KKR Earnings Report Shows It's Primed for Public Offering on NYSE

Tom Taulli
Updated

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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