Kohlberg Kravis Roberts & Co is considering separating a plan that links buying its Amsterdam-listed fund with its own moves to list on the NYSE, a source familiar with the matter said, throwing further doubt on whether the private equity giant will list in New York.

KKR's plans to follow in Blackstone Group's footsteps and become a publicly-traded New York Stock Exchange-listed company hinge on a complex deal to buy its fund, known as KPE.

Separating the two plans would give KKR, co-founded by buyout king Henry Kravis, the option to buy its Amsterdam-listed fund without the pressure of having to list at a difficult time to go public. The company could later decide to list under a different method if it desired.

KKR said in July 2008 it would buy Euronext-listed KKR Private Equity Investors (KPE), delist it from Euronext and launch the combined new company on the NYSE under the stock symbol KKR . KKR had previously considered a more conventional initial public offering.

But KKR and KPE said in March they were reevaluating the deal in the face of the global financial crisis and later extended by four months the deadline to buy the fund -- to August 31.

As a matter of policy, we do not comment on rumors or speculation, KKR said in an emailed statement late on Thursday. We and the KPE Board continue to evaluate the advisability of the transaction. Any official announcement related to the transaction will be made via press release.

The details were earlier reported by the Financial Times, which cited people familiar with the matter saying KKR is holding talks with a shareholder of KPE about a merger without a New York listing - at least for the time being.

The new arrangement could involve altered terms for the deal under which KPE shareholders would receive stakes in the combined entity, the FT report said.

It cited people close to the talks saying they were preliminary and cautioned that the outcome was uncertain.

The source who spoke to Reuters said that no decisions have been made.

The private equity industry has been struggling with the absence of leverage for new deals, as well as troubled portfolio companies and investors hurt by a fall in equities.

Rival Blackstone , the only other major U.S. private equity firm to go public, is trading at around $11.15, significantly less than its June 2007 IPO value of $31 a share.

(Reporting by Megan Davies and Ritsuko Ando; Editing by Dhara Ranasinghe)

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