PE recovery?

George Roberts and Henry Kravis are first cousins. I bet their childhood games in post-WW 2 Tulsa, Oklahoma weren't the typical "Cowboys vs Indians" fare. Perhaps they were, with the caveat of Custer buying out Sitting Bull's arrow supply prior to Little Bighorn.

More than half a century later, the visionary duo (leaving Bear in '76, talk about far-sighted) are set to take their legendary buyout firm KKR, public. The 3+ year long journey, which stalled due to the crisis, is now reaching it's end. But can we really take the ending of this drawn out saga as a signal to new beginnings?

Does this event signify a return of private equity to the financial world's mainstream? With all the heat taken by investment banks over the past two years, most buyout funds have not just been keeping a low profile, some have actually applied for witness protection.

With the credit crunch making life difficult for day-to-day borrowers, buyout funds seeking billions in credit had no doors to knock on. Many of the pre-crisis acquisitions had nowhere to be sold off. Recent events seem to indicate a change for the better.

Domestic LBO activity, which was as low as $10.4 billion in the first half of 2009, started to turn back up last fall. New PE volume surpassed $37 billion through June, making it the most active half in two years.

Secondary LBOs and trade sales yielded most of the profits and an improving stock market allowed for 54 IPOs of PE owned companies in the last 12 months.

With the recovery as nascent and fragile as it seems to be, are these signs of a comeback or just overstocked producers shedding inventory as soon as the opportunity presented itself?

In an informative semi-nostalgic piece, David Carey asks some of these questions and goes into further detail on the players and fine points.