Boston mutual fund giant Fidelity Investments and New York private equity firm Kohlberg Kravis Roberts & Co.
KKR has investments in 50 companies with a combined $200 billion of revenue. But KKR hasn't had an IPO since it took Sealy Mattress Co public in 2006.
Just 10 IPOs have been completed this year, down from 97 at the same point a year ago, according to data from Renaissance Capital, an IPO research specialist.
But the market may be picking up momentum, said Mark Haggerty, president of Fidelity's capital markets unit, based on the deals so far. Overall it's moving in the direction we hope, he added.
IPOs tend to be riskier investments, their image strongly tied to the dot-com era, and the recession has all but eliminated them this year.
Under the terms of the deal, Fidelity will get the right to sell retail securities to its customers. 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. Also, many financial advisers caution that these shares can be too risky for the average investor saving for retirement or similar goals.
Craig Farr, head of KKR's Capital Markets group, said he hopes the deal with Fidelity will increase demand for shares, or what he called greater pricing tension. If retail customers typically buy around 25 percent of an IPO, he said the new arrangement might increase that to 30 percent.
The record for IPOs came in 2000 when 695 were offered, followed by just 108 the following year. Things picked back up in 2007 when 374, a figure that fell to 151 in 2008 and so far this year there have been just 10 IPOs filed to date, according to a count by Renaissance Capital.
(Reporting by Ross Kerber; Editing by Jason Szep and Steve Orlofsky)