KKR preps $750m public vehicle

The New York buyout giant has filed to take public a ‘business development company’ which will make debt and equity investments in private companies.

Kohlberg Kravis Roberts, the New York buyout behemoth, has filed a registration statement for the proposed $750 million (€629 million) initial public offering of KKR BDC, a ‘business development company’ affiliated with the firm that will make debt and equity investments in public companies.

 

The proposed public entity will not invest in any company already sponsored by any other KKR private equity fund, although KKR BDC will ‘capitalize’ on KKR’s significant deal flow that is turned down by the private equity funds.

 

The vehicle may also invest up to 30 percent of its portfolio opportunistically in high-yield bonds, distressed debt, or the equity of other public companies, according to the registration statement.

 

KKR BDC will have the ‘support’ of the buyout firm’s professionals, but will be managed by an unnamed investment advisor.

 

Credit Suisse First Boston and JP Morgan are advising KKR on the offering.

 

A business development company is typically required to return the majority of current income and profits to shareholders as dividends. For this reason, other prominent BDCs, such as Allied Capital and American Capital Strategies, have historically focused on mezzanine debt and other yield-producing investments.

 

Last week, New York buyout firm Apollo Advisors took public a BDC of its own, Apollo Investment, raising $930 million for the vehicle.