Citing an unfriendly market for stock offerings, KKR & Co. (NYSE: KKR) has pulled its planned $500 million secondary offering just one month after moving its listing from Euronext to the New York Stock Exchange. Other than a statement referring to “unfavorable market conditions” in its registration documents filed with the SEC, KKR has made no other comment about the withdrawn offering.
The fortunes of three IPOs issued last week no doubt played some role in KKR’s decision. NXP Semiconductors N.V. (NASDAQ: NXPI) offered 34 million shares at $14 per share, below its range of $18-$21. KKR and Bain Capital LLC had owned NXP since 2006, and the cash coming from this IPO was to used to pay down debt.
IntraLinks Holdings Inc. (NYSE:
IL) priced 11 million shares $1 below its expected range, and NuPathe Inc. (NASDAQ: PATH) sold 5 million shares at $10 per share, significantly below its $14-$16 range. At the end of the day, IntraLinks and NXP closed flat, while NuPathe closed down almost 4%.
That’s not the sort of environment that KKR was expecting. The company reported earnings of $29.9 million, down 92% year-over-year, including a one-time charge for equity awards the company made that were related to its stock offering. Proceeds from the offering were expected to be used to fund growth and potential acquisitions.
KKR is not exactly suffering, with $54.4 billion under management. However, the company has invested three-quarters of its $17.6 billion buyout fund, which it raised in the good old days of 2006. KKR also has just $508.1 million in cash, although its revolving credit facility adds another $500 million and its available credit adds another $1.6 billion.
KKR’s problems could get worse if the IPO market doesn’t wake up and get behind some IPOs that KKR has in the pipeline. Both hospital company HCA Inc. and toy store Toys ‘R’ Us Inc. have filed for IPOs. If these turn out as weak as NXP’s offering, KKR could have some difficulty raising its next leveraged buyout fund.
KKR shares opened up slightly this morning, at $9.93.
26 Broken Stocks to Sell Now – There’s a long list of companies that have jumped off their lows but are still trading at dirt-cheap prices. But BEWARE: these bargain stocks aren’t just cheap, they’re broken. Get their names here or risk losing your shirt.
