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Table of Contents

Lead Story

Unbanked, underbanked - untapped

News

Industry Update

HR 5546, the downside

Uncle Sam to get slice of payments pie

Private equity giant going public

MWAA meeting goes the distance

PCI on the menu

Scott Henry
VeriFone

Three-step systemization

Biff Matthews
CardWare International

Features

The consulting guru that could

Industry Leader

Linda Perry –
Unfettered spirit, extraordinary success

Views

PCI on the menu

Scott Henry
VeriFone

Three-step systemization

Biff Matthews
CardWare International

Education

Street SmartsSM:
To Capitol Hill we go

Jason Felts
Advanced Merchant Services

Becoming registered

Adam Atlas
Attorney at Law

Check processing diversification: Hop aboard

Christian Murray
Global eTelecom Inc.

Invest in trust

Jeff Fortney
Clearent LLC

Web site optimization: A route to talent

Curt Hensley
CSH Consulting

Lead with communication

Daniel Wadleigh
Marketing Consultant

Company Profile

GreenSoft Solutions Inc.

New Products

Keep alert with merchant accounts

MercuryAlerts
Mercury Payment Systems LLC

Turbo charge PCI compliance

TurboPCI
TurboPCI Inc.

Inspiration

For better or worse

Miscellaneous

POScript

Departments

Forum

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

August 11, 2008  •  Issue 08:08:01

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Private equity giant going public

Kohlberg Kravis Roberts & Co. LP, one of the world's largest alternative asset managers, and KKR Private Equity Investors LP (KPE), an equity trust limited partnership that invests its assets in private equity and investment opportunities identified by KKR, signed an agreement in which KKR will acquire all assets and assumption of liabilities of KPE.

In conjunction with this transaction, KKR will become publicly listed on the New York Stock Exchange under the symbol KKR. Industry sources indicate the initial public offering (IPO) could generate between $12 billion and $15 billion.

Under the agreement, KPE investors will turn over their KPE assets to KKR in exchange for equity interests in KKR; KPE will be delisted from the Euronext Amsterdam stock exchange. This move comes less than a year after KKR made some of the largest acquisitions in the company's 32-year history, including a $29 billion deal for First Data Corp. and a $45 billion merger agreement and privatization of Dallas-based TXU Corp., in the summer of 2007.

As of Sept. 30, 2007, KKR's equity investments were valued at over $86 billion. KKR has 46 companies in its portfolio in which it invested over $39 billion.

Executives exempt from profit

When the merger is completed, current KPE investors will own 21 percent of the equity in the newly combined business. The remaining 79 percent will be retained by KKR executives. Additionally, none of KKR's existing owners will be allowed to sell shares of KKR or otherwise receive any net proceeds or cash in connection with the IPO for six to eight years.

In a released statement, Henry R. Kravis, co-founder of KKR, said, "This transaction offers substantial benefits for KPE unitholders, and it builds KKR for the long-term.

"Going forward, KPE unitholders will benefit by being owners in a diversified asset management business that generates regular distribution of cash earnings.

"For KKR, this transaction provides us with additional capital for our business.

"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."

Partnership promotes liquidity

When asked how he thought its portfolio of companies would benefit by KKR's IPO, George R. Roberts, KKR's other co-founder, added, "Through our listing on the New York Stock Exchange, KPE holders will have access to a broader investor base in a significantly more liquid market ... and unitholders will benefit from a far more diverse income stream than they do today."

KPE was created in May 2006 to enable certain public market investors, including financial institutions and qualified individuals, to participate in certain KKR investments.

The independent directors of KPE said this transaction "will create a partnership with a more diverse asset base in terms of strategies, geographies and companies ... and facilitate the purchase and sale of stock in a more liquid market."

KKR expects to complete the transaction during the fourth quarter 2008.

Until then, KPE shares will continue to trade on Euronext. KKR said this transaction will have no effect on KKR's strategy or operations, or on how the firm works with its portfolio companies.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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