KKR’s decision to go public is quite inopportune at this juncture
It’s a rough road; wherever they choose to go. But then, they
have to make a choice, which Kohlberg Kravis Roberts & Co. L.P. (KKR) has now done. The company has entered into a contractual agreement with KKR Private Equity Investors LP (KPE) providing for acquisition of all assets and assumption of all liabilities, of KPE by KKR. After this happens, KKR will become publicly listed on the New York Stock Exchange (NYSE), heralding another landmark incidence of a PE firm taking the public route.
“It should give them access to capital, particularly when the debt markets still don’t seem to be open to deals (at least the large deals for which KKR is known),” said Malcolm E. Polley, President & Chief Investment Officer, Stewart Capital Advisors. Interestingly, this deal does not actually give KKR any new capital. Rather, it is being used to purchase an affiliate currently listed on the Amsterdam (KPE). While this affiliate has struggled, KKR has long stated its belief that the affiliate was significantly undervalued relative to its asset values. Also, it gives KKR future access to the capital markets. “This offering is meant as a unique solution to a unique problem”, feels Malcolm.
On the positive end, they can learn from past failures. As per Isabel Schauerte, Analyst, Securities & Investments Group, Celent, “KKR should learn from the Blackstone IPO adventure and not cash out or sell shares.” But primarily, this isn’t the most opportune time for them to go public. Had the market for PE (or public equity, debt, etc) been better, KKR probably wouldn’t have taken such a decision. Some other PE IPOs (like Fortress and Blackstone) have not fared well. “Fortress and Blackstone offered their shares for cash. KKR also initially filed for the offering in that way but with market places so depressed, they didn’t do that”, opines Andrew Richards, Stock Analyst, Morningstar. Analysts feel the current market slump could correct itself soon and so they could have waited before launching their IPO.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
It’s a rough road; wherever they choose to go. But then, they
have to make a choice, which Kohlberg Kravis Roberts & Co. L.P. (KKR) has now done. The company has entered into a contractual agreement with KKR Private Equity Investors LP (KPE) providing for acquisition of all assets and assumption of all liabilities, of KPE by KKR. After this happens, KKR will become publicly listed on the New York Stock Exchange (NYSE), heralding another landmark incidence of a PE firm taking the public route.“It should give them access to capital, particularly when the debt markets still don’t seem to be open to deals (at least the large deals for which KKR is known),” said Malcolm E. Polley, President & Chief Investment Officer, Stewart Capital Advisors. Interestingly, this deal does not actually give KKR any new capital. Rather, it is being used to purchase an affiliate currently listed on the Amsterdam (KPE). While this affiliate has struggled, KKR has long stated its belief that the affiliate was significantly undervalued relative to its asset values. Also, it gives KKR future access to the capital markets. “This offering is meant as a unique solution to a unique problem”, feels Malcolm.
On the positive end, they can learn from past failures. As per Isabel Schauerte, Analyst, Securities & Investments Group, Celent, “KKR should learn from the Blackstone IPO adventure and not cash out or sell shares.” But primarily, this isn’t the most opportune time for them to go public. Had the market for PE (or public equity, debt, etc) been better, KKR probably wouldn’t have taken such a decision. Some other PE IPOs (like Fortress and Blackstone) have not fared well. “Fortress and Blackstone offered their shares for cash. KKR also initially filed for the offering in that way but with market places so depressed, they didn’t do that”, opines Andrew Richards, Stock Analyst, Morningstar. Analysts feel the current market slump could correct itself soon and so they could have waited before launching their IPO.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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