Business Blog: Hoover’s Business Insight Zone

Two big IPOs filed last week while I was on vacation: Och-Ziff Capital Management Group (who?) and KKR (a.k.a. Kohlberg Kravis Roberts, or just Kohlberg*). Here’s the skinny on each:

Och-Ziff is an asset management firm with about $27 billion of assets under management. It’s not a household name in the industry — it serves fund managers rather than individual investors — but it pulls down more than $1 billion yearly in revenue and has a broad portfolio of investments spread across the world. For a $2 billion IPO, expect this one to be on the quiet side.

Rumors had been flying for months that KKR would follow in the footsteps of Blackstone’s historic $4 billion IPO.** The private equity business is notoriously stocked with competitive types — as in, Tiger Woods-like competitive. So no doubt the KKR folks would have liked to beat Blackstone in this regard. But these firms are also very good at copying and refining their competitors’ moneymaking ideas. In the wake of Blackstone’s offering, it doesn’t take a genius to figure out that now is a good time for a rich, highly regarded private equity firm to make a pretty penny on the public equity markets — which is precisely what KKR plans to do with its $1.25 billion offering. Mind you, KKR does have some experience in this vein, as revealed in this tidbit from Hoover’s subscription-level profile on the company:

The company is no stranger to the public equity process. In 2005 it took its real estate investment trust (REIT) unit, KKR Financial, public. The next year the company raised some $5 billion by listing its KKR Private Equity Investors fund on the Euronext stock market, a strategy that is gaining popularity among private equity firms.

Don’t be surprised if other big private equity firms (TPG, anyone?) follow suit by taking the IPO route.
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* A note on Hoover’s naming conventions: Whenever possible — and I’m going to guess this is >99% of the time — we use the legal name of the company in question, rather than the common name or trade name.  In this case, the firm that used to be called Kohlberg Kravis Roberts is now legally titled “KKR & Co. L.P. ” Henry Kravis and George Roberts still run the company as co-CEOs. The company is still often called “Kohlberg” for short, which is funny when you consider that Jerome Kohlberg left to start up his own outfit 20 years ago.

** A note on the historic-ness of private equity firms going public: To be technical, Blackstone wasn’t the first private equity company to go public.  Fortress beat them out of the gate when it had its market debut in February. But Fortress doesn’t set the tone for its industry. Blackstone does. Somewhere, Henry Kravis just flinched as I wrote that.