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KKR to go public on NYSE via fund takeover

By Amarendra Bhushan for CEOWORLD Magazine Updated:July 28, 2008

Private equity firm Kohlberg Kravis Roberts & Co., which gained recognition by taking RJ Reynolds private more than three decades ago and now controls hospital operator HCA and many other companies, said Sunday it will go public on the New York Stock Exchange through a takeover of its Amsterdam-listed affiliate investment fund KKR Private Equity Investors LP. The transaction is a big departure from the plans announced a year ago by founders Henry R. Kravis and George R. Roberts to tap equity markets for up to $1.25 billion through an initial public offering. Credit market turmoil torpedoed that plan.

“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,” Henry Kravis and George Roberts, co-founders of KKR, said in a statement.

One of the biggest private equity firms, KKR is run by Henry Kravis and George Roberts, who founded the business in 1976. They have built fortunes estimated by Forbes magazine at $5.5bn each.

Sources close to KKR say the firm has been unhappy with the valuation put on its Amsterdam-listed offshoot and sees an opportunity to take advantage of this. The Euronext-quoted fund has a market capitalisation of $1.2bn and its shareholders are likely to have about 20% of the combined public entity.

Challenges

Rival Blackstone, which became the first US private equity firm to go public when it listed in June 2007, has seen its shares drop sharply, disappointing the Chinese state investment fund which took a 5% stake last year.

Private equity firms have faced challenges as the cheap financing to fund their deals has dried up amid the credit crunch.

KKR said it made a loss of $117.9m in the first three months of 2008 after a profit of $814.8m in 2007.

Its investments include Toys R Us and Boots.

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