KKR & Co agreed to sell shares of its private-equity companies through Fidelity Investments as the firms prepare for an increase in initial public offerings (IPOs).
Fidelity, the world’s biggest mutual-fund company, will exclusively distribute offerings backed by New York-based KKR to individual investors, the companies said yesterday in a statement.
Fidelity, based in Boston, has 12 million brokerage clients.
A slump in IPOs has made it hard for private-equity firms to sell their investments. Companies in the US raised US$29.6 billion through IPOs last year, down 45 percent from 2007, data compiled by Bloomberg indicated.
“When the IPO market returns, our distribution network is going to be very interested in getting back involved,” said Mark Haggerty, president of Fidelity Capital Markets, the company’s institutional trading division.
KKR seeks business beyond leveraged buyouts as deal-making remains hindered by the recession and banks’ unwillingness to lend.
The firm’s capital-markets unit, headed by former Citigroup Inc managing director Craig Farr, has underwritten debt and equity offerings for holdings including software maker SunGard Data Systems Inc.
“This allows us as an underwriter to have a terrific retail distribution,” Farr said in an interview. “It’s a continued evolution of this business.”
KKR has about 50 private companies generating more than US$200 billion in annual revenue, including Energy Future Holdings Corp, the Texas power producer formerly known as TXU Corp, and discount retailer Dollar General Corp.
KKR had US$47.3 billion under management as of March, an investor presentation from last month said. Fidelity also can set up programs to sell securities directly to employees of KKR-owned companies, the statement said.
Haggerty oversees Fidelity’s prime-brokerage unit, which loans stocks and clears trades for hedge funds, along with the retail unit.
Fidelity is broadening those businesses as fees from its main business of managing client’s assets fell last year.
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