KKR is the pioneer of private equity (specializing in buyouts). The firm has survived a variety of tough economic cycles, such as the junk bond implosion of the late 1980s.Yet, KKR can't seem to get the timing right on an IPO. For the second time in a year, the firm has postponed plans for a public offering.
Then again, KKR devised a convoluted plan for its IPO, involving a merger of KKR Private Equity Investors LP holding, which is traded in Amsterdam. In fact, the deal would involve no capital raise.
With the plunge in September and October, the portfolios of private equity firms have been ravaged. That is, expect some large writedowns, which is something that scars away IPO investors.
Besides, the shares of KKR Private Equity have deflated, dropping 73% in 2008. In other words, this makes it extremely difficult to pull off an IPO at a decent valuation.
Interestingly enough, the portfolios are likely to not improve until the public markets warm up again (it's the main way to get returns). But KKR is still optimistic and thinks that next year may finally be the time for an IPO.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market
. He is also the founder of BizEquity, a valuation website.
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