Comment 3 for bug 1660946

After going the wrong direction for a while I see the almost hidden, yet so important words - "in nested only" !
That also explains the kvm-pr I wondered about, as I'd have expected kvm-hv if in 1st level.

I tried as you instructed - on first stage it worked (Host to lvl 1)

Command:
$virt-install --virt-type=kvm --cpu=host --name=nested-xenial --controller type=scsi,model=virtio-scsi --graphics none --console pty,target_type=serial --disk path=/home/ubuntu/cpaelzer/test-xenial-virt-inst.qcow2,size=20 --vcpus=4 --ram=4096 --os-type=linux --os-variant ubuntu16.04 --network bridge=virbr0,model=virtio --cdrom=ubuntu-16.04-server-ppc64el.iso

On a Xenial system with:
ii libvirt-bin 1.3.1-1ubuntu10.6
ii qemu-kvm 1:2.5+dfsg-5ubuntu10.6
ii virtinst 1:1.3.2-3ubuntu1.16.04.3

And HW:
POWER8E - PowerNV 8247-22L

Now the same in 2nd level:
1. install all packages for kvm
2. ensure kvm_pr is loaded correctly
3. make sure libvirt default network can start in 2nd level
3. wget http://cdimage.ubuntu.com/releases/xenial/release/ubuntu-16.04-server-ppc64el.iso
4. virt-install as above, yet shrinked down to fit (5G disk)

With that I can confirm your issue.