KKR may pull IPO

The Wall Street Journal reports that KKR may pull its IPO [subscription required]. The reason? It's getting harder for KKR and its peers to get banks to offer cheap money for their deals. This chilling in the credit environment has caused the stock price of competitor, Blackstone Group (NYSE: BX) to tank and made it tougher for Apollo Management to extract money from investors.

At the risk of breaking my arm, I am going to pat myself on the back. That's because last Friday I posted here that I thought KKR should pull its IPO. And yesterday, Reuters picked up on this idea, quoting from my original post. This morning, the Journal published its article on the topic as well. It may be too early to say that private equity is on the down slope for this cycle -- I was certainly too early last August when I outlined some reasons why private equity may have peaked.

I think the deteriorating credit environment for private equity will be bad for stocks. In particular, it will hurt banks that cater to private equity firms. It will also take away a floor [subscription] that was keeping stocks from falling as there always existed the chance of being taken over by KKR and/or its peers. Today the markets may rebound initially -- Tokyo's Nikkei lost 2.4% -- but if credit dries up for private equity deals, look out below.

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.