IPO Profile: Kohlberg Kravis Roberts & Co. (KKR)

Company Name: Kohlberg Kravis Roberts & Co.
Ticker: KKR
Exchange: NYSE
Size: $1.25b
Timing: Q3/Q4 2007
Underwriters: Morgan Stanley, Citigroup Global Markets
Website: Kohlberg Kravis Roberts & Co.
Commentary: Kohlbert Kravis Roberts or KKR was originally started in 1976 by Henry Kravis and George Roberts in 1976. The proceeds of this offering will be used to grow its business. The firm is best known for its $25.1 billion purchase of RJR Nabisco. With over $53.4b in assets under management up from $18.3b at the end of 2002, KKR is growing quite aggressively. In 2006, KKR earned $1.1b in profit, up 12% from $941m in 2005.

Recommendation: Aside from the impressive growth rates, there are several issues to consider before purchasing shares of KKR; 1) KKR will provide no earnings guidance 2) Congress has proposed that all private equity firms should begin paying higher tax rates 3) KKR shareholders will have no control of the firm’s managing partner and will not vote in the election or removal of its directors. Private equity firms going public will most likely continue with others such as the Carlyle Group. I suggest you sit tight and hold off on picking up any shares of both Blackstone and KKR until the dust settles.