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KKR to list on NYSE, first acquiring KPE28/07/2008. Source: AltAssets. 
 US buy-out giant Kohlberg Kravis Roberts & Co has agreed to acquire all of the assets and assumption of all of the liabilities of KKR Private Equity Investors, the Netherlands-listed private equity investment fund. The transaction will form part of KKR's IPO on the New York Stock Exchange in the fourth quarter of this year.
It is widely believed that KKR decided to go for this complicated route following last summer's events. Had the credit crunch not happened, KKR would probably have chosen to go public in a more traditional way.
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. Following completion of the transaction, KPE shareholders would own 21 per cent of KKR. KKR executives would retain the remaining 79 per cent of the equity in the combined entity.
In addition, KPE unitholders would receive a contingent value interest providing consideration of up to an additional six 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 30 June 2008 net asset value, three years after completion of the transaction.
The deal does not involve the payment of any cash consideration or involve an offering of any newly issued securities to the public. KKR will also not be selling any equity interests in the transaction, the firm said in a statement.
Under the terms of the agreement, KPE unit-holders will receive a 21 per cent equity interest in the combined business, after which KPE will be dissolved and delisted from Euronext Amsterdam. The deal is expecting to be completed in the fourth quarter of 2008; until then, KPE will continue to trade.
The agreement was unanimously approved by the board of directors of KPE's general partner.
Henry R Kravis and George R Roberts, co-founders of KKR, said in a joint statement, 'This transaction offers substantial benefits for KPE unit-holders, and it builds KKR for the long term. Going forward, KPE unit-holders will benefit by being owners in a diversified asset management business that generates regular distributions of cash earnings.
'For KKR, this transaction provides us with additional capital for our business. 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,' they added.
KKR's IPO is expected to value the combined business anywhere between $15bn and $19bn, according to various sources.
KPE manages a portfolio of $5.4bn, with investments in six KKR private equity funds, co-investments in 13 companies alongside the private equity funds and negotiated equity investments.
KKR has assets under management of approximately $60.8bn. Earlier this month, the firm hired TWC Group's William Sonneborn as it looks to further develop its asset management business.
Major buy-out houses, including The Blackstone Group, have recently looked into listing their business in part or in full to raise cash for management and for investment. Some listings have not been as successful as hoped. KKR's management reportedly does not plan to take any money out of the business.
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