George Roberts, the “R” in KKR, said his firm expects a loss in its portfolio this year, the firm’s first since 1990, Reuters reports. Not surprising after Blackstone’s worse-than-expected quarterly earnings report last week.
But that’s not all bad, he said.
Roberts predicted that even with the current economic and financial market woes, private equity would outperform conventional investments over the long term. And he told a ballroom of private equity executives that they were lucky to be witnessing the current crisis.
“There are a lot of young people in this room. This is the best experience you could ever get. You will never forget this. It will be ingrained in your psyche. It will be ingrained in your judgement going forward. And this is a good thing,” he said.
Not looking as good, however, are KKR’s IPO prospects, which Roberts said is still in the works. I just want to know why. By this point, judging by the 70% decline in Blackstone Group’s stock since its IPO, it can’t be a competition thing. If anything, they’d look smart for staying private. And yes, we’ve established the other benefits of such a move–liquidity, retirement, a war chest for strategic acquisitions, etc.
But isn’t it OK to just say, “Hey, we’re going to wait a year or two.” The only theory I can come up with is that, if by some miracle of God the firm manages to float in the next few quarters, Roberts realizes its stock price can only go up from such lows. Dan, of course, disagrees.