AMSTERDAM (Reuters) – Kohlberg Kravis Roberts & Co's KKR.UL Amsterdam-listed fund jumped 27 percent during morning trade on Monday after the private equity group detailed plans to list in New York in a public offering.
Under public offering plans detailed by the investment group on Sunday, shares in the Amsterdam listing, KKR Private Equity Investors (KPE) (KKR.AS: Quote, Profile, Research, Stock Buzz), would be exchanged for newly issued New York Stock Exchange-listed shares and delisted.
KPE was among several affiliates of larger private equity funds to list in Amsterdam within the past few years. Lehman Brothers Private Equity Partners Ltd (LBPE.AS: Quote, Profile, Research, Stock Buzz), an affiliate of U.S. bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) that listed in July 2007, has fund and buyout investments.
Most notably, Carlyle Capital Corp, which was an affiliate of U.S.-based buyout firm Carlyle Group CYL.UL and mainly invested in mortgage-backed assets, went bankrupt in March and liquidated its assets as it could not meet margin calls from its lenders.
In March, KPE said that it had no exposure to residential real estate loans.
KPE went public in Amsterdam in May 2006 in a $5 billion, or $25 per share, offering. Shares have fallen since the credit turmoil hit and closed on Friday at $10.50 a share.
The shares rallied to $13.31 by 5:20 a.m. EDT, up 26.8 percent and a three-month high. They had already been near a lifetime low of $10.30.
A NYSE listing could value the combined KKR and fund at $15 billion to $19 billion, and KKR itself at $12 billion to $15 billion, a source familiar with the situation said.
For KPE shareholders, the deal has an implied value of $16 to $19.20 per share, according to a KKR presentation — a premium of between about 50 and 80 percent over the current value.
KPE holders would own 21 percent of the combined company, with KKR holding the remaining 79 percent.
The move comes amid a drought for the private equity industry's traditional business of leveraged buyouts. The mega-buyouts of the past few years dried up abruptly last summer, when the credit crunch shut off the cheap financing that sustained multibillion dollar deals.
The transaction is expected to go through in the fourth quarter, meaning KKR should be publicly traded on the NYSE before the end of 2008.
The deal also addresses a concern that KPE's stock has traded with little liquidity. Under the deal, KKR is giving KPE stockholders an insurance policy that if the stock does not trade at specified levels, KKR will give up to an additional 6 percent ownership in the company.
Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) and Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) are advising KKR, Citi (C.N: Quote, Profile, Research, Stock Buzz) is advising KPE, and Lazard (LAZ.N: Quote, Profile, Research, Stock Buzz) is advising the independent directors of KPE, the statement said.
By Reed Stevenson
(Additional reporting by Megan Davies in New York, Anupreeta Das in San Francisco and Jessica Hall in Philadelphia; Editing by David Cowell)