Sunday, private equity firm KKR & Co. L.P. announced its plan to list on the New York Stock Exchange later this year in a complex transaction that would involve the takeover of its Amsterdam-listed investment fund, KKR Private Equity Investors L.P., or KPE. KKR could be valued at as much as $15 billion after its shares are listed on the New York Stock Exchange.
The announcement marks a departure from the company's earlier stance of tapping the equity markets through an initial public offering. KKR was forced to postpone a $1.25 billion public offering in 2007 after investors showed little interest following the credit crunch that paralyzed the financial markets.
Peer Blackstone Group (BX), which went public at $31 per share in June 2007, just before the credit crunch surfaced, has seen its share price dwindle by about 50%. Blackstone closed Friday's trading at $17.01.
New York-based KKR, with $61 billion of assets under management as of June 30, 2008, was founded in 1976 and was among the most prolific private equity investors in the 1980s. The private equity firm is best known for its acquisition of conglomerate RJR Nabicso for $25.1 billion in 1989, an event that was chronicled in the book, "Barbarians at the Gate". It has also been involved in other major takeover deals including those of HCA Inc. and TXU Corp.
Private equity firms like KKR generally make the bulk of their income acquiring companies by using large amount of borrowed money, restructuring them, and then selling them for a profit. However, on account of the credit market turmoil, the lending markets for these types of transactions dried up. A stock exchange listing would enable the company to have a more permanent capital base and use stock to retain staff.
Under the terms of the agreement between KKR and KPE, unitholders and related depositary units of KPE would receive equity interests in KKR, after which KPE would be dissolved and delisted from Euronext Amsterdam. Upon completion of the transaction, KPE shareholders would own 21% of the equity in the combined business, while the remaining 79% of the equity would be retained by KKR executives.
The agreement also provides for current KPE unitholders up to additional 6% ownership if even after three years KKR units trade below $22.25, the net asset value per unit of KPE as of June 30, 2008.
KPE's net asset value for the second quarter declined to $22.25 per unit from $23.02 per unit at the end of the first quarter. The fund has a market capitalization of $2.1 billion, down 58% since it raised $5 billion in May 2006.
For shareholders of KPE, the deal has an implied value of $16-$19.20 per share, according to a KKR presentation. This represents a premium of between about 50 and 80 percent over KPE's current value.
The completion of the transaction is expected to occur during the fourth quarter of 2008. Until then, KPE units will continue to trade on Euronext Amsterdam. Solicitation of consents from KPE unitholders is anticipated to commence during the fourth quarter of 2008.
KKR noted that the transaction does not involve the payment of any cash consideration or involve an offering newly issued securities directly to the public for cash. The company also said that its executives would not sell any equity interests in the transaction. KKR principals will be subject to a 180-day lock up period as well as significant transfer and vesting restrictions.
The deal was unanimously approved by the board of directors of KPE's general partner, acting on the unanimous recommendation of the directors of KPE's general partner who are independent of KKR under NYSE standards. The transaction is subject to approval by unitholders of KPE holding a majority of KPE's common units, in addition to other customary closing conditions.
Henry Kravis and George Roberts, co-founders of KKR, said, "Moving forward with a public listing will allow KKR to do what we do best -- grow companies around the world and produce solid returns for our investors from a larger platform and a deeper capital base."
The independent directors of KPE said in a statement, "Through the transaction, KPE unitholders will benefit from direct access to KKR's entire business as it builds upon its private equity foundation, while retaining significant participation through the contingent value interests should there be a shortfall in the expected value of the combined company."
Citigroup Inc. (C) is acting as sole financial advisor to KPE. Lazard is acting as financial advisor to the independent directors, while Bredin Prat is acting as lead legal counsel to KPE as well as the independent directors.
Goldman Sachs (GS) and Morgan Stanley (MS) are acting as financial advisors to KKR and Simpson Thacher & Bartlett LLP is acting as the lead legal counsel.
KKR also announced that it expects its assets under management as of June 30, 2008 to be approximately $60.8 billion, up from $53.2 billion on December 31, 2007. The firm reported a pre-tax economic net loss of $117 million for the first quarter of 2008, compared to a net income of $346 million in the same period last year.
For fiscal year 2009, KKR forecasts a profit of about $1.2 billion. The company expects investors to value it at 10 to 12 times earnings, or between $12 billion and $15 billion.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.