KKR IPO: Why Now? Why Not?

I keep getting asked the same question: “Why is KKR going public now?”

First, it isn’t going public now. It’s going public sometime in Q4, which could conceivably mean sometime after Christmas. Second, KKR going public now via this structure makes much more sense than going public then (pre-credit crunch) or later (2011?) does.

KKR management is not selling any shares in the IPO, so the initial trading price doesn’t much matter to their wallets. In fact, it arguably gives them lots of upside and relatively little downside. Ditto for the new execs they recruit using this “public currency.” The only flip side is that stock purchases of other asset managers (e.g. Blackstone/GSO) will be a bit more difficult, but there is no good reason for why KKR will trade at more of a discount than would its prospective targets.

In fact, the only thing I still can’t figure is why KKR isn’t wrapping KKR Financial — its NYSE-listed real estate investment trust — into the transaction. Only legit explanation I’ve heard is that KKRF is more independently-managed than is the Amsterdam-listed vehicle, but that would just require a bit of hierarchical rejiggering (small potatoes compared to the whole enchilada).