Bill Sjostrom —  3 May 2006

Yesterday’s W$J reported on the planned IPO of KKR Private Equity Investors, an investment fund managed by Kohlberg Kravis Roberts & Co., the legendary corporate buy-out firm (see here). The shares have begun trading on Euronext Amsterdam at $24.80 per share. According to the W$J, KKR listed the shares in Amsterdam to avoid “some of the detailed disclosure that U.S. exchanges require.� I suspect SOX had something to do with it as well.

This is unfortunate. According to this Reuters article, “KKR’s latest foray into the public markets, will allow investors to participate in KKR’s investments without needing the minimum $25 million traditionally required to participate in the buyout firm’s funds.â€? Personally, I would consider buying some shares in my IRA to further diversify my portfolio, but I have no idea how to go about buying shares in Amsterdam or what the transaction costs would be. I haven’t been able to track down a copy of the prospectus, and KKR’s website does not even mention the deal. This is, of course, because the SEC casts a wide regulatory net. Generally, a “foreign private issuerâ€? (such as the KKR fund) is required to register under the ’34 Act any class of its securities held by 300 or more U.S. shareholders. And ’34 Act registration triggers SOX compliance, among other regulatory burdens. Hence, you make sure to stay under 300, which essentially shuts people like me out of the deal.

3 responses to KKR IPO


    This is comparable to the treatment of US investors by other foreign funds, who explicitly reject US investors because otherwise the fund would be subject to US tax law.


    Bill, This is indeed quite interesting. I would be favorably inclined toward this deal as well. bh.

Trackbacks and Pingbacks:

  1. Abnormal Returns » Wednesday links: monetary kerfuffle - May 3, 2006

    […] Bill Sjostrom at Truth on the Market suspects KKR did the deal overseas to avoid some of the additional disclosures required by Sarbanes-Oxley. […]