Private equity firm Kohlberg Kravis Roberts Co (KKR), which gained fame by taking RJ Reynolds private more than three decades ago and now controls hospital operator HCA and many other companies, said on Sunday it would go public on the New York Stock Exchange (NYSE) through a takeover of its Amsterdam-listed affiliate investment fund KKR Private Equity Investors LP.
The transaction is a big departure from the plans announced a year ago by founders Henry Kravis and George Roberts to tap equity markets for up to US$1.25 billion through an initial public offering. Credit market turmoil torpedoed that plan.
KKR principals would hold 79 percent of the combined company and KKR Private Equity shareholders would own 21 percent. No cash will change hands in the deal, which is expected to close in the fourth quarter, and no additional public stock sales are planned.
But by having the shares of the combined company trading on the NYSE, KKR said it should have enough cash needed to finance additional takeovers.
The value of the combined company would depend on how KKR Private Equity shares trade in the weeks and months ahead.
KKR Private Equity Investors said in an earnings release on Sunday it had 204.9 million units outstanding, giving it a market capitalization of US$2.15 billion at the current price of US$10.50 per unit. That would suggest a value for the combined company of US$10.25 billion.
But in its earnings statement, KKR Private Equity said its net asset value totaled US$4.56 billion, or US$22.25 per unit, at the end of the second quarter — nearly double its June 30 market price of US$12.75.
Therefore, KKR said it would make additional payments if KKR Private Equity shares don’t reach a level of at least US$22.25 each, which would suggest it values the entire enterprise at more than US$21 billion.
KKR Private Equity shares will continue to trade on Euronext Amsterdam until the merger is complete, forecast for sometime in the fourth quarter of this year. Then the stock would be delisted and listed on the NYSE.
The transaction was unanimously approved by the board of KPE’s general partner, with the deal now subject to approval by KKR Private Equity’s unitholders.
“For KKR, this transaction provides us with additional capital for our business,” Kravis and Roberts said in a statement.
“Moving forward with a public listing will allow KKR to do what we do best — grow companies around the world and produce solid returns for our investors from a larger platform and a deeper capital base,” the statement said.
KKR also said it expects its assets under management at June 30 to be about US$60.8 billion, up from US$53.2 billion on Dec. 31.
For investors, KKR’s IPO presents a rare opportunity to get in on the booming private equity industry — which buys struggling companies, turns them around, and cashes in by taking them public again or selling them to other firms.
But Blackstone’s IPO at US$31 a share, raising US$4.75 billion from new investors, has been mostly a bust. Its shares now trade at US$17.01, meaning investors have lost 45 percent of their initial investment.
KKR’s IPO isn’t looking to raise new capital, but the arrangement with KKR Private Equity gives it access to the fund’s investments at a much cheaper price.
And for investors in KKR Private Equity, who have watched shares fall from their initial listing price of US$25 to the US$10 range, the deal provides assurance that they will recoup some of their investment.
Taiwan aims to open 18 representative offices and seven Taiwan Tourism Information Centers worldwide by next year to attract international visitors, the Tourism Administration said on Saturday. The agency has so far opened three representative offices abroad this year and would open two more before the end of the year, it said. It has also already opened information centers in Jakarta, Mumbai and Paris, and is to open one in Vancouver next month and in Manila in December, it said. Next year, it would also open offices in Amsterdam, Dubai and Sydney, it added. While the Cabinet did not mention international tourists in its
EYES AT SEA: Many marine enthusiasts have expressed interest in volunteering for coastal patrols, which would help identify stowaways and illegal fishing, the CGA said Six thousand coastal patrol volunteers are to be recruited for 159 inspection offices to enhance the nation’s response to “gray zone” conflicts, Coast Guard Administration (CGA) sources said yesterday. Volunteer teams would be established to increase the resilience of coastal defense systems in the wake of two unlawful entries attempted by Chinese over the past three months, Ocean Affairs Council Minister Kuan Bi-ling (管碧玲) said. A former Chinese navy captain drove a motorboat into the Tamsui River (淡水河) in Taipei on the eve of the Dragon Boat Festival in June, while another Chinese man sailed in a rubber boat into the Houkeng
NEXT LEVEL: The defense ministry confirmed that a video released last month featured personnel piloting new FPV drone systems being developed by the Armaments Bureau Taipei and Washington are pushing for their drone companies to work together to establish a China-free supply chain, the Financial Times reported on Friday. A delegation of high-level executives and US government officials were yesterday to arrive in Taipei to discuss with their Taiwanese counterparts collaboration on drone technology procurement and development, the report said. The executives represent 26 US manufacturers of drone and counter-drone systems, while the officials are from the US Department of Commerce and the US Department of Defense’s Defense Innovation Unit, along with Dev Shenoy, principal director for microelectronics in the Office of the Under Secretary of Defense
‘ANONYMOUS 64’: A national security official said that it is an attempt by China to increase domestic anti-Taiwanese sentiment and inflame cross-strait tensions The Ministry of National Defense’s (MND) Information, Communications and Electronic Force Command (ICEFCOM) yesterday denied accusations by China that it had undermined regional security by carrying out cyberattacks against targets in China, adding instead that Beijing was responsible for raising tensions and undermining regional peace. The Chinese Ministry of State Security on WeChat accused a hacker group called “Anonymous 64” of targeting China, Hong Kong and Macau starting earlier this year through frequent cyberattacks. The group carried out cyberattacks to seize control of Web sites, outdoor electronic billboards and video-on-demand platforms in China, Hong Kong and Macau, it said, adding the hackers’