Even in the middle of a recession, dealmakers will make deals. Kohlberg Kravis Roberts, the merchant bank that once stood for the barbarian excesses of the '80s, is making a recession play by shopping around a dollar store.

On Thursday, KKR filed papers with the Securities and Exchange Commission for an initial public offering of stock in Dollar General Corp.
Dollar General, the largest discount store chain in the country, with 8,577 stores in 35 states, plans to use the $750 million it will raise from the IPO to pay down debt, according to the filing. KKR took it private in 2007 in a $7.1 billion transaction, paid off mainly with debt; by May 1, Dollar General had $4.14 billion in outstanding debt.

At a time when investors are looking for recession-proof stocks -- companies that make must-have items, or help consumers save money -- Dollar General should be a popular stock. And the recession has been good to the Dollar General, which posted 15.7 percent sales growth in the first quarter, ending May 1, and 13.3 percent same-store growth, compared to 5.4 percent same-store sales growth in the first quarter of 2008. For the full year 2008, it had 10.1 percent increase in sales, including 9 percent in same-store sales growth.

Management installed by KKR set off to give the 41-year-old company a facelift, remodeling stores and expanding the chain's private brand -- a smart move at a time when penny-pinching Americans are more willing to trade down to no-name brands. The chain began a growth spurt in 2008, opening 207 stores; it plans to open 500 this year.

The filing didn't give details on where the stock will trade, or under what symbol. Underwriters include KKR itself, along with Citigroup, Goldman Sachs & Co., Bank of America, Merrill Lynch, and JP Morgan.

Some observers believe this is a very good time for KKR to cash in on its investment. Consumers are rediscovering frugality -- as Dollar General's recent sales results suggest -- and the IPO market is showing signs of life, after last year's stock-market debacle.

Thirty-six companies have filed IPO plans so far this year -- nine this month alone, according to Renaissance Capital LLC. And that includes established companies such as Dole Foods Co. and Hyatt Hotels. So this could be the right time to take the money and run -- or at least some of the money.

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