KKR files modest $1.25B IPO

With the Fourth of July holiday coming smack dab in the middle of last week, many industry observers thought it would be a rather mild week for news.

Kohlberg Kravis Roberts saw to it that there would be plenty for PE industry folk to chew on. The firm filed regulatory papers to raise up to $1.25 billion for an IPO. The filing was expected, coming, as it did, after last month’s high-profile listing of rival buyout firm The Blackstone Group. However, Blackstone raised more than $4.1 billion in its offering. Unlike the Blackstone IPO, KKR’s owners are not selling any common units or receiving any net proceeds.

Shares of Blackstone (NYSE: BX), by the way, rose about 13% after their first day of trading. But the shares have fallen about 15% since the IPO. Fortress Investment Group (NYSE: FIG), a private equity and hedge fund firm, raised $634 million in its IPO in February. The firm has seen its shares fall about 25% since then.

Some media speculated that the relatively modest size of KKR’s offering (if $1.25 billion can be called modest) and the timing of the announcement, on the eve of the Independence Day holiday, suggests that KKR hopes that its IPO will be a low-key affair. In comparison, Blackstone‘s debut prompted some unwanted attention from the U.S. Congress in the form of increased legislation and tax hikes.

But this isn’t KKR’s first foray into a public exchange. Last year, the firm raised $5 billion for a publicly traded fund on the Euronext exchange.

The next question is, “Who will be next?” Most other major buyout firms, such as The Carlyle Group, Apollo Management and TPG Capital, have considered an IPO of their own. Could the KKR filing accelerate those anticipated plans? —Alastair Goldfisher