KKR listing to ‘dramatically change’ industry

Carlyle co-founder David Rubenstein, speaking at the IFC’s Global Private Equity Conference today, said KKR’s recent Euronext IPO will ‘dramatically change’ the private equity industry. His comments come amid a surge in interest in publicly listed private equity vehicles.

The recent $5 billion IPO of a vehicle sponsored by Kohlberg Kravis Roberts is creating a wave of interest across the global private equity industry, with GPs seeking to launch similar vehicles.

Speaking today at the Global Private Equity Conference in Washington DC, The Carlyle Group co-founder David Rubenstein said of the KKR listing: “You’ll see others doing the same thing.”

Rubenstein noted the long-term appeal of the KKR vehicle, which is structured as a Guersey Limited Partnership and traded on the Amsterdam Euronext exchange. He said: “I think that this will dramatically change the face of the private equity world as we know it.”

KKR Private Equity Investors, the name of the vehicle, was originally launched with a $1.5 billion goal, but drew $5 billion in interest. The structure of the vehicle earmarks $2 billion for KKR’s 2006 Fund, a private limited partnership currently in fundraising mode. This makes KKR Private Equity Investors among the largest LP commitments ever made.

A partner at a major US private equity investment advisor said his phone has been “ringing off the hook” due to calls from general partners who want to know how limited partners may react to the pursuit of similar listings. “People are filing as we speak,” said the advisor.

KKR’s public vehicle creates a pool of “permanent capital” – investment capital that is automatically recycled for use at the discretion of the GP. It is also structured with favourable terms for the GP, such as not having a requirement to share deal fees with the LP.

The Global Private Equity Conference, a sold-out event sponsored by the International Finance Corporation and the Emerging Markets Private Equity Association, is focused on private equity investment in emerging and “emerged” markets.