KKR’s back office build-up

Going public requires significant investment in your finance, admin, and IR teams, as KKR’s preparations for its public listing show, writes Jennifer Harris.

Kohlberg Kravis Roberts today completed its merger with its Euronext-listed affiliate KKR Private Equity Investors. In doing so the alternatives firm has taken the first step on its two-stage journey to an expected listing on the New York Stock Exchange.

The management of KKR has coveted a public listing of its management company for some time. The intention to float the firm was first aired in 2007, shortly after rival firm The Blackstone Group listed on NYSE. The subsequent problems in the debt markets caused the firm to shelve the plans, which were then restated in July 2008. Once again turmoil in the financial markets caused the buyout giant to suspend its plans, which were resurrected again in June this year.

In preparation for the eventual listing, KKR has had to invest quite a bit in building up its back office. Just this week the firm announced the appointment of Jonathan Levin as its first ever head of IR. In November 2008 the firm named a former Newsweek bureau chief, Peter McKillop, as its director of global communications. In August 2008, when the KKR thought a listing was imminent, KKR assembled a team of six prominent law firms led by Simpson Thatcher & Bartlett to assist with the listing.

In July 2008, the firm launched a substantial administrative shake-up and reorganized and launched several lines of business. Scott Nuttall, previously the head of KKR's financial services group, moved to oversee fundraising and broker-dealer activities, allowing veteran fundraiser Perry Golkin to narrow his investor relations activities. Todd Fisher, co-founder of the firm's London office, became the firm's first chief administrative officer. Finally, KKR Financial, the firm's credit business, was fully integrated into the rest of KKR. These moves came in tandem with efforts to launch infrastructure and traditional asset management vehicles.

As far back as November 2007, KKR hired David Sorkin of Simpson Thatcher as its general counsel, Robert Gottlieb of Goldman Sachs as its chief human resources officer, and Edward Brandman of PricewaterhouseCoopers as its chief information officer.

Back in early 2008, The Carlyle Group’s David Rubenstein predicted at a conference that someday all the large private equity firms would be public. If that is to become a reality, firms are going to have to follow KKR’s lead, transforming themselves from a federation of dealmakers to true institutions.