Kohlberg Kravis Roberts & Co is on the verge of catching up with private equity arch-rival Blackstone in having a share listing, more than two years after initially seeking to go public.
KKR on Thursday closed a long-awaited deal to buy its Amsterdam-quoted fund, becoming a Euronext-listed company and completing the first step toward an expected move to the New York Stock Exchange.
New York-based KKR, co-founded by buyout king Henry Kravis, has been planning for two years to follow rival Blackstone Group LP in becoming a publicly traded company, but it has been held up by market turmoil.
KKR's complicated deal to become a publicly traded entity involves combining with KKR Private Equity Investors LP, a Guernsey limited partnership traded on Euronext and known as KPE.
A move to a New York listing, which would put KKR on the same playing field as Blackstone, will likely come next spring, a source familiar with the situation previously told Reuters.
Blackstone has been able to use its shares as currency in a series of deals expanding the investment banking and hedge fund side of its business. Many analysts expect KKR's listing will give it the flexibility for similar transactions.
KPE on Thursday was renamed KKR & Co (Guernsey). It owns 30 percent of the combined KKR-KPE.
LONG DELAYED PROCESS
From Friday, the stock symbol of the combined KKR-KPE will be KKR. The stock is currently listed on some systems as KPE. The shares were up 1.5 percent at $9.49 in afternoon trade in Amsterdam.
Our mission is to create attractive returns for our investors, co-founders Henry Kravis and George Roberts said in a statement. This transaction is a milestone that will enhance this mission and provide capital to grow our firm.
KKR is not issuing new capital under the deal, and KKR executives are not selling any shares.
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 a more complex method of going public, by combining with KPE. In June it formally withdrew the traditional IPO plan but kept the door open for such a move in the future.
It said in recent filings that after KKR and KPE combined, 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 appointed its first head of investor relations on Tuesday as it readied itself to become publicly listed.
Analyst Michael Kim at Sandler O'Neill said earlier this week that the completion of the KKR-KPE deal would likely be a non-event for the stock, as the market has been aware of the deal's terms for some time.
Since the time that they announced the revised terms and indicated a high likelihood that the reverse merger would get approved, I think the stock (KPE) has essentially traded as a proxy for the overall KKR, said Kim.
KPE shares have risen more than 50 percent since the revised terms of the deal were announced on July 20.
Blackstone shares are currently trading at around half their IPO price of $31.
KKR has investments in numerous household names, including Toys R Us Inc TOY.UL, mattress maker Sealy Corp and asset manager Legg Mason Inc?
(Reporting by Megan Davies; additional reporting by Ben Berkowitz in Amsterdam; editing by John Stonestreet and John Wallace)