While we wait for KKR to actually go public, here’s something to ponder: What if the so-called Blackstone Bill reemerges? You know, the piece of legislation that would require publicly-traded partnerships to pay taxes at the corporate rate. If so, wouldn’t it significantly decrease whatever valuation KKR ultimately settles on?
The dual answer is: No it won’t, but yes it would.
What I mean is that the Blackstone Bill isn’t coming back anytime soon, even if President Obama has a filibuster-proof Senate. First, the public fervor over Blackstone and Fortress going public has subsided, in large part thanks to the share price smackdown each firm has received. Second, we haven’t seen the anticipated bulrush of PE firms into the public market yet, although that’s more a function of inability than antipathy.
Last, and most important: There are larger related issues to discuss – namely, carried interest taxation and the overall issue of capital gains tax rates. Some pieces of the Blackstone Bill could conceivably get rolled into those discussions, but it’s so far on the back burner that it may be forgotten altogether.