Private-Equity IPOs: Who's Next?
If you missed your chance to buy shares of private-equity firms Blackstone and Fortress when they went public earlier this year, don't despair–more initial public offerings seem right around the corner. While wealthy individuals with more leverage at brokerage firms usually have a better shot at getting the shares at lower, premarket prices, small-time investors sometimes get lucky. "The notion that you must be a multimillionaire is a misnomer," says Scott Sweet, managing director at the advisory firm IPO Boutique. Here's the skinny on five private-equity firms likely to go public next:
Kohlberg Kravis Roberts & Co. announced its intent to go public on July 3. While the prospectus is not yet available, Thomson Financial ranked it as the largest private-equity firm at the end of last year, with $36.6 billion under management. (Other firms have since surpassed that value, and it's not yet known how much KKR has also grown.) The IPO date has not yet been announced.
Och-Ziff Capital Management Group announced its intent to go public on July 2, by filing paperwork with the Securities and Exchange Commission. According to Investment Dealers Digest, the firm manages about $26.8 billion in assets, and its largest fund has generated annual returns of 17 percent.
The Carlyle Group, which manages more than $58.5 billion, is often named as a future IPO possibility. In April, Managing Director David Rubenstein hinted at an IPO, saying that Carlyle was closely watching the outcome of Blackstone's public offering. "The big private-equity firms will probably all go public at some point," he predicted, "because we'll have to if we're going to compete with each other."
Apollo Management, run by Leon Black, has been rumored for several months to be considering an IPO. Black is notoriously cagey, but he has revealed some of his thoughts on the pros and cons of an IPO in recent remarks. "Going public provides a currency [stock] you can use to acquire niche firms to make your company stronger," he said in April. "It's also nice to be able to monetize these cash flows. The real negative is being in that fishbowl, where a small shareholder can sue you for anything."
Texas Pacific Group, like other big private-equity firms, is considered an IPO candidate on account of its sheer size. It manages over $30 billion in assets and, along with KKR, was involved in one of the largest private-equity deals ever in February, the acquisition of TXU Corp, a Texas energy company. According to Thomson Financial, TPG and KKR paid $44.37 billion for the company. David Bonderman, TPG's quixotic founder, is wry about an IPO. "There is this delicious irony," he observed earlier this year, "in us proselytizing to public companies that you should go private, at the same time we're talking about going public."
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