KKR, the US private equity firm, is considering scrapping its plan to list in New York, people familiar with the matter said.
KKR had planned to merge its operations with its Euronext-listed KKR Private Equity Investors (KPE) and then list the whole operation on the New York Stock Exchange.
But it is now holding talks with a shareholder of KPE about another arrangement, under which the merger would occur without a New York listing – at least for the time being, the people said.
The new arrangement could involve altered terms for the deal under which KPE shareholders would receive stakes in the combined entity.
One advantage of simply merging its operations into its Amsterdam-listed entity would be to avoid the lengthy registration process and governance requirements of the NYSE.
However, the people close to the talks described them as preliminary and cautioned that the outcome was uncertain. A KKR spokesman declined to comment.
KKR had originally hoped to follow Blackstone’s trailblazing June 2007 public offer. But market sentiment deteriorated and KKR postponed its offer, opting in the summer of 2008 to merge with KPE instead.
A few weeks ago, KKR and KPE put out a joint notice saying KKR and the independent directors of KPE “continue their process of evaluating the advisability of the transaction. There can be no assurance as to whether or when the transaction will be completed”.
KPE trades at a discount to Blackstone, partly reflecting the circumstance of KKR-owned companies. A listing involving KKR itself, by contrast, would give investors a stake in more than just its private equity portfolio.
“If you are contemplating a large capital raise, like Blackstone did, you want to be on the NYSE,” said one person familiar with the matter. “But if the goal is simply to bring the two companies together, Europe is just fine.” KKR principals have long declared that they have no intention to cash out as part of any future KKR listing.
The discussion between KKR and its shareholders comes at a time when some private equity executives are beginning to see signs that their companies are stabilising. The ebullience in the high-yield bond market has enabled many companies to refinance debts.
Moreover, KKR’s portfolio is in better shape than many of its competitors. While some KKR companies have struggled, most of KKR’s biggest deals have been in US companies such as Dollar General, a discount retailer, which have held up well in the face of the recession.
Additional reporting by Martin Arnold in London