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"Unfavorable Market Conditions" - KKR Pulls US Offering
It's official - KKR has pulled its IPO. It appears distribution is actually a relevant metric when it comes to pricing overbloated, DOA PE corpses (especially when the memory of BX and FIG is still fresh). HFTs get an F for pushing the market up 10% on next to negative volume. And since when is a parabolic move up of almost 10% considered "Unfavorable Market Conditions." Just how much bullshit is going on behind the scenes of this market?
From just filed 8-K
Re: KKR & Co. L.P. Registration Statement on Form S-1 (File No. 333-166687)
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-1 initially filed with the Securities and Exchange Commission (“Commission”) by KKR & Co. L.P. (the “Registrant”) on May 10, 2010 and an amendment thereto subsequently filed by the Registrant on June 16, 2010 (File No. 333-166687) (together with all amendments, the “Registration Statement”). Pursuant to Rule 477 promulgated under the Securities Act of 1933 (“Securities Act”), the Registrant hereby applies for the withdrawal of the Registration Statement together with all exhibits thereto, effective as of the date of this application or as soon as practicable thereafter.
At this time, the Registrant has elected not to proceed with the public offering contemplated by the Registration Statement due to unfavorable market conditions. The Registration Statement has not been declared effective by the Commission and the Registrant confirms that it has not sold any securities pursuant to the Registration Statement.
The Registrant requests that, in accordance with Rule 457(p) promulgated under the Securities Act, all fees paid to the Securities and Exchange Commission in connection with the filing of the Registration Statement be credited for future use.
Upon the granting of the Commission’s consent, please forward copies of the order withdrawing the Registration Statement to the undersigned at KKR & Co. L.P., 9 West 57th Street, Suite 4200, New York, New York 10019 and to the Registrant’s counsel, Joseph H. Kaufman at Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017.
If you have questions or require additional information, please do not hesitate to contact Joseph H. Kaufman at (212) 455-2948.
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Bagholders getting smarter? WS banks seeing they would eat a major chunk of the shares say no thanks?
Could this be the peak event they write about in the history books?
Doubtful. If this be a peak, it's too minor an intermed peak to make the history books. IMO the "tell" was the Bear Stearns fund(s) going belly up in mid-2007, then the emerg rate cut Aug 2007. And then SocGen Jan 2008 and . . .
Stocks don't have to go up to be in a bubble. 0% return this year looks bubbly to me...
More like an anticlimax - what Blackstone had was climax, peak, pinnacle - and the test is that the IPO must succeed, SWFs like CIC/ADIA/Temasek must have enthusiastically subscribed a billion here and there buying from the founders, and must not forget the rock concerts attended by Washington and WS elites. Bottom line - Wall Street sees a higher peak(s) ahead of the mid-term elections. KIV until 2011 for peak discussion.
Ambak filing BK and not a peep from MSM.
This might take a little wind out of the market tomorrrow.
Wow...the chickens have come to roost!!!
No appetite for destruction. Welcome to the Jungle. All the Guns N' Roses tunes apply here.
It gets worse here every day.
To be played while surfing through HFT charts from Nanex
http://www.youtube.com/watch?v=Zi8vJ_lMxQI
The whole Ponzi financing concept with each incarnation taking on more and more debt before it is offloaded to unsuspecting slow money bagholders just pisses me off.
Hopefully people have wised up and there are no takers anymore for this type of fraud.
I'll be grateful if someone can explain the importance of this - I'm not in the USA.
Thanks!
DavidC
No importance at all. The entire system is still totally corrupt and 99% of our "leaders" are criminals and need to be doing the air dance. Just add another 10 billion to QE2.
A private equity firm basically said fuck you to their bookrunner after months of road shows and assuring investors their shares will jump xx% after the IPO
Playing the Devil's Advocate here:
Could it not be argued that the beneficiaries of the IPO see the market as being too "soft" and feel that the IPO would underprice the value of their firm. Hence, their view would be that the market is "cheap".
This is not my personal position regarding overall market conditions, but, just some conjecture regarding their thoughts.
You float a company when it is right for the company not when the market conditions are right. A companies move onto an exchange used to be because the companies capital structure and capital requirements were now better suited to a listed vehicle in order to grow. These days IPOs are just off loaded to the investing public based on how much money the float will make for the vendors and their corporate advisors. If its a good business that will benefit from access to the capital markets just float it. They have pulled it because they know it is not.
Its just another slap in the face for retail investors as through these actions "unsuitable market conditions" people see that the underlying business now has nothing to do with the IPO, its all about getting the best price, generating the most fees for the the vendors. Anyone who goes near this float if it ever comes back on deserves to lose money.
I would assume that Kohlberg, Kravis and Roberts have a lock-up period, therefore if they think the market will tank, they will stop the IPO. But hey, I don't have a PHD...
"HF STOP"
I guess they want to avoid
Yeah, ignore that 92% drop in earnings. lol
http://jessescrossroadscafe.blogspot.com/2010/08/things-are-so-swell-that-kkr-just.html
That pig picture is priceless!
DavidC
In a world of asymmetric information, private equity looks to differentiate itself by having a better understanding of "value". Forget about enhancing profitability, repaying debt, etc., much of the value creation from the individual investments comes from good timing - buying when multiples are low and selling when multiples are high(er). If they make an investment (on a leveraged basis) at 5x EBITDA and sell it for 8x EBITDA the result is tremendous profits to the LP with a 20% cut to the GP.
Henry and George didn't decided to take KKR public because they thought the business was undervalued!! BK and FIG used exactly the same thought process. Unfortunately, too many investors are attracted to these types of IPOs because they think the are investing along side the GP when nothing could be further from the truth.
They can still ask for a high premium in this 'undervalued' economy... they just probably won't get any decent subs
Is no one here old enough to remember 1989, RJR, Barbarians at the Gate?
Interesting to note that KKR call themselves "private equity". The idea is to give it a patina of acceptability. I personally prefer their old moniker as leverage buyout kings. Low-lifes like them are the parasites of capitalism, they swarm in on a healthy company and make fake projections about what they will do, overload it with debt, strip the pensions, write new low wage employment contracts, and stick the old management on new obscene compensation packages to hide the books and sell the dying, rotting coprse onto some sucker down the line, usually a government or a pension fund forced into it by a government desperate to avoid the coming layoffs.
If you are an employee of a large corporation and wonder why you've been going financially backwards for the last 20 years look no further than the "private equity" crowd and the crap they've been feeding MBA peons. The idea is to get all employees not on the board, to be temps or on subsistence wage. It has worked a charm.
If the market is no longer buying the BS peddled by Henry Kravis then there may just be hope for the future.
Jerome Kohlberg left KK&R before RJR NAB to return to the smaller middle-market post-WWII family liquidity LBO bootstrap deals he pioneered at BS in the 60s.
On the way out the door he made some prophetic wry comments on the lack of economics for bigger bonfire of vanity deals.
So did some subsequent KKR executives who left.
Thus, is it irony, karma or prophecy, take your pick, that KKR, the company that made bona fide business owners liquid at a better price than corporate conglomerate acquisition, now faces liquidity valuation issues?
KKR is still mostly a closely-held insider company rolling over limited partner fund tranches to stay alive during increasingly tough times for debt deflation deleveraging.
KKR Executives still own 70% of KKR after five years of IPOs.
KFN KKR went public in June 2005 on NYSE with a REIT structure to increase KKR valuation, and fell with the sub-prime morass.
KPE KKR went public on Euronext in May 2006.
In August 2007 the KKR/KPE Big Board IPO was cancelled due to market conditions.
Why go public on the NYSE if it does not add value?
In November 2008, the NYSE listing of 30% of KKR/KPE was again delayed with the demise of LEH.
On 15 July 2010 KKR migrated Amsterdam or Guernsey traded shares to the Big Board for deeper pocket liquidity, a nifty way to test the market waters before the full Monte IPO.
http://money.cnn.com/2010/07/15/news/companies/kkr_stock/index.htm?postv...
KKR shares traded as low as 8.64, -13% below the 10.50 NYSE opening price, not an auspicious debut in a bullish market.
http://stockcharts.com/charts/gallery.html?kkr
Rumour is some institutional buy side did not like the 6 August 2010 46% haircut on NXP Semi from the original KKR LBO purchase price.
Also, word is some in Congress did not like the rich KKR partner 85% tax-savings on special 754 tax elections during tough times, so threatened to increase the Long Term Capital Gains on the Carry.
BX, PZN, OZM, DWA, and LAZ had similar special interest taxation arrangements that meant as WEB observed that administrative assistants paid more taxes than financial alchemist would-be wizards.
http://money.cnn.com/2010/07/28/news/companies/kkr_tax_deal.fortune/inde...
Perhaps the most telling indicator was the fact that 2007 IPOs of BX and FIG now trade -71% and -87% lower, not encouraging for those in lockup periods who risk undermining market confidence by selling on the IPO like BX principals did.
Altogether perhaps enough racy financial material to headline Wall Street III later this year like Wall Street II in 1987 and Wall Street I in 1929.
Neither founding partner first cousin, each of whom is 66, has plans to retire.
Unlike BX founders, neither was selling stock on the IPO.
Each owns 13% of KKR. Neither needs the cash, liquidity or taxes, having made their fortunes long ago.
From here on out it's all about legacy.
The $64 Billion dollar question is:
Are they and other KKR private shareholders trapped by debt deflation?
Full disclosure: KKR took a company I mid-wifed private for over $11 Billion with some pretty good partners. I wish them well cashing out...
KKR is just another form of bottom feeder, sucking fees out of pensions etc
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