Now comes #2. This really amazes me. KKR files for IPO to raise $1.25B By STAN CHOE AP Business Writer Article Launched: 07/04/2007 12:31:22 AM PDT NEW YORKâKKR & Co. LLP is following in the footsteps of rival buyout firm Blackstone Group with plans for an initial public offering that will allow investors to take a stake in its management partnership. KKR, launched by Henry Kravis and George Roberts in 1976, filed for the offering with the Securities and Exchange Commission on Tuesday, saying it expects to raise as much as $1.25 billion and use the proceeds to grow its business. The leveraged buyout powerhouse best known for its $25.1 billion purchase of RJR Nabisco said it hopes to complete the proposed offering during the third or fourth quarter of 2007 and trade on the New York Stock Exchange under the ticker symbol "KKR." The IPO will come amid fresh pressure on private-equity firms, especially after the 4.1 percent drop in rival Blackstone Group LP's shares since its $4.75 billion offering June 21. Buyout shops are facing a standoff with Congress over plans to make the firms pay a higher tax rate, and scrutiny on Wall Street that funding might be drying up for the recent spate of mega-deals. For many investors, Blackstone's IPO presented a rare opportunity to get in on the booming private equity industryâwhich buys struggling companies, turns them around, and cashes in by taking them public again or selling them to other firms. KKR has been one of the most prolific private-equity firms, scoring the two biggest deals in U.S. history with proposed buyouts of TXU Corp. and Advertisement First Data Corp. "We believe that our strong brand name in the financial services industry will support growth through acquisitions or combinations with similarly strong franchises that will complement our existing activities," KKR's filing said. "By adding our products and brand to the products of acquired companies, we believe we will be well positioned to create significant value for our stakeholders." Like with Blackstone, investors buying KKR units will have no control of the firm's managing partner and will not vote in the election or removal of its directors. Stephen Schwarzman and Peter G. Peterson, who started Blackstone, took home $2.56 billion in the much-hyped public offering of its management partnership. The company said in the run-up to its IPO that the management side would not show a profit for years, and that money made would be used for its founders and top management to unwind positionsâa path that other private-equity firms, like KKR and Carlyle Group, are also expected to take. Blackstone on Tuesday made its first deal since going public, saying it would buy Hilton Hotels Corp. in an $18.5 billion cash deal. Like other leveraged buyouts, this one gave investors a large paydayâthe offer price values Hilton shares at a 32 percent premium over Tuesday's closing stock price. KKR, which said it doesn't have any current acquisition plans, had about $53.4 billion in assets under management as of March 31, up from $18.3 billion at the end of 2002. The firm boasts the first $1 billion-plus leveraged buyout among its achievements, and in 2006 earned $1.11 billion in full-year profitâup 12 percent from $941.5 million in 2005. Among the risk factors KKR listed in its SEC filing for the IPO, it said its earnings and cash flow are highly variable, and that it doesn't plan on providing any earnings guidance, which could make the price of its units volatile. KKR didn't disclose the number of shares it will offer, or their price. The $1.25 billion value was an estimate used to calculate the SEC registration fee. The firm's existing owners will not sell any partnership units or receive any of the offering's proceeds. The offering's underwriters include Morgan Stanley and Citigroup Global Markets, both among the 16 investment banks that also underwrote Blackstone's IPO.
Could this be the top of the LBO market? As this will give taxi drivers and school teachers (both honarable jobs) the chance to get involved in this business model and you know the old saying about when taxi drivers start giving stock tips!!
Funny you mention a top, it could very well be a top thats nearing. I think there are a few more deals in this area before it eventually tires itself out. Also, you mentioned taxi drivers giving out tips, that hasn't happened to me just yet, but I can tell you I have two friends who could care less about the stock market come to me in the last week and ask advice to start investing. That has me questioning this market lately.
The way the markets have been I certainly dont know when we will hit the top but yeah I have had a DJ mate bragging about all the money he is making in the mining stocks
I would rather care about Japanese housewives...;=) http://www.bloomberg.com/apps/news?pid=20601087&sid=adnSs4grfQlQ&refer=home Gotta love Japanese housewives...
Why? Was the first IPO of an internetcompany the sign of a top in the bubble? A failed IPO will be something to watch out for.
How was the Fortress IPO failed?? Oversubscribed, priced at the top of the ranged almost double at the break. Okay, the performance since then has been less than spectacular, but it's still trading 30% higher than IPO price. The fact that even the IPO of Carlyle Capital Corp that invests with 28x leverage in US mortgage backed securities went ahead during all the subprime turmoil to me indicated the market is still healthy and (too?) hungry for paper.