Fidelity deal would include any KKR IPO
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A deal between KKR and Fidelity would give the mutual fund giant’s customers access to an IPO by the private equity firm itself – if KKR were to do one, a source familiar with KKR said.
The source did not want to be identified because KKR is still studying the possibility of going public and has not said whether it would do an IPO or not.
KKR’s plans to become a publicly traded company hinge on a deal to buy an Amsterdam-listed fund, KPE. In April, it extended the deadline to buy the fund by four months.
KKR announced the complicated transaction last July, saying it would buy KPE, delist it from Euronext and launch the combined new company on the New York Stock Exchange under the stock symbol “KKR”. KKR had previously considered a more conventional IPO.
Under the terms of the Fidelity deal, the mutual fund company will get the right to sell retail securities to its customers from IPOs of KKR companies. KKR has investments in 50 companies with a combined $200 billion of revenue.
Traditionally, retail customers had trouble getting IPO shares to buy through their brokers, since underwriters first look to wealthier customers and institutional investors to buy large numbers of the securities.
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This is a good deal for Fidelity investors. KKR will have some demand if they do file for a IPO, even in this bearish environment. I would guess we will see a 2010 IPO, it looks like the market has not decided what direction it wants to go and if these are “green shoots” or just a typical bear market rally. My call is, the bears are back and earnings will show that.