KKR just sent word that it plans to go public on the NYSE in the fourth quarter of this year. Not via a traditional IPO, but by acquiring an affiliated fund that is already traded in Amsterdam. That vehicle would de-list in Amsterdam, with unit-holders receiving newly-issued shares in a NYSE-listed KKR. The firm itself would not issue any new shares, which means that it would hold around a 79% equity stake in the merged entity.
Confusing? Sure, but probably easier than trying to pull off a regular IPO these days.
Most notably, the firm sent over a 71-page document that includes a press release and all sorts of financial data and strategic plans. Here it is: KKR.PDF
I haven’t read the entire thing yet, so just a few quick thoughts in no particular order:
- This is not surprising. KKR first indicated its interest in going public in June 2007, when it filed an S-1 to raise $1.25 billion. Lots has happened since then – including the credit crunch and continued weakening of Blackstone Group’s stock price – but KKR has told anyone and everyone that it was moving forward. It ramped up speculation in recent weeks, by reorganizing its back-office, and hiring William Sonneborn to help further develop its asset management business.
- The structure is clever. Folks like me had been having difficulty reconciling the aforementioned resolve with the impossibly-difficult IPO market.
- Nobody is rooting harder for this to succeed than is The Carlyle Group. Well, except maybe for the SEIU.
- I’m still not sure I really understand why KKR is doing this, save for the fear of being perpetually overshadowed by Blackstone Group. It lists three reasons in the materials, and the only persuasive one is about attracting and retaining talent. Indeed, it’s unlikely that a still-private Blackstone, for example, would have gotten GSO Capital. That said, my gut is that the negatives still outweigh the positives. As always, I’m open to all opposing arguments in the interim (note: I’m getting some good ones, and will discuss in the morning).
Here’s an article filed by my Reuters colleague Megan Davies.
Here’s another piece on KKR’s Q1 results.
A conference call is scheduled for tomorrow morning at 8am ET. I’ll try to live-blog it.