bloggingbuyouts

Dealbook reports that the KKR IPO train is still chugging along. The firm filed an amended prospectus for the second time with the SEC Tuesday morning. The original prospectus had been filed July 3rd.

Most of the details have to do with KKR Financial, KKR's publicly traded affiliate, which took big losses in its mortgage holdings.

So KKR seems to be taking its time getting it's ducks in a row, or waiting for the credit markets to thaw, or both.

Don't strain your eyes on the small print looking for the compensation figures, though. They're still not there.

When KKR filed its IPO, the firm mentioned that it was exploring activities beyond its core private equity business.

Well, it's getting started. As pointed out in a recent piece in the Wall Street Journal [a paid service], KKR is edging into the IPO game. That is, the firm is the joint book-running manager on an equity offering for Rockwood Holdings (NYSE: ROC), which is a major specialty chemicals manufacturer. The company plans to issue 10 million shares.

Basically, KKR will help to drum up investors for the offering. No doubt, it's a lucrative business (where commissions have held steady over the years). In fact, KKR is a major shareholder in Rockwood (always nice to double dip, huh?)

Despite the fact KKR is getting competitive with Wall Street investment banks, that's not having much impact on this deal. After all, Goldman (NYSE: GS) and UBS (NYSE: UBS) are participating.

And, with private equity cooling off, it seems KKR has no choice but to expand its business -- turning itself more into a full-fledged financial services firm.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements

Nothing like seeing billionaires have a hard time. But that's the case with big-time private equity kingpins, like KKR's Henry Kravis.

Despite being the pioneer of the industry, KKR was a bit late to the IPO feeding frenzy, with arch enemy Blackstone (NYSE: BX) snagging the riches.

Interestingly enough, KKR had to report some of the misery in an updated IPO filing (which is the first amended document).

If you look at page 30, you'll find the following:

"For example, the cost of financing leveraged buyout transactions by issuing high-yield debt securities in the public capital markets has recently increased significantly. If conditions in the debt markets do not become more favorable to us in the near term, we may need to rely on financing commitments provided directly by investment banks or other sources in order to consummate pending transactions or finance future transactions. Such financing may be significantly more costly, with terms that may be significantly more restrictive, than financing that was, until recently, available to us in the public capital markets. More costly and restrictive financing may adversely impact the returns of our leveraged buyout transactions and, therefore, adversely affect our results of operations and financial condition. In addition, in the event of a prolonged market downturn, our business could be affected in different ways. Our profitability may also be adversely affected by our fixed costs and the possibility that we would be unable to scale back other costs within a time frame sufficient to match any decreases in net income relating to changes in market and economic conditions."

Yes, it's a bummer for an upcoming IPO. Just look at the horrendous after-market performance of Blackstone. In fact, despite a strong quarterly report, the stock had a tepid performance today.

And, if KKR does have troubles financing mega deals like TXU (NYSE: TXU) and First Data Corp (NYSE: FDC), we might see the next filing for withdrawal of the public offering.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

According to Hennessee Group, the hedge fund industry had a good June. The average hedge fund posted a 0.88% return. This compares to the S&P's -1.8% performance for the same period.

So far for this year, the average hedge fund has returned 8.7%. How about the S&P? It has clocked about 6%.

While interest rates have been an issue, the fact is that the buyout boom has been extremely helpful for equities. And as seen with the IPO filing of KKR and mega deals like the buyout of Hilton Hotels Corp. (NYSE: HLT), there still appears to be momentum with M&A and private equity.

It's also encouraging that hedge funds have been able to deal with the subprime meltdown. Interestingly enough, it looks like some hedge funds aggressively shorted subprime vehicles. Paulson & Co., for example, posted a 40% return in June because of its bearish bets (there's an excellent story on this on Bloomberg.com).

With credit agencies like S&P and Moody's reducing their ratings of subprime mortgage backed securities, there may be more shorting opportunities for hedge funds. There is also likely to be more pain for firms like Bear Stearns (NYSE: BSC), which have been on the wrong side of the subprime market.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.