When Blackstone went public last year, it was a spectacle as dollar signs danced in the heads of Wall Street. Now, the stock has essentially been cut in half as buyout deals have gotten less attractive as their costs have risen.
KKR, the original Barbarians at the Gate, is doing a merger with its Amsterdam-listed KKR Private Equity Investors to go public in order to keep the value of that vehicle strong. It appears that KKR, unlike several of the private equity and hedge fund operations that have gone public in the past three years, is buying itself low instead of selling high to the investing public.
The new publicly-traded firm would be valued between $12 billion and $15 billion when its shares are listed on the New York Stock Exchange, the WSJ reported. That would make KKR more valuable than battered Lehman Brothers and about half the market value of wounded Merrill Lynch.
The WSJ says the secretive KKR wants to depend less on private equity deals and become a larger money manager. That’s pretty much the model Larry Fink’s BlackRock has followed to become one of the few Wall Street giants that’s remained strong in the tornado of the credit crunch.
Since January, both Blackstone and BlackRock have been volatile, but as of Monday morning, BlackRock was flat while Blackstone was off almost 25 percent.
Some see the deal having advantages for investors exactly because it doesn’t seem like such a sweet deal for insiders.
According to 24/7WallSt.com, “this is somewhat of a distressed IPO—and that may mean investors will be better positioned for success than they were by the cynical insider cash-outs at companies like Blackstone and Fortress Investment Group.”
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