A publicly traded $5 billion (€3.97 billion) investment vehicle sponsored by Kohlberg Kravis Roberts is down nearly 9 percent since it was first listed on May 3.
The erosion of share value is worrying to other large private equity firms that hope to raise capital on the public markets. Potential investors in this type of vehicle may shy away from similar offerings if they think their shares will trade at a discount post-IPO.
KKR Private Equity Investors, traded under the ticker symbol KPE on the Euronext Amsterdam exchange, closed today at $22.39 per share, a new low.
The shares hit an intraday low of $22.17 today. As recently as June 2, shares of KPE closed above $24.
The vehicle, which will invest in KKR-sponsored private equity funds and investments, debuted on the Euronext Amsterdam exchange at $24.80 after the New York buyout firm raised nearly $5 billion in a Guernsey-based private placement.
KKR will gradually invest the capital of its public vehicle, including committing roughly $2 billion of it to the firm’s new KKR 2006 limited partnership. In the meantime, the proceeds of the IPO will be invested in fixed-income and money-market accounts.
At $22.39, KPE is now down 8.91 percent from its opening price.
In related news, Apollo Management has raised roughly $1.5 billion for a similar vehicle, which has not yet been listed on Euronext Amsterdam. Some market observers have read waning investor interest in public private equity vehicles into the fact that Apollo raised far less than KKR’s $5 billion. Others note that the two offerings are very different.