Is KKR missing the boat?
Unnerved by sagging markets, storied private equity firm Kohlberg Kravis Roberts appears to be thinking of putting off its New York listing. The original plan was to buy its Amsterdam-listed fund and parlay it into a New York-listed entity.
Now, having watched Blackstone‘s stock tumble a gut-wrenching 68 percent since it went public two years ago, we hear KKR is leaning toward buying out the Dutch fund, known as KPE, but putting off the NYSE listing.
Separating the two plans would give KKR, co-founded by “buyout king” Henry Kravis (pictured left), the option of buying its Amsterdam-listed fund without the pressure of having to list at a difficult time to go public. The company could later decide to list under a different method if it desired, Megan Davies reports.
The IPO market is so sickly that it twitches and jumps at the tiniest tech deals, and private equity has been in an equally soporific hibernation. But Mr. Kravis may want to take another look at Blackstone’s stock. Since hitting a March low under $4, it has more than doubled and hit a high above $14 in May.
Imagine the jolt the IPO market would get from a big, juicy KKR listing. Probably just a shade less dramatic than the boost to the egos at KKR if the firm was credited with engineering the pivot point of the financial markets recovery.
The rise in Blackstone shares since March could signal strong appetite for private equity stock, which is still a somewhat rare commodity and may command a reasonable premium. It may also imply investors see green shoots rising for leverage from the muck of markets soaked with liquidity. Then again, it could just be the sound of a dead cat bouncing down Wall Street.
Christopher Kaufman; DealZone Editor
Chairgate: the Economist recants
The Economist has published a correction to its earlier report that Henry Kravis, KKR’s archetypal “Barbarian at the Gate”, may have stumped up 22 million euros for a chair once owned by Yves Saint Laurent:
“Our report suggested that Henry and Marie-Josée Kravis may have been the purchasers of an early 20th-century chair designed by Eileen Gray. Mr Kravis assures us that neither he nor anyone in his family bought the chair in question. Our apologies to all concerned,” the free-trade-loving weekly says.
Our post yesterday on the Economist’s original story prompted some acerbic follow-ups elsewhere in the blogosphere and a firm denial from Kohlberg Kravis Roberts HQ.
Anyone who knows the whereabouts of the actual buyer of the chair, or who wishes to speculate as to his or her identity, please leave a comment.
UPDATED: KKR denies an auction victory
(This updates an earlier post with KKR’s denial).
Maybe the days of private equity paying eye-watering prices at auction really are over.
Kohlberg Kravis Roberts has firmly denied a report in the Economist’s books and arts section saying that, despite the deep economic funk, buyout doyen Henry Kravis was behind the “startling” $28 million purchase of a vintage chair at the recent Yves Saint Laurent sale in Paris:
“Who, in the current climate, were the buyers?” the Economist asked. ”Few prices were more startling than the €22m commanded by an early 20th-century chair designed by Eileen Gray. Cheska Vallois, an Art Deco dealer, won the work in the room; it is thought that she did so on behalf of Henry and Marie-José Kravis, who had already acquired examples of Gray’s work from Ms. Vallois at the Biennale des Antiquaires in Paris.”
But this is one sales process KKR is keen to distance itself from.
“Contrary to speculation, I can categorically deny that neither Henry Kravis, nor anyone in his family, purchased the chair in question,” KKR spokesman Peter McKillop told Reuters in an email. A spokeswoman for the Economist did not immediately return an (admittedly late in the evening) request for comment.
Who was Gray anyway? As London’s Design Museum explains, Gray is “regarded as one of the most important furniture designers and architects of the early 20th century and the most influential woman in those fields.” Kravis, as you must know, was by Forbes‘s reckoning the 49th richest American last year.
IPO by U.K. buyout firm an ocean apart
It’s enough to make Leon Black, Henry Kravis and Stephen Schwarzman jealous.
UK-based buyout firm Resolution, founded by entrepreneur Clive Cowdery, has not only launched a rare IPO – it raised £600 billion ($889 million) last week- but the deal enjoyed a 15 percent “pop” in its trading debut on the London Stock Exchange Wednesday.
The buyout fund will target U.K. insurance and asset management companies in deals in the range of £3 to 5 billion. And that may be part of why the IPO did well: The U.K. insurance sector has underperformed the market with companies contending with lower valuations.
The deal was only the fifteenth IPO to list in London this year, where new issues in 2008 have raised only $8.9 billion, down 78 percent this year, according to Thomson Reuters data, and the fourth largest. The U.S. market for IPOs is down by about the same for the year.
The deal’s success came in stark contrast to the cold shoulder the IPO market in the U.S. has given financial companies, including private equity firms.
Apollo Management, which used the private placement market in August 2007 to begin trading stocks, filed to transfer its shares to the New York Stock Exchange in April, while Kohlberg Kravis Roberts has postponed its complicated plan to use the Amsterdam-based listing of a subsidiary to list on the NYSE.
But then again, with the performance of rival Blackstone Group – its shares are down 70 percent so far this year, who can blame investors for sitting on the sidelines? And it’s been a brutal year for private equity firms with little improvement in sight.
