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Did Buyout king KRAVIS just missed the boat?

By Amarendra Bhushan for CEOWORLD Magazine Updated:July 29, 2008

Anyway, I am very suspicious when a longstanding privately-held corporation decides its time to go public.It usually means they have wrung all the profits and growth prospects out of it and want to relieve themselves of holding the stock bag when the company goes public. But the answer is, What to do when other people won’t lend you their money, and How to avoid marking investments to market?

What does KKR’s decision to finally go public mean? KKR plans to acquire KKR Private Equity Partners, its publicly listed Amsterdam investment fund.The deal shows that the established firm still can shake Wall Street. Private-equity firms like to buy companies and leverage their balance sheets to pay out a dividend. The deal does not offer any newly listed securities directly to the public for cash and KKR executives are not selling any equity interests in the transaction, the company said.

- KKR will list on the New York Stock Exchange under the symbol KKR.
- KKR had previously planned to become a public entity and had filed papers to do so more than a year ago.
- The company has an aggregate enterprise value exceeding $410 billion.

# Maybe Kravis just wants to monetize (cash out) his holdings so his kids can have fun!
# Also, if the whispers about private equity buying financials is true (and I’m not convinced, yet, that it is) then takin KKR public makes sense in a more pragmatic way.
# KKR chiefs are using private stock (no market value) to buy driven down stock in a publicly held entity they control ?
# Sounds like outright theft. If the stock in KKR is worth so much, why don’t they go public with 10%, then use the market determined value to buy up the eqity of the Dutch listed entity ?
# Is the Dow Jones Industrial Averages going to be 17,000 now?

My guess is that the best way to avoid “marking to market” is to buy the whole company, that way there is no “market”.

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