Private Equity News & Analysis

Union attacks KKR, Och-Ziff IPOs

The US’ largest federation of unions has appealed to the SEC to require KKR and Och-Ziff to register as investment companies ahead of the two firms’ planned initial public offerings.

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Powerful US trade union federation, the AFL-CIO, has written a letter to the Securities and Exchange Commission asking that Kohlberg Kravis Roberts and hedge fund Och-Ziff Capital Management be regulated as investment companies rather than publicly traded limited partnerships in their upcoming initial public offerings, according to The Associated Press.

If the two firms were subject to the Investment Company Act of 1940, as the AFL-CIO has asked, they would be required to publicly disclose information about their finances and operations.

The letter expressed concern that the two firms’ activities, particularly KKR’s ownership of $11.9 billion (€8.6 billion) in mortgage-backed securities, would present a risk for potential investors, according to the AP.

KKR filed in early July for a proposed $1.25 billion listing on the New York Stock Exchange. Och-Ziff also filed in early July for a $2 billion initial public offering on the NYSE.

In a similar letter sent prior to The Blackstone Group’s $4 billion IPO in June, the AFL-CIO accused the private equity firm of evading the Investment Company Act.

Andrew Donohue, director of the SEC’s division of investment management, recently told the Senate Finance Committee that its staff had thoroughly reviewed the filings of alterative asset managers such as Blackstone and Fortress Investment Group and found they were not required to register under the Investment Company Act.