KKR IPO Needs to Be Postponed

I feel like Dr. Obvious for even saying this, but KKR really needs to stop kidding themselves when it comes to their IPO, and announce publicly that they will be delaying their IPO. I feel bad for people in the company that were going to receive their big cash-out (well, not really), but now is just not the time to go public. The company has been crushed by bad news, and there would be no appetite whatsoever for a KKR IPO right here. Here is what the company is currently trying to deal with:

1. A credit crunch that has resulted in increased costs for financing buyouts and a dependence on investment banks for loans that would result in more restrictive terms. The company is having a hard time putting together financing for some of its current deals.

2. A potential change in the tax code that would result in buyout firms paying higher taxes.

3. KKR Financial reporting that they were being hit by the turmoil in the credit markets

4. Blackstone Financial, KKR's chief rival, currently trading about $7 below its original IPO price of $31 dollars. This should be one of the biggest warning signs for KKR management; the last thing that they want is a dead IPO that is well below its offering price.

5. Overall markets. The stock market is trading down, down, down. There is a lot of skittishness right now in the markets, and this has to be one of the worst markets that I have ever seen to price an IPO in.

Note to KKR management; you probably want to delay until 2008.

Filed under: The Economic Meltdown | General Market News