Will KKR withdraw its IPO?

Yesterday two hedge fund initial public offerings (IPOs) performed poorly, according to the Wall Street Journal [subscription required]. And Blackstone Group LP (NYSE: BX) hit an all time low -- closing yesterday 12% below its offering price.

The two busted London IPOs included that of MF Global Ltd., the brokerage unit of hedge-fund giant Man Group and hedge fund Third Point LLC. MF Global stock fell 8% on its trading debut a day after being sold well below its proposed price range. And in London, the listing of a fund by hedge fund Third Point LLC fell short of its targeted IPO size despite a one-day delay in the offering to generate more demand. It raised $525 million, short of the $690 million target.

With three recent financial IPOs tanking, it's beginning to look like a trend -- and KKR may decide that it would be better to pull its IPO rather than risk the market rattling impact of yet another busted IPO. What's causing these financial IPOs to crater? Investors are worried about their exposure to the U.S.subprime-mortgage sector and a more general widening of credit spreads in global markets.

In other words, the party is ending and I think KKR should pull its IPO -- no doubt Henry Kravis is savoring Steve Schwarzman's busted IPO with a fine claret. And I doubt he'd like to return the favor by having his IPO go bust.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.