KKR Going Public... with the markets where they are right now? Thoughts?
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This does seem to be very odd timing given the Senate bill that will probably lead to higher tax on partnerships and bear market. Looks like the lure of $billions$ and liquidity for the partners is outweighing the relatively bad timing.
According to Dan Primack of PE Hub:
Sorry for interrupting your Sunday, but...
Buyout giant KKR just sent word that it plans to go public on the NYSE later this year. Not via a traditional IPO, but by acquiring an affiliated fund that's already traded in Amsterdam. That vehicle would de-list, 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. I’ll obviously have more on this in tomorrow’s email, and already begun posting info to peHUB. Most notably, the firm sent over a 71-page document that includes a press release and all sorts of financial data and strategic plans. Get it here.
For the rest of you who don’t care, please return to your regularly-scheduled Sunday.
http://www.pehub.com/wordpress/?p=2833
So interesting. The weirdest part that strikes me is apparently the founders have agreed not to cash out when the close to 30% of the firm is listed as public.
reverse merger..?
.
But not in the way you're describing it. This isn't a traditional IPO and KKR partners/mgmt aren't going to make any money when the transaction closes. No new shares are being issued, and the founders aren't taking any cash out of the listing... so this isn't a run and gun.
Down the road, when KKR needs to raise its next fund, you can count on the decision to float shares to help raise that capital.
.
Agreed that funds like these benefit from not having to deal with short-term scrutiny... although the NYSE listing does provide some financial flexibility, and another way for GPs to compensate and reward their employees, but I think it's too early to tell if this is a good thing or not... my guess is it will make little difference in their long-term performance.
It certainly stands to reason that KKR has had some trouble with some of the investments in its portfolio and will likely put out some poor return numbers shortly. When they target another +$15B fund with that recent record, this expandable pool of capital will certainly help...
KKR probably has the 2nd worst portfolio, after apollo. i have no idea why they want the world to know.
even tpg screwed up with that wamu investment.
it seems only Blackstone, carlyle and bain cap had some restraint during the boom.
agreed most megas overpaid for a lot of assets during the good times and are already starting to feel the pain (defaults/bankruptcies in the works)
to be fair, tpg made the wamu investment after the credit collapse and believed they were getting a steal (and protected their downside nicely). they also turned a crappy asset (for which they overpaid) into a nice return when they flipped alltel
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