,090,214 —

$ 684,483 1,002,240 333,605

$2,405,125

$2,020,328

On February 26, 2008, Kohlberg Kravis Roberts & Co. L.P entered into a credit agreement with a major financial institution (the ‘‘Management Company Credit Agreement’’). The Management Company Credit Agreement provides for revolving borrowings of up to $1 billion, with a $50 million sublimit for swingline notes and a $25 million sublimit for letters of credit. The facility has a term of three years that expires on February 26, 2011, which may be extended through February 26, 2013 at the option of the Company. As of December 31, 2008, $100 million was outstanding under the Management 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 Management Company Credit Line expires in 2009. The Management Company Credit Line is available for general corporate purposes. As of December 31, 2008, $25 million was outstanding under the Management Company Credit Line, and the interest rate on such borrowings was approximately 3.3% as of December 31, 2008. From time to time, the Company may borrow amounts to satisfy general short-term needs of the business by opening short-term lines of credit with established financial institutions. These amounts may be incremental to, or in lieu of, borrowings made under the Management Company Credit Line, and are generally repaid within 30 days, at which time such short-term lines of credit would close. There were 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 a major financial institution (the ‘‘KCM Credit Agreement’’). The KCM Credit Agreement provides for revolving borrowings of up to $700 million with a $500 million sublimit for letters of credit. The KCM Credit Agreement has a maturity date of February 27, 2013. There was $14 million outstanding under the KCM Credit Agreement as of December 31, 2008. As of December 31, 2008, the interest rate on borrowings 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 on revolving borrowings from $700 million to $500 million. As a result of this amendment, the counterparty returned approximately $1.6 million in financing costs. In June 2007, KPE entered into a revolving credit agreement (the ‘‘KPE Credit Agreement’’) with a syndicate of financial institutions. The KPE Credit Agreement provides for up to $1.0 billion of senior secured credit, subject to availability under a borrowing base determined by the value of certain investments 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 the investments constituting the borrowing base is subject to certain advance rates based on type of investment. In October 2008, Lehman Commercial Paper Inc. (‘‘Lehman’’), an original lender under the Credit Agreement with an initial $75.0 million commitment, filed for bankruptcy and was responsible for funding an additional $43.8 million in commitments as of December 31, 2008. Due to Lehman’s bankruptcy, 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 million absent 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 to another existing or new lender. There can be no assurance that any lender will assume any part of Lehman’s commitment under the KPE Credit Agreement. As of December 31, 2008, the interest rates on borrowings under the KPE Credit Agreement ranged from 1.47% to 3.85%. As of December 31, 2008, the Company had $951.2 million of borrowings outstanding, which included $969.0 million of borrowings and $17.8 million of foreign currency adjustments relating to borrowings denominated in foreign currency. Foreign currency adjustments related to the debt during the period are recorded in Net (Losses) Gains from Investment Activities in the accompanying combined statements of operations. The net change in fair value associated with these borrowings for the year ended December 31, 2008 totaled $34,552 ($13,821 of realized gains and $20,731 of unrealized gains). December 31, 2007

2008

Notional borrowings under the KPE Credit Agreement . . . . . Foreign currency adjustments: Less: Unrealized gain related to borrowings denominated in British pounds sterling . . . . . . . . . . . . . . . . . . . . . . . Less: Unrealized gain (loss) related to borrowings denominated in Canadian dollars . . . . . . . . . . . . . . . . .

$968,970

$ 999,266

14,058

3,237

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 equity investments 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 be required to provide additional collateral, up to the amount borrowed plus accrued interest, under the terms of these financing arrangements. The per annum rates 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 4.40% to 5.40% as of December 31, 2008). The remaining $182.5 million of financing was structured through the use of a syndicated term and a revolving credit facility (the ‘‘Term Facility’’). As of December 31, 2008, $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 Bloomberg United States Dollar Interest Rate Swap Ask Rate plus 1.75% at the time of each borrowing under the Term Facility (rates range from 4.90% to 7.20% at December 31, 2008) 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 the one year LIBOR rate plus 1.75%. The Company’s Fixed Income Funds may leverage their portfolios of securities and loans through the use of short-term borrowings in the form of warehouse facilities and repurchase agreements. These borrowings used by the Company generally bear interest at floating rates based on a spread above the London 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 as follows: Years Ending December 31,

2009 . . . . . 2010 . . . . . 2011 . . . . . 2012 . . . . . 2013 . . . . . Thereafter

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

Amount

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

25,000 — 100,000 1,297,642 14,000 968,483

$2,405,125

7. INCOME TAXES The Company has provided for New York City unincorporated business tax for certain entities based on a statutory rate of 4%. Certain consolidated entities of the Company are subject to income tax 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 2006 respectively. Years Ended December 31, 2008 2007 2006

Current Foreign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . State and Local Income Tax . . . . . . . . . . . . . . . . . . . .

$6,366 $ 7,042 (612) 9,754

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,206 700

5,754

16,796

(451) 1,483

107 (4,839)

257 —

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,032

(4,732)

257

Total Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . .

$6,786

Deferred Foreign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . State and Local Income Tax . . . . . . . . . . . . . . . . . . . .

$12,064

3,906

$4,163

Income taxes are provided at the applicable statutory rates. The tax effects of the changes in the temporary differences in the areas listed below resulted in deferred tax assets and liabilities: December 31, 2008 2007

Deferred Tax Assets Net Operating Losses . . . . . . Accrued Expenses . . . . . . . . Asset Retirement Obligations Revenue Recognition . . . . . . Other . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

$2,726 650 194 — 40

$

— 1,154 166 3,711 81

Total Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,610

$5,112

Deferred Tax Liabilities Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revenue Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 540 217 80

$1,258 — 49

Total Deferred Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . .

$ 837

$1,307

A deferred tax asset has been recognized for certain foreign timing differences with a full valuation allowance as it is more likely that the asset will not be recognized. As of December 31, 2008 and 2007 the 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 combined financial 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 federal statutory tax rate: Years Ended December 31, 2008 2007 2006

Statutory U.S. Federal Income Tax Rate Income Passed Through to Partners . . . Foreign Income Taxes . . . . . . . . . . . . . State and Local Income Taxes . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

35.00% (35.00) 2.64 .38

35.00% (35.00) 1.86 1.27

35.00% (35.00) 2.41 .49

Effective Income Tax Rate . . . . . . . . . . . . . . . . . . . .

3.02%

3.13%

2.90%

The Company analyzed its tax filing positions in all of the federal, state and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. Based on this review, no reserves for uncertain tax positions were required to have been recorded. 8. RELATED PARTY TRANSACTIONS Due from Affiliates consists of: December 31 2008 2007

Due from Portfolio Companies . . . . . . . . . . . . . . . . . . . . . . . . . Due from Related Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due from Unconsolidated Funds . . . . . . . . . . . . . . . . . . . . . . . .

$14,337 12,287 3,265

$15,684 12,234 16,051

$29,889

$43,969

Discretionary Investments Certain of the Company’s investment professionals, including its Principals and other qualifying employees, are permitted to invest and have invested their own capital in side-by-side investments with its Traditional Private Equity Funds. Side-by-side investments are investments in Portfolio Companies that are made on the same terms and conditions as those acquired by the applicable fund, except that the side-by-side investments are not subject to management fees or a carried interest. The cash invested by these individuals aggregated $25.1 million, $174 million and $110 million for the years ended December 31, 2008, 2007 and 2006, respectively. These investments are not included in the accompanying combined financial statements. Aircraft and Other Services Certain of the Senior Principals own aircraft that the Company uses for business purposes in the ordinary course of its operations. These Senior Principals paid for the purchase of these aircraft with their personal funds and bear all operating, personnel and maintenance costs associated with their operation. The hourly rates that the Company pays for the use of these aircraft are based on current market 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 an ownership interest in the Company’s Menlo Park location. Payments made to this partnership aggregated $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 are differentiated primarily by their investment focuses and strategies, consist of the following: • Private Markets—The Company’s Private Markets segment involves sponsoring and managing a group of funds and co-investment vehicles that make primarily control-oriented investments in connection with leveraged buyouts and other similarly-yielding investment opportunities. These funds are managed by Kohlberg Kravis Roberts & Co. L.P. and currently consist of Traditional Private Equity Funds and KPE. • Public Markets—The Company’s Public Markets segment is comprised of KKR’s fixed income and mezzanine finance businesses, as well as other businesses that invest primarily in publicly traded 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 mezzanine instruments. These businesses are managed by subsidiaries of Kohlberg Kravis Roberts & Co. (Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic Capital Management, L.L.C., and KKR FI Advisors LLC. Economic Net Income (‘‘ENI’’) and Fee Related Earnings (‘‘FRE’’) are key performance measures used by management. ENI is a measure of profitability for the Company’s reportable segments and represents income before taxes less net income attributable to noncontrolling interests in the KKR Funds 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 consolidated funds that were eliminated in consolidation; (iii) exclude investment income; (iv) exclude amortization of intangibles assets; and (v) exclude net income attributable to noncontrolling interests in the KKR Funds. These measures are used by management for the Company’s segments in making resource deployment and other operational decisions. Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and data that is presented excluding the impact 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 KKR Funds.

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 and for the year ended December 31, 2008: December 31, 2008 Private Markets

Fee Income Management Fees . . . . . . . . . . . . . . . . . . . . Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . Incentive Fees . . . . . . . . . . . . . . . . . . . . . . .

$

Total Reportable Segments

Public Markets

426,005 137,531 —

$62,030 14,038 —

$

488,035 151,569 —

Total Fee Income . . . . . . . . . . . . . . . . . . .

563,536

76,068

639,604

Expenses Employee Compensation and Benefits . . . . . Other Operating Expenses . . . . . . . . . . . . . .

136,807 227,513

12,375 20,238

149,182 247,751

Total Expenses . . . . . . . . . . . . . . . . . . . . .

364,320

32,613

396,933

Fee Related Earnings . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . .

199,216 (1,431,569)

43,455 (192)

242,671 (1,431,761)

(Loss) Income before Taxes . . . . . . . . . . . . . . . (Loss) Income Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,232,353)

43,263

(1,189,090)

(37)

6,421

6,384

Economic 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 financial statements as of and for the year ended December 31, 2008: December 31, 2008

Fee Income(a) . . . . . . . . . . . . Expenses(b) . . . . . . . . . . . . . . Investment Loss(c) . . . . . . . . . Loss before Taxes . . . . . . . . . (Loss) Income Attributable to Noncontrolling Interests . . . Total Assets(d) . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

........ ........

Total Reportable Segments

Combination Adjustments

Combined

$ 639,604 $ 396,933 $(1,431,761) $(1,189,090)

$ (404,423) $ 21,455 $(11,433,478) $(11,859,356)

$ 235,181 $ 418,388 $(12,865,239) $(13,048,446)

$ $

$(11,857,145) $(11,850,761) $ 22,077,472 $ 22,441,030

6,384 363,558

(a) The Fee Income adjustment represents the elimination of intercompany transactions upon consolidation of the KKR Funds and other adjustments necessary to reconcile from segment 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 of management fees earned from its consolidated funds, a positive adjustment will be required to eliminate this intercompany transaction and reconcile to the Company’s combined fee income. (b) The Expenses adjustment primarily represents the inclusion of certain operating expenses upon consolidation of the KKR Funds. (c) The Investment Loss adjustment primarily represents the inclusion of investment income allocable to noncontrolling interests upon consolidation of the KKR Funds. (d) The Total Assets adjustment primarily represents the inclusion of private equity and credit investments that are allocable to noncontrolling interests upon consolidation of the KKR Funds. The reconciliation of Economic Net Loss to Net Loss Attributable to KKR Group as reported in the combined Statement of Operations consists of the following: Year Ended December 31, 2008

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(1,195,474) (6,786) (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 and for the year ended December 31, 2007: December 31, 2007 Private Markets

Public Markets

Total Reportable Segments

Fee Income Management Fees . . . . . . . . . . . . . . . . . . . . Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . Incentive Fees . . . . . . . . . . . . . . . . . . . . . . .

$ 231,527 537,126 —

$ 68,194 11,421 23,335

$ 299,721 548,547 23,335

Total Fee Income . . . . . . . . . . . . . . . . . . .

768,653

102,950

871,603

Expenses Employee Compensation and Benefits . . . . . . Other Operating Expenses . . . . . . . . . . . . . .

187,540 209,700

24,507 16,349

212,047 226,049

Total Expenses . . . . . . . . . . . . . . . . . . . . .

397,240

40,856

438,096

Fee Related Earnings . . . . . . . . . . . . . . . . Investment Income . . . . . . . . . . . . . . . . . . . . .

371,413 403,601

62,094 984

433,507 404,585

Income before Taxes . . . . . . . . . . . . . . . . . . . .

775,014

63,078

838,092

Loss Attributable to Noncontrolling Interests . .

—

23,264

23,264

Economic 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 financial statements as of and for the year ended December 31, 2007: December 31, 2007 Total Reportable Segments

Fee Income(a) . . . . . . . . . . . . Expenses(b) . . . . . . . . . . . . . Investment Income(c) . . . . . . Income before Taxes . . . . . . . (Loss) Income Attributable to Noncontrolling Interests . . . Total Assets(d) . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

.......... ..........

$ $ $ $

871,603 438,096 404,585 838,092

$ 23,264 $1,964,702

Combination Adjustments

Combined

$ (9,338) $ 2,814 $ 1,587,198 $ 1,575,046

$ 862,265 $ 440,910 $ 1,991,783 $ 2,413,138

$ 1,575,046 $30,878,094

$ 1,598,310 $32,842,796

(a) The Fee Income adjustment represents the elimination of intercompany transactions upon consolidation of the KKR Funds and other adjustments necessary to reconcile from segment 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 of management fees earned from its consolidated funds, a positive adjustment will be required to eliminate this intercompany transaction and reconcile to the Company’s combined fee income. (b) The Expenses adjustment primarily represents the inclusion of certain operating expenses upon consolidation of the KKR Funds. (c) The Investment Income adjustment primarily represents the inclusion of investment income allocable to noncontrolling interests upon consolidation of the KKR Funds. (d) The Total Assets adjustment primarily represents the inclusion of private equity and credit investments that are allocable to noncontrolling interests upon consolidation of the KKR Funds. The following table presents the financial data for the Company’s reportable segments as of and for the year ended December 31, 2006: December 31, 2006 Private Markets

Public Markets

Total Reportable Segments

Fee Income Management Fees . . . . . . . . . . . . . . . . . . . . Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . Incentive Fees . . . . . . . . . . . . . . . . . . . . . . .

$ 181,371 172,950 —

$ 55,994 9,119 15,613

$ 237,365 182,069 15,613

Total Fee Income . . . . . . . . . . . . . . . . . . .

354,321

80,726

435,047

Expenses Employee Compensation and Benefits . . . . . . Other Operating Expenses . . . . . . . . . . . . . .

92,950 121,327

18,662 12,193

111,612 133,520

Total Expenses . . . . . . . . . . . . . . . . . . . . .

214,277

30,855

245,132

Fee Related Earnings . . . . . . . . . . . . . . . . Investment Income . . . . . . . . . . . . . . . . . . . . .

140,044 929,518

49,871 10,103

189,915 939,621

Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (Loss) Income Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,069,562

59,974

1,129,536

—

25,428

25,428

Economic 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 financial statements as of and for the year ended December 31, 2006: December 31, 2006

Fee Income(a) . . . . . . . . . . . . Expenses(b) . . . . . . . . . . . . . Investment Income(c) . . . . . . Income before Taxes . . . . . . . (Loss) Income Attributable to Noncontrolling Interests . . . Total Assets(d) . . . . . . . . . . .

Total Reportable Segments

Combination Adjustments

Combined

. . . .

$ 435,047 $ 245,132 $ 939,621 $1,129,536

$ (24,718) $ 22,334 $ 3,061,301 $ 3,014,249

$ 410,329 $ 267,466 $ 4,000,922 $ 4,143,785

.......... ..........

$ 25,428 $1,759,239

$ 3,014,249 $21,533,544

$ 3,039,677 $23,292,783

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

(a) The Fee Income adjustment represents the elimination of intercompany transactions upon consolidation of the KKR Funds and other adjustments necessary to reconcile from segment reporting measures to combined financial results. In periods where the amount of fee income attributable to the Company’s consolidated funds exceeds the amount of management fees earned from its consolidated funds, a positive adjustment will be required to eliminate this intercompany transaction and reconcile to the Company’s combined fee income. (b) The Expenses adjustment primarily represents the inclusion of certain operating expenses upon consolidation of the KKR Funds. (c) The Investment Income adjustment primarily represents the inclusion of investment income allocable to noncontrolling interests upon consolidation of the KKR Funds. (d) The Total Assets adjustment primarily represents the inclusion of private equity and credit investments that are allocable to noncontrolling interests upon consolidation of the KKR Funds. 10. CREDIT AND MARKET RISK In the normal course of business, the Company primarily encounters two significant types of economic risk: credit and market. Credit risk is the risk of default on the Company’s investments in debt securities, loans, leases and derivatives that results from a borrower’s, lessee’s or derivative counterparty’s inability or unwillingness to make required or expected payments. Market risk reflects changes in the value of investments in loans, securities, portfolio companies or derivatives, as applicable, due to changes in interest rates, credit spreads or other market factors, including the value of the collateral underlying loans and the valuation of equity and debt securities. Management believes that the carrying values of its investments are reasonable taking into consideration these risks along with 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 ability of 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 the ability of the KKR Funds to generate adequate returns on their investments. In addition, substantially all of the Company’s net assets, after deducting the portion attributable to noncontrolling interests, are comprised of capital investments in these funds. Furthermore, the Company is exposed to economic risk concentrations related to certain large investments as well as concentrations of investments in certain industries and geographic locations, as disclosed 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 unsecured revolving credit agreement with KFN pursuant to which the Company has agreed to provide financing to KFN under the arrangement. The borrowing facility matures in December 2010 and bears interest at a rate equal to LIBOR for an interest period of 1, 2 or 3 months (at KFN’s option) plus 15.00% per annum. Under the terms of the agreement, KFN can elect to capitalize a portion of accrued interest on any loan under the agreement by adding up to 80% of the interest due and payable at a particular time in respect of such loan to the outstanding principal amount of the loan. As of December 31, 2008, no amounts were outstanding under this arrangement. Debt Covenants Borrowings of the Company contain various customary loan covenants. These covenants do not, in management’s opinion, materially restrict KKR’s investment or financing strategy. The Company is in compliance 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 KKR Funds. The general partners of the Traditional Private Equity Funds had unfunded general partner capital commitments 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 to Traditional 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 repay amounts 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 of the general partners of the KKR Funds that is subject to contingent repayment if such funds were liquidated at zero value, a possibility which management views as remote. If such funds were liquidated at their current fair values, the contingent repayment amount would be approximately $380.4 million. A portion of the carried interest paid to current and former KKR personnel is held in segregated accounts in the event of a cash clawback obligation. These segregated accounts are not included in the financial statements of the Company. At December 31, 2008, $88.8 million was held in such segregated accounts. Certain Traditional Private Equity funds allocate to the general partner a greater share of the fund’s losses from investments relative to the capital contributed by the general partner and correspondingly reduce noncontrolling interests’ allocable share of those losses. Based on fair market values as of December 31, 2008, capital deficits resulting from losses in excess of gains at certain of the Traditional Private Equity Funds amounted to $288.0 million. If the Funds were liquidated at zero value, such capital deficits in excess of any contingent repayments of carried interest previously distributed would be approximately $1,090.3 million. Indemnifications In the normal course of business, the Company and its subsidiaries enter into contracts that contain a variety of representations and warranties and provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company’s that have not yet occurred. However, based on experience, 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 claims incidental to the conduct of the Company’s business. The Company believes that the ultimate liability arising from such proceedings, lawsuits and claims, if any, will not have a material effect on the Company’s business, results of operations, cash flows or financial condition. In August 2008, KFN, its directors and executive officers, including certain of the Company’s personnel, were named as defendants in a purported class action complaint by KFN shareholders under federal securities laws (the ‘‘Charter Litigation’’). The suit alleges that the registration statement utilized by KFN to effectuate its restructuring plan in May 2007 was false and misleading in that it misrepresented 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 Financial Corp. An amended complaint was filed in March 2009 whereby KFN’s directors were no longer named as defendants. On April 27, 2009, KFN and the remaining individual defendants in the Charter Litigation moved to dismiss with prejudice all of the claims in the amended complaint. The motion is 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 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 individuals in connection with the conduct at issue in the Charter Litigation discussed 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 Charter Litigation is dismissed on the pleadings or KFN files an answer to the Charter Litigation. In addition, in March 2009, a shareholder derivative action was filed in United States District Court for the Southern District of New York 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 alleges breaches of fiduciary duty, waste of corporate assets and unjust enrichment by such individuals in connection with the conduct at issue in the Charter Litigation 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 public companies recently acquired by private equity firms. In August 2008, the Company, along with 16 other private equity firms 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 bidding process in certain going-private transactions in violation of antitrust laws and that this purported behavior suppressed the price paid by the private equity firms for the plaintiffs’ shares in the acquired companies below that which would otherwise have been paid in the absence of such behavior. In 2005, the Company and certain of the Company’s investment professionals were named as defendants in now-consolidated shareholder derivative actions relating to one of our portfolio companies. These actions claim that the board of directors of the portfolio company breached its fiduciary duty of loyalty in connection with the redemption of certain shares of preferred stock in 2004 and 2005. The plaintiffs further allege that the Company benefited from these redemptions of preferred stock at the expense of the portfolio company and that the Company usurped a corporate opportunity of the portfolio company in 2002 by purchasing shares of its preferred stock at a discount on the open market while causing the portfolio company to refrain from doing the same. In February 2008, the special litigation committee formed by the board of directors of the portfolio company, following a review 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 fiduciary duty and conspiracy in connection with the acquisition of one of the Company’s portfolio companies in 1995. In April 2000, the complaint in this action was amended to further allege that the Company and others violated state law by fraudulently misrepresenting the financial condition of this portfolio company. The Company believes that each of these actions is without merit and intends to defend them vigorously. In addition, in September 2006 and March 2009, the Company received requests for certain documents 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 they have engaged in conduct prohibited by United States antitrust laws. The Company is fully cooperating with 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 threatened or pending litigation as the Company believes that losses are neither probable nor reasonable estimable. Operating Leases The Company leases office space under non-cancelable lease agreements in New York, Menlo Park, 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 improvement incentives associated with any of our property leases. In addition to base rentals, certain lease agreements are subject to escalation provisions, and are recognized on a straight-line basis over the term of the lease agreement. As of December 31, 2008, the approximate aggregate minimum future lease payments, net of sublease income, required on the operating leases are as follows: Year Ending December 31,

2009 . . . . . 2010 . . . . . 2011 . . . . . 2012 . . . . . 2013 . . . . . Thereafter .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

Amount

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

$ 28,292 26,958 23,519 19,317 19,452 109,331

Total minimum payments required . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$226,869

Rent expense recognized on a straight-line basis for the years ended December 31, 2008, 2007 and 2006 was $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 investments contain provisions that require the fund underlying the principal protected product for private equity investments (the ‘‘Master Fund’’) to liquidate certain of its portfolio investments in order to satisfy liquidity requirements of the fund agreements, if the performance of the Master Fund is lower than certain benchmarks defined in the agreements. In an instance where the Master Fund is not in compliance 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 the Master Fund at 95% of their current fair market value. As of December 31, 2008, the Master Fund was in 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 unconsolidated KKR sponsored co-investment fund for an aggregate purchase price of $200.4 million in cash. Net realized 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 to six private equity investments. Four of these investments, amounting to $469.4 million, have since closed and none of these investments are expected to exceed 5% of the net assets of consolidated private equity investments. KPE Transaction On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement with KKR pursuant to which, among other things, KKR agreed to acquire all of the assets of KPE and assume all of the liabilities of KPE in exchange for newly issued partner interests in KKR Group Holdings 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 to share 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 not change. 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 to consent to the KPE Transaction. The consent of unitholders representing at least a majority of the KPE units for which a properly submitted consent form is submitted (excluding KPE units whose consent rights 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 the amended purchase and sale agreement are satisfied or waived, KKR will consummate the transaction as described. If the conditions to closing the KPE Transaction are satisfied or waived on or prior to September 30, 2009, then October 1, 2009 would be the date that KPE and KKR would begin to share ratably in the assets, liabilities, profits, losses and distributions, if any, of the combined business of KPE and 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, 2009

December 31, 2008

$

254,313 1,107,587 12,970 19,863,053 35,933 609,067

$

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$21,882,923

$22,441,030

Liabilities and Equity Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . .

$ 2,420,295 236,530

$ 2,405,125 185,548

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,656,825

2,590,673

Commitments and Contingencies Equity KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . .

29,858 33

150,634 1,245

Total KKR Group Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,891 19,196,207

151,879 19,698,478

Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,226,098

19,850,357

Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$21,882,923

$22,441,030

Assets Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . Cash and Cash Equivalents Held at Consolidated Entities Restricted Cash and Cash Equivalents . . . . . . . . . . . . . . . Investments, at Fair Value . . . . . . . . . . . . . . . . . . . . . . . Due from Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

See notes to condensed combined financial statements. F-53

198,646 965,319 50,389 20,883,519 29,889 313,268

KKR GROUP Condensed Combined Statements of Operations (Unaudited) For the Three Months ended March 31, 2009 and 2008 (Dollars in Thousands) Three months ended March 31, 2009 2008

Revenues Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 39,070

$ 68,590

. . . .

45,542 8,885 37,403 12,928

48,064 6,538 30,703 18,232

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104,758

103,537

. . . .

(720,849) 700 27,082 (22,278)

(732,974) 4,592 25,343 (35,359)

Total Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(715,345)

(738,398)

Loss Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(781,033) 1,531

(773,345) 888

Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Net Loss Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . .

(782,564) (727,981)

(774,233) (656,335)

Expenses Employee Compensation and Benefits Occupancy and Related Charges . . . . . General, Administrative and Other . . . Fund Expenses . . . . . . . . . . . . . . . . . Investment Loss Net Losses from Investment Dividend Income . . . . . . . . Interest Income . . . . . . . . . Interest Expense . . . . . . . .

Activities . ........ ........ ........

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. . . .

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. . . .

. . . .

. . . .

Net Loss Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . . . . .

See notes to condensed combined financial statements. F-54

$ (54,583) $(117,898)

KKR GROUP Condensed Combined Statements of Changes in Equity (Unaudited) For the Three Months ended March 31, 2009 and 2008 (Dollars in Thousands)

Balance at December 31, 2008 . . . . Comprehensive Income (Loss): Net Loss . . . . . . . . . . . . . . . . Other Comprehensive Income—Currency Translation Adjustment . . . .

KKR Group Partners’ Capital

KKR Group Accumulated Other Comprehensive Income

Noncontrolling Interests

$150,634

$ 1,245

$19,698,478

(54,583)

Total Comprehensive Income (Loss)

$19,850,357

(727,981) (1,212)

1

Total Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . Capital Contributions . . . . . . . . . Capital Distributions . . . . . . . . . Balance at March 31, 2009 . . . . . .

Balance at December 31, 2007 . . . Comprehensive Income (Loss): Net Loss . . . . . . . . . . . . . . . . Other Comprehensive Income—Currency Translation Adjustment . . . .

542 $ 29,858

(782,564)

(1,211)

(1,211)

$(783,775)

(783,775) 231,241

(4,990) $

33

$19,196,207

KKR Group Partners’ Capital

KKR Group Accumulated Other Comprehensive Income

Noncontrolling Interests

$1,507,694

$ 9,652

$28,749,814

(117,898)

(71,725) $19,226,098

Total Comprehensive Income (Loss)

(656,335) 2,467

—

Total Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . 33,559

Capital Distributions . . . . . . . . .

(106,286) $1,317,069

1,915,249 (313,993) $12,119

$29,694,735

See notes to condensed combined financial statements. F-55

Total Equity

$30,267,160 $(774,233) 2,467 $(771,766)

Capital Contributions . . . . . . . . Balance at March 31, 2008 . . . . . .

$(782,564)

230,699

(66,735)

Total Equity

(774,233) 2,467 (771,766) 1,948,808 (420,279) $31,023,923

KKR GROUP Condensed Combined Statements of Cash Flows (Unaudited) For the Three Months ended March 31, 2009 and 2008 (Dollars in Thousands) Three Months ended March 31, 2009 2008

Cash Flows from Operating Activities Net Loss Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments to Reconcile Net Loss Attributable to KKR Group to Net Cash Used in Operating Activities: Net Loss Attributable to Noncontrolling Interests . . . . . . . . . . . . . . Net Realized Losses (Gains) on Investments . . . . . . . . . . . . . . . . . . Change in Unrealized Losses on Investments Attributable to KKR Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in Unrealized Losses on Investments Attributable to Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Non-Cash Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash Flows Due to Changes in Operating Assets and Liabilities: Change in Cash and Cash Equivalents Held at Consolidated Entities Change in Due from Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in Accounts Payable, Accrued Expenses and Other Liabilities Investments Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash Proceeds from Sale of Investments . . . . . . . . . . . . . . . . . . . . . Net Cash Used In Operating Activities . . . . . . . . . . . . . . . . . . . .

...

$ (54,583) $ (117,898)

... ...

(727,981) 96,521

(656,335) (162,273)

...

93,492

212,914

... ...

530,836 2,037

682,333 893

. . . . . . .

(143,468) (6,044) 15,228 27,970 (220,323) 229,486 (156,829)

(147,188) (17,628) 118,872 72,636 (1,906,940) 666,540 (1,254,074)

Cash Flows from Investing Activities Change in Restricted Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . Purchase of Furniture, Equipment and Leasehold Improvements . . . . . . . . Net Cash Provided by (Used in) Investing Activities . . . . . . . . . . . . . . . .

37,419 (3,894) 33,525

(26,881) (6,340) (33,221)

(4,990) 230,699 (66,735) 542 40,191 (22,238) 1,502 178,971

(313,993) 1,915,249 (106,286) 33,559 49,069 (367,674) (19,621) 1,190,303

Cash Flows from Financing Activities Distributions to Noncontrolling Interests . . . . . Contributions from Noncontrolling Interests . . Distributions to KKR Group Partners . . . . . . . Contributions from KKR Group Partners . . . . Proceeds from Debt Obligations . . . . . . . . . . . Repayment of Debt Obligations . . . . . . . . . . . Deferred Financing Costs Returned (Incurred) Net Cash Provided By Financing Activities .

. . . . . . . .

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. . . . . . .

. . . . . . . .

. . . . . . . .

Net Change in Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . Cash and Cash Equivalents, Beginning of Year . . . . . . . . . . . . . . . . . . . . . Cash and Cash Equivalents, End of Year . . . . . . . . . . . . . . . . . . . . . . . . .

F-56

55,667 198,646 $ 254,313

$

(96,992) 272,045 175,053

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 ended March 31, 2009 2008

Supplemental Disclosures of Cash Flow Information Payments for Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supplemental Disclosure of Non-Cash Activities Restricted Stock Grant from Affiliate . . . . . . . . . . . . . . . . . . . . . . . Non-Cash Debt Financing / Purchase of Investments . . . . . . . . . . . . Proceeds Due from Unsettled Sales of Investments . . . . . . . . . . . . . Purchases of Unsettled Investments . . . . . . . . . . . . . . . . . . . . . . . . . Change in Unrealized Foreign Exchange on Debt Obligations . . . . . . Change in Foreign Exchange on Cash and Cash Equivalents Held at Consolidated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

.......

See notes to condensed combined financial statements. F-57

. . . . .

$ 16,003 $ 792

$ 18,853 $ 3,110

$ — $ — $210,699 $ (37,107) $ (2,028)

$ 15,939 $625,000 $ — $ — $ —

$ (1,200) $

—

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 executive offices in New York and Menlo Park, California. The Company’s alternative asset management business involves sponsoring and managing investment funds that make investments worldwide in private equity and 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 in public 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 of the acquisition price for the fund’s investments. The accompanying condensed combined financial statements of the Company include the results of eight of the 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 a single 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 and management. The accompanying combined financial statements include the accounts of the management companies, specifically Kohlberg Kravis Roberts & Co. L.P., KKR Financial Advisors LLC, KKR Strategic Capital Management, L.L.C., and KKR FI Advisors LLC, as well as the general partners of the private equity funds (collectively the ‘‘Common Control Entities’’) and their respective consolidated funds: KKR 1996 Fund, KKR European Fund, KKR Millennium Fund, KKR European Fund II, KKR 2006 Fund, KKR Asian Fund, KKR European Fund III, KKR Private Equity Investors (‘‘KPE’’) and certain of the KKR Strategic Capital Funds. KPE consists of an upper-tier limited partnership, which is referred to as the feeder fund, which makes all of its investments through a lower-tier limited partnership which is referred to as the master fund, of which the feeder fund is the sole limited partner. The accompanying condensed combined financial statements include the general partner of the KKR Private Equity Investors master fund as well as the master fund. The general partner of the feeder fund and the feeder fund itself are not included in the accompanying condensed combined financial 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 the general 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 limited liability company interests are listed on the New York Stock Exchange under the symbol ‘‘KFN.’’ KFN is managed by the Company but is not under the common control of the Senior Principals or otherwise consolidated by the Company as control is maintained by third-party investors. KFN was organized in August 2004 and completed its initial public offering on June 24, 2005. As of March 31, 2009 and December 31, 2008, KFN had consolidated assets of $10.9 billion and $12.5 billion, respectively, and shareholders’ equity of $0.7 billion as of March 31, 2009 and December 31, 2008. Shares of KFN held by the Company are accounted for as trading securities (see Note 2, ‘‘Summary of Significant Accounting Policies—Management fees received from consolidated and unconsolidated funds’’) and represented 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 of March 31, 2009 and December 31, 2008. For management reporting purposes, the Company operates through two reportable business segments: • Private Markets—The Company’s Private Markets segment involves sponsoring and managing a group of funds and co-investment vehicles that make primarily control-oriented investments in connection with leveraged buyouts and other similar investment opportunities. These funds are managed by Kohlberg Kravis Roberts & Co. L.P. and currently consist of a number of private equity 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 a group 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 to complete secured financing transactions. Additionally, beginning in July 2008, the Company’s Public Markets segment began serving as investment manager for accounts held by large institutional investors (‘‘Separately Managed Accounts’’). The Fixed Income Funds and Separately Managed Accounts are managed by subsidiaries of Kohlberg Kravis Roberts & Co. (Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic Capital Management, L.L.C., and KKR FI Advisors LLC. The Fixed Income Funds currently consist of KFN and the KKR Strategic Capital Funds (‘‘SCF’’), which are comprised of three side-by-side private fixed income funds. Two of the three side-by-side funds in SCF have been consolidated in the accompanying condensed combined financial statements of the Company. The third side-by-side fund is not consolidated by the KKR Group, because this fund is owned and controlled 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 the KKR Group as KFN holds the majority of the economic and voting interests. Accordingly, these structured finance vehicles are consolidated by KFN. The KKR Group holds no economic or voting interests in these structured finance vehicles. The KKR Group receives management fees for all assets managed in the Public Markets segment and incentive fees for assets managed at KFN and SCF. See Note 2, ‘‘Summary of Significant Accounting Policies,’’ to the condensed combined financial statements for the Company’s accounting policy regarding Fee Income. The instruments governing the Traditional Private Equity Funds provide that the funds will continue 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 applicable governing instruments. The instruments governing KPE and the Fixed Income Funds generally provide that those funds will continue in existence indefinitely, unless the funds are terminated earlier as provided in the applicable governing instruments. The Company has three primary sources of income: (i) fee income (consisting primarily of management, advisory and incentive fees); (ii) amounts received from the Company’s funds in the form of 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 the Company’s own capital in its funds and other proprietary investments. The KKR Funds are consolidated by the Company pursuant to accounting principles generally accepted in the United States of America (‘‘GAAP’’) as described in Note 2 ‘‘Summary of Significant Accounting Policies,’’ notwithstanding the fact that the Company has only a minority economic interest in those funds. Specifically, the general partners of the KKR Funds consolidate their respective funds and 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 a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights’’ or Financial Accounting Standards Board (‘‘FASB’’) Interpretation No. 46 (revised December 2003) ‘‘Consolidation of Variable Interest Entities—an Interpretation of ARB 51 (‘‘FIN 46R’’).’’ Consequently, the Company’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 of the economic interests in those funds, which are held by third-party investors, are attributed to noncontrolling interests in the accompanying condensed combined financial statements. Substantially all of the management fees and certain other 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, the Company’s attributable 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 net income attributable to the Company or KKR Group’s partners’ capital. See Note 2, ‘‘Summary of Significant Accounting Policies.’’ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Basis of Accounting—The accompanying condensed combined financial statements are prepared in accordance with GAAP. The condensed combined financial statements and these notes are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed combined financial statements are presented fairly and that estimates made in preparing its condensed combined financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed combined financial statements should be read in conjunction with 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 beneficiary of a variable interest entity (‘‘VIE’’). Hereinafter, all entities that are included in the accompanying condensed combined financial statements are referred to as consolidated entities. The majority of the consolidated entities are under the common control of the Senior Principals and are comprised of: (i) those entities in which the Company, directly or through the Senior Principals, has majority ownership and has control over significant operating, financial and investing decisions; 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 member interests. With respect to the consolidated KKR Funds, the Company generally has operational discretion and control, and fund investors have no substantive rights to impact ongoing governance and operating activities of the fund. The KKR Funds do not consolidate their majority-owned and controlled investments in portfolio companies (‘‘Portfolio Companies’’). Rather, those investments are accounted for as investments and carried at fair value as described below. FASB Staff Position (‘‘FSP’’) Financial Accounting Standard (‘‘FAS’’) No. 140-4 and FIN 46R-8 provides disclosure requirements for, among other things, involvements with VIEs. Those involvements include when the Company (i) consolidates an entity because it is the primary beneficiary, (ii) has a significant 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 a fully aggregated basis. The Company’s investment strategies differ by Investment Vehicle; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of incentive and management fees. Accordingly, disaggregation of the Company’s involvement with VIEs would not provide more useful information. In the Company’s role as general partner or investment advisor, it generally considers itself the sponsor of the applicable Investment Vehicle. For certain of these Investment Vehicles, the Company is determined to be the primary beneficiary and hence consolidates such Investment Vehicle within the condensed combined financial statements. FIN 46R requires an analysis to (i) determine whether an entity in which the Company holds a variable interest is a variable interest entity, and (ii) whether the Company’s involvement, through holding 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 the entity. Performance of that analysis requires the exercise of judgment. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and reconsiders that conclusion based on certain events. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the fund held either directly by the Company or indirectly through its related parties. The consolidation analysis under FIN 46R can generally be performed qualitatively. However, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative expected losses and expected residual returns calculation will be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective Investment Vehicle could affect an 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 as general partner to provide commitments to such funds. During 2008, the Company did not provide any support 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 financial statements. The Company is also a significant variable interest holder in certain VIE’s which are not consolidated, 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 in this unconsolidated entity totaled $1,583 of receivables. In addition, in an instance where one of these entities is not in compliance with certain defined liquidity requirements in its governing documents and has 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. As of 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 loss was $1,583 as of March 31, 2009. Intercompany transactions and balances have been eliminated. Noncontrolling Interests—Noncontrolling interests represent the ownership interests in consolidated entities held by entities or persons other than our Principals. Noncontrolling interest holders 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 in 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 limited partners are generally allocated to the limited partners in an amount equal to 80% of the ratio of their capital 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 carried interest. Losses on a fund’s investments are generally first applied to the excess of any prior income over such losses. For the majority of the Traditional Private Equity Funds, any remaining fund losses are applied to the equity accounts of the partners in proportion to their capital contributed with respect to each individual investment, until the partners’ equity accounts have been reduced to zero. For certain other Traditional Private Equity Funds, remaining fund losses are allocated to the limited partners and general partners in a manner consistent with profits as described above. For all Traditional Private 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 that will entitle it to a disproportionate share of the gains generated by the fund’s direct investments once the fund’s capitalization costs (the ‘‘Creditable Amount’’) have been recouped as described below. This economic interest consists of: • a carried interest that generally will allocate to the general partner 20% of the gain that is realized on private equity investments that are made with fund investors’ capital after any realized 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 increase in the net asset value of all other direct investments that are made with fund investors’ capital above 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 respect to the fund’s indirect investments, which consist of investments made through other funds that the Company sponsors. However, if the KPE fund acquires a partner interest in one of the Company’s other funds from a third party, the amount of distributions that the general partner receives pursuant to its distribution right may be adjusted to reflect realized gains or losses relating to the value of the

F-62

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) acquired partner interest. As noted above, the general partner of KPE has agreed to forego receiving a carried interest or distribution until the profits on investments with respect to which it would be entitled to receive a carried interest or distribution equal the Creditable Amount. As of March 31, 2009 and 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 the management companies of our Public Markets segment (‘‘KFI Transaction’’) in order to further integrate our operations, enhance existing collaboration among all of the Company’s investment professionals and to accelerate the growth of the Company’s Public Markets business. Immediately prior 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 the purchase method of accounting in accordance with FASB Statement of Financial Accounting Standards (‘‘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 the noncontrolling interests acquired (which approximates the fair value of the net assets acquired 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 fee contracts. The Company has recorded intangible assets of $37,887 which are being amortized over an estimated useful life of ten years, based on contractual provisions that enable renewal of the contracts without 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 were included in net income attributable to KKR Group. Use of Estimates—The preparation of the condensed combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed combined financial statements and the reported amounts of revenues, expenses and investment income during the reporting periods. Such estimates include but are not limited to the valuation of Portfolio Companies owned by the KKR Funds, financial instruments owned and other matters that affect reported amounts of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the condensed combined financial statements. Fair Value Measurements—The Company accounts for its investments in accordance with FASB Statement 157 ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’). SFAS 157 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in 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 with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level I—Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include publicly-listed equities and

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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) publicly listed derivatives. In addition, securities sold, but not yet purchased and options written by the 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 the Company 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 either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this category include corporate bonds and loans, convertible debt securities indexed to publicly listed securities and certain over-the-counter derivatives. Level III—Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in this category generally include private portfolio companies held through our private equity funds and KPE. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and it considers factors specific to the investment. Statement of Operations Measurements Fee Income—Fee income is comprised of: (i) transaction and monitoring fees received from Portfolio Companies and transaction fees from Capital Markets activities (collectively ‘‘Advisory Fees’’); (ii) management fees received from unconsolidated funds; and (iii) incentive fees received from unconsolidated funds. Such fees are based upon the contractual terms of fund management and related agreements and are recognized in the period during which the related services are performed and the amounts have been contractually earned. For the three months ended March 31, 2009 and 2008, fee income consisted of the following: Three Months ended March 31, 2009 2008

Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Fees Received from Unconsolidated Funds . . . . . . Incentive Fees Received from Unconsolidated Funds . . . . . . . . .

$25,715 13,355 —

$53,660 14,930 —

Total Fee Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$39,070

$68,590

Management fees received from consolidated and unconsolidated funds—For the Traditional Private Equity Funds and certain unconsolidated KKR sponsored funds, gross management fees generally range from 1% to 1.5% of committed capital during the fund’s investment period and approximately 0.75% of invested capital after the expiration of the fund’s investment period. Typically, an investment

F-64

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) period is defined as a period of up to six years. The actual 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, the Company’s allocated share of the net income from consolidated KKR Funds is increased by the amount of fees that are eliminated. Accordingly, the elimination of the fees does not have an effect on the net income 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’s equity 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 amount defined in the management agreement. Until the Creditable Amount is reached, the Company has generally agreed to reduce the amount of management fees payable by the fund in any period by any carried interest or incentive distributions that the Company or its affiliates receive during the period pursuant 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 earn certain management fees that it would be entitled to from its Traditional Private Equity Funds. The cash that would have been payable is collected from the funds’ investors and is initially included as a component of Cash and Cash Equivalents Held at Consolidated Entities. In lieu of making direct cash capital contributions, these cash collections are used to satisfy a portion of the capital commitments to which the Company would otherwise be subject as the general partner of the fund. As a result of the election to waive the fees, the Company is not entitled to any portion of these fees until the fund has achieved positive investment results. Because the ability to earn the waived fees is contingent upon the achievement of positive investment returns by the fund, the recognition of income only occurs when the contingency is satisfied. Our Traditional Private Equity Funds require the management company to refund up to 20% of any cash management fees earned from limited partners in the event that the funds recognize a carried interest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% of the management earned or a portion thereof, a liability to the fund’s limited partners is recorded and revenue is reduced for the amount of the carried interest recognized, not to exceed 20% of the management earned. As of March 31, 2009, the amount subject to refund for which no liability has been recorded totaled $123.7 million as a result of certain funds not yet recognizing sufficient carried interests. The refunds to the limited partners are paid, and the liabilities relieved, at such time that the underlying investments are sold and the associated carried interests are realized. In the event that a fund’s carried interest is not sufficient to cover all or a portion of the amount that represents 20% of the earned management fees, these fees will not be returned to the funds’ limited partners, in accordance with the respective fund agreements. The Company’s management agreement with KFN provides, among other things, that KFN is responsible for paying to the Company certain fees and reimbursements, consisting of a base management fee, an incentive fee and reimbursement for out-of-pocket and certain other costs and expenses 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

F-65

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) purposes of calculating the base management fee, adjusted equity is an amount defined in the management agreement. Effective January 1, 2009, the Company has elected to defer receipt of 50% of the monthly base management fee that would otherwise be payable by KFN until December 2009. As of and for the three months ended March 31, 2009, $1.8 million is included in due from unconsolidated funds and fee income. The Company’s management agreement with KFN was renewed on January 1, 2009 and will automatically be renewed for successive one-year terms following December 31, 2009 unless the agreement is terminated in accordance with its terms. 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-thirds of the fund’s independent directors or by the holders of a majority of the outstanding shares of the fund’s common stock and the termination is based upon (i) a determination that the Company’s performance has been unsatisfactory and materially detrimental to the fund or (ii) a determination 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 reduce the Company’s management and incentive fees), in which case a termination fee is payable to the Company; or • the Company’s subsidiary that manages the fund experiences a ‘‘change of control’’ or the Company materially breaches the provisions of the agreement, engages in certain acts of willful misconduct or gross negligence, becomes bankrupt or insolvent or is dissolved, in which case a termination 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 a component of compensation for management services to that fund. The restricted common stock and stock options vest ratably over applicable vesting periods and are initially recorded as deferred revenue at their estimated fair values at the date of grant. Subsequently, the Company re-measures the restricted common stock and stock options to the extent that they are unvested, with a corresponding adjustment to deferred revenue. Income from restricted common stock and common stock options is recognized 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 the characteristics of derivative investments. Vested stock options are recorded at estimated fair value with changes in fair value recognized in Net Gains (Losses) from Investment Activities. Both vested and unvested common stock options are valued using a Black-Scholes pricing model as of the end of each period. Vested common stock that is received as a component of compensation for management services are carried as trading securities, because the Company generally intends to distribute the common stock subsequent to vesting. Vested common stock is recorded at estimated fair value with changes in fair value recognized in Net Gains (Losses) from Investment Activities.

F-66

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 has entered into management agreements with the side-by-side funds comprising the KKR Strategic Capital Funds pursuant to which it has agreed to provide them with management and other services. Under the management agreement and, in some cases, other documents governing the individual 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 management fee that is equal to 0.1667% (or 2.0% annualized) of the net asset value of the individual fund that is allocable to those investors; and • with respect to investors who have agreed to a 60 month lock-up period, a monthly management fee that is equal to 0.1250% (or 1.5% annualized) of the net asset value of the primary fund that is allocable to those investors. The Company has elected to reduce the management fee it earns under the management agreements with 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 to 0.0208% (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 the general 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 the KKR Strategic Capital Funds was triggered whereby all investors became eligible to submit redemption requests, in full, without regard to class or lock-up period. Subsequent to December 15, 2008, all investors have since submitted such redemption requests. The redemptions would be payable after the board of directors (or general partner, as applicable) of the KKR Strategic Capital Funds rescinds the suspension of redemptions. The Company’s management agreement for its Separately Managed Accounts provides for management fees determined quarterly based on an annual rate of 0.5% of the fund’s equity. For purposes of calculating the management fee, equity is an amount defined in the management agreement. The Company’s management agreement for its principal protected product for private equity investments provides for management fees determined quarterly based on an annual rate of 1.25% of the fund’s equity. For purposes of calculating the management fee, equity is an amount defined in the management agreement. Incentive fees received from KFN—The Company’s management agreement with KFN provides that KFN is responsible for paying a quarterly incentive fee when the return on assets under management exceeds certain benchmark returns or other performance targets. This incentive fee is accrued quarterly, after all contingencies have been removed, based on performance to date versus the performance benchmark stated in the management agreement. Once earned, there are no clawbacks of incentive fees received from KFN.

F-67

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) Incentive fees received from KKR Strategic Capital Funds—As part of the Company’s management agreements with the side-by-side funds comprising the KKR Strategic Capital Funds, certain of which are consolidated, through October 31, 2008 the Company was entitled to receive incentive fees as follows: • with respect to investors who have agreed to a 25 month lock-up period, an annual incentive fee equal to 20% of the increase in the net asset value of the individual fund that is allocable to those investors above the highest net asset value at which an incentive fee has previously been received; and • with respect to investors who have agreed to a 60 month lock-up period, an annual incentive fee equal to 15% of the increase in the net asset value of the individual fund that is allocable to those investors above the highest net asset value at which an incentive fee has previously been received. The Company has elected to reduce the incentive fee it earns under the management agreements with 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 in the net asset value of the individual fund above the highest net asset value at which an incentive fee has previously been received, and subject to an 8% preferred return that is retroactive to the date of original investment. These incentive fees are accrued annually, after all contingencies have been removed, based on performance to date versus the performance benchmark stated in the management agreement. Since performance 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-side funds comprising the KKR Strategic Capital Funds. Incentive fees received from consolidated KKR Strategic Capital Funds have been eliminated. However, because these amounts are funded by, and earned from, noncontrolling interests, the Company’s allocated share of the net income from consolidated KKR Funds is increased by the amount of fees that are eliminated. Accordingly, the elimination 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—The Company’s management agreement for its principal protected product for private equity investments provides for an annual incentive fee to be paid to the Company when the return on assets under management exceeds certain benchmark returns or other performance targets. This incentive fee is accrued annually, after all contingencies have been removed, based on performance to date versus the performance benchmark stated in the management agreement. Once earned, there are no clawbacks of incentive fees received under this agreement. Transaction fees received from Portfolio Companies—Transaction fees are earned by the Company primarily in connection with successful acquisitions of Portfolio Companies by private equity funds and with respect to certain other negotiated investments. Transaction fees are recorded in advisory fee income upon closing of the transaction. Fees are typically paid by Portfolio Companies on or around the closing date and generally approximate 1% of the total transaction value to which the Company is

F-68

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) entitled to its proportionate share. There were no Transaction fees received from portfolio companies during the three months ended March 31, 2009. Transaction fees received from portfolio companies amounted to $16,608 for the three months ended March 31, 2008. Transaction-related expenses associated with successful Portfolio Company investments are deferred and recorded in Other Assets until the transaction is consummated. See description under ‘‘—Reimbursement of Transaction-Related Expenses’’ below. Transaction-related expenses associated with investigating Portfolio Company investments that are not consummated are recorded in fund expenses 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 for services provided to Portfolio Companies and are recognized in advisory fee income as services are rendered. These fees are paid based on a fixed periodic schedule by the Portfolio Companies either in advance or in arrears and are separately negotiated for each Portfolio Company. Monitoring fees amounted 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 for services provided by our Capital Markets business and are recognized in fee income upon closing of the transaction. Fees are typically paid on or around the closing date and vary based on the nature of the transaction. Transaction fees received from Capital Market activities amounted to $191 and $8,085 for the three months ended March 31, 2009 and 2008, respectively. Reimbursement of Transaction-Related Expenses—In connection with pursuing successful Portfolio Company investments, the Company receives reimbursement for certain transaction-related expenses. Transaction-related expenses, which are reimbursed by third parties, are deferred until the transaction is consummated and are recorded in other assets on the date the expense is incurred. The costs of successfully completed transactions are borne by the KKR Funds and included as a component of the investment’s cost basis. Subsequent to closing, investments are recorded at fair value each reporting period as described in the section below titled Investments, at Fair Value. Upon reimbursement from a third party, the cash receipt is recorded and the deferred amounts are relieved. No fee income or expense 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 expenses incurred on behalf of these entities. Billable monitoring expenses are recognized as revenue in accordance with EITF 01-14, ‘‘Income Statement Characterization of Reimbursement Received for Out of 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 fee income. 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 and losses on private equity investments as well as dividends and interest received primarily from the Portfolio Companies, after giving effect to interest expense incurred primarily by the Company’s Fixed Income Funds and foreign exchange gains and losses relating to mark-to-market activity on foreign exchange forward contracts, foreign currency options and interest rate swaps. The amount of

F-69

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) investment income retained in net income attributable to the Company, after allocation to net income attributable to noncontrolling interests, represents investment income attributable to the Company resulting 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 the profits generated by a fund as described below. Unrealized gains or losses result from changes in fair value of investments during the period, and are included in Net Gains (Losses) from Investment Activities. Upon disposition of an investment, previously recognized unrealized gains or losses are reversed and a realized gain or loss is recognized. Net Losses from Investment Activities earned by the consolidated 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’s earnings from investments relative to the capital contributed by the general partner and correspondingly reduce noncontrolling interests’ attributable share of those earnings. Amounts earned pursuant to carried interests in Traditional Private Equity Funds are included as investment income in Net Gains (Losses) from Investment Activities and are earned by the general partner of those funds to the extent that investment returns are positive. If these investment returns decrease or turn negative in subsequent 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 governing the fund as if the fund was terminated at the reporting date with the then estimated fair values of the investments 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 periodic performance of the Company in the management of those funds. Carried interest recognized amounted to approximately $(69) million and $(133) million for the three months ended March 31, 2009 and 2008, 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 contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to investors at the end of the life of the fund. Under a ‘‘clawback’’ provision, upon the liquidation of a fund, the general partner is required to return, on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the terms of the fund exceed the amount to which the general partner was ultimately entitled. As of March 31, 2009, the amount 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 the investments in such funds been liquidated at their March 31, 2009 fair values, the contingent repayment obligation would have been $411.9 million. Under a ‘‘net loss sharing provision,’’ upon the liquidation of a fund, the general partner is required to contribute capital to the fund, to fund 20% of the net losses on investments. In connection with the ‘‘net loss sharing provisions’’, certain of KKR’s traditional private equity vehicles allocate a greater share of their investment losses to KKR relative to the amounts contributed by KKR to those vehicles. In these vehicles, such losses would be required to be paid by KKR to the limited partners in those vehicles in the event of a liquidation of the fund regardless of whether any carried interest had previously been distributed. Based on the fair market values as of March 31, 2009, KKR’s contingent repayment obligation would have been approximately

F-70

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) $322.0 million. If the vehicles were liquidated at zero value, the contingent repayment obligation would have been approximately $1,093.8 million as of March 31, 2009. See Note 11, ‘‘Commitments and Contingencies.’’ In Traditional Private Equity Funds where the allocation of cumulative net losses is proportional to the capital contributed by the partners in the fund, the Company will not earn any carried interest in that fund until all such losses have been recovered. As losses are recovered, income is allocated in proportion to the capital contributed until the fund has reached a net positive investment return, at which time carried interest is recognized and income is allocated as described above. The performance of each fund is independent from all other funds and the losses to be recovered vary from fund to fund based 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 a formal 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 Funds amounted 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 sharing of the income earned on its investments and carried interests in the KKR Funds. Amounts payable under such arrangements are charged to compensation expense or professional fees expense when payment 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 with original 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 at consolidated entities represents cash that, although not legally restricted, is not available to fund general liquidity needs of the Company as the use of such funds is generally limited to the investment activities of the KKR Funds. Restricted Cash and Cash Equivalents—Restricted cash and cash equivalents represent amounts that 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 equity investments, debt investments and other investments. See Note 3, ‘‘Investments,’’ for information relating to the Company’s investments. Private Equity Investments—Private equity investments consist of investments in Portfolio Companies of consolidated KKR Funds that are, for GAAP purposes, investment companies under the AICPA Audit and Accounting Guide—‘‘Investment Companies.’’ The KKR Funds reflect investments at their estimated fair values, with unrealized gains or losses resulting from changes in fair value reflected as a component of Net Gains (Losses) from Investment Activities in the condensed combined statement of operations. Fair value is the amount at which the investments could be exchanged in a

F-71

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) current transaction between willing parties, other than in a forced or liquidation sale. The Company has retained the specialized accounting of these investments pursuant to EITF No. 85-12, ‘‘Retention of Specialized Accounting for Investments in Consolidation.’’ Private equity investments that have readily observable market prices (such as those traded on a securities exchange) are stated at the last reported sales price on the statement of financial condition date. As of March 31, 2009, approximately 81% of the fair value of the Company’s private equity investments has been valued by the Company in the absence of readily observable market prices. The determination of fair value may differ materially from the values that would have resulted if a ready market had existed. For these investments, the Company generally uses a market approach and an income (discounted cash flow) approach when determining fair value. Management considers various internal and external factors when applying these approaches, including the price at which the investment was acquired, the nature of the investment, current market conditions, recent public market and private transactions for comparable securities, and financing transactions subsequent to the acquisition of the investment. The fair value recorded for a particular investment will generally be within the range suggested by the two approaches. Investments denominated in currencies other than the U.S. dollar are valued based on the spot rate of the respective currency at the end of the respective reporting period with changes related to exchange 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 are classified as trading securities and are valued at their last quoted sales price. Securities that are not listed 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 fixed income securities, are valued at the mean of the ‘‘bid’’ and ‘‘asked’’ prices obtained from third-party pricing services. In the event that third-party pricing service quotations are unavailable, values are obtained from dealers or market makers. Investments where third-party values are not available are valued by the Company and the Company may engage a third-party valuation firm to assist in such valuations. Derivatives—The Company invests in derivative financial instruments, including total rate of return swaps and credit default swaps. In a total rate of return swap, the Company receives the sum of all interest, fees and any positive economic change in fair value amounts from a reference asset with a specified notional amount and pays interest on the referenced notional amount plus any negative change in fair value amounts from such asset. Credit default swaps, when purchasing protection, involve the payment of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event, such as payment default or bankruptcy. Under a credit default swap, one party acts as a guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if a credit event occurs. Derivative contracts, including total rate of return swap contracts and credit default swap contracts, are recorded at 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.

F-72

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) Opportunistic Investments in Publicly Traded Securities—The Company’s opportunistic investments in publicly traded securities represent equity securities, which are classified as trading securities and carried at fair market value. Changes in the fair market value of trading securities are reported within Net Gains (Losses) from Investment Activities in the accompanying condensed combined statement of operations. These investments represent investments by KPE other than debt, investments in governmental bonds and other similar investments. Securities Sold, Not Yet Purchased—Whether part of a hedging transaction or a transaction in its own right, securities sold, not yet purchased, or securities sold short, represent obligations of the Company to deliver the specified security at the contracted price, and thereby create a liability to repurchase the security in the market at then prevailing prices. Short selling allows the investor to profit from declines in market prices. The liability for such securities sold short is marked to market based on the current value of the underlying security at the date of valuation 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. These transactions may involve a market risk in excess of the amount currently reflected in the Company’s condensed combined statement of financial condition. Due from and Due to Affiliates—For purposes of classifying amounts, the Company considers its Principals, 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 derivative financial instruments primarily to manage foreign exchange risk and interest rate risk arising from certain assets and liabilities. All derivatives are recognized as either assets or liabilities in the condensed combined statements of financial condition and measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying condensed combined statement of operations. The Company does not apply ‘‘hedge accounting’’ under SFAS No. 133, ‘‘Accounting for Derivative Instruments and Hedging Activities’’ (‘‘SFAS 133’’). The Company’s derivative financial instruments contain credit risk to the extent that its bank counterparties may be unable to meet the terms of the agreements. The Company minimizes this risk by limiting its counterparties to major financial institutions with strong credit ratings. Fixed Assets, Depreciation and Amortization—Fixed assets consist primarily of leasehold improvements, furniture, fixtures and equipment, and computer hardware and software. Such amounts are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the assets’ estimated useful lives, which are the life of the related lease for leasehold improvements, and three to seven years for other fixed assets. Securities Sold Under Agreements to Repurchase—Transactions involving sales of securities under agreements to repurchase are accounted for as collateralized financings. The Company recognizes interest expense on all borrowings on an accrual basis. Capital Distributions—Capital distributions to Principals are generally in proportion to their equity interests and take the form of cash distributions and, in certain cases, non-cash distributions. Non-cash distributions 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 the Principals historically has been accounted for as distributions from partner’s capital rather than as compensation and benefits expense. As a result, the Company’s net income historically has not reflected payments for services rendered by its Principals. Comprehensive Income—Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from contributions and distributions to owners. For the Company’s purposes, comprehensive income represents Net Income, as presented in the accompanying condensed combined statements of operations and net foreign currency translation adjustments. Foreign Currency—Foreign currency denominated assets, liabilities and operations are primarily held through the KKR Funds. Assets and liabilities relating to foreign investments are translated using the exchange rates prevailing at the end of each reporting period. Results of foreign operations are translated at the weighted average exchange rate for each reporting period. Translation adjustments are included in current income to the extent that unrealized gains and losses on the related investment are included in income, otherwise they are included as a component of accumulated other comprehensive income until realized. Foreign currency gains or losses resulting from transactions outside of the functional currency of a consolidated entity are recorded in income as incurred and were not material during the three months ended March 31, 2009 and 2008. Income Taxes—No federal income taxes have been provided for by the Company in the accompanying condensed combined financial statements as each existing partner is individually responsible for paying federal income taxes on their respective share of the reported income or loss of an entity’s income and expenses as reported for income tax purposes. However, certain consolidated entities of the Company are subject to either New York City unincorporated business tax on their trade and 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 by relevant taxing jurisdictions, if any, are recorded as incurred as a component of Income Taxes in the Company’s condensed combined statements of operations. Deferred taxes are provided for the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of the deferred tax assets and establishes a valuation allowance when it is more likely than 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 a business combination to recognize the full fair value of assets, liabilities, contractual contingencies and contingent 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 and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) applies to all transactions 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 achieved without the transfer of consideration, for example, by contract alone or through the lapse of minority veto rights. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009. The Company had no such transactions for the three months ended March 31, 2009. In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51 (‘‘SFAS No. 160’’). SFAS No. 160 requires reporting entities to present noncontrolling (minority) interests as equity (as opposed to as a liability or mezzanine equity) and provides guidance on the accounting for transactions between an entity and noncontrolling interests. SFAS No. 160 applies prospectively as of January 1, 2009, except for the presentation and disclosure requirements applied retrospectively for all periods presented. The Company adopted SFAS No. 160 effective January 1, 2009 and as a result, (1) with respect to the condensed combined statements of financial condition, noncontrolling interests have been reclassified as a component of Equity, (2) with respect to the condensed combined statements of operations, Net Income (Loss) is now presented before noncontrolling interests and the condensed combined statements of operations now net to Net Income (Loss) Attributable to KKR Group, (3) with respect to the condensed combined statement of changes in equity, a rollforward column has been included for noncontrolling interests. In November 2008, the EITF reached a consensus on Issue No. 08-6, Equity Method Investment Accounting Considerations (‘‘EITF 08-6’’). EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. An entity is required to recognize its share of other-than-temporary impairments of equity method investments rather than test the investee’s underlying assets for impairment. Additionally, a share issuance by an equity method investee should be accounted for as if the investor sold a proportionate share of its investment, with any associated gain or loss recognized in earnings. EITF 08-6 is effective in fiscal years and interim periods beginning on or after December 15, 2008. The adoption of EITF 08-6 did not have a material impact on the Company’s condensed combined financial statements. In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (‘‘SFAS No. 161’’). SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better 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. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The adoption of SFAS No. 161 did not have a material 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-Class Method 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 equity distributions. EITF 07-4 is to be applied retrospectively beginning with financial statements issued in the interim periods of fiscal years beginning after December 15, 2008. The adoption of EITF 07-4 did not 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 of Intangible Assets (‘‘FSP No. 142-3’’). FSP No. 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142, Goodwill and Other Intangible Assets . FSP No. 142-3 affects entities with recognized intangible assets and is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The new guidance applies prospectively to (1) intangible assets that are acquired individually or with a group of other assets and (2) both intangible assets acquired in business combinations and asset acquisitions. The adoption of FSP No. 142-3 did not have a material impact on the Company’s condensed combined financial statements. In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (‘‘FSP FAS 157-4’’), to help constituents estimate fair value when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective for interim 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 currently evaluating the impact that the adoption of FSP FAS 157-4 may have the Company’s condensed combined financial statements. In April 2009, the FASB issued Staff Position No. 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (‘‘FSP FAS 115-2’’) which provides new guidance on the recognition of other-than-temporary impairments of investments in debt securities and provides new presentation and disclosure requirements for other-than-temporary impairments of investments in debt and equity securities. FSP FAS 115-2 is effective for financial statements issued for interim or annual periods ending after June 15, 2009. The Company is currently evaluating the impact of FSP FAS 157-4 on the Company’s condensed combined financial statements. In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, Interim Disclosures about Fair 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 financial instruments in interim reporting periods. Such disclosures were previously required only in annual financial statements. FSP FAS 107-1 is effective for financial statements issued for interim or annual periods 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, Subsequent Events (‘‘SFAS 165’’). SFAS 165 is intended to establish general accounting and disclosure standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. SFAS 165 is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 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 the elimination of the concept of a qualifying special purpose entity. SFAS 167 updates FIN 46R’s approach to determination of a controlling financial interest with one focused on identifying (a) which enterprise has the power to direct the activities of a variable interest entity (VIE) and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 requires entities 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 that begins after November 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 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 FASB Accounting 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 source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-SEC accounting literature not included in the Codification will become nonauthoritative. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 168 may have on the Company’s condensed combined financial statements. 3. INVESTMENTS Investments, at fair value consist of the following: Fair Value March 31, 2009 December 31, 2008

Private Equity Investments . . . . . . . . . . . . . . . . . . . Debt Investments . . . . . . . . . . . . . . . . . . . . . . . . . . Other Investments . . . . . . . . . . . . . . . . . . . . . . . . .

$19,247,910 446,353 168,790

$20,230,405 481,945 171,169

$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 collateral against various financing arrangements. In addition, KPE holds limited partnership interests in our Traditional Private Equity Funds with a fair value of $1,162,992 as of March 31, 2009 that are pledged as 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 March 31, December 31, 2009 2008

Private Equity Investments, at Fair Value North America Retail . . . . . . . . . . . . . . . . . . . . . . . . Financial Services . . . . . . . . . . . . . . . . Healthcare . . . . . . . . . . . . . . . . . . . . . Media . . . . . . . . . . . . . . . . . . . . . . . . Energy . . . . . . . . . . . . . . . . . . . . . . . Technology . . . . . . . . . . . . . . . . . . . . Education . . . . . . . . . . . . . . . . . . . . . Consumer Products . . . . . . . . . . . . . . . Chemicals . . . . . . . . . . . . . . . . . . . . . Telecom. . . . . . . . . . . . . . . . . . . . . . . Hotels/Leisure . . . . . . . . . . . . . . . . . .

. . . . . . . . . . .

$ 2,890,975 2,464,643 2,414,973 1,102,134 1,008,625 947,918 500,918 262,857 172,354 33,872 6,232

$ 2,676,801 2,632,998 2,285,506 1,138,520 1,412,075 970,409 456,061 360,398 234,436 34,946 10,179

15.0% 12.8% 12.6% 5.7% 5.2% 4.9% 2.6% 1.4% 0.9% 0.2% 0.0%

13.2% 13.0% 11.3% 5.6% 7.0% 4.8% 2.3% 1.8% 1.2% 0.2% 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%

. . . . . . . .

1,748,912 1,386,906 675,867 601,786 325,815 225,100 98,160 31,764

2,103,930 1,410,686 710,611 609,955 389,832 236,672 154,810 89,060

9.1% 7.2% 3.5% 3.1% 1.7% 1.2% 0.5% 0.2%

10.4% 7.0% 3.5% 3.0% 1.9% 1.2% 0.8% 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 Locations Technology . . . . . . . . . . . . . . . . Media . . . . . . . . . . . . . . . . . . . . Telecom . . . . . . . . . . . . . . . . . . . Manufacturing . . . . . . . . . . . . . . Financial Services . . . . . . . . . . . . Consumer Products . . . . . . . . . . . Recycling . . . . . . . . . . . . . . . . . .

. . . . . . .

1,431,444 234,240 222,795 128,964 142,857 139,399 48,400

1,386,984 287,638 222,795 117,240 148,655 99,208 50,000

7.4% 1.2% 1.2% 0.7% 0.7% 0.7% 0.3%

6.9% 1.4% 1.1% 0.6% 0.7% 0.4% 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%

Europe Manufacturing Healthcare . . . Telecom . . . . . Technology . . Recycling . . . . Retail . . . . . . Transportation Media . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . . . . .

Fair Value as a Percentage of Total March 31, December 31, 2009 2008

. . . . . . . .

. . . . . . .

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 primarily on 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 of consolidated private equity funds included: (i) Dollar General valued at $1,612,190; (ii) First Data valued 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 Holdings valued 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 of consolidated private equity funds included: (i) First Data valued at $1,514,986; (ii) Legrand S.A. valued at $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) Legg Mason valued at $1,053,059. The majority of the securities underlying the Company’s private equity investments represent equity securities. As of March 31, 2009 and December 31, 2008 the aggregate amount of investments that 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 the nature of the ownership interests and the Company’s ability to control, direct or substantially influence management and the operations of such Portfolio Companies. Net Losses from Investment Activities in the condensed combined statement of operations include net realized gains or losses from sales of investments and the net change in unrealized gains or losses resulting from changes in fair value of the Company’s private equity investments (including foreign exchange gains and losses attributable to foreign-denominated investments). The following table presents the Company’s realized and net change in unrealized gains or losses relating to its private equity investments: Three Months ended March 31, 2009 2008

Realized (Losses) Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Change in Unrealized Losses . . . . . . . . . . . . . . . . . . . .

$ (39,931) $ 167,077 (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) . . . . . . . . . . . . . . . . . Strategic Capital Master Fund(b) . . . . . . . . . . . . . Restricted Stock(b) . . . . . . . . . . . . . . . . . . . . . . .

$314,559 130,805 989

$353,983 126,187 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 the three months ended March 31, 2009 and 2008 (b) Represents the fair value of an investment in a master investment partnership held through the two consolidated SCF side-by-side funds. Net Losses from Investment Activities in the condensed combined statement of operations include net realized gains or losses from sales of investments and the net change in unrealized gains or losses resulting from changes in fair value of the Company’s debt investments. The following table presents the Company’s realized and net change in unrealized gains or losses relating to its debt investments: Three Months ended March 31, 2009 2008

Realized (Losses) Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Change in Unrealized Gains (Losses) . . . . . . . . . . . . . . . .

$(71,983) $ 245 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 Value March 31, December 31, 2009 2008

Government and Government Agency Bonds . . . . . . . . . Corporate Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Municipal Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Opportunistic Investments in Publicly Traded Securities(a) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

$105,990 36,850 9,983 — 15,967

$109,443 40,426 2,267 1,072 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 trading gains relating to these investments amounted to $4,125 for the three months ended March 31, 2008. Net Losses from Investment Activities in the condensed combined statement of operations include net realized gains or losses from sales of investments and the net change in unrealized gains or losses resulting from changes in fair value of the Company’s other investments. The following table presents the Company’s realized and net change in unrealized gains or losses relating to its other investments. Three Months ended March 31, 2009 2008

Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Change in Unrealized Gains . . . . . . . . . . . . . . . . . . . . . . . .

$(1,597) $ (9,994) 1,971 18,212 $

F-81

374

$ 8,218

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 fair value hierarchy levels described in Note 2 as of March 31, 2009 and December 31, 2008, respectively: Assets, at fair value: March 31, 2009 Level II Level III

Level I

Total

Private Equity Investments . . . . . . . . . . . . . . . . . Debt Investments . . . . . . . . . . . . . . . . . . . . . . . Other Investments . . . . . . . . . . . . . . . . . . . . . . .

$1,653,748 989 152,845

$2,093,614 310,482 —

$15,500,548 134,882 15,945

$19,247,910 446,353 168,790

Total Investments . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains on Foreign Exchange Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign Currency Option . . . . . . . . . . . . . . . . . .

1,807,582

2,404,096

15,651,375

19,863,053

— —

204,620 29,542

— —

204,620 29,542

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,807,582

$2,638,258

$15,651,375

$20,097,215

December 31, 2008 Level II Level III

Level I

Total

Private Equity Investments . . . . . . . . . . . . . . . . . Debt Investments . . . . . . . . . . . . . . . . . . . . . . . Other Investments . . . . . . . . . . . . . . . . . . . . . . .

$1,908,845 1,775 153,245

$2,164,933 335,237 —

$16,156,627 144,933 17,924

$20,230,405 481,945 171,169

Total Investments . . . . . . . . . . . . . . . . . . . . . . Unrealized Gains on Foreign Exchange Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign Currency Option . . . . . . . . . . . . . . . . . .

2,063,865

2,500,170

16,319,484

20,883,519

— —

84,094 45,816

— —

84,094 45,816

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,063,865

$2,630,080

$16,319,484

$21,013,429

Liabilities, at fair value: Level I

Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

—

Level I

March 31, 2009 Level II Level III

$10,674

$

—

December 31, 2008 Level II Level III

Total

$10,674

Total

Securities Sold, Not Yet Purchased . . . . . . . . . . . . . . . . . . . . . . Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Return Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,916 — —

$

— 12,539 4,610

$

— — —

$ 1,916 12,539 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 of March 31, 2009: Private Equity Investments

Third-Party Fund Managers . . . . . . . . . . . . . . . . . Public/Private Company Comparables and Discounted Cash Flows . . . . . . . . . . . . . . . . . .

—%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

March 31, 2009 Debt Other Investments Investments

.9%

.1%

99.0

—

—

99.0%

.9%

.1%

Total Level III Holdings

1.0% 99.0% 100.0%

The changes in investments measured at fair value for which the Company has used Level III inputs to determine fair value for the three months ended December 31, 2008 through March 31, 2009 and for the three months ended December 31, 2007 through March 31, 2008 are as follows: Three months ended March 31, 2009 March 31, 2008

Balance, Beginning of Period . . . . . . Transfers In (Out) . . . . . . . . . . . . . . (Sales) Purchases, Net . . . . . . . . . . . Realized and Unrealized Losses, Net

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

$16,319,484 — (144,177) (523,932)

$24,391,146 — 772,870 644,846

Balance, End of Period . . . . . . . . . . . . . . . . . . . . . . .

$15,651,375

$25,808,862

Changes in Unrealized Losses Included in Net Losses from Investment Activities (including foreign exchange gains and losses attributable to foreigndenominated investments) Related to Investments Still Held at Reporting Date . . . . . . . . . . . . . . . . . .

$ (455,260)

$

643,377

Total realized and unrealized gains and losses recorded for Level III investments are reported in Net 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 from affiliates, and accounts payable, accrued expenses and other liabilities approximate fair value due to their short-term maturities. All investments are carried at fair value, with the exception of corporate loans, which are carried at amortized cost. The Company’s debt obligations bear interest at floating rates 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: Unrealized Gains on Foreign Exchange Forward Contracts(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds Due from Sale of Certain Private Equity Investments(b) . . . . . . . . . . . . . . . . . . . . . . . . . Furniture & Fixtures(c) . . . . . . . . . . . . . . . . . . . . Intangible Asset(d) . . . . . . . . . . . . . . . . . . . . . . . Foreign Currency Option (Cost: March 31, 2009, $10,741; December 31, 2008, $13,736)(e) . . . . . . Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . Leasehold Improvements(c) . . . . . . . . . . . . . . . . . Deferred Financing Costs . . . . . . . . . . . . . . . . . . . Prepaid Expense . . . . . . . . . . . . . . . . . . . . . . . . . Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

March 31, 2009

December 31, 2008

.

$204,620

$ 84,094

. . .

200,400 41,560 34,729

— 38,966 35,676

. . . . . .

29,542 29,248 17,964 14,949 5,624 30,431

45,816 42,751 19,247 18,070 4,243 24,405

$609,067

$313,268

(a) Represents derivative financial instruments used to manage foreign exchange risk arising from certain assets and liabilities. Such instruments are measured at fair value with changes in fair value recorded in Net Losses from Investment Activities in the accompanying condensed combined statement of operations. The net changes in fair value recorded in Losses from Investment Activities in the accompanying condensed combined statements 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 unrealized losses 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 of March 31, 2009 and December 31, 2008, respectively. Depreciation and amortization expense 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 and December 31, 2008, respectively. Amortization expense totaled $947 for the three months ended 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 is measured at fair value with changes in fair value recorded in Net Losses from Investment Activities in the accompanying condensed combined statement of operations. The net changes 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 unrealized losses of $8,420 for the three months ended March 31, 2008. Accounts Payable, Accrued Expenses and Other Liabilities consist of the following: Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . Unsettled Investment Trades . . . . . . . . . . . . . . Accrued Benefits and Compensation . . . . . . . . . Accounts Payable and Accrued Expenses . . . . . . Derivative Liabilities(a) . . . . . . . . . . . . . . . . . . Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . Securities Sold, Not Yet Purchased (proceeds of $1,785 at December 31, 2008)(b) . . . . . . . . . . Other Liabilities . . . . . . . . . . . . . . . . . . . . . . .

March 31, 2009

December 31, 2008

. . . . . .

$ 97,610 50,289 36,718 27,561 10,674 7,760

$ 92,618 13,183 12,889 40,125 17,149 4,656

... ...

— 5,918

1,916 3,012

$236,530

$185,548

. . . . . .

. . . . . .

(a) Represents derivative financial instruments used to manage credit and market risk arising from certain assets and liabilities. Such instruments are measured at fair value with changes in fair value recorded in Net Losses from Investment Activities in the accompanying condensed combined statement of operations. The net changes in fair value recorded in Net Losses from Investment Activities in the accompanying condensed combined statement of operations were $2,303 ($4,172 of realized losses and $6,475 of unrealized 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 a specified security at a contracted price at a future point in time. Such securities are measured at fair value with changes in fair value recorded in Net Gains Losses from Investment Activities in the accompanying condensed combined statements of operations. Net changes in fair value recorded in Net Losses from Investment Activities in the accompanying condensed combined statement of operations were net gains of $336 ($205 of realized gains and $131 of unrealized gains) and net gains of $1,215 ($1,555 of realized gains and $340 of unrealized losses) for the three months ended March 31, 2009 and 2008, 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: Other Financing Arrangements . . . . . . . . . . . . . . . Revolving Credit Agreements . . . . . . . . . . . . . . . . . Short-term Loans . . . . . . . . . . . . . . . . . . . . . . . . .

March 31, 2009

December, 31, 2008

$1,314,911 1,065,193 40,191

$1,314,911 1,090,214 —

$2,420,295

$2,405,125

On February 26, 2008, Kohlberg Kravis Roberts & Co. L.P entered into a credit agreement with a major financial institution (the ‘‘Management Company Credit Agreement’’). The Management Company Credit Agreement provides for revolving borrowings of up to $1 billion, with a $50 million sublimit for swingline notes and a $25 million sublimit for letters of credit. The facility has a term of three years that expires on February 26, 2011, which may be extended through February 26, 2013 at the option of the Company. As of March 31, 2009, $100 million was outstanding under the Management Company Credit Agreement, and the interest rate on such borrowings was approximately 1.0% as of March 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 Credit Line expired in February 2009 and was not renewed. As of March 31, 2009, $25 million was outstanding under the Management Company Credit Line, and the interest rate on such borrowings was approximately 3.3%. During April 2009, the Company repaid all amounts outstanding as of March 31, 2009. From time to time, the Company may borrow amounts to satisfy general short-term needs of the business by opening short-term lines of credit with established financial institutions. These amounts may be incremental to, or in lieu of, borrowings made under the Management Company Credit Line, and are generally repaid within 30 days, at which time such short-term lines of credit would close. As of March 31, 2009, there was a $40.2 million short-term loan outstanding, and the interest rate on such borrowing was approximately $3.3%. On February 27, 2008, KKR Capital Markets entered into a revolving credit agreement with a major financial institution (the ‘‘KCM Credit Agreement’’). The KCM Credit Agreement provides for revolving borrowings of up to $700 million with a $500 million sublimit for letters of credit. The KCM Credit Agreement has a maturity date of February 27, 2013. There was $14 million outstanding under the KCM Credit Agreement as of March 31, 2009. As of March 31, 2009, the interest rate on borrowings under the KCM Credit Agreement was 2.1%. In March 2009, the KCM Credit Agreement was amended to reduce the amounts available on revolving borrowings from $700 million to $500 million. As a result of this amendment, the counterparty returned approximately $1.6 million in financing costs. In June 2007, KPE entered into a revolving credit agreement (the ‘‘KPE Credit Agreement’’) with a syndicate of financial institutions. The KPE Credit Agreement provides for up to $1.0 billion of senior secured credit, subject to availability under a borrowing base determined by the value of certain investments 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 the investments constituting the borrowing base is subject to certain advance rates based on type of investment. In October 2008, Lehman Commercial Paper Inc. (‘‘Lehman’’), an original lender under the Credit Agreement with an initial $75.0 million commitment, filed for bankruptcy and was responsible for funding an additional $45.6 million in commitments as of March 31, 2009. Due to Lehman’s bankruptcy, 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 million absent 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 to another existing or new lender. There can be no assurance that any lender will assume any part of Lehman’s commitment under the KPE Credit Agreement. As of March 31, 2009, the interest rates on borrowings under the KPE Credit Agreement ranged from 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 relating to borrowings denominated in foreign currency. Foreign currency adjustments related to the debt during the period are recorded in Net Losses from Investment Activities in the accompanying condensed combined statements of operations. The net change in fair value associated with these borrowings 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 2009

December 31, 2008

Notional borrowings under the KPE Credit Agreement . . . . Foreign currency adjustments: Less: Unrealized gain related to borrowings denominated in British pounds sterling . . . . . . . . . . . . . . . . . . . . . . . Less: Unrealized gain related to borrowings denominated in Canadian dollars . . . . . . . . . . . . . . . . . . . . . . . . . . .

$941,921

$968,970

15,728

14,058

—

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 equity investments 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 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 be required to provide additional collateral up to the amount borrowed plus accrued interest, under the terms of these financing arrangements. As a result of a decline in collateral value, the Company provided additional collateral in the amount of $16.7 million as of March 31, 2009. The per annum rates of interest payable by us for the financings range from three-month LIBOR plus 0.90% to threemonth 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 credit facility (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 Bloomberg United States Dollar Interest Rate Swap Ask Rate plus 1.75% at the time of each borrowing under the Term 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 the one year LIBOR rate plus 1.75%. The Company’s Fixed Income Funds may leverage their portfolios of securities and loans through the use of short-term borrowings in the form of warehouse facilities and repurchase agreements. These borrowings used by the Company generally bear interest at floating rates based on a spread above the London Interbank Offered Rate (‘‘LIBOR’’). There were no such borrowings as of March 31, 2009 or December 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 entities based on a statutory rate of 4%. Certain consolidated entities of the Company are subject to income tax of the foreign countries in which they conduct business. The Company’s effective income tax rate was approximately 3.80% and 2.75% for the three months ended March 31, 2009 and 2008, respectively. March 31, 2009 2008

Current Foreign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . State and Local Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,547 $684 (16) 149

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,531

833

Deferred Foreign Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . State and Local Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— —

55 —

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

55

Total Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,531

$888

Income taxes are provided at the applicable statutory rates. The Company’s deferred tax assets and liabilities 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 relating to the underpayment of income taxes have been recognized in the condensed combined financial statements.

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:

Due from Portfolio Companies . . . . . . . . . . . . . . . . . . . . . . Due from Related Entities . . . . . . . . . . . . . . . . . . . . . . . . . Due from Unconsolidated Funds . . . . . . . . . . . . . . . . . . . . .

March 31, 2009

December 31, 2008

$17,333 10,980 7,620

$14,337 12,287 3,265

$35,933

$29,889

Discretionary Investments Certain of the Company’s investment professionals, including its Principals and other qualifying employees, are permitted to invest and have invested their own capital in side-by-side investments with its Traditional Private Equity Funds. Side-by-side investments are investments in Portfolio Companies that are made on the same terms and conditions as those acquired by the applicable fund, except that the side-by-side investments are not subject to management fees or a carried interest. The cash invested by 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 condensed combined financial statements. Aircraft and Other Services Certain of the Senior Principals own aircraft that the Company uses for business purposes in the ordinary course of its operations. These Senior Principals paid for the purchase of these aircraft with their personal funds and bear all operating, personnel and maintenance costs associated with their operation. The hourly rates that the Company pays for the use of these aircraft are based on current market rates for chartering private aircraft of the same type. The Company paid $2,182 and $1,648 for the 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 an ownership interest in the Company’s Menlo Park location. Payments made to this partnership aggregated $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 are differentiated primarily by their investment focuses and strategies, consist of the following: • Private Markets—The Company’s Private Markets segment involves sponsoring and managing a group of funds and co-investment vehicles that make primarily control-oriented investments in connection with leveraged buyouts and other similarly-yielding investment opportunities. These funds are managed by Kohlberg Kravis Roberts & Co. L.P. and currently consist of Traditional Private 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 income and mezzanine finance businesses, as well as other businesses that invest primarily in publicly traded 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 mezzanine instruments. These businesses are managed by subsidiaries of Kohlberg Kravis Roberts & Co. (Fixed Income) LLC, specifically KKR Financial Advisors LLC, KKR Strategic Capital Management, L.L.C., and KKR FI Advisors LLC. Economic Net Income (‘‘ENI’’) and Fee Related Earnings (‘‘FRE’’) are key performance measures used by management. ENI is a measure of profitability for the Company’s reportable segments and represents income before taxes less net income attributable to noncontrolling interests in the KKR Funds 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 consolidated funds that were eliminated in consolidation; (iii) exclude investment income; (iv) exclude amortization of intangibles assets; and (v) exclude net income attributable to noncontrolling interests in the KKR Funds. These measures are used by management for the Company’s segments in making resource deployment and other operational decisions. Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and data that is presented excluding the impact of any of the KKR Funds that are consolidated into the condensed combined financial statements. Consequently, all segment data excludes the assets, liabilities and operating results related to 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 and for the three months ended March 31, 2009: March 31, 2009 Private Markets

Public Markets

Total Reportable Segments

Fee Income Management Fees . . . . . . . . . . . . . . . . . . . . . . . . Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . Incentive Fees . . . . . . . . . . . . . . . . . . . . . . . . . .

$103,802 23,993 —

$11,928 — —

$115,730 23,993 —

Total Fee Income . . . . . . . . . . . . . . . . . . . . . .

127,795

11,928

139,723

Expenses Employee Compensation and Benefits . . . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . . . .

39,416 44,324

6,126 6,121

45,542 50,445

Total Expenses . . . . . . . . . . . . . . . . . . . . . . . .

83,740

12,247

95,987

Fee Related Earnings . . . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . . . . .

44,055 (95,913)

(319) (17)

43,736 (95,930)

Loss before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . Loss Attributable to Noncontrolling Interests . . . . . .

(51,858) (89)

(336) —

(52,194) (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 condensed combined financial statements as of and for the three months ended March 31, 2009: March 31, 2009

Fee Income(a) . . . . Expenses(b) . . . . . . Investment Loss(c) . Loss before Taxes . . Loss Attributable to Total Assets(d) . . . .

................... ................... ................... ................... Noncontrolling Interests . ...................

Total Reportable Segments

Combination Adjustments

Condensed Combined

$139,723 $ 95,987 $ (95,930) $ (52,194) $ (89) $298,857

$ (100,653) $ 8,771 $ (619,415) $ (728,839) $ (727,892) $21,584,066

$ 39,070 $ 104,758 $ (715,345) $ (781,033) $ (727,981) $21,882,923

(a) The Fee Income adjustment represents the elimination of intercompany transactions upon consolidation of the KKR Funds and other adjustments necessary to reconcile from segment reporting measures to consolidated financial results. In periods where the amount of fee income attributable to the Company’s consolidated funds exceeds the amount 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 the Company’s condensed combined fee income. (b) The Expenses adjustment primarily represents the inclusion of certain operating expenses upon consolidation of the KKR Funds. (c) The Investment Income adjustment primarily represents the inclusion of investment income attributable to noncontrolling interests upon consolidation of the KKR Funds. (d) The Total Assets adjustment primarily represents the inclusion of private equity and credit investments that are attributable to noncontrolling interests upon consolidation of the KKR Funds. The reconciliation of Economic Net Loss to Net Loss Attributable to KKR Group as reported in the Condensed combined Statement of Operations consists of the following: Three Months Ended March 31, 2009

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(52,105) (1,531) (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 and for the three months ended March 31, 2008: March 31, 2008 Private Markets

Fee Income Management Fees . . . . . . . . . . . . . . . . . . . . . Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . Incentive Fees . . . . . . . . . . . . . . . . . . . . . . . .

$

Public Markets

Total Reportable Segments

78,833 37,740 —

$16,127 3,333 —

Total Fee Income . . . . . . . . . . . . . . . . . . . .

116,573

19,460

136,033

Expenses Employee Compensation and Benefits . . . . . . . Other Operating Expenses . . . . . . . . . . . . . . .

43,412 48,561

4,651 4,154

48,063 52,715

Total Expenses . . . . . . . . . . . . . . . . . . . . . .

91,973

8,805

100,778

Fee Related Earnings . . . . . . . . . . . . . . . . . Investment Loss . . . . . . . . . . . . . . . . . . . . . . . .

24,600 (148,310)

10,655 (85)

35,255 (148,395)

(Loss) Income before Taxes . . . . . . . . . . . . . . . .

(123,710)

10,570

(113,140)

Income Attributable to Noncontrolling Interests .

65

3,805

$

94,960 41,073 —

3,870

Economic Net (Loss) Income . . . . . . . . . . . . . . .

$ (123,775) $ 6,765

$ (117,010)

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,428,678

$1,476,310

$47,632

The following table reconciles the Company’s total reportable segments to the condensed combined financial statements as of and for the three months ended March 31, 2008: March 31, 2008 Total Reportable Segments

Fee Income(a) . . . . . . . . . . . . Expenses(b) . . . . . . . . . . . . . Investment Loss(c) . . . . . . . . Loss before Taxes . . . . . . . . . Income (Loss) Attributable to Noncontrolling Interests . . . Total Assets(d) . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

.......... ..........

$ $ $ $

136,033 100,778 (148,395) (113,140)

$ 3,870 $1,476,310

Combination Adjustments

Condensed Combined

$ (67,443) $ 68,590 $ 2,759 $ 103,537 $ (590,003) $ (738,398) $ (660,205) $ (773,345) $ (660,205) $ (656,335) $32,865,704 $34,342,014

(a) The Fee Income adjustment represents the elimination of intercompany transactions upon consolidation of the KKR Funds and other adjustments necessary to reconcile from segment 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 the amount of management fees earned from its consolidated funds, a positive adjustment will be required to eliminate this intercompany transaction and reconcile to the Company’s condensed combined fee income. (b) The Expenses adjustment primarily represents the inclusion of certain operating expenses upon consolidation of the KKR Funds. (c) The Investment Loss adjustment primarily represents the inclusion of investment income attributable to noncontrolling interests upon consolidation of the KKR Funds. (d) The Total Assets adjustment primarily represents the inclusion of private equity and credit investments that are attributable to noncontrolling interests upon consolidation of the KKR Funds. The reconciliation of Economic Net Loss to Net Loss Attributable to KKR Group as reported in the Condensed Combined Statement of Operations consists of the following: Three Months Ended March 31, 2008

Economic Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(117,010) (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 unsecured revolving credit agreement with KFN pursuant to which the Company has agreed to provide financing to KFN under the arrangement. The borrowing facility matures in December 2010 and bears interest at a rate equal to LIBOR for an interest period of 1, 2 or 3 months (at KFN’s option) plus 15.00% per annum. Under the terms of the agreement, KFN can elect to capitalize a portion of accrued interest on any loan under the agreement by adding up to 80% of the interest due and payable at a particular time in respect of such loan to the outstanding principal amount of the loan. As of March 31, 2009, no amounts were outstanding under this arrangement. Debt Covenants Borrowings of the Company contain various customary loan covenants. These covenants do not, in management’s opinion, materially restrict KKR’s investment or financing strategy. The Company is in compliance 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 KKR Funds.

F-94

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 capital commitments 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 to Traditional 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 repay amounts 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 the general partners of the KKR Funds that is subject to contingent repayment if such funds were liquidated at zero value, a possibility which management views as remote. If such funds were liquidated at 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 share of the fund’s losses from investments relative to the capital contributed by the general partner and correspondingly reduce noncontrolling interests’ attributable share of those losses. Based on the fair market values as of March 31, 2009, capital deficits resulting from losses in excess of gains at certain of the Traditional Private Equity Funds amounted to $322.0 million. If the funds were liquidated at zero value, such capital deficits in excess of any contingent repayments of carried interest previously distributed would be approximately $1,093.8 million. A portion of the carried interest paid to current and former KKR personnel is held in segregated accounts in the event of a cash clawback obligation. These segregated accounts are not included in the financial statements of the Company. At March 31, 2009, $94.3 million was held in such segregated accounts. Indemnifications In the normal course of business, the Company and its subsidiaries enter into contracts that contain a variety of representations and warranties and provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company’s that have not yet occurred. However, based on experience, 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 claims incidental to the conduct of the Company’s business. The Company believes that the ultimate liability arising from such proceedings, lawsuits and claims, if any, will not have a material effect on the Company’s financial condition, results of operations, or cash flows. In August 2008, KFN, its directors and executive officers, including certain of the Company’s current and former personnel, were named as defendants in a purported class action complaint by KFN shareholders under federal securities laws (the ‘‘Class Action’’). The suit alleges that the registration statement utilized by KFN to effectuate its restructuring plan in May 2007 was false and misleading in that 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, KKR Financial Corp. An amended complaint was filed in March 2009 whereby KFN’s directors were no longer named as defendants. On April 27, 2009, KFN and the remaining individual defendants in the Charter Litigation moved to dismiss with prejudice all of the claims in the amended complaint. The motion is 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 executive officers, including certain of the Company’s current and former personnel, as well as against KFN as nominal defendant. The suit alleges breaches of fiduciary duty, waste of corporate assets and unjust enrichment by such individuals in connection with the conduct at issue in the Class Action discussed 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 on the pleadings or KFN files 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 New York purportedly on behalf of KFN against its directors and executive officers, including certain of the Company’s current and former personnel, as well as against KFN as nominal defendant. The suit alleges breaches of fiduciary duty, waste of corporate assets and unjust enrichment by such individuals in connection 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 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 public companies recently acquired by private equity firms. In August 2008, the Company, along with 16 other private equity firms 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 bidding process in certain going-private transactions in violation of antitrust laws and that this purported behavior suppressed the price paid by the private equity firms for the plaintiffs’ shares in the acquired companies below that which would otherwise have been paid in the absence of such behavior. In 2005, the Company and certain of the Company’s investment professionals were named as defendants in now-consolidated shareholder derivative actions relating to one of our portfolio companies. These actions claim that the board of directors of the portfolio company breached its fiduciary duty of loyalty in connection with the redemption of certain shares of preferred stock in 2004 and 2005. The plaintiffs further allege that the Company benefited from these redemptions of preferred stock at the expense of the portfolio company and that the Company usurped a corporate opportunity of the portfolio company in 2002 by purchasing shares of its preferred stock at a discount on the open market while causing the portfolio company to refrain from doing the same. In February 2008, the special litigation committee formed by the board of directors of the portfolio company, following a review 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 fiduciary duty and conspiracy in connection with the acquisition of one of the Company’s portfolio companies in 1995. In April 2000, the complaint in this action was amended to further allege that the Company and

F-96

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 portfolio company. The Company believes that each of these actions is without merit and intends to defend them vigorously. In addition, in September 2006 and March 2009, the Company received requests for certain documents 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 they have engaged in conduct prohibited by United States antitrust laws. The Company is fully cooperating with the DOJ’s investigation. Moreover, in the ordinary course of business, the Company is and can be both the defendant and the 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 the KKR Funds. As of March 31, 2009 and December 31, 2008, no amounts were accrued relating to threatened or pending 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, Mumbai and Dubai. There are no material rent holidays, contingent rent, rent concessions or leasehold improvement incentives associated with any of our property leases. In addition to base rentals, certain lease agreements are subject to escalation provisions, and are recognized on a straight-line basis over the term of the lease agreement. The related lease commitments have not changed materially since March 31, 2009. Principal Protected Product for Private Equity Investments The fund agreements for the Company’s principal protected product for private equity investments contain provisions that require the fund underlying the principal protected product for private equity investments (the ‘‘Master Fund’’) to liquidate certain of its portfolio investments in order to satisfy liquidity requirements of the fund agreements, if the performance of the Master Fund is lower than certain benchmarks defined in the agreements. In an instance where the Master Fund is not in compliance 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 the Master Fund at 95% of their current fair market value. As of March 31, 2009, the performance of the Master Fund was lower than the defined benchmarks, however, the Master Fund was able to meet its defined 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 five private equity investments. Three of these investments, amounting to $451.4 million, have since closed and none of these investments are expected to exceed 5% of the net assets of consolidated private equity investments. KPE Transaction On July 19, 2009, KPE entered into an amended and restated purchase and sale agreement with KKR pursuant to which, among other things, KKR agreed to acquire all of the assets of KPE and assume all of the liabilities of KPE in exchange for newly issued partner interests in KKR Group Holdings 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 to share 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 not change. 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 to consent to the KPE Transaction. The consent of unitholders representing at least a majority of the KPE units for which a properly submitted consent form is submitted (excluding KPE units whose consent rights are controlled by KKR or its affiliates) is a conditions to completing the Combination Transaction. If the unitholder consent described above is obtained and the other conditions precedent in the amended purchase and sale agreement are satisfied or waived, KKR will consummate the transaction as described. If the conditions to closing the KPE Transaction are satisfied or waived on or prior to September 30, 2009, then October 1, 2009 would be the date that KPE and KKR would begin to share ratably in the assets, liabilities, profits, losses and distributions, if any, of the combined business of KPE and KKR and that reporting as a combined company would begin.

F-98

Appendix A AMENDED AND RESTATED PURCHASE 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.

2.

3.

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

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

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE CONTROLLING 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

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

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

TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A-25

8.1

Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A-25

8.2

Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A-26

4.

5.

8.

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 Management Holdings L.P.

Exhibit I:

Form of Amended and Restated Limited Partnership Agreement of KKR Fund Holdings L.P.

Exhibit J:

Form of Amended and Restated Limited Liability Company Agreement of the Controlling 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

iv

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 Disclosure Schedule . . . . . . . . . . . . . .

A-7

Original Agreement . . . . . . . . . . . . . . . .

A-1

Consent Solicitation Documents . . . . . . .

A-16

Outside Date . . . . . . . . . . . . . . . . . . . . .

A-30

Consolidated Persons . . . . . . . . . . . . . . .

A-7

Participant . . . . . . . . . . . . . . . . . . . . . . .

A-13

Contract . . . . . . . . . . . . . . . . . . . . . . . .

A-8

Permits . . . . . . . . . . . . . . . . . . . . . . . . .

A-12

Contributed Interests . . . . . . . . . . . . . . .

A-9

Permitted Liens . . . . . . . . . . . . . . . . . . .

A-6

Controlling Partnership . . . . . . . . . . . . .

A-1

person . . . . . . . . . . . . . . . . . . . . . . . . . .

A-33

Controlling Partnership GP . . . . . . . . . .

A-1

Press Release . . . . . . . . . . . . . . . . . . . .

A-14

Controlling Partnership GP Agreement . .

A-21

Proceedings . . . . . . . . . . . . . . . . . . . . . .

A-25

Effect . . . . . . . . . . . . . . . . . . . . . . . . . .

A-5

Purchase and Sale . . . . . . . . . . . . . . . . .

A-2

Effective Time . . . . . . . . . . . . . . . . . . . .

A-3

Purchaser . . . . . . . . . . . . . . . . . . . . . . .

A-1

Exchange Act . . . . . . . . . . . . . . . . . . . .

A-33

Purchaser Common Units . . . . . . . . . . . .

A-2

Exchange Agreement . . . . . . . . . . . . . . .

A-21

Purchaser Enhanced Arrangement . . . . .

A-13

Fund Holdings . . . . . . . . . . . . . . . . . . . .

A-1

Purchaser GP . . . . . . . . . . . . . . . . . . . .

A-1

Fund Holdings LPA . . . . . . . . . . . . . . . .

A-21

Purchaser LPA . . . . . . . . . . . . . . . . . . . .

A-21

GAAP . . . . . . . . . . . . . . . . . . . . . . . . . .

A-5

Requisite Unitholder Consent . . . . . . . . .

A-16

Governmental Entity . . . . . . . . . . . . . . .

A-6

Restructuring Transactions . . . . . . . . . . .

A-19

Group Partnerships . . . . . . . . . . . . . . . .

A-1

Satisfaction Date . . . . . . . . . . . . . . . . . .

A-3

Holdings . . . . . . . . . . . . . . . . . . . . . . . .

A-1

SEC . . . . . . . . . . . . . . . . . . . . . . . . . . .

A-10

HSR Act . . . . . . . . . . . . . . . . . . . . . . . .

A-6

Securities Act . . . . . . . . . . . . . . . . . . . .

A-10

Independent Directors . . . . . . . . . . . . . .

A-2

Seller . . . . . . . . . . . . . . . . . . . . . . . . . .

A-1

Interim Financial Statements . . . . . . . . .

A-9

Seller Common Units . . . . . . . . . . . . . . .

A-2

Investment Agreement . . . . . . . . . . . . . .

A-21

Seller GP . . . . . . . . . . . . . . . . . . . . . . .

A-1

Investment Company Act . . . . . . . . . . . .

A-11

Seller Limited Partnership Agreement . . .

A-5

KKR Funds . . . . . . . . . . . . . . . . . . . . . .

A-7

Seller Recommendation . . . . . . . . . . . . .

A-16

KKR Group . . . . . . . . . . . . . . . . . . . . .

A-9

Specified Information . . . . . . . . . . . . . . .

A-17

Liability . . . . . . . . . . . . . . . . . . . . . . . .

A-3

Tax Receivables Agreement . . . . . . . . . .

A-21

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .

A-12

v

AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT This AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT, dated as of July 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 ‘‘Controlling Partnership’’), 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 through KKR Guernsey GP Limited, a Guernsey company limited by shares (the ‘‘Seller GP’’) in its capacity as the 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 Acquired Partnership GP (solely for purposes of Section 1.4), (4) KKR Holdings L.P., a Cayman Islands exempted limited partnership (‘‘Holdings’’), acting through KKR Holdings GP Limited in its capacity as general 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 (‘‘Management Holdings’’), acting through KKR Management Holdings Corp. in its capacity as the general partner of Management Holdings (solely for purposes of Section 6), (6) KKR Fund Holdings L.P. (‘‘Fund Holdings’’), a Cayman Islands exempted limited partnership, acting through KKR Management LLC in its capacity as the general partner of the general partner of Fund Holdings (solely for purposes of Section 6) (Management Holdings and Fund Holdings are sometimes collectively referred to herein as the ‘‘Group Partnerships’’) and (7) KKR Group Holdings L.P. (the ‘‘Purchaser’’), a Cayman Islands exempted 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 of Section 1.1, Section 1.2, Section 3 and Section 9.2). WHEREAS, the parties hereto (other than the Purchaser) entered into a Purchase and Sale Agreement, dated as of July 27, 2008 (the ‘‘Original Agreement’’); WHEREAS, the parties hereto now desire to amend and restate the Original Agreement in its entirety as provided in this Agreement; WHEREAS, the Seller owns all of the limited partner interests (the ‘‘Limited Partner Interests’’) in the Acquired Partnership and certain other assets; WHEREAS, the Seller desires to sell, and the Purchaser desires to purchase, all of the Limited Partner Interests and all of the other assets of the Seller upon the terms and subject to the conditions set forth in this Agreement; WHEREAS, the Controlling Partnership, the Purchaser, Holdings and Messrs. Henry Kravis and George 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 Limited Partnership Agreement (as defined below) that each of them is an Interested Party (as such term is defined in the Seller Limited Partnership Agreement) and accordingly this Agreement and the transactions contemplated hereby are required, among other things, to be approved by a majority of the directors of the Seller GP who are not affiliated with the Controlling Partnership, the Purchaser, the Purchaser 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 evaluating the transactions contemplated by this Agreement, have the sole authority to select their advisors, have the sole authority to negotiate for and on behalf of the Seller the terms and conditions of this

A-1

Agreement, and have the sole authority to recommend to the Board that the Board approve or not approve the transactions contemplated by this Agreement; WHEREAS, the Independent Directors have unanimously recommended to the Board that the Board approve this Agreement and the transactions contemplated by this Agreement; and WHEREAS, the Board, acting upon the unanimous recommendation of the Independent Directors, has unanimously determined that this Agreement and the transactions contemplated hereby are fair to and in the best interests of the Seller and the holders of common units, including restricted depository units, of the Seller (the ‘‘Seller Common Units’’) and has approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby. NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements 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 this Agreement, 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 other assets of the Seller, free and clear of all liens, claims, charges, mortgages, pledges, security interests or other encumbrances of any kind (‘‘Liens’’), other than Permitted Liens (as defined below). In consideration of the sale, conveyance, assignment and transfer of the Limited Partner Interests and all of the other assets of the Seller and upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, the Purchaser shall deliver to the Seller a number of common units representing limited partner interests of the Purchaser (the ‘‘Purchaser Common Units’’) equal to the number of Seller Common Units then outstanding, as a result of which the Seller will at the Effective Time own 100% of the outstanding Purchaser Common Units. The transactions contemplated by this Section 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 this Agreement, at the Effective Time, the Purchaser shall assume and pay, perform and discharge when due and indemnify the Seller and the Seller GP and hold the Seller and the Seller GP harmless against all of the Liabilities of the Seller and the Seller GP as of the Effective Time and all of the Liabilities of the Seller and the Seller GP incurred at or arising after the Effective Time. The Purchaser shall have the right to cause one or more of its designated affiliates to assume and pay, perform and discharge when due the Liabilities, but in no event shall the Purchaser be released from its obligation in this Section 1.2 to indemnify the Seller and the Seller GP and hold the Seller and the Seller GP harmless against 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, present or future, accrued or unaccrued, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability or otherwise), including any off-balance sheet liabilities and all liabilities relating to or incurred in connection with any suit, claim, action, proceeding, arbitration or investigation arising 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 be irrevocably satisfied or waived for all purposes of this Agreement on the first date on which all of the conditions 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 the Satisfaction Date, the conditions set forth in Section 7.2(a)-(c) and Section 7.3(a)-(c) shall be deemed satisfied or waived on the date on which all of the other conditions set forth in Section 7 of this Agreement 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) and Section 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) and Section 7.3(a)-(c) are waived or capable of being satisfied (and in the case of Section 7.2(b) and Section 7.3(b) have been satisfied)); provided that in no event shall the Satisfaction Date be prior to August 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 are required to be delivered in order to satisfy the conditions set forth in Section 7.2 and Section 7.3 on the date that would constitute the Satisfaction Date assuming that such documents and instruments have been delivered on such date, and the delivery of those documents shall occur at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, or such other place as the parties shall mutually agree. (c) The transfer of assets contemplated pursuant to Section 1.1 hereof, and the assumption of liabilities 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 am Eastern Time on October 1, 2009 or, in the event the Satisfaction Date has not occurred on or prior to October 1, 2009, 12:01 am Eastern Time on the first day of the fiscal quarter of the Controlling Partnership immediately succeeding the fiscal quarter in which the Satisfaction Date occurs; provided however without the consent of the Seller the Effective Time shall not occur if (i) the Controlling Partnership or Holdings has not performed in all material respects all obligations required to be performed by it under Section 5.4, Section 5.5, Section 5.6, Section 5.7 and Section 5.9 during the period from the Satisfaction Date to the Effective Time, (ii) the Restructuring Transactions shall not have been implemented in a manner consistent with the steps set forth in the structure memorandum set forth as Exhibit C hereto, except for deviations thereto which would not reasonably be expected to have an adverse impact in more than an insignificant respect on the Seller, the Controlling Partnership or the holders of the Seller Common Units or deviations consented to by the Seller, which consent shall not be unreasonably withheld or delayed or (iii) the Seller shall not have received the certificate required to be delivered pursuant to Section 5.4(d). For the avoidance of doubt, notwithstanding the occurrence of the Satisfaction Date, the beneficial ownership of the assets and liabilities of the Seller and 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 or receive any of the assets, liabilities, profits, losses or distributions of each other until the Effective Time. 1.4 Acquired Partnership GP Consent. In accordance with the requirements of Clause 9.2 of the limited partnership agreement of the Acquired Partnership (as amended, supplemented or otherwise modified from time to time, the ‘‘Acquired Partnership LPA’’), the Acquired Partnership GP, acting as general partner of the Acquired Partnership, hereby consents to the transfer of the Limited Partner Interests upon the terms and subject to the conditions set forth in this Agreement and agrees, subject to the Purchaser becoming a party to the Acquired Partnership LPA and assuming the Seller’s obligations thereunder, to register the Purchaser as the sole limited partner of the Acquired Partnership 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 the Controlling Partnership as follows: 2.1 Organization. The Seller is a limited partnership duly organized, validly existing and in good standing 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 to execute and deliver this Agreement and to perform its obligations hereunder and consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Seller and the Seller GP and, except as contemplated by Section 2.4, no other action is necessary on the part of the Seller or the Seller GP for the execution, delivery and performance by the Seller (acting through the Seller GP) of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller GP acting as the general partner of the Seller and, assuming due authorization, execution and delivery by the Controlling Partnership, the Purchaser, Holdings, the Group Partnerships and the Acquired Partnership GP, constitutes a valid and binding obligation of the Seller enforceable against the Seller in accordance 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 generally and by general equity principles. The Board, acting upon the unanimous recommendation of the Independent Directors, has unanimously determined that this Agreement and the transactions contemplated hereby are fair to and in the best interests of the Seller and the holders of the Seller Common Units and has approved the execution, delivery and performance of this Agreement 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 by the Seller of the transactions contemplated hereby (including the Restructuring Transactions and including the execution and performance of each of the agreements referenced in Section 3.20), nor compliance by the Seller with any of the terms or provisions hereof, will (i) violate any provision of the amended and restated limited partnership agreement of the Seller, dated as of May 2, 2007 (as amended, supplemented or otherwise modified from time to time, the ‘‘Seller Limited Partnership Agreement’’) and (ii) assuming that the consents, approvals and filings referred to in Section 2.4 are duly obtained or made and except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (as defined below) on the Acquired Partnership, violate any statute, 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, results of operations or financial condition of such person and any person (other than the Acquired Partnership and its subsidiaries in the case of the Purchaser) whose financial results are consolidated with such person (including, in the case of the Purchaser, the KKR Funds (as defined below)), taken as a whole, and, with respect to the holders of the Seller Common Units, a material adverse effect on the overall economic value to be received as of the date of this Agreement by the Seller as a result of the Purchase and Sale, taken as a whole (it being understood that for purposes of determining whether there has been a Material Adverse Effect with respect to the holders of the Seller Common Units, any Effect that does not generally affect holders of a material proportion of Seller Common Units will be disregarded); provided, however, that in determining whether a Material Adverse Effect has occurred or would 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 such Effect is (i) changes in general economic or political conditions, (ii) changes in the financial or securities 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 of America (‘‘GAAP’’) or interpretations thereof and (vii) with respect to the Acquired Partnership, any actions 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 actions or omissions of the Seller GP or the Seller, acting through the Seller GP, that are due to the taking of any 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 a whole, together with any person (other than the Acquired Partnership and its subsidiaries in the case of the Purchaser) whose financial results are consolidated with such person, is materially disproportionately affected thereby as compared with other participants in the applicable industry or industries in which any such persons operate. The parties hereto acknowledge and agree that the exclusions set forth in clauses (i) through (vii) above shall not include, and in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur there may be taken into 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 the Levin-Rangel bill (H.R. 1935), the Welch bill (H.R. 2762) and/or any Tax law, statute, rule, ordinance and/or regulation enacted by any Governmental Entity (as defined below) in the United States having a similar 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, administrative agency or commission or other governmental authority or instrumentality, legislative body or self-regulatory organization (each a ‘‘Governmental Entity’’) by the Seller is necessary in connection with the execution, delivery and performance of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby, except (i) for the giving of written notice by the Seller GP to the Guernsey Financial Services Commission, (ii) for the giving of notice by the Seller to the Authority for the Financial Markets in The Netherlands and/or Euronext Amsterdam by NYSE Euronext, the regulated market of Euronext Amsterdam N.V., (iii) filings necessary to comply with the applicable 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 Investment Schemes Rules 2008 or for the granting by the Guernsey Financial Services Commission of a modification to Rule 3.01(12) of the Authorised Closed-Ended Investment Schemes Rules 2008 to the effect that the Purchase and Sale satisfies the criteria for independent valuation if the value of the property being sold is subject to an independent fairness opinion from a person qualified to provide such an opinion. 2.5 Ownership of Limited Partner Interests. The Seller owns beneficially and of record the Limited Partner Interests free and clear of any Liens other than Liens for Taxes (as defined below) and other governmental charges and assessments not yet due and payable or that are being contested in good faith and for which adequate accruals or reserves have been established (‘‘Permitted Liens’’). The Limited Partner Interests to be sold pursuant to Section 1.1 of this Agreement consist of Class A limited partner interests, Class B limited partner interests, Class C limited partner interests and Class D limited partner interests. There are no voting trusts, proxies, powers of attorney or other agreements 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, for brokers’ or finders’ fees or commissions in connection with the transactions contemplated by this Agreement for which the Controlling Partnership, the Purchaser or the Acquired Partnership is or will become liable, except for the fees of Lazard Fr` eres & Co. LLC and Citigroup Global Markets Limited in connection with the transactions contemplated by this Agreement as advisors to the Seller and the Independent Directors the amount of which have been disclosed to the Controlling Partnership and will be borne by the Purchaser in accordance with Section 9.2 in the event the Effective Time occurs and otherwise will be borne by the Seller. 2.7 Other Agreements. Each of the Investment Agreement, the Exchange Agreement and the Tax Receivables 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 binding obligation of the Seller enforceable against the Seller in accordance 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 generally and by general equity principles. 3.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE CONTROLLING PARTNERSHIP

Except as otherwise specified in a correspondingly enumerated section of the disclosure schedule delivered to the Seller by the Controlling Partnership concurrently with the execution of this Agreement (the ‘‘Confidential Controlling Partnership Disclosure Schedule’’) (it being understood that any matter set forth under any item under any section or subsection of the Confidential Controlling Partnership Disclosure Schedule shall be deemed disclosure with respect to any other section or subsection to the extent such matter is disclosed in such a way as to make its relevance to the information called for by such other section or subsection reasonably apparent), the Controlling Partnership GP acting as the general partner of the Controlling Partnership and the Purchaser GP acting 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 defined below) and each of the KKR Funds (as defined below) (i) is duly organized, validly existing and in good standing (to the extent such a concept exists in the relevant jurisdiction) in the jurisdiction in which it is organized, (ii) has the power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and (iii) is licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties or assets owned or leased by it makes such licensing or qualification necessary, except, in the cases of clauses (ii) and (iii) where the failure to have such power and authority, or to be so licensed or qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser (after giving effect to the Restructuring Transactions, but excluding the Acquired Partnership and its subsidiaries). (b) For purposes of this Agreement, (i) ‘‘Consolidated Persons’’ means the Purchaser and each of the persons whose financial results will be consolidated with the Purchaser in accordance with GAAP upon the consummation of the Restructuring Transactions (as defined below) other than (A) the KKR Funds and (B) the Acquired Partnership and its subsidiaries and (ii) ‘‘KKR Funds’’ means investment funds or investment vehicles that are from time-to-time managed, sponsored or otherwise advised by one or more members of the KKR Group whose financial results will be required to be consolidated with the Purchaser in accordance with GAAP upon the consummation of the Restructuring Transactions, other than the Acquired Partnership and its subsidiaries.

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3.2 Authority. The Controlling Partnership (acting through the Controlling Partnership GP), the Purchaser (acting through the Purchaser GP) and the 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 (including the Restructuring Transactions). The execution, delivery and performance of this Agreement have been and the consummation of the transactions contemplated hereby (including the Restructuring Transactions) have been, or will be, duly authorized by all necessary action on the part of the Controlling Partnership, the Purchaser, the Purchaser GP and the Group Partnerships and no other action will be necessary on the part of the Controlling Partnership, the Purchaser, the Controlling Partnership GP and the Group Partnerships for the execution, delivery and performance by the Controlling Partnership (acting through the Controlling Partnership GP), the Purchaser and the Group Partnerships of this Agreement and the consummation of the transactions contemplated hereby (including the Restructuring Transactions). This Agreement has been duly executed and delivered by the Controlling Partnership, the Purchaser and the Group Partnerships and, assuming due authorization, execution and delivery by the Seller, Holdings and the Acquired Partnership GP, constitutes a valid and binding obligation of the Controlling Partnership, the Purchaser and the Group Partnerships, enforceable against the Controlling Partnership, the Purchaser and the Group Partnerships in accordance 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 generally and by general equity principles. 3.3 No Conflicts. Neither the execution and delivery of this Agreement by the Controlling Partnership, the Purchaser and the Group Partnerships nor the consummation by the Controlling Partnership, the Purchaser and the Group Partnerships of the transactions contemplated hereby (including the Restructuring Transactions and including the execution and performance of each of the agreements referenced in Section 3.20), nor compliance by the Controlling Partnership, the Purchaser or the Group Partnerships with any of the terms or provisions hereof, will (i) violate any provision of the certificate of formation or limited partnership agreement of the Controlling Partnership or any similar organizational documents of any of the Consolidated Persons or any of the KKR Funds or of the Purchaser GP and (ii) assuming that the consents, approvals and filings referred to in 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 the Purchaser (after giving effect to the Restructuring Transactions, 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 Controlling Partnership, the Purchaser GP, any of the Consolidated Persons or any of the KKR Funds or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, or require redemption or repurchase or otherwise require the purchase 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 or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the properties or assets of the Controlling Partnership, the Purchaser GP, any of the Consolidated Persons or any of the KKR Funds under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation (each, a ‘‘Contract’’) to which the Controlling Partnership, the Purchaser GP or any of the Consolidated Persons is a party, or by which any of them or any of their respective properties or assets may 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 by the Controlling Partnership, the Purchaser or the Group Partnerships is necessary in connection with the execution, delivery and performance of this Agreement by the Controlling Partnership, the Purchaser or the Group Partnerships and the consummation by the Controlling Partnership, the Purchaser 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 the aggregate, a Material Adverse Effect on the Purchaser (after giving effect to the Restructuring Transactions, 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 Disclosure Schedule, 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 ‘‘KKR Group’’) whose financial position, results of operations and cash flows are reflected in the historical condensed combined financial statements of the KKR Group as of December 31, 2008 and for the year then ended and as of March 31, 2009 and for the three months then ended (the ‘‘Interim Financial Statements’’). Such interests (other than those included in the exceptions set forth in the preceding sentence) are sometimes referred to herein as the ‘‘Contributed Interests.’’ (b) Complete, true and correct copies of the Interim Financial Statements and the historical combined financial statements of the KKR Group as of December 31, 2007 and for the year then ended 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 regulations of the SEC in effect as of the date of this Agreement and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto). The combined financial statements of the KKR Group as of December 31, 2008 and for the 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 KKR Group as of December 31, 2008 and for the year then ended. The Interim Financial Statements were prepared in a manner that is consistent with the preparation of the annual financial statements and fairly present in all material respects, the combined financial position, results of operations, changes in equity and cash flows of the KKR Group as of the dates and for the periods presented therein (subject to 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 disclosures not required with respect to interim dates). (c) Deloitte & Touche LLP is, and during the periods covered by the KKR Group’s financial statements referred to in Section 3.6(b), was an independent registered public accounting firm as required under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’), and the published rules and regulations thereunder adopted by the United States Securities and Exchange Commission (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 statement of financial condition included in the Interim Financial Statements or described in the footnotes to the Interim Financial Statements, (ii) for liabilities incurred in the ordinary course of business since March 31, 2009 and (iii) for liabilities incurred in connection with this Agreement and the transactions contemplated hereby, including the Restructuring Transactions, the KKR Group has not incurred any material liabilities or obligations that would be required to be reflected or reserved against on a combined statement of financial condition of the KKR Group prepared in accordance with GAAP. (b) The Controlling Partnership, the Purchaser, the Purchaser GP and KKR Management Holdings 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 the Satisfaction Date, will have engaged in no other business activities, and have incurred and, prior to the Satisfaction Date, will have incurred no liabilities or obligations other than in furtherance of the transactions contemplated hereby (including the Restructuring Transactions). 3.8 Internal Controls. The Controlling Partnership, each of the Consolidated Persons and each of the KKR Funds have established and maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since December 31, 2008, there has been no change in the KKR Group’s internal controls over financial reporting that has materially adversely affected, or is reasonably likely to materially adversely affect, the KKR Group’s internal controls over financial reporting. 3.9

Capitalization.

(a) The Purchaser Common Units and the limited partnership interests evidenced thereby to be issued to the Seller pursuant to Section 1.1 will be duly authorized prior to issuance and, when issued pursuant to the terms and conditions of this Agreement, will be validly issued and fully paid and free and clear of any Liens. Except for (i) Purchaser Common Units issuable to the Seller pursuant to Section 1.1 or in connection with an exchange by Holdings or its designees of partner interests in the Group 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 equity interests in the Purchaser, (B) outstanding securities or other instruments or rights of any person convertible or exchangeable for equity interests in the Purchaser or (C) options or other rights to acquire from the Purchaser any equity interests in the Purchaser or obligations of the Purchaser to issue any equity interests in the Purchaser. (b) All of the issued shares of capital stock, partnership interests, member interests or other equity interests of each other Consolidated Person have been or will be, duly authorized and validly issued and fully paid (in the case of any other Consolidated Persons that are organized as limited liability companies, limited partnerships or other business entities, to the extent required under the applicable limited liability company, limited partnership or other organizational agreement) and non-assessable (except in the case of interests held by general partners or similar entities under the applicable laws of other jurisdictions, in the case of any Consolidated Persons that are organized as limited liability companies, as such non-assessability may be affected by Section 18-303, Section 18-607 or Section 18-804 of the Delaware Limited Liability Company Act or similar provisions under the applicable laws of other jurisdictions or the applicable limited liability company agreement and, in the case of any Consolidated Persons that are organized as limited partnerships, as such non-assessability may be affected by Section 17-303, Section 17-607 or Section 17-804 of the Delaware Revised Uniform Limited Partnership Act or similar provisions under the applicable laws of other jurisdictions or the applicable limited partnership agreement) and are owned or will be owned, as the case may be, directly or 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 to subscribe for, to purchase, to exchange any securities or interests for or to convert any securities or interests into, any partnership interests or partnership units or membership interests or shares of capital stock of the Controlling Partnership or any of the Consolidated Persons pursuant to any partnership or limited liability company agreement, any articles or certificates of incorporation or other governing documents 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 Person may, directly or indirectly, be bound, and there are no outstanding options or warrants to purchase any securities of the Controlling Partnership or any of the Consolidated Persons. 3.10 Investment Company. Neither the Controlling Partnership nor any of the Consolidated Persons 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 under the 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 Consolidated Persons and the KKR Funds are being, and since January 1, 2007, have been, conducted in compliance in 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 any of the KKR Funds has received any written communication or notice from any Governmental Entity that alleges that the Controlling Partnership or a Consolidated Person or a KKR Fund is not in compliance in any material respect with any law, statute, rule, ordinance or regulation of any Governmental Entity and that is reasonably likely to give rise to any material liability on the part of the Controlling 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 have received all material permits, certificates, licenses and authorizations (the ‘‘Permits’’) to own or hold under lease and operate their respective assets and to conduct the business of the Controlling Partnership, the Consolidated Persons and the KKR Funds as currently conducted. All such Permits are validly held by the Controlling Partnership, the Consolidated Persons and the KKR Funds, as the case may be, and each of the Controlling Partnership, the Consolidated Persons and the KKR Funds has complied 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 investigation pending or, to the knowledge of the Controlling Partnership, threatened against the Controlling Partnership, any of the Consolidated Persons or any KKR Fund that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser (after giving effect to the Restructuring Transactions, but excluding the Acquired Partnership and its subsidiaries). Neither the Controlling Partnership nor any of the Consolidated Persons nor any KKR Fund is subject to or bound by any outstanding order, injunction, judgment, award or decree that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser (after giving effect to the Restructuring Transactions, but excluding the Acquired Partnership and its subsidiaries). 3.14 Taxes. Each of the Controlling Partnership, the Consolidated Persons and, to the knowledge of the Controlling Partnership, the KKR Funds has (i) duly and timely filed (including pursuant to applicable extensions) all material returns, reports, information returns or other documents required 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 taxing authority (‘‘Taxes’’) and such returns, reports and other documents are true and correct and (ii) paid in full all material Taxes due or claimed to be due or owing from such entity, other than any such amounts being contested in good faith and by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There are no material Tax audits or investigations of which the Controlling Partnership, any of the Consolidated Persons or, to the knowledge of the Controlling Partnership, any of the KKR Funds has notice, nor does the Controlling Partnership have notice of any proposed additional material Tax assessments against the Controlling Partnership, any of the 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, neither the Controlling Partnership nor any of the Consolidated Persons nor any KKR Fund is a party to or bound 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 exclusion of contracts entered into more than two years before the filing of a registration statement) of the Controlling Partnership (after giving effect to the Restructuring Transactions, but excluding the Acquired Partnership and its subsidiaries) (each such Contract, a ‘‘Material Contract’’). As of the date of this Agreement, each of the Material Contracts is valid and binding on the Controlling Partnership or the Consolidated Person or the KKR Fund party thereto and is in full force and effect in all material respects. There is no material breach or default under any Material Contract or any material management agreement by the Controlling Partnership or the Consolidated Person or the KKR Fund party thereto or, to the knowledge of the Controlling Partnership, any other party thereto and no event has occurred that with or without the lapse of time or the giving of notice or both would constitute a material breach or default thereunder by the Controlling Partnership, the Consolidated Person, the KKR 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 has received prior to the date of this Agreement any notice of the intention of any party to terminate any Material Contract or any material management agreement. Complete, true and correct copies of all Material Contracts, together with all existing modifications and amendments thereto, have been made available 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 the Consolidated 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 of organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’)), to any material Tax, fine, lien, penalty or other liability imposed by the 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 or understandings of the Controlling Partnership or any of the Consolidated Persons pursuant to the express terms of which any partner, member, director, officer, employee or consultant of the Controlling Partnership or any of the Consolidated Persons (each, a ‘‘Participant’’) would reasonably be expected to become entitled to (a) any additional compensation, enhanced severance or other benefits or grant of Purchaser Common Units or awards related thereto or any acceleration of the time of payment or vesting of any compensation, severance or other benefits or any funding of any compensation or benefits by the Controlling Partnership or any of the Consolidated Persons, in each case, as a result of the Restructuring Transactions or (b) any other compensation or benefits from the Controlling Partnership or any of the Consolidated Persons that is related to, contingent upon, or the value 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 Consolidated Persons (other than Holdings or an affiliate thereof (other than the Controlling Partnership or any of the 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 the Controlling 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 any Consolidated Person has incurred any obligation or liability, contingent or otherwise, for brokers’ or finders’ fees or commissions in connection with the transactions contemplated by this Agreement for which the Seller is or will become liable. 3.18 Press Release. (a) The press release to be issued on announcement of the execution of this Agreement, 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 not misleading in any material respect. The Press Release contains, in summary form, all the information about 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 the consideration to be received by the Seller pursuant hereto, including information necessary for assessing the value of such consideration, that is required to be made publicly available as of the date of this Agreement pursuant to the Dutch Financial Markets Supervision Act or the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. Without limiting the provisions set forth in the preceding sentence, the parties acknowledge that additional information with respect to the Purchaser, the terms and conditions of the Purchase and Sale, the Restructuring Transaction, the Investment Agreement and the consideration to be received by the Seller, including pro forma financial information, will be included in the Consent Solicitation Documents. (b) The ranges of economic net income, assets under management and fee-related earnings of the total reportable segments of the KKR Group and the range of net asset value of the Seller included in the Press Release as of and for the three months ended June 30, 2009 are the Controlling Partnership’s good faith estimates of such ranges. The economic net income of the total reportable segments of the KKR Group shall be reported by the Controlling Partnership in the footnotes to its financial statements as 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 any Consolidated Person and any person granting such a person the right to require the Controlling Partnership 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 duly authorized, executed and delivered by the Controlling Partnership or the parties thereto that are affiliated with the Controlling Partnership (other than the Seller), as applicable, and, assuming due authorization, execution and delivery by the other parties thereto, will be a valid and binding obligation of 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 to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other 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 in perpetuity, without payment to any other person, and have duly registered or filed for registration with the appropriate Governmental Entities, the ‘‘KKR’’ trademark in the United States and, to the knowledge of the Controlling Partnership, in all other countries or jurisdictions where such trademark is reasonably necessary for the conduct of the business of the Controlling Partnership and the Consolidated Persons as presently conducted, (ii) the consummation of the Purchase and Sale and the other transactions contemplated hereby (including the Restructuring Transactions) does not and will not conflict with, alter or impair any such rights, (iii) since January 1, 2007, none of the Controlling Partnership or any of the Consolidated Persons has received any written communication or notice from any person asserting any ownership interest in the ‘‘KKR’’ trademark and (iv) none of the Controlling Partnership 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 the laws of the Cayman Islands.

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4.2 Authority. Holdings has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby (including the Restructuring Transactions). The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby (including the Restructuring Transactions) have been, or will be, duly authorized by all necessary action on the part of Holdings and no other action will be necessary on the part of Holdings for the execution, delivery and performance by Holdings of this Agreement and the consummation of the transactions contemplated hereby (including the Restructuring Transactions). This Agreement has been duly executed and delivered by Holdings and, assuming due authorization, execution and delivery by the Purchaser, the Controlling Partnership, the Seller, the Group Partnerships and the Acquired Partnership GP, constitutes a valid and binding obligation of Holdings enforceable against Holdings in accordance 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 generally and by general equity principles. 4.3 No Conflicts. Neither the execution and delivery of this Agreement by Holdings nor the consummation of the transactions contemplated hereby, nor compliance by Holdings with any of the terms or provisions hereof, will (i) violate any provision of the certificate of formation or limited partnership agreement of Holdings and (ii) assuming that the consents, approvals and filings referred to in 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 the Restructuring 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 require redemption or repurchase or otherwise require the purchase or sale of any securities or constitute a default under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the properties or assets of Holdings under, any of the terms, conditions or provisions of any Contract to which Holdings is a party, 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 by Holdings is necessary in connection with the execution, delivery and performance of this Agreement by Holdings 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 written consent and such other documents, substantially in the form of the draft provided by the Controlling Partnership to the Seller concurrently with the execution of this Agreement with such changes as deemed reasonably necessary by the Controlling Partnership and Seller acting in good faith (collectively, the ‘‘Consent Solicitation Documents’’) that may be necessary or desirable (as agreed reasonably and in good faith by the Controlling Partnership and the Seller, taking into account requirements under applicable law) to obtain the consent of the holders of at least a majority of the Seller Common Units for which a properly submitted consent form is submitted in response to the Consent Solicitation Documents (excluding in both the numerator and the denominator any Seller Common Units whose consent rights are controlled by the Controlling Partnership or its affiliates) to consummate the Purchase and Sale (the ‘‘Requisite Unitholder Consent’’), all pursuant to the procedures to be agreed reasonably and in good faith by the Controlling Partnership and the Seller, taking into account requirements under applicable law. To the extent that the consent of holders of at least a majority 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 its affiliates and any Seller Common Units whose consent rights are controlled as of the applicable record date by a person who has informed the Seller in writing that it will not submit a consent form in response to the Consent Solicitation Documents) have been obtained, all consents shall cease to be revocable 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 Units consent 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 otherwise disseminate in a manner that complies with any applicable law, rule, regulation and the Seller Limited Partnership Agreement, the Consent Solicitation Documents to the holders of the Seller Common Units. The Seller shall use its reasonable best efforts to obtain the Requisite Unitholder Consent as promptly as practicable following the mailing or other dissemination of the Consent Solicitation Documents. In the event that the consent solicitation period contemplated by the Consent Solicitation Documents has expired, or would otherwise expire, and the condition set forth in Section 7.1(a) was not, or would not be, satisfied upon such expiration, the expiry time of the consent solicitation shall be extended 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 of the Seller Limited Partnership Agreement without in either case the prior consent of both the Controlling Partnership and the Seller. (c) The Controlling Partnership shall furnish to the Seller all information concerning the Controlling Partnership and each of the Consolidated Persons and KKR Funds and such other matters as 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 and comment (and the Seller shall consider in good faith the inclusion of any comments provided by the Controlling Partnership) on the Consent Solicitation Documents and any amendments or supplements thereto 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 information to be included in the Consent Solicitation Documents will be based on historical segment information of the KKR Group and historical financial information of the Acquired Partnership and its subsidiaries and 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 occurred on January 1, 2008 with respect to the preliminary unaudited pro forma statement of operations segment information and as of March 31, 2009 with respect to the preliminary unaudited pro forma statement of financial condition segment information by applying the adjustments described in the accompanying notes. Such adjustments are based on information that is available and determinable as of the date of this Agreement and are based on assumptions that management of the Controlling Partnership believes are reasonable as of the date of this Agreement in order to reflect, on a pro forma basis, the impact of the transaction aspects described therein on the historical segment financial information of the KKR Group. (d) The Controlling Partnership and, with respect only to the Specified Information (as defined below), the Seller, agree that none of the information included or incorporated by reference in the Consent Solicitation Documents will, at the time the Consent Solicitation Documents are mailed or otherwise disseminated to the holders of the Seller Common Units, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time prior to the date on which the Requisite Unitholder Consent is received any information should be discovered by either the Controlling Partnership or the Seller that should be set forth in an amendment or supplement to the Consent 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 statement therein, in the light of the circumstances under which they were made, not misleading, the party that discovers 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 be promptly mailed or otherwise disseminated to the holders of the Seller Common Units. For purposes of this Agreement, ‘‘Specified Information’’ shall mean any information concerning the Independent Directors and the process conducted by them in connection with the transactions contemplated hereby furnished in writing by or on behalf of the Independent Directors specifically for use in the Consent Solicitation Documents, it being understood that such information shall be identified as such by the Seller 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 Independent Directors may change their recommendation to the Board in response to any material events or circumstances, if the Independent Directors have concluded in good faith, after consultation with, and taking into account the advice of, their outside legal counsel, that had such material events or circumstances occurred and/or been known to the Independent Directors prior to the date of this Agreement, the Independent Directors would, in compliance with their fiduciary duties under applicable law, not have recommended, or would have modified the terms of their recommendation, to the Board that the Board approve this Agreement and the transactions contemplated by this Agreement. 5.2

Reasonable Best Efforts.

(a) Subject to the terms and conditions of this Agreement, each of the Controlling Partnership and 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 in Section 7 of this Agreement are satisfied and to consummate the transactions contemplated by this Agreement as promptly as practicable, including using its reasonable best efforts to (i) obtain (and to cooperate with the other party to obtain) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or any third party which is required to be obtained in connection with the transactions contemplated by this Agreement from Governmental Entities or third parties and (ii) making all registrations, notifications and filings with any Governmental Entity or any third party that are required to be made in connection with the transactions contemplated by this Agreement. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to require the Controlling Partnership or the Seller to take, or agree to take, any action if the taking of such action would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser (after giving effect to the Restructuring Transactions, but excluding the Acquired Partnership and its subsidiaries) or the Seller, as applicable. Notwithstanding the foregoing, nothing contained in this Agreement shall be deemed to require the Controlling Partnership or any of its affiliates to take any action that would require the Controlling Partnership or any of its affiliates to become subject to regulation under the Investment Company Act. (b) Each of the Controlling Partnership and the Seller shall in connection with the efforts referenced in Section 5.2(a) (i) promptly cooperate with and furnish information to the other in connection with any action required to be taken pursuant to Section 5.2(a), and (ii) permit the other to review any communication given by it to, and consult with each other in advance of any meeting or conference with, 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. 5.3

No Solicitation.

(a) The Seller shall not, and shall cause its investment bankers, attorneys, accountants, agents and other 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 an Acquisition Proposal (as defined below) or any inquiry or proposal that could reasonably be expected to lead to an Acquisition Proposal, (ii) participate in any discussions or negotiations regarding an Acquisition Proposal or any inquiry that constitutes or could reasonably be expected to lead to an Acquisition Proposal, (iii) furnish to any person any information or data with respect to it or any of its assets or otherwise cooperate with or take any action to knowingly facilitate any proposal that constitutes or could reasonably be expected to lead to an Acquisition Proposal or (iv) enter into any letter of intent, memorandum of understanding or other agreement or understanding relating to, or that could reasonably be expected to lead to, an Acquisition Proposal. The Seller shall promptly notify the Controlling Partnership of the receipt of any Acquisition Proposal (or any request for any information or data or other inquiry or request that could reasonably be expected to lead to an Acquisition Proposal). For the avoidance of doubt, the parties understand and agree that nothing in this Agreement is intended to give the Independent Directors the power or authority to participate in any discussions or negotiations regarding, or entering into any agreement or understanding on behalf of the Seller with any person with respect to, any direct or indirect acquisition of any Limited Partner Interests, any of the outstanding Seller Common Units or any of the assets of the Acquired Partnership. (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 affiliates relating to any direct or indirect acquisition of (i) any Limited Partner Interests, (ii) 20% or more of the outstanding Seller Common Units or (iii) 20% or more of the consolidated assets of the Acquired Partnership. 5.4 Restructuring Transactions. (a) Holdings shall use its reasonable best efforts to take, or cause to be taken, such actions as are necessary so that at the Effective Time: (i) the Group Partnerships shall own, directly or indirectly, all of the Contributed Interests, (ii) upon the completion of the Purchase and Sale, the Purchaser shall contribute all of the Limited Partnership Interests and any assets of the Acquired Partnership distributed to the Purchaser in respect of such Limited Partnership Interests, directly or indirectly, to the Group Partnerships in exchange for a direct or indirect controlling interest and 30% of the outstanding Class A units representing limited partner interests in each of the Group Partnerships (it being understood that no Class A units that are permitted to be issued pursuant to Section 5.9(a)(iv)(C) shall be deemed outstanding for purposes of the foregoing), and (iii) upon the completion of the Purchase and Sale, the structure of the KKR Group shall be consistent with the structure set forth in Exhibit B hereto. The transactions contemplated by this Section 5.4 are sometimes referred to herein as the ‘‘Restructuring Transactions’’. (b) The Restructuring Transactions shall be implemented in a manner that is consistent with the steps 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 adverse impact in more than an insignificant respect on the Seller, the Controlling Partnership or the holders of the Seller Common Units or deviations consented to by the Seller, which consent shall not be unreasonably withheld or delayed. The Controlling Partnership shall consider in good faith any deviations to the steps (or methods of implementing the steps) set forth in Exhibit C requested by the Seller or its representatives, it being understood that the decision of whether or not to implement any such requested deviations or methods shall be in the sole determination of the Controlling Partnership acting in good faith. (c) In connection with the Restructuring Transactions, the Seller and KKR Management Holdings Corp. shall not make an election under Section 362(e)(2)(C) of the Code to reduce the tax basis in the Seller 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 the Investment 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 to make such an election. (d) At or prior to the Effective Time, the Controlling Partnership shall deliver to the Seller a certificate signed by a senior officer on behalf of each of the Controlling Partnership GP and the general partner of Holdings in form and substance reasonably satisfactory to the Seller certifying that each has performed in all material respects all obligations required to be performed by it under Section 5.4, Section 5.5, Section 5.6, Section 5.7 and Section 5.9 during the period from the Satisfaction Date 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 may mutually agree. 5.5 Insurance. Except as otherwise set forth in Section 5.5 of the Confidential Controlling Partnership Disclosure Schedules, from the Effective Time until the occurrence of the closing contemplated by the Investment Agreement, the Seller shall, and to the extent required, the Controlling Partnership shall cause the non-Independent Directors of the Seller GP to authorize the Seller 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 amounts as the existing directors’ and officers’ liability insurance of the Seller GP in effect on the date of this Agreement; provided that (i) the Seller shall use its commercially reasonable efforts to increase the coverage limit for such insurance coverage to $100 million and (ii) the Seller shall not be permitted to expend annually in excess of the percentage set forth in Section 5.5 of the Confidential Controlling Partnership 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 shall be required to obtain a policy with the greatest coverage available for a cost not exceeding such amount. 5.6 Modifications to Existing Agreements. Each of the Controlling Partnership and 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 cause, prior to the Satisfaction Date, or as promptly as practicable thereafter and in any event prior to the Effective Time (i) the Investment Agreement, dated as 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 Time pursuant to the Termination Agreement substantially in the form attached hereto as Exhibit M, (ii) the Services 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 or immediately following the Effective Time so as to read substantially in the form attached hereto as Exhibit N, (iii) the Investment Policies and Procedures of the Seller to be amended effective as of the Effective Time so as to read substantially in the form attached hereto as Exhibit O, (iv) the limited partnership agreement of the Acquired Partnership to be amended as of the Effective Time so as to read substantially in the form attached hereto as Exhibit P, (v) the audit committee charter of the board of the Seller GP to be amended as of the Effective Time so as to read substantially in the form attached hereto as Exhibit Q and (vi) the articles of incorporation of the Seller GP to be amended effective 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 its reasonable best efforts to execute, or to cause the other parties thereto to execute, prior to the Satisfaction Date (it being understood that the provisions of the following agreements shall not be effective until the Effective Time), the Investment Agreement between the Controlling Partnership, the Seller 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 ‘‘Exchange Agreement’’), the Amended and Restated Limited Partnership of the Purchaser, substantially in the form attached hereto as Exhibit G (the ‘‘Purchaser LPA’’), the Amended and Restated Limited Partnership Agreement of Management Holdings, substantially in the form attached hereto as Exhibit H (the ‘‘Management Holdings LPA’’), the Amended and Restated Limited Partnership Agreement of Fund Holdings, substantially in the form attached hereto as Exhibit I (the ‘‘Fund Holdings LPA’’), the Lock-Up Agreements, substantially in the forms attached hereto as Exhibit K (the ‘‘Lock-Up Agreement’’) and the Tax Receivables Agreement between the Seller, Holdings, Management Holdings Corp. and Management Holdings substantially in the form attached hereto as Exhibit L (the ‘‘Tax Receivables Agreement’’). The Controlling Partnership shall use its reasonable best efforts to execute, or to cause the other parties thereto to execute, prior to the Effective Time, the Confidentiality and Restrictive Covenant Agreement between the applicable employing entity and those persons who are members of KKR & Co. L.L.C. immediately prior to the consummation of the Restructuring Transactions, substantially in the form attached hereto as Exhibit F, and the Amended and Restated Limited Liability Company Agreement of the Controlling Partnership GP, substantially in the form attached hereto as Exhibit J (the ‘‘Controlling Partnership GP Agreement’’). The Seller shall use its reasonable best efforts to execute, prior to the Satisfaction Date, the Investment Agreement, the Exchange Agreement and the Tax Receivables Agreement, substantially in the forms attached as exhibits hereto. 5.8 Delivery of Letters. (a) The Controlling Partnership shall use its reasonable best efforts to cause to be delivered to the Seller a ‘‘comfort’’ letter from Deloitte & Touche LLP with respect to financial information contained in the Consent Solicitation Documents, dated the date of the Consent Solicitation Documents, in a form customary in scope and substance for ‘‘comfort’’ letters delivered by independent public accountants in connection with registration statements related to equity securities of an issuer (it being understood that such ‘‘comfort’’ letters shall also provide comfort on the interim financial statements included in the Consent Solicitation Documents in accordance with applicable Statement on Auditing Standards, customary comfort on the pro forma financial statements (except that it is anticipated that the pro forma financial statements will not be compliant with Rule 11-02 of Regulation 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 to the Seller a ‘‘negative assurance’’ letter from Simpson Thacher & Bartlett LLP with respect to the absence of material misstatements or omissions in the Consent Solicitation Documents, dated the date of the Consent Solicitation Documents in a form customary in scope and substance for ‘‘negative assurance’’ letters delivered by issuer’s counsel in connection with registration statements relating to equity securities of an issuer. (c) The Controlling Partnership shall use its reasonable best efforts to cause to be delivered to the Seller an opinion from Simpson Thacher & Bartlett LLP dated as of the date of the Consent Solicitation Documents, substantially to the effect that, subject to the qualifications, assumptions and limitations stated therein, the statements made in the Consent Solicitation Documents under the caption ‘‘Material U.S. Federal Income Tax Considerations,’’ insofar as they purport to constitute summaries of matters of United States federal tax law and regulations or legal conclusions with respect thereto, 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 set forth in Section 5.9 of the Confidential Controlling Partnership Disclosure Schedule, as required by applicable 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 respects in the usual, regular and ordinary course. Without limiting the generality of the foregoing, except as contemplated by this Agreement, including the Restructuring Transactions, as set forth in Section 5.9 of the 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 this Agreement 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 the holders 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 those required by GAAP or the SEC; (iii) the Controlling Partnership shall not, and shall not permit the Purchaser to, adopt, enter into, 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 or partnership interests, membership interests, shares of capital stock, other equity securities or interests, (2) redeem, purchase or otherwise acquire, or call for redemption any partnership units or partnership interests, membership interests, shares of capital stock, other equity securities or interests or (3) issue any partnership units or partnership interests, membership interests, shares of capital stock or other equity securities or interests or any option, warrant or right relating thereto or any securities convertible into or exchangeable therefor, other than (A) to the Purchaser or another 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 extent such grants do not, and will not, reduce the percentage of the Class A common units of the Group Partnerships that will be owned directly or indirectly by the Seller below 30% of the outstanding Class A common units of the Group Partnerships, (C) issuances not involving securities of the Controlling 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 persons who will hold a direct or indirect equity interest in Holdings following the Restructuring Transactions so long as any equity interests so issued will constitute Contributed Interests, except as otherwise set forth in Section 3.6(a) of the Confidential Controlling Partnership Disclosure Schedule, or (E) redemptions or repurchases of equity securities or interests or options, warrants or rights relating thereto or securities convertible into or exchangeable therefor from former or departing employees, members, partners, or consultants of any Consolidated Person consistent with such 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 respective partnership units or partnership interests, membership interests, shares of capital stock or other equity securities or interests, except for dividends or distributions to the Purchaser or another Consolidated 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-K under the Securities Act other than any such transaction the terms of which are no less favorable to the Controlling Partnership or the Consolidated Person, as applicable, than those that would be available 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 Holdings Corp. or the Purchaser shall incur or assume any indebtedness for borrowed money or guarantee any such indebtedness; and (viii) the Controlling Partnership shall not, and shall not permit any Consolidated Persons to commit or agree to take, whether in writing or otherwise, any of the foregoing actions that the Controlling 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 the Confidential 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 prevent the Controlling Partnership or the Consolidated Persons from expanding any of their existing businesses or 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 any press release or other public announcement materials with respect to this Agreement or the transactions contemplated by this Agreement and neither the Controlling Partnership or the Seller shall issue any such press release or other public announcement materials without the prior consent of the other party (such consent not to be unreasonably withheld or delayed), except as may be required by law, rule or regulation, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance. The Controlling Partnership and the Seller shall consult with each other regarding communications with holders of the Seller Common Units, analysts, journalists and prospective investors related to this Agreement and the transactions contemplated hereby. (b) Notwithstanding any other provisions of this Agreement, nothing contained in this Agreement shall prohibit the Seller from making any disclosure to the holders of Seller Common Units or to the public (including with respect to any change in the Independent Directors recommendation made in accordance with Section 5.1) if, in the good faith judgment of the Independent Directors after consultation with outside legal counsel, such disclosure would be required under applicable law or stock exchange rules and would be true and correct in all material respects; provided that the Controlling Partnership shall be given, to the extent possible, a reasonable time to comment on such disclosure prior to it being made to the holders of Seller Common Units or to the public. The Controlling Partnership and Holdings acknowledge that the Seller is a publicly listed limited partnership in the Netherlands and is accordingly required to comply with applicable Dutch disclosure rules of the Dutch Financial Markets Supervision Act. 5.11 Anti-takeover Statutes. If any anti-takeover or similar statute or regulation is or may become applicable to the transactions contemplated by this Agreement, the Seller shall grant such approvals and take such other actions as are necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate or minimize the effects of such statute or regulation on such transactions. 5.12 Access to Information. Upon reasonable notice and subject to the terms of the Confidentiality Agreement, dated June 20, 2008, between the Seller and Kohlberg Kravis Roberts & 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 respective personnel and documents (including, books, accounts, contracts, commitments, tax returns and other records) and shall furnish to the Seller, the Independent Directors and their respective representatives as 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 Independent Directors or their respective representatives may reasonably request; provided, that the foregoing shall not obligate the Controlling Partnership to disclose any information of the Controlling Partnership or the Consolidated Persons that the Controlling Partnership reasonably determines, based on the advice of counsel, to be privileged; provided that the Controlling Partnership shall use reasonable best efforts to make appropriate substitute disclosure arrangements under circumstances in which the immediately preceding proviso applies. 5.13 Litigation. In the event a Proceeding (as defined below) relating to this Agreement, the Purchase and Sale or the other transactions contemplated hereby is initiated by a third party between the date of the Original Agreement and the Effective Time against the Seller, during such period the Seller shall conduct and control such Proceeding. The Seller shall give the Controlling Partnership the opportunity to comment with respect to the defense of such Proceedings and such comments shall be duly taken into account. The Seller shall give the Controlling Partnership the opportunity to participate in the defense of any such Proceeding, shall keep the Controlling Partnership informed of the progress of such Proceeding and its or their defense and shall make available to the Controlling Partnership all documents, notices, communications and filings (including court papers) as may be requested by the Group Partnerships. The Seller shall not settle or compromise any such Proceeding without the prior written 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 to conduct such Proceeding. 6.

INDEMNIFICATION

(a) To the fullest extent permitted by applicable law, from the Effective Time through the earlier of (i) the sixth anniversary thereof and (ii) until such time as the beneficiaries of this Section 6 become entitled to the benefits of the covenants and agreements contained in Section 5 of the Investment Agreement, the Group Partnerships shall indemnify, defend and hold harmless, and provide advancement of expenses to, each present and former director and officer of the Seller GP and the persons identified in Section 6.1 of the Confidential Controlling Partnership Disclosure Schedule against all losses, liabilities, damages, judgments and fines (‘‘Losses’’) incurred in connection with any suit, claim, action, proceeding, arbitration or investigation (‘‘Proceedings’’) arising out of or related to actions taken by them in their capacity as directors or officers of the Seller GP (including, this Agreement and the transactions contemplated hereby) or taken by them at the request of the Seller or the 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 by applicable law the Purchaser, the Purchaser GP, the Controlling Partnership, the Seller and each present and former director and officer of the Seller GP and the persons identified in Section 6.1 of the Confidential Controlling Partnership Disclosure Schedule against any and all Losses to which they or any of them may become subject under the Securities Act, the Exchange Act or other applicable law, statute, rule or regulation insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Consent Solicitation Documents, the Press Release, any other document issued by the Controlling Partnership, the Seller or any of their respective affiliates in connection with or otherwise relating to the Purchase and Sale, or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Group Partnerships agree to reimburse each such person, as incurred, for any legal or other expenses reasonably incurred by such person in connection with investigating or defending against any such Losses to the fullest extent permitted by applicable law; provided, however that the Group Partnerships 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 omission made in the Consent Solicitation Documents, the Press Release or in any amendment thereof or supplement thereto, or in any such other document in reliance upon and in conformity with the Specified Information. (c) The Group Partnerships shall, in respect of any indemnified person that was a director of the Seller GP as of the date of this Agreement who may be called upon, subsequent to the date of his resignation or expiration of his term, to testify in any Proceeding in connection with this Agreement or the transactions contemplated hereby, provide such person with reasonable compensation for his time spent 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 of application of the proviso to Section 6.1(b)) to or insufficient to hold harmless the indemnified person in respect of any Losses, then the Group Partnerships shall contribute to the amount paid or payable by the indemnified person as a result of such Losses (A) in such proportion as is appropriate to reflect the relative fault of the Group Partnerships, on the one hand, and the indemnified person, on the other or (B) if the allocation provided by clause (A) is not permitted by applicable law, or provides a lesser sum to the indemnified person than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative fault of the Group Partnerships, on the one hand, and the indemnified person, on the other, in respect of such Losses but also the relative benefits received by the Group Partnerships, on the one hand, and the indemnified person, on the other, from the transactions 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 in this Section 6.1 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified person in connection with investigating or defending any such action or claim. For purposes of this Section 6, any benefit or fault in respect of the transactions contemplated by this Agreement 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 of which indemnity or contribution may be sought pursuant to this Section 6.1, such person shall promptly notify the Group Partnerships thereof in writing; provided that the failure to so notify the Group Partnerships will not affect the rights of such person under this Section 6.1 except to the extent that the Group Partnerships are actually prejudiced by such failure. The Group Partnerships shall be entitled to take control of and conduct such Proceeding and to appoint counsel (including local counsel) of the Group 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 of any separate counsel retained by the indemnified party). Notwithstanding the Group Partnerships’ election to appoint counsel (including local counsel) to represent the indemnified party in connection with a Proceeding, the indemnified party shall have the right to employ separate counsel (including local counsel), and the Group Partnerships shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Group Partnerships to represent the indemnified party would present such counsel with a conflict of interest (based on the advice of counsel to the indemnified person), (ii) such Proceeding includes both the indemnified party and the Group Partnerships, and the indemnified party shall have reasonably concluded (based on the advice of counsel to the indemnified person) that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the Group Partnerships or (iii) the Group Partnerships shall authorize the indemnified party to employ separate counsel at the expense of the Group Partnerships. It is understood that the Group Partnerships shall not, in respect of the legal expenses of any indemnified party in connection with any Proceeding or related Proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties. The Group Partnerships shall not be liable under this 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 be sought under this Section 6.1 (whether or not the indemnified parties are actual or potential parties to such claim or action), unless such settlement, compromise or consent is consented to by the Group Partnerships, such consent not to be unreasonably withheld or delayed. (f) Notwithstanding any other provision of this Agreement to the contrary, the indemnified parties specified in this Section 6.1 shall be third party beneficiaries of this Section 6.1. The provisions of this Section 6.1 are intended to be for the benefit of each such person to whom this Section 6.1 applies (and, in the case of each director of the Seller GP, for the benefit of such director in his individual capacity) and his or her heirs. The obligations of the Group Partnerships under this Section 6.1 shall not be terminated or modified in such a manner as to adversely affect any such person to 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 or merge into any person and shall not be the continuing or surviving person in such consolidation or merger or (ii) transfer all or substantially all of its assets to any other persons, then, and in each such case, proper provisions shall be made so that the successors and assigns of the Group Partnerships shall assume 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 all applicable expenses advanced to any person pursuant to this Section 6 if it is ultimately determined by a non-appealable judgment that such person is not entitled to indemnification hereunder with respect to 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 Purchase and Sale shall be subject to the satisfaction or waiver on the Satisfaction Date by the Controlling Partnership and the Seller of each of the following conditions: (a) Unitholder Approval. The Requisite Unitholder Consent shall have been obtained and 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 have expired or been terminated. (c) No Injunctions or Restraints; Illegality. No order, injunction, judgment, award or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition 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 or enforced by any Governmental Entity which prohibits or makes illegal the consummation of the Purchase and Sale. 7.2 Conditions to Obligations of the Purchaser. The obligations of the Purchaser to consummate the Purchase and Sale are also subject to the satisfaction or waiver on the Satisfaction Date by the Controlling Partnership of each of the following conditions: (a) Representations and Warranties. The representations and warranties of the Seller set forth in this Agreement shall be true and correct as of the date of this Agreement and (except to the extent such representations and warranties are expressly limited to an earlier date) as of the Satisfaction Date as though made on and as of the Satisfaction Date, except where the failure of such representations and warranties to be so true and correct (without giving effect to 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, a Material Adverse Effect on the Acquired Partnership. The Controlling Partnership shall have received on the Satisfaction Date a certificate, signed on behalf of the Seller by the Chief Financial Officer of the Seller, attesting to the foregoing in form and substance reasonably satisfactory to the Controlling Partnership. (b) Performance of Obligations by the Seller. The Seller shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Satisfaction Date. The Controlling Partnership shall have received on the Satisfaction Date a certificate, signed on behalf of the Seller by the Chief Financial Officer of the Seller, attesting to the foregoing in form and substance reasonably satisfactory to the Controlling Partnership. (c) Absence of Material Adverse Effect. Since the date of this Agreement, there shall not have been any Effect that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Acquired Partnership. (d) Execution of Other Agreements. The Investment Agreement, the Exchange Agreement and the Tax Receivables Agreement, in substantially the forms attached as an exhibit to this Agreement shall have been duly authorized, executed and delivered by the Seller and shall be in full force (it being understood that the provisions of such agreements shall not be effective until the Effective Time). 7.3 Conditions to Obligations of the Seller. The obligations of the Seller to consummate the Purchase and Sale are also subject to the satisfaction or waiver on the Satisfaction Date by the Seller of each of the following conditions: (a) Representations and Warranties. (i) The representations and warranties of the Controlling Partnership set forth in Section 3.18 shall be true and correct as of the date of this Agreement, except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate has not had, and would not reasonably be expected to have, a Material Adverse Effect on the holders of Seller Common Units and (ii) the other representations and warranties of the Controlling Partnership and the representations and warranties of Holdings and the Purchaser set forth in this Agreement shall be true and correct as of the date of this Agreement and (except to the extent such representations and warranties are expressly limited to an earlier date) as of the Satisfaction Date as though made on and as of the Satisfaction Date, except where the failure of such representations and warranties to be so true and correct (without giving effect to any materiality or Material Adverse Effect or similar qualifiers set forth therein), individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect on (1) the Purchaser in the case of the other representations and warranties of the Controlling Partnership and the Purchaser, or (2) Holdings, in the case of the representations and warranties 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). The Seller shall have received a certificate on the Satisfaction Date signed on behalf of a senior officer of each of the Controlling Partnership GP and the general partner of Holdings attesting to the foregoing in form and substance reasonably satisfactory to the Seller. (b) Performance of Obligations of the Controlling Partnership. Each of the Controlling Partnership, the Purchaser and Holdings shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Satisfaction Date. The Seller shall have received a certificate on the Satisfaction Date signed on behalf of a senior officer of each of the Controlling Partnership GP and the general partner of Holdings attesting 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 shall not have been any Effect that has had or would reasonably be expected to have, individually or 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 Exchange Agreement, the Tax Receivables Agreement, the Purchaser LPA, the Management Holdings LPA, the Fund Holdings LPA and the Lock-Up Agreements in substantially the forms attached as exhibits to this Agreement shall have been duly authorized, executed and delivered by each of the parties thereto (other than the Seller) and shall be in full force (it being understood that the provisions of such agreements shall not be effective until the Effective 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 this Agreement, each in form and substance reasonably satisfactory to the Seller. 8.

TERMINATION

8.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Satisfaction Date (or the Effective Time, in the case of clauses (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 of competent jurisdiction shall have issued an order, injunction, judgment, award or decree or taken any other action permanently enjoining, restraining or otherwise prohibiting the Purchase and Sale and such order, injunction, judgment, award, decree or other action shall have become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(b) shall not be available to any party who has not used its reasonable best efforts to cause such order, injunction, judgment, award, decree or other action to be vacated, annulled or lifted; (c) by either the Controlling Partnership or the Seller if the consent solicitation contemplated by the Consent Solicitation Documents expires (and is not extended) and the Requisite Unitholder Consent is not obtained; provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(c) shall not be available to any party whose failure to fulfill any of its obligations under this Agreement has been a principal cause of the failure of the Requisite Unitholder Consent to be obtained; (d) by either the Controlling Partnership or the Seller if the Satisfaction Date shall not have occurred on or before October 31, 2009 (the ‘‘Outside Date’’); provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to any party whose failure to fulfill any of its obligations under this Agreement has been a principal cause of or has resulted 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 or Section 7.2 shall become incapable of being satisfied on or before the Outside Date; provided that if the condition giving rise to the right to terminate under this Section 8.1(e) is incapable of being satisfied due to a breach by the Seller of any of its representations, warranties, covenants or agreements in this Agreement or the failure of any representation or warranty of the Seller to be true, the Controlling Partnership shall not be permitted to terminate this Agreement unless such breach or failure to be true has not been cured prior to the earlier of (i) 30 days after the giving of written notice by the Controlling Partnership to the Seller of such breach or failure to be true and (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 Controlling Partnership is then in breach of any representation, warranty, covenant or agreement in this Agreement that would cause any of the conditions set forth in Section 7.1 or Section 7.3 not to be satisfied; or (f) by the Seller if any of the conditions set forth in Section 7.1 or Section 7.3 shall become incapable of being satisfied on or before the Outside Date; provided, that if the condition giving rise to the right to terminate under this Section 8.1(f) is incapable of being satisfied due to a breach by the Controlling Partnership, the Purchaser or Holdings of any of their respective representations, warranties, covenants or agreements in this Agreement or the failure of any representation 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 be true has not been cured prior to the earlier of (i) 30 days after the giving of written notice by the Seller to the Controlling Partnership, the Purchaser or Holdings, as applicable, of such breach or failure to be true and (ii) the Outside Date; provided, further that the right to terminate this Agreement pursuant to this Section 8.1(f) shall not be available to the Seller if the Seller is then in breach of any representation, warranty, covenant or agreement in this Agreement that would cause any 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 abandonment of the transactions contemplated hereby pursuant to Section 8.1, this Agreement shall forthwith become void and have no effect, and no party or any of their respective affiliates, employees or representatives shall have any liability of any nature whatsoever under this Agreement, or in connection with the transactions 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 this Agreement and (ii) neither the Seller, the Purchaser, the Controlling Partnership, the Group Partnerships nor Holdings shall be relieved or released from any liabilities or damages arising out of its willful 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’s certificate delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, agreements and provisions, shall survive following the Satisfaction 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 shall survive until the Effective Time, (ii) those covenants contained in Section 5.5 shall survive in accordance with the terms thereof, (iii) those covenants and agreements contained in Section 6 shall survive until such time as the beneficiaries thereof become entitled to the benefits of the covenants and agreements contained in Section 5 of the Investment Agreement, and (iv) those covenants and agreements contained in Section 1.1, Section 1.2, Section 1.4, Section 5.4(c), Section 5.13 and Section 9 shall survive indefinitely. 9.2 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses; provided that if the Effective Time occurs, (i) all costs and expenses incurred by the Seller or the Seller GP in connection with this Agreement and the transactions contemplated hereby shall be paid by the Purchaser and (ii) all other costs and expenses incurred in connection with this Agreement shall be paid 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 that are 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 indirect economic interest in a Consolidated Person). 9.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, (b) on the first business day following the date of dispatch if delivered by a recognized next-day courier service or (c) on the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: if to the Controlling Partnership, to: KKR & Co. L.P. 9 W. 57th Street, Suite 4200 New York, NY 10019 Attention: David J. Sorkin Facsimile: (212) 750-0003 with a copy to (which shall not constitute notice): Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Attention: Alan M. Klein Joseph H. Kaufman Facsimile: (212) 455-2502 if to the Seller, to: KKR Private Equity Investors, L.P. P.O. Box 255 Trafalgar Court, Les Banques St. Peter Port, Guernsey GY1 3QL Channel Islands Attention: Christopher Lee Facsimile: +44.1481.745.074 with a copy to (which shall not constitute notice): Bredin Prat 130 rue du Faubourg Saint Honor´ e 75008 Paris France Attention: Patrick Dziewolski Benjamin Kanovitch Facsimile: +33 (0)1.42.89.10.73 and Cravath, Swaine & Moore LLP CityPoint | One Ropemaker Street London EC2Y 9HR UK Attention: George Stephanakis Facsimile: +44 (0)207 860 1150

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and Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, NY 10019 Attention: Sarkis Jebejian Facsimile: (212) 474-3700 9.4 Interpretation. The words ‘‘hereof,’’ ‘‘herein’’ and ‘‘hereunder’’ and words of similar import when used in this Agreement shall refer to this Agreement as a whole and the schedules hereto and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified. Whenever the words ‘‘include,’’ ‘‘includes’’ or ‘‘including’’ are used in this Agreement, 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 Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or interpretation against the party drafting or causing any instrument to be drafted. All schedules accompanying this Agreement and all information specifically referenced in any such schedule form an integral part of this Agreement, and references to this Agreement include references to them. The term ‘‘affiliate’’ has the meaning 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) and 13(d)(3) of the Exchange Act. Whenever this Agreement requires the Seller or the Controlling Partnership to take, or not take, any action, such requirement shall be deemed to include an undertaking on the part of the Seller GP or the Controlling Partnership GP, as the case may be, to cause the Seller or the Partnership to take, or not take, such action. For the avoidance of doubt, no representations, warranties, covenants or agreements set forth in this Agreement are intended to apply to any portfolio companies of any of the KKR Funds. 9.5 Amendment; Waiver. Subject to compliance with applicable law, this Agreement may be amended by the parties hereto, by a written instrument authorized and executed on behalf of the parties hereto (provided that in the case of the Seller in addition to any other requirement under applicable law, any such amendment shall be valid only if approved by all of the Independent Directors). At any time prior to the Effective Time, each party hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties by the other parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance by the other parties hereto with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party (provided that in the case of the Seller in addition to any other requirement under applicable law, any such extension or waiver shall be valid only if approved by all of the Independent Directors), but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 9.6 Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. 9.7 Entire Agreement. This Agreement (together with the documents, schedules and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and 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 of competent jurisdiction to be invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction, and if any provision of this Agreement is determined to be so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable, in all cases so long as neither the economic nor legal substance of the transactions contemplated hereby is affected in any manner materially adverse to any party. 9.9 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations of any party hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties hereto. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable 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 5.5 and Section 6, is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder. 9.10 Further Assurances. The Purchaser, the Controlling Partnership, the Seller and Holdings each agrees to execute and deliver such other documents or agreements and to use their respective reasonable best efforts to take such other actions as may be reasonably necessary or desirable for the implementation 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 Articles of Association of the Seller GP, during the period from the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with the terms hereof, the Independent 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 the Purchaser, the Controlling Partnership and/or Holdings. The parties hereto further agree that (i) the Seller shall not be deemed to have breached this Agreement unless such breach was due to the taking of any action, or failure to take any action, by the Independent Directors and (ii) the Controlling Partnership shall be deemed to have breached this Agreement if the Controlling Partnership or any of its affiliates (other than the Seller or the Seller GP) takes any action, or fails to take any action, that causes the Seller to breach this Agreement; provided that if the taking of such action, or failure to take such 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 the taking of, or failure to take, such action other than for purposes of determining whether the condition set forth in Section 7.3(b) has been satisfied and the Controlling Partnership shall have no liability to the 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 the laws of the State of New York. 9.13 Submission to Jurisdiction. Each party irrevocably submits to the jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each party agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Southern District of New York or, if such suit, action or other proceeding may not be brought in such court for reasons of subject matter jurisdiction, in the Supreme Court of the State of New York, New York County. 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 District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party further irrevocably consents to the service of process out of any of the aforementioned courts in any such suit, action or other proceeding by the mailing of copies thereof by mail to such party at its address set forth in this Agreement, such service of process to be effective upon acknowledgment of receipt of such registered mail; provided that nothing in this Section 9.13 shall affect the right of any party to serve legal process in any other manner permitted by law. The consent to jurisdiction set forth in this Section 9.13 shall not constitute a general consent to service of process in the State of New York and shall have no effect for any purpose except as provided in this Section 9.13. The parties agree that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 9.14 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms on a timely basis or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court identified in Section 9.13, this being in addition 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 BY JURY IN ANY JUDICIAL PROCEEDING DIRECTLY INVOLVING ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 9.16 Effect on Original Agreement. The parties agree that this Agreement amends and restates the Original Agreement in its entirety and upon execution and delivery of this Agreement by the parties hereto the Original Agreement shall cease to have any force or effect and no person shall have any 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 of the date first above written. KKR & CO. L.P. By:

KKR MANAGEMENT LLC, its general partner

By:

/s/ WILLIAM J. JANETSCHEK Name: William J. Janetschek Title: Chief Financial Officer

KKR PRIVATE EQUITY INVESTORS, L.P. By:

KKR GUERNSEY GP LIMITED, its general partner (Registration No. 44666)

By:

/s/ KENDRA DECIOUS Name: Kendra Decious Title: Chief Financial Officer

KKR PEI ASSOCIATES, L.P., in its capacity as general 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 Decious Title: Vice President

KKR HOLDINGS L.P. (solely for purposes of Section 4, Section 5.4, Section 5.7, Section 5.10(b) and Section 9.10) By:

KKR HOLDINGS GP LIMITED, its general partner

By:

/s/ WILLIAM J. JANETSCHEK Name: William J. Janetschek Title: Director

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KKR FUND HOLDINGS L.P. (solely for purposes of Section 6) By:

KKR & CO. L.P., its general partner

By:

KKR MANAGEMENT LLC, its general partner

By:

/s/ WILLIAM J. JANETSCHEK Name: William J. Janetschek Title: Chief Financial Officer

KKR MANAGEMENT HOLDINGS L.P. (solely for purposes of Section 6) By:

KKR MANAGEMENT HOLDINGS CORP., its general partner

By:

/s/ WILLIAM J. JANETSCHEK Name: William J. Janetschek Title: Chief Financial Officer

KKR GROUP HOLDINGS L.P. (solely for purposes of 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. Janetschek Title: 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.

2.

3.

4.

5.

THE RIGHT TO EFFECT A US LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-1

1.1

Right to Effect a US Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-1

1.2

Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-1

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

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

ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-5

4.1

Contribution of Purchaser Common Units; Restrictions; Affirmation of Assumption of 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

INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-12

Page

6.

7.

8.

CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-14

6.1

Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-14

TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-14

7.1

Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-14

7.2

Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-14

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 Controlling Partnership Exhibit D—Form of Amended and Restated Limited Liability Company Agreement of the Controlling Partnership 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 . . . . . . . . . . . . . . . . . . . . . . . .

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Group Partnerships . . . . . . . . . . . . . . . .

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US Listing . . . . . . . . . . . . . . . . . . . . . . .

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iv

INVESTMENT AGREEMENT This INVESTMENT AGREEMENT, dated as of [ ], 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 ‘‘Controlling Partnership’’), (2) KKR Private Equity Investors, L.P., a Guernsey limited partnership (‘‘KPE’’), acting through KKR Guernsey GP Limited, a Guernsey company limited by shares (the ‘‘KPE GP’’) in its capacity as the general partner of KPE, (3) KKR Management Holdings L.P. (‘‘Management Holdings’’), a Delaware limited partnership, acting through KKR Management Holdings Corp. in its capacity as the general partner of Management 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 Fund Holdings L.P. (Management Holdings and KKR Fund Holdings L.P. are sometimes collectively referred to herein as the ‘‘Group Partnerships’’) and (5) KKR Holdings L.P., a Cayman Islands exempted limited partnership (‘‘Holdings’’), acting through KKR Holdings GP Limited in its capacity as general partner of 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 of July 19, 2009 (the ‘‘Purchase Agreement’’), among the Controlling Partnership, KPE, KKR Group Holdings L.P. (the ‘‘Purchaser’’) and the other parties thereto, the Purchaser has agreed to issue and deliver 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 the parties with certain rights and obligations with respect to the Purchaser Common Units that will be issued to KPE pursuant to the Purchase Agreement. NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements 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 of KPE and the Controlling Partnership shall have the right (the ‘‘Listing Right’’) to require that the other use its reasonable best efforts to cause the Contribution Transactions to occur and, in connection therewith, the Controlling Partnership Units to be listed and traded on the New York Stock Exchange or The NASDAQ Stock Market (the ‘‘US Listing’’) by delivering to the other party a written notice informing such party of its exercise of the Listing Right (such notice, an ‘‘Election Notice’’). The Controlling Partnership shall only be permitted to deliver an Election Notice following the 6 month anniversary of the date of this Agreement and KPE shall only be permitted to deliver an Election Notice following the 12 month anniversary of the date of this Agreement. If an Election Notice is delivered by either KPE or the Controlling Partnership, subject to Section 4.2 the Controlling Partnership shall, after promptly advising and consulting with KPE (it being understood that the decision to take any action shall be in the sole determination of the Controlling Partnership) be entitled to take any and all actions that it deems necessary or appropriate in order to effectuate the US Listing and any transactions ancillary thereto, including selecting the national stock exchange on which to effect the US Listing and determining whether to appoint one or more dealer managers or information agents in connection therewith and whether to effectuate a separate primary offering of its units (on an underwritten basis or otherwise) simultaneously therewith. 1.2 Closing. Subject to the terms and conditions of this Agreement, if an Election Notice is delivered in accordance with Section 1.1, the closing of the US Listing (the ‘‘Closing’’) shall take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 at 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 of those conditions), or such other place, date or time as the parties may mutually agree (the ‘‘Closing Date’’). For purposes of this Agreement, a ‘‘Business Day’’ shall mean any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to close in the City of New York, 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 Controlling Partnership as follows: 2.1 Organization. KPE is a limited partnership duly organized, validly existing and in good standing under the laws of the Island of Guernsey. 2.2 Authority. KPE (acting through the KPE GP) has the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder and consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been, or will be, duly authorized by all necessary action on the part of KPE and the KPE GP and, except as contemplated by Section 2.4, no other action is necessary on the part of KPE or the KPE GP for the execution, delivery and performance by KPE (acting through the KPE GP) of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the KPE GP acting as the general partner of KPE and, assuming due authorization, execution and delivery by the Controlling Partnership and the Group Partnerships constitutes a valid and binding obligation of KPE enforceable against KPE in accordance 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 generally and by general equity principles. 2.3 No Conflicts. Neither the execution and delivery of this Agreement by KPE nor the consummation by KPE of the transactions contemplated hereby nor compliance by KPE with any of the terms or provisions hereof, will (i) upon execution of the amendment to the KPE Limited Partnership Agreement substantially in the form attached hereto as Exhibit E, violate any provision of the amended and restated limited partnership agreement of KPE, dated as of May 2, 2007 (as amended, supplemented or otherwise modified from time to time, the ‘‘KPE Limited Partnership Agreement’’) and (ii) assuming that the consents, approvals and filings referred to in Section 2.4 are duly 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, administrative agency or commission or other governmental authority or instrumentality, legislative body or self-regulatory organization (each a ‘‘Governmental Entity’’) by KPE is necessary in connection with the execution, delivery and performance of this Agreement by KPE and the consummation by KPE of the transactions contemplated hereby, except (i) for the giving of written notice by the KPE GP to the Guernsey Financial Services Commission, (ii) for the giving of notice by KPE to the Authority for the Financial Markets in The Netherlands, (iii) for consultation with Euronext Amsterdam with respect to the amendment to the Seller Limited Partnership Agreement substantially in the form attached hereto as Exhibit E and for filing of the draft amendment with the Authority for the Financial Markets in the Netherlands and Euronext Amsterdam, (iv) for any consent, authorization, order or approval by the Authority for the Financial Markets in the Netherlands in connection with the Distribution, (iv) the consent of Euronext Amsterdam N.V. for the delisting of KPE Common Units from Euronext Amsterdam by NYSE Euronext, the regulated market of Euronext Amsterdam N.V., and (v) for the KPE 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 partners of 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 Partnership hereby represents and warrants to KPE as follows: 3.1 Organization. The Controlling Partnership is a limited partnership duly organized, validly existing 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) and the 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. The execution, delivery and performance of this Agreement have been and the consummation of the transactions contemplated hereby have been, or will be, duly authorized by all necessary action on the part of the Controlling Partnership and the Group Partnerships and no other action will be necessary on the part of the Controlling Partnership, the Controlling Partnership GP and the Group Partnerships for the execution, delivery and performance by the Controlling Partnership (acting through the Controlling Partnership GP) and the Group Partnerships of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Controlling Partnership and the Group Partnerships and, assuming due authorization, execution and delivery by KPE, constitutes a valid and binding obligation of the Controlling Partnership and the Group Partnerships, enforceable against the Controlling Partnership and the Group Partnerships in accordance 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 generally and by general equity principles. 3.3 No Conflicts. Neither the execution and delivery of this Agreement by the Controlling Partnership and the Group Partnerships nor the consummation by the Controlling Partnership and the Group Partnerships of the transactions contemplated hereby, nor compliance by the Controlling Partnership and the Group Partnerships with any of the terms or provisions hereof, will (i) violate any provision of the certificate of formation or limited partnership agreement of the Controlling Partnership or the Group Partnerships or (ii) except as would not reasonably be expected to prevent or materially impede or delay the consummation of the transactions contemplated hereby (x) assuming that the consents, approvals and filings referred to in Section 3.4 are duly obtained or made violate any statute, code, ordinance, rule or regulation applicable to the Controlling Partnership or the Group Partnerships or (y) violate, conflict with, result in a breach of any provision or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under any of the terms, 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 Group Partnerships is a party, or by which any of them or any of their respective properties or assets may 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 by the 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 Partnerships and the consummation by the Controlling Partnership or the Group Partnerships of the transactions contemplated hereby, except (i) the approval of the listing of the Controlling Partnership Units to be issued pursuant to Section 4.1 on the New York Stock Exchange or The NASDAQ Stock Market, as applicable, (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 to comply with foreign or state securities or blue sky laws. 3.5 Due Authorization and Validity. The Controlling Partnership Units and the limited partnership interests evidenced thereby to be issued pursuant to Section 4.1 will be duly authorized prior to issuance and, when issued pursuant to the terms and conditions of this Agreement, will be validly issued and fully paid and non-assessable (except as such non-assessability may be affected by Section 17-303, Section 17-607 or Section 17-804 of the Delaware Revised Uniform Limited Partnership Act or the Controlling Partnership LPA) and free and clear of any Liens. Except for (i) Controlling Partnership Units issuable to KPE pursuant to Section 4.1, (ii) Controlling Partnership Units issuable upon exchange by Holdings or its designees or other holders of Class A Units to the Controlling Partnership of partner interests in the Group Partnerships in accordance with the Exchange Agreement or a similar agreement providing for similar exchange rights, (iii) Controlling Partnership Units that may be issued at or following the Closing upon exchange of Group Partnership Units issued pursuant to 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 Purchase Agreement), in accordance of Section 4.12 of this Agreement; provided, that for the avoidance of doubt, awards of Controlling Partnership Common Units (including grants of phantom, option or other derivative securities) may also be issued upon the completion of the Closing under the Post-Listing Incentive Plan in accordance with its terms and (iv) non-economic general partner interests in the Controlling 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 for equity interests in the Controlling Partnership or (C) options or other rights to acquire from the Controlling Partnership any equity interests in the Controlling Partnership or obligations of the Controlling 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 Partnership Disclosure Schedules delivered to the Seller by the Controlling Partnership concurrently with the execution of this Agreement (the ‘‘Confidential Controlling Partnership Disclosure Schedules’’), each of the Controlling Partnership, the Purchaser, KKR Group Limited (the ‘‘Purchaser GP’’) and KKR Management Holdings Corp. has been formed solely for the purpose of engaging in the transactions contemplated hereby (including the Contribution Transactions) and in the Purchase Agreement and serving as the direct or indirect general partner of the Purchaser and the Group Partnerships, as applicable, and has engaged and, at the Closing, will have engaged in no other business activities, and has incurred and, at the Closing, will have incurred no liabilities or obligations other than in furtherance of the transactions contemplated hereby (including the Contribution Transactions) or as a result 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 the Controlling Partnership, as applicable, and, assuming due authorization, execution and delivery by the other parties thereto, will be a valid and binding obligation of the Controlling Partnership or the parties thereto that are affiliated with the Controlling Partnership, as applicable, enforceable against them in accordance 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 generally and 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 of the Closing, KPE shall contribute all of its Purchaser Common Units to the Controlling Partnership in exchange 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 Common Units’’) then outstanding. The transactions contemplated by this Section 4.1(a), together with the execution of the agreements required to be executed pursuant to Section 4.7 prior to the Closing, are referred to as the ‘‘Contribution Transactions’’. (b) Except as contemplated by this Section 4.1, KPE shall not, and shall not permit any of its affiliates 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 Controlling Partnership. Other than in furtherance of the transactions contemplated by this Agreement, neither KPE nor the KPE GP shall engage in any other business activities, including making, or agreeing to make, any investments in any person and incurring any liabilities or obligations. Other than in furtherance of the transactions contemplated hereby (including the Contribution Transactions) or serving as the direct or indirect general partner of the Purchaser or the Group Partnerships, as applicable, each of the Controlling Partnership, the Purchaser, the Purchaser GP and KKR Management Holdings Corp. shall engage in no other business activities, including making, or agreeing to 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 hereto that, with respect to any benefits of the combined business of the Consolidated Persons to which the holders of the Class A units in the Group Partnerships (the ‘‘Class A Units’’) are entitled, the ultimate beneficial owners of the Class A Units (in their capacity as such, the ‘‘Ultimate Owners’’) are intended to be entitled to such benefits in proportion to their relative ultimate beneficial ownership of the Class A Units and, accordingly, from the Effective Time until the Closing, issuances of equity or other economic interests, dividends and other distributions by any Consolidated Person shall be structured to ensure that no Ultimate Owner shall be disproportionately adversely affected relative to any other Ultimate Owner without the consent of any such Ultimate Owner (or the Seller, in the case of an Ultimate Owner whose beneficial interest is through the ownership of KPE Common Units) that would be so disproportionately adversely affected. (d) In the event that an Election Notice is delivered in accordance with Section 1.1, at the time of the completion of the Dissolution Transactions, the Controlling Partnership shall cause the Purchaser to reaffirm the assumption of the liabilities assumed by the Purchaser pursuant to Section 1.2 of the Purchase Agreement. 4.2 Registration Statement. (a) The Controlling Partnership shall as promptly as practicable following the delivery of an Election Notice in accordance with Section 1.1 prepare a registration statement on such form as the Controlling Partnership in consultation with its legal counsel shall determine to be appropriate under the 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 Controlling Partnership Units to be issued to, and distributed by, KPE pursuant to this Agreement (such registration statement(s), as amended or supplemented from time to time and together with any prospectus included therein, the ‘‘Registration Statement’’) and shall as promptly as practicable thereafter file the Registration Statement with the SEC. Each of the Controlling Partnership and KPE shall use its reasonable best efforts to have the Registration Statement declared effective by the SEC as promptly 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 the date on which the Registration Statement is declared effective by the SEC, KPE shall mail, or otherwise disseminate in a manner that complies with any applicable law, rule, regulation and the KPE Limited Partnership Agreement, the Registration Statement (or prospectus contained therein) to the holders of the KPE Common Units. Notwithstanding the foregoing, nothing contained in this Agreement, including Section 4.3 and Section 4.5, shall be deemed to require the Controlling Partnership or any of its affiliates to take any action that would require the Controlling Partnership or any 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 all information concerning the Independent Directors, if any, required to be included in the Registration Statement. The Controlling Partnership shall provide KPE and its legal counsel with a reasonable opportunity to review and comment on the Registration Statement and any amendments or supplements thereto prior to the filing thereof with the SEC. The Controlling Partnership shall, as promptly as practicable after receipt thereof, (i) provide KPE and its legal counsel with copies of any written comments and advise KPE and its legal counsel of any oral comments with respect to the Registration Statement received from the SEC and (ii) notify KPE and its legal counsel of any requests by the SEC for any supplement thereto or for additional information. As promptly as practicable after receipt of any written correspondence from the SEC and reasonably in advance of transmitting any written correspondence to the SEC, in each case relating to the Registration Statement, the Controlling Partnership 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 in connection with the filing with, and the review by, the SEC of the Registration Statement. The Controlling Partnership shall (i) consider in good faith any comments and suggestions on the disclosure to be included in the Registration Statement made by KPE and/or its legal counsel and (ii) incorporate such comments into the Registration Statement if failure to do so would reasonably be expected, in the good faith judgment of the Controlling Partnership after taking into account the advice of its outside legal counsel, to result in a violation of, or give rise to liability under any applicable securities laws. For purposes of clauses (i) and (ii) above, where the Controlling Partnership would otherwise elect not to incorporate any comment or suggestion made by KPE or its legal counsel, KPE and its legal counsel shall be provided with the reasonable opportunity to discuss any such comments directly with the Controlling Partnership, the Controlling Partnership’s auditors and outside legal counsel for the Controlling Partnership. (d) Notwithstanding the provisions of Section 4.2(c), neither the Registration Statement (or any amendment or supplement thereto) nor any written correspondence relating to the Registration Statement (including any responses to any comments from the SEC) shall include any statements regarding 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 the Registration Statement becomes effective and as of the Closing Date, the Registration Statement will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that the foregoing covenant shall not apply to any information concerning the Independent Directors furnished in writing by or on behalf of the Independent Directors specifically for use in the Registration Statement, it being understood that such information shall be identified as such by KPE prior to the effectiveness of the Registration Statement (the ‘‘Specified Information’’) and (ii) as of the date on which the Registration Statement 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 and regulations of the SEC thereunder. (f) If at any time prior to the Closing any information should be discovered by either the Controlling Partnership or KPE that should be set forth in an amendment or supplement to the Registration Statement so that the Registration Statement would not include any misstatement of a material fact or omit to state any material fact necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading, the party that discovers 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 be promptly filed with the SEC. 4.3

Reasonable Best Efforts.

(a) Subject to the terms and conditions of this Agreement, following the delivery of an Election Notice in accordance with Section 1.1, each of the Controlling Partnership and KPE 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 in Section 6 of this Agreement are satisfied and to consummate the transactions contemplated by this Agreement as promptly as practicable, including using its reasonable best efforts to (i) obtain (and to cooperate with the other party to obtain) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or any third party which is required to be obtained in connection with the transactions contemplated by this Agreement from Governmental Entities or third parties, (ii) making all registrations, notifications and filings with any Governmental Entity or any third party that are required 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 transactions contemplated hereby, by any Governmental Entity, which, if not resolved, would reasonably be expected to prevent or materially impede or delay the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to require the Controlling Partnership or KPE to take, or agree to take, any action if the taking of such action would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Controlling Partnership (after giving effect to the Contribution Transactions). (b) Each of the Controlling Partnership and KPE shall in connection with the efforts referenced in Section 4.3(a) (i) promptly cooperate with and furnish information to the other in connection with any action required to be taken pursuant to Section 4.3(a), and (ii) permit the other to review any communication given by it to, and consult with each other in advance of any meeting or conference with, 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 with Section 1.1, KPE shall take, and the Controlling Partnership shall cause the non-Independent Directors of the KPE GP to authorize, all actions necessary or advisable to (i) cause the amendment to the KPE Limited Partnership Agreement in substantially the form attached hereto as Exhibit E to be executed prior to the Closing, (ii) deliver the Controlling Partnership Units to a bank or trust company designated 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 Partnership Units to the holders of KPE Common Units in accordance with the KPE Limited Partnership Agreement as of, or as promptly as practicable after, the Closing (the ‘‘Distribution’’), (iv) cause the KPE Common Units to be delisted from, and to cease to be traded on, Euronext Amsterdam by NYSE Euronext, 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, in accordance 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 this Section 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 with Section 1.1, the Controlling Partnership shall use its reasonable best efforts to cause the Controlling Partnership Units that are to be registered in the Registration Statement to be approved for listing on the 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, prior to the Closing, the Controlling Partnership shall obtain and fully pay the premium for, or shall cause to be obtained and to be fully paid the premium for, directors’ and officers’ liability insurance for the benefit 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’’) through and including the date that is six years after the Dissolution Date, (ii) cover claims arising out of or relating to any action, statement or omission (including a failure to act) of such directors and officers of the KPE GP, whether on or before the Dissolution Date (including the transactions contemplated by this Agreement and the decision making process by the directors of the KPE GP in connection therewith) to the same extent as the directors and officers of the Controlling Partnership GP acting in their 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 effect on the date of the Purchase Agreement; provided, however, that in no event shall the Controlling Partnership be required to, or be required to cause any other person to, expend for such insurance an amount in excess of the amount set forth in Section 4.6 of the Confidential Controlling Partnership Disclosure Schedules. 4.7 Execution of Additional Agreements. In the event an Election Notice is delivered in accordance with Section 1.1, the Controlling Partnership and Holdings shall use its reasonable best efforts to execute, or to cause the other parties thereto to execute, prior to the Closing, the Amended and Restated Exchange Agreement between the Controlling Partnership, the Group Partnerships and Holdings (the ‘‘Exchange Agreement’’), the Amended and Restated Tax Receivables Agreement between the Controlling Partnership, Holdings, KKR Management Holdings Corp. and Management Holdings (the ‘‘Tax Receivables Agreement’’), the Amended and Restated Limited Partnership Agreement of the Controlling Partnership (the ‘‘Controlling Partnership LPA’’) and the Amended and Restated Limited Liability Company Agreement of the Controlling Partnership GP (the ‘‘Controlling Partnership GP Agreement’’), in each case substantially in the form attached as exhibits to this Agreement (together with any changes thereto as may be necessary to comply with requirements of the jurisdiction of organization of the Controlling Partnership in the event that the Controlling Partnership’s rights and obligations 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 Controlling Partnership shall use its reasonable best efforts to cause to be delivered to KPE a ‘‘comfort’’ letter from Deloitte & Touche LLP with respect to financial information contained in the Registration Statement, dated the effective date of the Registration Statement, in a form customary in scope and substance for ‘‘comfort’’ letters delivered by independent public accountants in connection with registration 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 Registration Statement in accordance with applicable Statement on Auditing Standards, customary comfort on the pro 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 Controlling Partnership 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 or omissions in the Registration Statement, dated the effective date of the Registration Statement, in a form customary in scope and substance for ‘‘negative assurance’’ letters delivered by issuer’s counsel in connection with registration statements similar to the Registration Statement. 4.9 Resignation of Independent Directors. Unless the Independent Directors agree otherwise in writing with the KPE GP and the Controlling Partnership, the Independent Directors shall not be required to resign until the completion of the Dissolution Transactions at which point the Independent Directors shall be required to resign. 4.10 Consent Rights. From the Effective Time (as such term is defined in the Purchase Agreement) until the Closing (the ‘‘Consent Period’’), without the prior consent of a majority of the Independent Directors, the Controlling Partnership shall not, and shall not permit the Purchaser GP or any Consolidated Person (as defined in the Purchase Agreement) to: (i) enter into any amendment to the Exchange Agreement, the Tax Receivables Agreement, a Lock-Up Agreement, the Controlling Partnership LPA, the Management Holdings LPA, the Fund Holdings LPA, the Purchaser LPA or the Controlling Partnership GP Agreement (each as defined in the Purchase Agreement) (each of the foregoing, a ‘‘Covered Agreement’’) that, in the reasonable judgment of the Controlling Partnership, is or 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 excess of $20 million with any related person (as such term is defined in Item 404 of Regulation S-K under the Securities Act) of the Controlling Partnership, the Purchaser GP or Consolidated Person (other than any related person that is another Consolidated Person or an investment fund or investment vehicle that is managed, sponsored, or otherwise advised by the Controlling Partnership, the Purchaser GP or any Consolidated Person) (a ‘‘Related Person’’) that is the type of transaction that would be required to be disclosed under the Securities Act by the Controlling Partnership, the Purchaser GP or such Consolidated Person pursuant to Item 404 of Regulation S-K under the Securities Act if the Controlling Partnership, the Purchaser, the Purchaser GP or such Consolidated Person were subject to the disclosure requirements of such Item (provided, however, that, except with respect to any transaction for which the restrictions of clause (ii) do not apply by virtue of the proviso below, the Controlling Partnership shall on at least a quarterly basis provide a report in reasonable detail of transactions which would be covered by this clause (ii) but for the requirement set forth in this clause (ii) as to a minimum aggregate amount), (iii) except in accordance with the Exchange Agreement, enter into any transaction with any Related Person if such transaction would reduce the percentage of KPE’s direct or indirect equity interest in any Consolidated Person or the percentage of the equity interest in the Controlling Partnership that the holders of KPE Common Units will receive upon the Distribution; provided, however the foregoing clauses (ii) and (iii) shall not restrict, and the approval of a majority of the Independent Directors shall not be required with respect to, (A) the payment, issuance, grant or delivery of compensation, including, subject to Section 4.12, equity-based compensation, to any Related Person in respect of such Related Person’s provision of services to the Controlling Partnership or a Consolidated Person provided that in performing such services, the Related Person is acting as a partner, member, director, officer or employee of the Controlling Partnership or a Consolidated Person and not as a third-party service provider, (B) any transaction or series of related transactions with a Related Person made on substantially similar terms as have been agreed to with unaffiliated third parties in connection with the same transaction or series of related transactions, (C) any investment by a Related Person in any investment fund or investment vehicle that is managed, sponsored or otherwise advised by the Controlling Partnership or any Consolidated Person or (D) the matters set forth in Section 4.10 of the Confidential Controlling Partnership Disclosure Schedules. In addition, upon the request of the Controlling Partnership, the Independent Directors shall 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 the purposes of determining whether a conflict of interest exists with respect to such transaction and that such transaction is in compliance with the respective organizational documents of the Controlling Partnership, 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 in compliance with the respective organizational documents of the Controlling Partnership, the Controlling Partnership GP, the Purchaser GP and the Consolidated Persons, such transaction shall not be void or voidable 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 have any liability to KPE, any affiliate thereof, or any person that has an equity interest in KPE, any Consolidated Person or any affiliate thereof as a result of, or arising from, any such transaction. At the request of the Controlling Partnership, the organizational documents of any Consolidated Person may be amended to include provisions to limit the liability of the Controlling Partnership and its affiliates in the manner described in the immediately preceding sentence. During the Consent Period, (w) upon the request of KPE, the Controlling Partnership agrees to take, or cause to be taken, any action to enforce the rights of the Controlling Partnership directly or through one or more entities controlled by the Controlling Partnership, under any Covered Agreement against (A) Holdings (and any subsidiary or other designee of Holdings through which Holdings holds any units representing limited partner interests in the Group Partnership) and (B) each person that is or becomes from time to time a general partner or limited partner of Holdings or a general partner, limited partner or holder of any other type of equity interest of any such person, (x) the Controlling Partnership shall not incur or assume any indebtedness for borrowed money or guarantee any such indebtedness, (y) the Controlling Partnership shall not permit the Designated Percentage with respect to Future Carried Interests (as such terms are defined in the limited partnership agreements of the Group Partnerships) to exceed 40%, and (z) upon reasonable 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, or cause to be taken, all actions necessary to provide the audit committee of the KPE GP board of directors 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 Consolidated Persons, and shall furnish to the audit committee of the KPE GP or the Independent Directors as promptly as practicable after receiving a request therefor such other information concerning the business of the Controlling Partnership, the Purchaser GP and the Consolidated Persons as the audit committee or the Independent Directors may reasonably request; provided that the foregoing shall not obligate the Controlling Partnership to disclose any information to such audit committee or the Independent Directors that the Controlling Partnership, the Purchaser GP or the Consolidated Person reasonably determines, based on the advice of counsel, to be privileged; provided further that Controlling Partnership, the Purchaser GP or the Consolidated Person shall use its reasonable best efforts to make appropriate substitute disclosure arrangements under circumstances in which the immediately preceding proviso applies. 4.11 Ongoing Reporting Obligations. From the Effective Time (as such term is defined in the Purchase Agreement) to the Closing Date, the Controlling Partnership shall, and shall cause the Consolidated Persons (as such term is defined in the Purchase Agreement) to, cooperate in good faith with KPE to take such actions as may be reasonably necessary or advisable to comply with the financial reporting obligations of KPE under applicable law, including the preparation of the financial statements and other financial information of the KKR Group (as defined in the Purchase Agreement) required to be 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 may cause the KKR Management Holdings L.P. Equity Incentive Plan, substantially in the form attached hereto 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 attached hereto as Exhibit G (the ‘‘Post-Listing Incentive Plan’’). Without the prior written consent of a majority of the Independent Directors, from and after the date of this Agreement until the completion of the Closing, the Controlling Partnership shall not, and shall not permit any Consolidated Person to, (i) pay to, grant, issue or otherwise deliver, or (ii) enter into or adopt any plan, program, policy, agreement or arrangement that provides for the payment, grant, issuance or delivery of, in the case of both clauses (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 any Consolidated Person, (B) the amount of which is determined primarily based on the value of the interests 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 indirect equity interest in any Consolidated Person or the percentage of the equity interest in the Controlling Partnership that the holders of KPE Common Units will receive upon the Distribution or the amount of cash distributable to the Seller as a result of its direct or indirect equity interest in the Controlling Partnership or any Consolidated Person; provided, however, that the foregoing restrictions shall not prohibit grants of awards pursuant to the Pre-Listing Incentive Plan during the period beginning at the Effective 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), except that until the earlier of (x) immediately following the Closing and (y) the first anniversary of the Effective Time (or, in the case of this clause (y), in the event that an Election Notice has been delivered prior to such first anniversary but if the Closing has not occurred, the fifteen month anniversary of the Effective Time), without the prior written consent of a majority of the Independent Directors, no grants of awards shall be made under the Pre-Listing Incentive Plan to any person who was 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 transactions contemplated by the Purchase Agreement, each outstanding unit appreciation right with respect to KPE Common Units issued under KPE’s 2007 Equity Incentive Plan (each, a ‘‘KPE UAR’’) became fully vested and immediately exercisable. Upon the Closing, except as may otherwise be agreed in writing between 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 UAR equals or exceeds the closing price per KPE Common Unit on Euronext Amsterdam on the final trading day of KPE Common Units shall be cancelled without the payment of any consideration in respect thereof and (ii) each other KPE UAR (other than those referred to in clause (i)) shall be converted into a fully vested unit appreciation right, on the same terms and conditions as were applicable under such KPE UAR, with respect to a number of Controlling Partnership Units equal to the number of KPE Common Units subject to such KPE UAR immediately prior to the Closing with an exercise price per Controlling Partnership Unit equal to the per unit exercise price for such KPE UAR (the KPE UARs referred to in this clause (ii), the ‘‘Adjusted UARs’’). Upon the Closing, the Controlling Partnership shall assume the Adjusted UARs and all obligations with respect thereto. As soon as practicable following the Closing, the Controlling Partnership shall deliver to the holders of Adjusted 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 the per unit exercise price with respect thereto) and specifying that such Adjusted UARs have been assumed by the Controlling Partnership and shall continue in effect on the same terms and conditions as were applicable to the KPE UARs immediately prior to the Closing. Prior to the Closing, KPE and the Controlling Partnership shall take all actions necessary or appropriate to effectuate the provisions of 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 sixth anniversary thereof, the Group Partnerships shall indemnify, defend and hold harmless, and provide advancement of expenses to, each present and former director and officer of the KPE GP and the persons identified in Schedule 5.1 to this Agreement against all losses, liabilities, damages, judgments and fines (‘‘Losses’’) incurred in connection with any suit, claim, action, proceeding, arbitration or investigation (‘‘Proceedings’’) arising out of or related to actions taken by them in their capacity as directors or officers of the KPE GP (including, this Agreement and the transactions contemplated hereby) 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 by applicable law the Controlling Partnership, KPE and each present and former director and officer of the KPE GP and the persons identified in Schedule 5.1 to this Agreement against any and all Losses to which they or any of them may become subject under the Securities Act, the Exchange Act or other applicable law, statute, rule or regulation insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement and any other document issued by the Controlling Partnership, KPE or any of their respective affiliates in connection with or otherwise relating to the US Listing, or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Group Partnerships agree to reimburse each such person, as incurred, for any legal or other expenses reasonably incurred by such person in connection with investigating or defending against any such Losses to the fullest extent permitted by applicable law; provided, however that the Group Partnerships shall not be liable in any such case to the extent that any such Losses arise out of or are based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement or in any amendment thereof or supplement thereto, or in any such other document in reliance upon and in conformity with the Specified Information. (c) The Group Partnerships shall, in respect of any indemnified person that was a director of the KPE GP as of the date of this Agreement who may be called upon, subsequent to the date of his resignation or expiration of his term, to testify in any Proceeding in connection with this Agreement or the transactions contemplated hereby, provide such person with reasonable compensation for his time spent 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 of application of the proviso to Section 5.1(b)) to or insufficient to hold harmless the indemnified person in respect of any Losses, then the Group Partnerships shall contribute to the amount paid or payable by the indemnified person as a result of such Losses (A) in such proportion as is appropriate to reflect the relative fault of the Group Partnerships, on the one hand, and the indemnified person, on the other or (B) if the allocation provided by clause (A) is not permitted by applicable law, or provides a lesser sum to the indemnified person than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative fault of the Group Partnerships, on the one hand, and the indemnified person, on the other, in respect of such Losses but also the relative benefits received by the Group Partnerships, on the one hand, and the indemnified person, on the other, from the transactions 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 in this Section 5.1 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified 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 of which indemnity or contribution may be sought pursuant to this Section 5.1, such person shall promptly notify the Group Partnerships thereof in writing; provided that the failure to so notify the Group Partnerships will not affect the rights of such person under this Section 5.1 except to the extent that the Group Partnerships are actually prejudiced by such failure. The Group Partnerships shall be entitled to take control of and conduct such Proceeding and to appoint counsel (including local counsel) of the Group 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 of any separate counsel retained by the indemnified party). Notwithstanding the Group Partnerships’ election to appoint counsel (including local counsel) to represent the indemnified party in connection with a Proceeding, the indemnified party shall have the right to employ separate counsel (including local counsel), and the Group Partnerships shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Group Partnerships to represent the indemnified party would present such counsel with a conflict of interest (based on the advice of counsel to the indemnified person), (ii) such Proceeding includes both the indemnified party and the Group Partnerships, and the indemnified party shall have reasonably concluded (based on the advice of counsel to the indemnified person) that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the Group Partnerships or (iii) the Group Partnerships shall authorize the indemnified party to employ separate counsel at the expense of the Group Partnerships. It is understood that the Group Partnerships shall not, in respect of the legal expenses of any indemnified party in connection with any Proceeding or related Proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties. The Group Partnerships shall not be liable under this Section 5.1 for any settlement or compromise or consent to the entry of any judgment with respect to any pending or threatened Proceeding in respect of which indemnification or contribution may be sought under this Section 5.1 (whether or not the indemnified parties are actual or potential parties to such claim or action), unless such settlement, compromise or consent is consented to by the Group Partnerships, such consent not to be unreasonably withheld or delayed. (f) Notwithstanding any other provision of this Agreement to the contrary, the indemnified parties specified in this Section 5.1 shall be third party beneficiaries of this Section 5.1. The provisions of this Section 5.1 are intended to be for the benefit of each such person to whom this Section 5.1 applies (and, in the case of each director of the KPE GP, for the benefit of such director in his individual capacity) and his or her heirs. The obligations of the Group Partnerships under this Section 5.1 shall not be terminated or modified in such a manner as to adversely affect any such person to 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 or merge into any person and shall not be the continuing or surviving person in such consolidation or merger or (ii) transfer all or substantially all of its assets to any other persons, then, and in each such case, proper provisions shall be made so that the successors and assigns of the Group Partnerships shall assume 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 all applicable expenses advanced to any person pursuant to this Section 5 if it is ultimately determined by a non-appealable judgment that such person is not entitled to indemnification hereunder with respect to 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 be subject 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 to Section 4.1 of this Agreement shall have been authorized for listing on the relevant United States stock exchange, subject to official notice of issuance. (b) Registration Statement Effectiveness. The Registration Statement shall have become effective under the Securities Act and/or Exchange Act, as applicable, without any requirement that the Controlling Partnership or any of its affiliates become subject to regulation under the Investment Company Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC. (c) No Injunctions or Restraints; Illegality. No order, injunction, judgment, award or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the US Listing and/or the Distribution shall be in effect. No law, statute, rule, ordinance or regulation shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits or makes illegal the consummation of the US Listing and/or the Distribution. (d) Contribution Transactions. The Contribution Transactions shall have been consummated in accordance with Section 4.1, except for any deviations thereto permitted under Section 8.3 and any other deviations thereto which would not reasonably be expected to have an adverse impact in more than an insignificant respect on KPE, the Controlling Partnership or the holders of the KPE Common Units. (e) Delivery of Letters. KPE shall have received the ‘‘comfort’’ letter and the ‘‘negative assurance’’ letter contemplated by Section 4.8 of this Agreement, each in form and substance reasonably satisfactory to KPE. 7.

TERMINATION

7.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing by mutual written consent of the Controlling Partnership and KPE. 7.2 Effect of Termination. In the event of termination of this Agreement and the abandonment of the transactions contemplated hereby pursuant to Section 7.1, this Agreement shall forthwith become void and have no effect, and no party or any of their respective affiliates, employees or representatives shall have any liability of any nature whatsoever under this Agreement, or in connection with the transactions 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) neither KPE, the Controlling Partnership nor the Group Partnerships shall be relieved or released from any liabilities 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 delivered pursuant 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 and Section 8. 8.2 Expenses. All costs and expenses incurred by the Controlling Partnership, the Controlling Partnership GP, KPE or the KPE GP in connection with this Agreement and the transactions contemplated 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 Fund Holdings L.P., or (ii) an entity that is a ‘‘publicly traded partnership’’ pursuant to Section 7704 of the Internal Revenue Code of 1986, as amended, the Controlling Partnership shall have the right to elect to effect the transactions described herein in such manner as the Controlling Partnership in its reasonable discretion, after consultation with KPE, deems to be the most beneficial taking into consideration such changes in law; provided that no alteration shall be made to the manner in which the transactions described herein will be effected in response to such a change in law to the extent such alteration would reasonably be expected to have an adverse impact in more than an insignificant respect on KPE, the Controlling Partnership or the holders of the KPE Common Units (other than any adverse impact resulting from any change in law), without the consent by KPE, which consent shall not be unreasonably withheld or delayed. Furthermore, the Controlling Partnership shall have the right to elect to effect the transactions described herein in such manner as the Controlling Partnership in its reasonable discretion, after consultation with KPE, deems to be necessary in order to permit the Controlling Partnership following the Contribution Transactions to be treated as a continuation of KPE for U.S. Federal income tax purposes; provided that no alteration shall be made to the manner in which the transactions described herein will be effected in order to permit such treatment to the extent such alteration would reasonably be expected to have an adverse impact in more than an insignificant respect on KPE, the Controlling Partnership or the holders of the KPE Common Units, without the consent 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 the US Listing, the Contribution Transactions and the Dissolution Transactions in a manner such that holders of KPE Common Units will recognize no income, gain or loss for United States federal income tax purposes; provided that to the extent there is a change in law so that the US Listing, the Contribution Transactions or the Dissolution Transactions may not be effected as currently contemplated without recognition by holders of KPE Common Units of income, gain or loss for United States federal income tax purposes, then each of the Controlling Partnership and KPE shall use reasonable best efforts to effect the transactions in a manner that attempts to minimize the recognition of income or gain for United States federal income tax purposes by the holders of KPE Common Units except to the extent that (i) the transactions and resulting structure results in an adverse impact in more 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 the recognition of income or gain for United States federal income tax purposes by the holders of KPE Common Units. 8.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, (b) on the first business day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated 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 4200 New York, NY 10019 Attention: David J. Sorkin Facsimile: (212) 750-0003 with a copy to (which shall not constitute notice): Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Attention: Alan M. Klein Joseph H. Kaufman Facsimile: (212) 455-2502 if to KPE, to: KKR Private Equity Investors, L.P. P.O. Box 255 Trafalgar Court, Les Banques St. Peter Port, Guernsey GY1 3QL Channel Islands Attention: Christopher Lee Facsimile: +44.1481.745.074 with a copy to (which shall not constitute notice): Bredin Prat 130 rue du Faubourg Saint Honor´ e 75008 Paris France Attention: Patrick Dziewolski Benjamin Kanovitch Facsimile: +33 (0)1.42.89.10.73 and Cravath, Swaine & Moore LLP CityPoint | One Ropemaker Street London EC2Y 9HR UK Attention: George Stephanakis Facsimile: +44 (0)207 860 1150 and Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, NY 10019 Attention: Sarkis Jebejian Facsimile: (212) 474-3700 8.5 Interpretation. The words ‘‘hereof,’’ ‘‘herein’’ and ‘‘hereunder’’ and words of similar import when used in this Agreement shall refer to this Agreement as a whole and the schedules hereto and not 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 this Agreement, 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 Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or interpretation against the party drafting or causing any instrument to be drafted. All schedules accompanying this Agreement and all information specifically referenced in any such schedule form an integral part of this Agreement, and references to this Agreement include references to them. The term ‘‘affiliate’’ has the meaning given to it in Rule 12b-2 of the Exchange, and the term ‘‘person’’ has the meaning given to it in Sections 3(a)(9) and 13(d)(3) of the Exchange Act. Whenever this Agreement requires KPE or the Controlling Partnership to take, or not take, any action, such requirement shall be deemed to include an undertaking on the part of the KPE GP or the Controlling Partnership GP, as the case may be, to cause 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 be amended by the parties hereto, by a written instrument authorized and executed on behalf of the parties hereto (provided that in the case of KPE in addition to any other requirement under applicable law, any such amendment shall be valid only if approved by all of the Independent Directors). At any time prior to the Closing, each party hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts by the other parties hereto, (b) waive any inaccuracies in the representations and warranties by the other parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance by the other parties hereto with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party (provided that in the case of KPE in addition to any other requirement under applicable law, any such extension or waiver shall be valid only if approved by all of the Independent Directors), but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition 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, any amendment or waiver hereto or thereto following the Closing with respect to the Controlling Partnership’s rights or obligations that survive the Closing hereunder or thereunder shall require the approval 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 be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. 8.8 Entire Agreement. This Agreement (together with the documents, schedules and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and 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 of competent jurisdiction to be invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction, and if any provision of this Agreement is determined to be so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable, in all cases so long as neither the economic nor legal substance of the transactions contemplated hereby is affected in any manner materially adverse to any party.

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8.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations of any party hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party; provided, however that with the prior written consent of KPE, which consent shall not be unreasonably withheld or delayed, the Controlling Partnership may assign all of its rights and obligations to an affiliate of the Controlling Partnership and upon such assignment the assignee will be deemed to be the Controlling Partnership and the common units or equivalent securities of such assignee shall be deemed to be the Controlling Partnership Units for all purposes under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns. 8.11 Third Party Beneficiaries. This Agreement (including the documents and instruments referred to herein), except for the provisions of Section 4.6, Section 4.9 and Section 5, is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder. 8.12 Further Assurances. The Controlling Partnership, Holdings and KPE each agrees to execute and deliver such other documents or agreements and to use their respective reasonable best efforts to take such other actions as may be reasonably necessary or desirable for the implementation of this Agreement 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 of incorporation of the KPE GP, during the period from the date of this Agreement until the earlier of the Closing and the termination of this Agreement in accordance with the terms hereof, the Independent 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, to exercise the rights of KPE under this Agreement and to enforce this Agreement against the Controlling Partnership and/or Holdings. The parties hereto further agree that (i) KPE shall not be deemed to have breached this Agreement unless such breach was due to the taking of any action, or failure to take any action, by the Independent Directors and (ii) the Controlling Partnership shall be deemed to have breached this Agreement if the Controlling Partnership or any of its affiliates (other than KPE or the 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 have been expected to cause KPE to breach this Agreement, the Controlling Partnership shall not be deemed to have breached this Agreement as a result of the taking of, or failure to take, such action and the Controlling Partnership shall have no liability to KPE as a result of the taking of, or failure to take, such action. 8.14 Actions of the Controlling Partnership. The parties hereto agree that, following the Closing Date, the independent directors of the Controlling Partnership GP shall have the right to enforce the Controlling Partnership’s rights under Section 5(b) against the Group Partnerships and the organizational documents of the Controlling Partnership and the Controlling Partnership GP shall provide for such right. 8.15 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York. 8.16 Submission to Jurisdiction. Each party irrevocably submits to the jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each party agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Southern District of New York or, if such suit, action or other proceeding may not be brought in such court for reasons 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 any 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 District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party further irrevocably consents to the service of process out of any of the aforementioned courts in any such suit, action or other proceeding by the mailing of copies thereof by mail to such party at its address set forth in this Agreement, such service of process to be effective upon acknowledgment of receipt of such registered mail; provided that nothing in this Section 8.16 shall affect the right of any party to serve legal process in any other manner permitted by law. The consent to jurisdiction set forth in this Section 8.16 shall not constitute a general consent to service of process in the State of New York and shall have no effect for any purpose except as provided in this Section 8.16. The parties agree that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 8.17 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms on a timely basis or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court identified in Section 8.16, this being in addition 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 BY JURY IN ANY JUDICIAL PROCEEDING DIRECTLY INVOLVING ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 8.19 Effectiveness. This Agreement shall be effective, and the provisions hereof shall become operative, upon the occurrence of the Effective Time (as defined in the Purchase Agreement) and no party 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 of the date first above written. KKR & CO. L.P. By:

KKR MANAGEMENT LLC, its general partner

By: Name: Title: KKR PRIVATE EQUITY INVESTORS, L.P. By:

KKR GUERNSEY GP LIMITED, its general partner (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 general partner

By: Name: Title: KKR HOLDINGS L.P. (solely for purposes of Section 4.7 and Section 8.12) By:

KKR Holdings GP Limited, its general partner

By: Name: Title:

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Appendix C Opinion of Citigroup Global Markets Limited

19JUL200701040995 July 19, 2009 The Board of Directors and the Independent Directors of the Board of Directors of KKR Guernsey GP Limited, acting in its capacity as general partner of KKR Private Equity Investors, L.P. P.O. Box 255 Trafalgar Court, Les Banques St. Peter Port, Guernsey, GY1 3QL Channel Islands Members of the Board of Directors and the Independent Directors of the Board of Directors of KKR Guernsey GP Limited: You have requested our opinion as to the fairness, from a financial point of view, to KKR Private Equity Investors, L.P., a Guernsey limited partnership (‘‘KPE LP’’), of the Consideration (as defined below) 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 of its other assets as contemplated by the Purchase Agreement (as defined below). As more fully described in the Amended and Restated Purchase and Sale Agreement (the ‘‘Purchase Agreement’’) to be 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 company limited by shares (the ‘‘GP’’)), (3) KKR PEI Associates, L.P., a Guernsey limited partnership, acting in its capacity as the general partner of the Acquired Partnership, (4) KKR Group Holdings L.P., a Cayman Islands exempted limited partnership (‘‘KKR Group’’) (acting through its general partner, KKR Group Limited, a Cayman Islands exempted limited company), and such other parties as are identified therein, (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, the KPE LP will receive a number of common units representing limited partnership interests of KKR Group (‘‘KKR Group Common Units’’) that represent 30% of the pro forma equity in the combined business of KKR and KPE LP (the ‘‘Consideration’’), which, following the completion of the transactions 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, approximately 40% of the carried interest from KKR Group will be allocated to the principals and other professionals of 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 and the exhibits thereto, including the draft announcement press release, and we held discussions with certain senior officers, directors and other representatives and advisors of KPE LP or GP and certain senior officers and other representatives and advisors of KKR concerning the businesses, operations and prospects of KPE LP and KKR. We examined certain publicly available business and financial information relating to KPE LP and KKR, as well as certain financial information and other data relating to KPE LP, and certain financial forecasts (on a standalone and pro forma basis) and other information relating to KKR and KKR Group, which were provided to or discussed with us by the respective managements of KPE LP and KKR, as applicable. We have not received any financial forecasts 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 to KPE LP. We reviewed the financial terms of the Transaction as set forth in the Purchase Agreement in relation 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 other operating data of KPE LP; the historical earnings and other operating data of KKR; certain financial forecasts (on a standalone and pro forma basis) relating to KKR and KKR Group; and the capitalization and financial condition of KPE LP and KKR. We considered, to the extent publicly available, the control premia of certain other transactions that we considered relevant in evaluating the Transaction and analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations we considered relevant in evaluating those of KPE LP and KKR. In addition to the foregoing, we conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as we deemed appropriate in arriving at our opinion. The issuance of our opinion has been authorized by our fairness opinion committee. In rendering our opinion, we have assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with us (including KPE LP’s Preliminary NAV and financial forecasts (on a standalone and pro forma basis) relating to KKR and KKR Group) and upon the assurances of the managements of KPE LP and KKR that they are not aware of any relevant information that has been omitted or that remains undisclosed to us. Based on discussions with the management of KPE LP, we have assumed that KPE LP’s net asset value as of June 30, 2009 to be reported 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 the financial forecasts and other information and data provided to or otherwise reviewed by or discussed with 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 best currently 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 with the terms of the Purchase Agreement, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the Transaction, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on KPE LP, KKR or KKR Group or the contemplated benefits of the Transaction. 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 professionals of KKR and its affiliates. Representatives of KPE LP have advised us, and we further have assumed, that the final terms of the Purchase Agreement and the exhibits thereto will not vary materially 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 not expressing any opinion as to what the value of the KKR Group Common Units actually will be when issued pursuant to the Transaction or the price at which the KKR Group Common Units (or any instruments for or into which such units may be exchanged or converted) may trade at any time. We have 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 the properties or assets of KPE LP or KKR. We do not express any opinion as to any tax or other consequences 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 on distributions made by KKR Group or its affiliates before or after the Transaction), as to which we understand that KPE LP obtained such advice as it deemed necessary from qualified professionals. We were not requested to, and we did not, solicit third party indications of interest in the possible acquisition of all or a part of KPE LP, nor were we requested to consider, and our opinion does not address, 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 effect of any other transaction in which KPE LP might engage (including the transaction contemplated by the original Purchase and Sale Agreement dated as of July 27, 2008 among KPE LP and the other parties thereto). We also express no view as to, and our opinion does not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the Transaction, or any class of such persons, relative to the Consideration. Our opinion is necessarily based upon information available to us, and financial, stock market and other conditions and circumstances existing, as of the date hereof. As you are aware, the credit, financial and stock markets are experiencing unusual volatility and we express no opinion or view as to any potential effects of such volatility on KKR or KPE LP or the contemplated benefits of the Transaction. Citigroup Global Markets Limited has acted as financial advisor to KPE LP (acting through its GP) in connection with the Transaction and will receive a fee for such services, a significant portion of which is contingent upon the consummation the Transaction. We and our affiliates in the past have provided, and currently provide, services to KPE LP and KKR unrelated to the Transaction, for which services we and such affiliates have received and expect to receive compensation, including, without limitation, (i) providing extensive financial advisory, capital markets and lending services to KKR, its affiliates or its portfolio companies in various transactions and proposed transactions, (ii) having a role in relation to KKR’s filed and now withdrawn initial public offering in 2007, (iii) acting as lead arranger on a $1 billion revolving credit facility for KPE LP in 2007 and (iv) acting as joint global coordinator and bookrunner for KPE LP’s initial public offering in 2006. KKR has also committed to us that we will have a role in a future initial public offering of KKR, which may occur if the Transaction is not consummated. In addition, in the event of a primary offering by KKR Group following consummation of the Transaction, KKR has indicated to us that we may have a role in such offering. In the ordinary course of our business, we and our affiliates may actively trade or hold the securities of KPE LP and KKR or its affiliates for our own account or for the account of our customers and, accordingly, may at any time hold a long or short position in such securities. In addition, we and our affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with KPE LP, KKR and their respective affiliates. Our advisory services and the opinion expressed herein are provided solely for the information of the Board of Directors and the Independent Directors of the Board of Directors of GP, acting in its capacity as general partner of KPE LP in their evaluation of the proposed Transaction, and our opinion is not intended to be and does not constitute a recommendation to any unit holder as to how such unit holder 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 as described above and other factors we deemed relevant, we are of the opinion that, as of the date hereof, 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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Appendix D Opinion of Lazard Fr`eres & Co. LLC

13JUN200810284931

` LAZARD FRERES & CO. LLC 30 ROCKEFELLER PLAZA NEW YORK, NY 10020 PHONE 212-632-6000 www.lazard.com July 19, 2009

The Independent Directors of the Board of Directors of KKR Guernsey GP Limited, acting in its capacity as general partner of KKR Private Equity Investors, L.P. P.O. Box 255 Trafalgar Court, Les Banques St. Peter Port, Guernsey, GY1 3QL Channel 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 its capacity as the general partner of KKR & Co. L.P., a Delaware limited partnership (‘‘KKR’’), and its affiliates, (2) KKR Group Limited, a Cayman Islands exempted limited company, acting in its capacity as the indirect general partner of KKR Group Holdings L.P. (‘‘KKR Group’’), a Cayman Islands exempted 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 Guernsey limited 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 limited partnership (the ‘‘Investment Partnership’’) and such other parties identified in the Agreement, as defined below, propose to enter into an Amended and Restated Purchase and Sale Agreement, dated as of July 19, 2009 (the ‘‘Agreement’’). Pursuant to the Agreement, among other things, (i) KKR Group will purchase and KPE LP will sell 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 LP will receive a number of newly issued common units representing limited partner interests of KKR Group (‘‘KKR Group units’’ and, such number of units so issuable, the ‘‘Consideration’’) representing 30% of the pro forma equity in the combined asset management business of KKR and the assets and liabilities 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. In addition, as a result of the closing of the Transaction, approximately 40% of the carried interest from KKR 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 are more fully set forth in the Agreement. You have requested our opinion as of the date hereof as to the fairness, from a financial point of view, to KPE LP of the Consideration to be paid to KPE LP in the Transaction as contemplated by the Agreement. In connection with this opinion, we have: (i) reviewed the financial terms and conditions of the draft dated July 19, 2009 of the Agreement 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 LP and KKR; (iii) reviewed various financial information and other data provided to us by the management of KPE LP relating to the business of KPE LP (we have not received any financial forecasts from KPE LP, other than a range of preliminary net asset value as of June 30, 2009 (the ‘‘Preliminary NAV’’) as well as components thereof) and financial forecasts and other data provided to us by the management 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 other representatives and advisors of KPE LP and members of the senior management and other representatives and advisors of KKR with respect to the businesses, operations and prospects of KPE LP and KKR, respectively; (v) reviewed and analyzed certain financial and other public information with respect to certain other companies in lines of business we believe to be generally relevant in evaluating the businesses of KPE LP and KKR, respectively; (vi) reviewed historical stock prices and trading volumes of the common units of KPE LP and net 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 and data publicly available or provided to or otherwise reviewed by or discussed with us. We have not conducted any independent valuation or appraisal of any of the assets or liabilities (contingent or otherwise) of KPE LP or KKR or their respective subsidiaries or concerning the solvency or fair value of KPE LP or KKR, and we have not been furnished with such valuation or appraisal. With respect to the financial information and forecasts that we have reviewed, we have assumed, with the consent of KPE LP and KKR, that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements of KPE LP and KKR as to the future financial performance of KPE LP, KKR and KKR Group, respectively. Based on discussions with the management of KPE LP, we have assumed that KPE LP’s net asset value as of June 30, 2009 to be reported by KPE LP on or before August 30, 2009 will be within the range of the Preliminary NAV. We assume no responsibility for and express no view as to such forecasts and other data or the assumptions on which they are based. Further, our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. In particular, we note that the recent unusual volatility and values in the credit, financial and stock markets have resulted in uncertainty regarding the long-term outlook for alternative asset managers and private equity vehicles such that traditional long-term valuation perspectives are currently of less relevance. We assume no responsibility for updating or revising our opinion based on circumstances or events occurring after the date hereof. We do not express any opinion as to the price at which common units of KPE LP may trade at any time or as to the price at which the KKR Group units (or any instruments for or into which 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 be consummated 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 of any material term, condition or agreement. We also have assumed, with your consent, that obtaining the necessary regulatory or third party approvals and consents for the Transaction will not have an adverse effect on KPE LP, KKR or KKR Group or the contemplated benefits of the Transaction. We further 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 professionals of KKR and its affiliates. We do not express any opinion as to any tax or other consequences 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 on distributions made by KKR Group or its affiliates before or after the Transaction), as to which we understand that KPE LP obtained such advice as it deemed necessary from qualified professionals. We express no view or opinion as to any terms or other aspects of the Transaction (other than the Consideration to the extent expressly specified herein). In addition, we express no view or opinion as to the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties 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 the Agreement and the Transaction will not vary materially from those set forth in the drafts reviewed by us. Lazard Fr` eres & Co. LLC is acting as investment banker to the Independent Directors of the Board of Directors of GP in connection with the Transaction and will receive fees for our services, a substantial portion of which is contingent upon the closing of the Transaction. We in the past have provided, currently are providing and in the future may provide financial advisory, capital markets, and investment banking services to KKR and its affiliates unrelated to the Transaction for which we have received and may receive compensation, including, without limitation, (i) acting as financial advisor to Rockwood in its sale of Groupe Novasep, (ii) acting as financial advisor to TDC in its sale of Bit´ e Lietuva, (iii) acting as financial advisor to the steering committee of the secured creditors in connection with Masonite International Inc.’s Chapter 11 proceedings, (iv) acting as financial advisor to Jazz Pharmaceuticals Inc. and acting as placement agent in connection with an offering of its common stock and (v) acting as financial advisor to Capmark Financial Group Inc. regarding debt and capital structure matters. In addition, in the ordinary course of their respective businesses, affiliates of Lazard Fr` eres & Co. LLC and LFCM Holdings LLC (an entity indirectly owned in large part by managing directors of Lazard Fr` eres & Co. LLC) may actively trade securities of KPE LP and KKR’s affiliates for their own accounts and for the accounts of their customers and, accordingly, may at any time hold a long or short position in such securities. The issuance of this opinion was approved by the Opinion Committee of Lazard Fr` eres & Co. LLC. In rendering our opinion, we were not authorized to, and we did not, solicit indications of interest from third parties regarding a potential transaction acquiring all or a part of KPE LP, nor have we participated in negotiation of the terms of the Transaction. In addition, we were not requested to consider, and our opinion does not address the relative merits of the Transaction as compared to any other transaction or business strategy in which KPE LP might engage (including the transaction contemplated by the Purchase and Sale Agreement, dated July 27, 2008, among KPE LP and the other parties 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 Independent Directors of the Board of Directors of GP and our opinion is rendered to you in connection with your evaluation of the Transaction. Our opinion is not intended to and does not constitute a recommendation to any unitholder of KPE LP as to how such unitholder should vote or act with respect 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, the Consideration 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 Weiss Managing Director

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22JUL200905111057