When it comes to organizing initial public offerings, private-equity giant KKR has few peers. Even in the tough market of the past couple of years, the firm has been able to pull off some impressive offerings, such as the Dollar General (DG) IPO.
However, when it comes to taking itself public, KKR hasn't had a smooth ride. The company filed its prospectus with the SEC back on July 3, 2007 -- just about the moment that the global financial system went into a tailspin.
Since then, KKR has continued to push ahead with its IPO. In fact, the firm has engaged in a convoluted process to merge its European and U.S. operations. And soon, KKR should be trading on the New York Stock Exchange.
But perhaps its most interesting SEC filing came Tuesday, when KKR disclosed the compensation of its senior officers.
Pocket Change for Kravis and Roberts
The founders of KKR, cousins Henry Kravis and George Roberts, have estimated net worths of $4.2 billion and $3.8 billion, respectively. They started the legendary firm back in 1976 and were responsible for many innovations in the private-equity business.
As should be no surprise, Kravis and Roberts have had few income troubles during the recession. Last year, both each received $22 million in compensation from their firm. But that didn't come from primarily from their salaries, which were a paltry $250,000 each. Instead, Kravis and Roberts made that from profit distributions and equity awards.
The two each own roughly 13% of KKR. Based on the trading value of the firm in Europe, this puts the value of their stakes at about $1.65 billion each.
True, $22 million is a nice payday. But it pales in comparison to the windfall received by Stephen Schwarzman, the co-founder of the Blackstone Group (BX). At the height of the buyout boom in early 2007, he partially cashed out for a sizzling $677.2 million, and he still retains a 23% stake in the firm. Kravis and Roberts, by contrast, will not sell a single share in KKR.
However, once KKR becomes a public company, they will eventually be able to unload their holdings -- something that will certainly be important when if comes to estate planning and diversification (Kravis and Roberts are both 66 years old). Plus, KKR will have public stock to make deals and beef up its operations, both of which Blackstone has done over the past couple of years.
Before KKR can trade on the NYSE, the SEC will need to declare the company's IPO "effective." Given that the firm has already provided its compensation information, the shares should trade within the next month or so.
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