Private equity firm Kohlberg Kravis Roberts & Co has filed to list $2.2 billion in shares on the New York Stock Exchange, moving forward in its long effort to become a publicly traded U.S. company.

New York-based KKR has been planning for two years to follow rival Blackstone Group LP in becoming public, but has been delayed by market turmoil.

KKR has said a public listing would allow it to have a more permanent capital base, use stock to retain and attract staff, and have a currency to use in making acquisitions.

There's been talk of KKR coming public for quite some time. I had thought they might had done a bigger offering, but with private equity firms like Blackstone struggling greatly in this market environment, it makes sense that it is smaller, said Scott Sweet, senior managing partner at the IPO Boutique.

In a filing with the U.S. Securities and Exchange Commission, KKR said it would list 204.9 million common units worth about $2.2 billion and trade under the symbol KKR on the NYSE. The timing of the offering, which would be the largest of the year so far, was not disclosed.

The units represent a 30 percent interest in KKR. The remaining 70 percent will be held by principals.

Will it receive a warm welcome? I do not believe so, Sweet said. There has been nothing that has come out of private equity that has been extraordinary.

TOUGH IPO MARKET

KKR's offering would come at a bad time for private equity-related IPOs, analysts said.

They are sitting on tremendous amounts of companies that they can't get public because there is no market for them, but they claim that the private equity companies themselves are in fine shape, Sweet said.

In its filing, KKR said its ability to exit its investments is heavily dependent on the state of stock markets, particularly how receptive they are to IPOs.

Given the size of many private equity-owned investments, IPOs often involve as little as 15 percent of an investment. KKR said this exposes its returns to the risks of downward movement in market prices over the time it sells off its stake.

The IPO market has cooled considerably in the past three months, making it harder to take companies public than it was last fall, when the market perked up after a long slump.

KKR had one of 2009's most successful IPOs when it brought discount retailer Dollar General Corp public in November in a $716.1 million IPO. Dollar General shares are up about 20 percent since then. KKR still owned about 90 percent of the company right after the IPO.

KKR rival Blackstone told investors in late October that it planned to take as many as eight of its portfolio companies public, but it has had to postpone the IPOs of some of its companies as stock markets turned volatile. One of its companies, travel services group Travelport, last month scrapped its London listing, citing market instability.

FORGING AHEAD

Our decision to pursue a U.S. listing is based on our conclusion that the U.S. listing will benefit KKR Guernsey unitholders over the long term, KKR said in the regulatory filing.

We believe that the U.S. listing offers the opportunity to build our firm by providing new opportunities to invest in our business, attract and incentivize world-class people, and enhance the diversity, scale and capital of our business, it said.

Led by Henry Kravis and George Roberts, the private equity firm had $52.2 billion in assets under management at the end of 2009. Since its founding 1976, the firm has completed more than 170 private equity investments with a total transaction value of more than $425 billion.

The deal to become a publicly traded entity involved combining with KKR Private Equity Investors LP , a Guernsey limited partnership traded on Euronext and known as
KPE.

KKR said at the time of the combination that either KKR or KPE would have the right to require the other to use reasonable best efforts to list the combined business in the United States.

KKR originally announced plans to list on the NYSE via a traditional initial public offering in July 2007, a month after Blackstone went public and just before the markets started to tumble.

KKR later proposed the more complex method of going public, and last June it formally withdrew the traditional IPO plan but kept the door open for an NYSE move.

KPE will be dissolved and delisted from Euronext Amsterdam.

(Reporting by Jessica Hall; Additional reporting by Phil Wahba, Steve Eder and Megan Davies; editing by John Wallace)