BusinessWeek – Private-equity funds, once the exclusive domain of large institutions and wealthy individuals, are going mainstream. Getting into a leveraged buyout isn’t quite as simple as purchasing a CD at the local bank — but it’s getting there. An increasing number of private equity firms are issuing stock in their funds on major exchanges, making it possible for individual investors to purchase shares on the open market.
The latest evidence of the trend emerged on Tuesday, amid word that private-equity giant Kohlberg Kravis Roberts plans to raise as much as $5 billion in an initial public offering for one of its investment funds. The size of the offering came as a surprise, since it was more than three times as large as the $1.5 billion KKR had previously indicated it was planning to raise. KKR isn’t known for doing things on a small scale, of course. Its record-breaking buyout of RJR Nabisco in the late ’80s is still the largest LBO. It cost $25 billion, plus more than $6 billion in debt.
The firm’s new investment fund, to be known as KKR Private Equity Investors, will trade on the Euronext exchange, based in Amsterdam. It’s expected to begin trading later this month. Financial firms are tapping overseas exchanges for some of their investment funds, in part because disclosure requirements often aren’t as strict as they are in the U. S. The investment banks handling the deal are Citigroup (C), Goldman Sachs (GS), and Morgan Stanley (MS). Officials for New York-based KKR declined to comment.
