Kohlberg Kravis Roberts & Co. (KKR)

  • Overview

THE SCOOP

Private equity fame game

Kohlberg Kravis Roberts & Co. (KKR) has built a reputation for itself through fame and infamy as one of the most recognizable names in private equity's short history.  The firm may be most well known for its part in one of the largest buyouts in history-the $31 billion takeover of RJR Nabisco, which was later immortalized in the best-selling book and subsequent television movie Barbarians at the Gate.

Today, KKR still has stature within the private equity community but stacks up slightly behind its major competitors in size, ranking fourth in the largest private equity firms of 2008, according to Private Equity International.  Since the firm was established in 1976, it has completed more than 165 transactions with a total value of $424 billion.  Its current investments are valued at about $86 billion.  KKR has 13 offices worldwide, including locations in the United States, Europe, Asia and Australia.

Making its public debut

In August 2008, KKR & Co. announced that it would officially combine with its U.K.-based Private Equity branch, KKR Private Equity Investors.  KKR Private Equity Investors was formerly KKR's European affiliate and was listed on Amsterdam's Euronext exchange under the symbol KPE.  After the two firms were officially joined, the plan is to delist KPE and the combined company will launch an IPO on the New York Stock Exchange.  The IPO will offer 21 percent ownership of the company to the public while retaining the remaining 79 percent for ownership by current KKR partners.  The public offering comes more than a year after initial plans for an IPO were stalled by the collapse of the credit markets.  KKR had hoped to follow in the footsteps of its rival Blackstone Group with a huge public debut.  However, extenuating circumstances, including the subsequent decline of Blackstone's stock, made it difficult to stir up much excitement for the offering.  With the help of the KPE acquisition, KKR's IPO will finally get off the ground.

Still setting records

KKR might not be the biggest private equity firm in the world anymore, but it's still making headlines around the world with its historic deals.  In 2006, KKR closed its $17.6 billion fund (the KKR 2006 Fund) and quickly began making big transactions afterwards.  The first of these big purchases was the $31.6 billion acquisition of HCA, beating KKR's previous record for the RJR Nabisco buyout.  In early 2007, KKR won a bid to acquire Alliance Boots, the massive U.K. drug store for $24.8 billion.  Later in the year, KKR teamed up with Blackstone, TPG and Goldman Sachs to buy Biomet, a medical devices company, for $11.6 billion.  The biggest deal of all, however, was by far the massive $44.37 billion buyout of TXU, a regulated utility and power producer, for which KKR also partnered with TPG and Goldman.  This deal made history as the largest buyout in history at the time of its completion.

KKR Financial stumbles

The subprime meltdown had particularly nasty consequences for KKR Financial, an affiliate of the private equity company that invests in bonds and loans.  Co-founders Henry Kravis and George Roberts had to bail out the financial company in late 2007 with $270 million and were still unsuccessful in fully recapitalizing it.  In August 2008, KKR announced that it would be receiving another $500 million cash infusion from investors.  KKR Financial has declined approximately 42 percent in 2008 due to losses in the loan market.



Kohlberg Kravis Roberts & Co. (KKR)


9 West 57th Street
Suite 4200
New York, NY 10019
Phone: (212) 750-8300
Fax: (212) 750-0003
www.kkr.com

STATS


  • Employer Type: Private
  • Founding Partners: Henry Kravis & George Roberts
  • 2006 Employees: 399

Key Financials

  • 2006 Income: $1,112 million
  • 2006 Revenue: $4,411 million

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