KKR’s decision to go public through a non-traditional method at this juncture in the market may be seen by some financial pundits as potential suicide but I am of the other camp and believe that the way KKR is structuring the transaction is brilliant.
Why is it brilliant? Well what KKR is in essence doing is a reverse merger aka Alternative Public Offering (APO). In this Particular instance KKR is merely merging with its Euronext trading LP called KKR Private Equity Investors (KPE). In conjunction with the roll up the combined company will qualify and be listed on the NYSE. This really gives KKR a better position to access capital in any market. I find it no coincidence that KKR is doing this now when there are substantial opportunities to be had in the distressed arena. The merger benefits the KPE holders by giving them a broader access to KKR’s private equity deals and transactions plus it will allow KPE to now share in all of the recurring income streams of KKR. It eliminates any duplicitous fees on the various partnerships that are created and will allow the combined company to retain key talent while looking for other asset management businesses to acquire. The combined company will now be a tour de force in the global asset management business.
The pitfalls of the Blackstone IPO were numerous but the main item was how much money the executives were taking off the table and the incredible valuation that was being forced onto Wall Street. KKR is really just merging with their struggling affiliate and maybe seen as a way of unlocking hidden value while making the combined story much hotter. As the old saying goes “the sum of the parts are greater than the whole”, that may be true in some instances but not in this one as KKR will definitely benefit greater from the whole.
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment