Private equity giant KKR to go public

28 July 2008

One of the most powerful gloabl private equity firms, Kohlberg Kravis Roberts (KKR),  will go public on the New York stock exchange.

It plans to acquire its Amsterdam-listed investment fund KKR Private Equity Investors, L.P, and list the new company in New York, converting itself in to a publicly listed company, after its plans to make a public offer of $1.25 billion fizzled out because of the credit market squeeze, that has seena slide in the shares of rival Blackstone that went public last year.

Private equity firms have faced an uphill task raidsing finances in the afternmath of the credit squeeze caused that has cut them off from low-cost loans to finance their acquisitions.

Under the terms of the agreement, KPE unitholders and related depositary units would receive equity interests in KKR, after which KPE would be dissolved and delisted from Euronext Amsterdam.

Upon completion of the transaction, those interests would constitute 21 per cent  of the equity in the combined business. The remaining 79 per cent of the equity in the combined entity would be retained by KKR executives.

In addition, KPE unitholders would receive a contingent value interest providing consideration of up to an additional 6 per cent of the equity in the combined company as of the completion of the transaction to the extent that KKR units trade below a specified threshold, tied to KPE's June 30, 2008 net asset value, three years after completion of the transaction.