Yet again this week, the IPO market looked shaky. But that should cause no trouble for private-equity powerhouse KKR, which is determined to become publicly traded on U.S. markets. In fact, this week the company posted its first-quarter results -- and they show that the firm continues to gain traction.
Profits came to $674.8 million, up from $2.51 million in the same period a year ago. During this time, assets under management have gone from $43.8 billion to $54.7 billion as portfolio valuations improved. And KKR's revival is not an exception in the industry: The Blackstone Group (BX) also recently posted a strong quarter.
In the first quarter, KKR invested a hefty $1.1 billion in private-equity deals, which included the acquisition of Pets at Home. The firm has $14.2 billion fresh capital available for deals, so expect the activity to continue. And keep in mind that Blackstone recently indicated that the markets will once again see $10 billion to $15 billion mega-deals soon.
What's more, KKR is poised to get liquidity on a variety of its portfolio holdings. The firm has filed IPOs for HCA and chipmaker NXP. There's also buzz that Toys R Us and Nielsen will try for public offerings. If successful, those sales should provide KKR with some much-needed returns.
Interestingly enough, KKR's capital markets division, which will likely provide advisory services on these IPO transactions, is also proving to be a profit center. In the first quarter, this segment saw earnings of $24.6 million.
The KKR IPO
While it's traded on the Euronext in Amsterdam, KKR has been trying to go public in the U.S. for the past three years. That should become a reality within the next quarter, when the firm will be publicly traded on the NYSE.
Also, KKR recently indicated it intends to raise up to $500 million through its sale of share on the NYSE. This will certainly be a nice slug of capital to help diversify its platform, which is still heavily concentrated in the private-equity business.
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