March 29, 2020

DealBook: Dell Adjourns Vote on Deal as Some Big Investors Start to Shift

Michael S. Dell, the founder of the computer company that bears his name.Kimihiro Hoshino/Agence France-Presse — Getty ImagesMichael S. Dell, founder of the computer company that bears his name.

9:21 p.m. | Updated

Dell bought itself six more days to win backing for its proposed $24.4 billion sale to its founder, but the fight for additional support remained tough.

On Thursday, Dell, the computer maker, adjourned a meeting for shareholders to vote on the deal only minutes after opening the gathering. The vote is now scheduled for July 24 at 6 p.m.

Thursday’s decision, which many had expected, prolongs the drama surrounding the former giant of the personal computer industry. Dell has been shrouded in uncertainty for several months, as investors have questioned whether the $13.65-a-share bid by Michael S. Dell and the investment firm Silver Lake would succeed.

The meeting was adjourned after preliminary tallies showed that the deal would almost certainly have been defeated. With more time, a committee of Dell’s board and the company’s proposed buyers will try to twist more arms.

The two groups have already made headway. On Wednesday night, a number of big institutional investors switched their votes to “yes,” people who had been briefed on the matter said. Those investors included big asset managers like the Vanguard Group, BlackRock, the State Street Corporation, the Bank of New York Mellon and Invesco.

For the votes already cast, the race looks like a dead heat, one of these people said. But an estimated 23 percent of Dell votes have not been cast, effectively counting as no votes. And any votes can be changed before the new shareholder meeting, meaning that the landscape may change yet again.

The bar for approving the deal is high. More than 42 percent of Dell’s shares would have to be cast in favor of the deal. The billionaire Carl C. Icahn and Southeastern Asset Management, who have proposed an alternative to the leveraged buyout, together own almost 12.7 percent.

“It is unfortunate, although not surprising, that Dell’s board and special committee have delayed the date of the special meeting at which stockholders can vote on the Michael Dell/Silver Lake freeze out transaction,” Mr. Icahn and Southeastern said in a statement. “We believe that this delay reflects the unhappiness of Dell stockholders with the Michael Dell/Silver Lake offer, which we believe substantially undervalues the company.”

Instead, Mr. Icahn and Southeastern have proposed that the company buy back 1.1 billion shares for $14 each, and offer warrants to buy additional shares for $20 each. The two investors valued their plan at $15.50 to $18. But the committee of Dell’s board rejected the idea as too risky and not in the best interests of other shareholders.

Both sides have argued that Dell must continue to move away from personal computer manufacturing, which once propelled its profits but now weighs down its prospects. The embattled business is trying to build a more profitable corporate software and services operation.

But Mr. Dell and Silver Lake argue that such a transformation can only succeed if carried out in private, away from analysts and public investors. Mr. Icahn and Southeastern dismiss that contention, while arguing that the current offer is too low.

Many investors appear to hope that the prospect of defeat will force Mr. Dell into raising the bid. He acquiesced before, increasing the purchase price to its current level from $13.60.

The committee will try to persuade the bidders in raise their price again, the people briefed on the matter said. But people close to Mr. Dell and Silver Lake insist that no such increase is coming, given the declining financial health of the company and the overall weakness of the personal computer industry.

If that is the case, the Dell committee will likely seek a letter from Mr. Dell and Silver Lake confirming that $13.65 a share is their best-and-final offer, erasing any illusions about an increase. Shares in Dell rose 1.9 percent on Thursday, to $13.12, suggesting that investors feel somewhat more optimistic that the buyout will succeed.

Article source: http://dealbook.nytimes.com/2013/07/18/dell-deal-said-to-lack-enough-votes-for-approval-but-big-investors-start-to-turn/?partner=rss&emc=rss

News Analysis: The Challenges of Taking Dell Private

Michael Dell, the chairman and chief executive of Dell.Kimihiro Hoshino/Agence France-Presse — Getty ImagesMichael Dell, the chairman and chief executive of Dell.

By exploring the possibility of going private, Dell appears to hope that it can finally fix the problems that have led to a 40 percent plunge in stock price over the last five years.

There’s one problem, however: Going private may not be all that easy — or help out the company in the end.

The effort is under way, people briefed on the matter have confirmed to DealBook, with Dell talking with private equity firms and exploring obtaining bank financing. It’s unclear how long it will take to reach a completed deal, though reports have suggested it may take nearly two months.

But a leveraged buyout of a company as big as Dell would be no small feat, and it would be dependent on overcoming hurdles specific to the private equity industry and the company itself.

As of Friday, before Bloomberg News reported the discussions with private equity, the company was valued at about $18.9 billion, based on a stock price of $10.88. Applying a 31 percent takeover premium, which was the average paid for high technology L.B.O.’s last year, according to Thomson Reuters, to that number would lead to a potential deal being valued at about $24.8 billion.

Dell

Of course, Dell’s stock has gone up higher since, reaching $12.60 by early Tuesday afternoon.

Many private equity executives, and the advisers who clamor for their business, have been longing for the return of bigger buyouts. No private equity deal has come close to the deals struck during the height of the credit boom that ended in 2007; a Dell takeover would be the biggest since the $25 billion takeover of Hilton Hotels in July of 2007.

To date, no leveraged buyout since the financial crisis of 2008 has topped the $7.2 billion that Kohlberg Kravis Roberts and others paid for the Samson Investment Company a year and a half ago. And many advisers say that it’s hard to consider completing a deal above $10 billion.

Partially, that’s a matter of logistics. Leveraged buyouts require private equity firms to put some money down, in the form of an equity check totaling on average somewhere around 30 percent of the overall deal. The rest would come from financing from bank loans and junk bonds.

And over the last five years, private equity shops have been loath to partner together on “club deals.” Investors in these firms have complained that the practice essentially multiplies their exposure to a particular transaction. And L.B.O. firms aren’t fond of them because they essentially erase distinctions from competitors, potentially making it harder to persuade investors to give them money for new funds.

A company of Dell’s size would almost surely need more than one investor, because private equity firms are limited in the amount of equity that they can put into any single transaction.

And then there is the matter of debt financing. A Dell transaction is likely to require at least $16 billion from bank loans and junk-bond sales, a seemingly daunting amount.

That said, some deal makers think the money is there for the taking, pointing to the hunger of investors for debt that yields even a few percentage points more than Treasury bonds. The co-head of JPMorgan Chase‘s global debt capital markets, Jim Casey, told CNBC in October that his firm could raise $15 billion to $25 billion in noninvestment-grade debt for a single transaction.

Then there’s the matter of Dell itself. Helping would-be buyers is the fact that the company’s founder, Michael S. Dell, controls a nearly 16 percent stake. That’s represents at least $3 billion worth of stock that he could contribute to a deal.

And the company also had about $11.3 billion in cash and short-term investments on its balance sheet as of Nov. 2. That’s a big pile of money that could go toward paying off any debt taken on in an L.B.O.

But in its most recent annual report, Dell said that only about 10 percent to 20 percent of its cash pile was held in the United States, meaning the company would take a potentially big tax hit if it were to bring that money back onshore. Because of that, analysts at Goldman Sachs estimated in December that the return on an L.B.O. could be as low as 8 percent. Avoiding the tax man could bolster that return to 31 percent.

(That may less of a problem, according to the investor Wilbur L. Ross, who told CNBC on Tuesday that the company could sell eurodollar bonds, which may avoid incurring a steep tax charge.)

Dell also had almost $5 billion in long-term debt as of Nov. 2. That means the newly private company would be highly indebted, though analysts at the ISI Group and Mizuho point out that the company has respectable cash flow, generating about $3.7 billion in cash from operations during that time.

The bigger question for the company is whether going private would solve any of the issues it has faced for years. Its traditional business of making and selling personal computers has become less and less profitable, and Dell has already been trying to move into the more lucrative and stable market of providing hardware and software services for corporations. That’s not something that requires Dell to be private, however.

And there’s also the question of whether a newly private Dell, forced to spend much of its revenue on paying down its debt, would have money to invest in its business or pay for new acquisitions. (Last year alone, the company struck 10 deals, including the $2.4 billion purchase of Quest Software.)

Mr. Ross said on CNBC that he believed the chances of a deal coming together were about 50-50. But there’s still a lot of work and finagling that needs to be done to get to that point.

Ben Protess contributed reporting.

 

Article source: http://dealbook.nytimes.com/2013/01/15/the-challenges-of-taking-dell-private/?partner=rss&emc=rss

DealBook: Chinese Companies Head For the Exit

HONG KONG–Fed up with slumping share prices, prickly regulators and aggressive short sellers, an increasing number of Chinese companies listed on American stock exchanges are heading for the exits.

The most recent case is also the biggest yet. On Wednesday, the directors of Focus Media Holdings, a display advertising company based in Shanghai, whose shares had come under attack by short-sellers, said they had accepted a sweetened $3.7 billion privatization bid from a buyout group that included the American private equity giant Carlyle Group, several Chinese private equity firms and the company’s chairman.

The deal would delist the company from Nasdaq. It includes $1.5 billion in debt financing from a consortium of Wall Street banks and mainly state-owned Chinese lenders and would rank as China’s biggest-ever leveraged buyout. Pending shareholders’ approval, the company expects the transaction to close in the second quarter of next year.

Including the Focus Media deal, which was first announced in August, Chinese companies began a record $5.8 billion worth of privatization bids in the first nine months of the year, according to the data provider Dealogic. That was a 42 percent increase from the same period a year earlier, and proposed Chinese delistings accounted for a record 16 percent of such transactions globally during the period, up from 6 percent a year earlier.

‘‘A lot of Chinese entrepreneurs want out of the U.S. markets. Share prices are depressed, and there are a lot of these deals in the pipeline,’’ said David Brown, greater China private equity practice leader at the auditing firm PricewaterhouseCoopers.

Valuations of companies from China that are listed in the United States have come under pressure in recent years after a wave of allegations of fraud and other accounting scandals. The Securities and Exchange Commission has deregistered the securities of nearly 50 China-based companies and has filed about 40 related fraud cases.

At the same time, a cross-border regulatory dispute over auditing procedures for Chinese companies listed in the United States escalated this month, when the S.E.C. charged the Chinese affiliates of the world’s four biggest accounting companies with violating securities law for failing to turn over documents related to their auditing work on businesses in China.

The standoff between United States and Chinese regulators over the auditing issue has raised concerns among multinational corporations that operate in both countries.

‘‘Failure to reach an agreement will create regulatory dead zones that harm investors and businesses,’’ the United States Chamber of Commerce said last week in a letter to securities regulators in Beijing and Washington. ‘‘The threat of retaliatory actions by regulators, on both sides of the Pacific, may create a regulatory protectionism that will harm both economies.’’

Article source: http://dealbook.nytimes.com/2012/12/20/chinese-companies-head-for-the-exit/?partner=rss&emc=rss

DealBook: Lehman Estate to Sell Archstone for $6.5 Billion

The deal that helped sink Lehman Brothers is now playing an important role in paying off the failed investment bank’s creditors.

The Lehman estate agreed on Monday to sell Archstone, the sprawling apartment complex company, to Equity Residential and AvalonBay Communities for about $6.5 billion in cash and stock.

Under the terms of the deal, the Lehman estate will receive $2.685 billion in cash, as well as shares in Equity Residential and AvalonBay worth about $3.8 billion. The two apartment companies will also assume Archstone’s roughly $9.5 billion in debt.

By selling Archstone, the Lehman estate will dispose of its single biggest asset, as it continues its efforts to wind itself down and pay off the firm’s legions of creditors. And it will signal the latest twist for a property that has played an important role in Lehman’s demise.

Lehman bought Archstone in 2007, paying more than $22 billion to buy the apartment complex operator at the very height of the housing boom. That leveraged buyout piled even more debt onto an already overburdened firm, significantly contributing to its demise in the fall of 2008.

Since then, however, Archstone has become regarded as one of the crown jewels in the Lehman estate’s pile of assets. And as the estate has sold off a number of its other properties, from the asset manager Neuberger Berman to sundry other real estate holdings, the apartment company was held out as the best opportunity for a major payday.

Such was the Lehman estate’s zealousness that it bought out its partners in Archstone, Bank of America and Barclays, earlier this year, spending a total of $2.88 billion. The goal then was to prevent the firms from selling their holdings to Equity Residential too cheaply.

The stock component of the transaction announced on Monday will give make the Lehman estate the single biggest investor in Equity Residential, with a 9.8 percent stake, and in AvalonBay, with a 13.2 percent stake.

The purchase price represents a roughly 17 percent premium to what the Lehman estate had valued the apartment complex operator.

“The sale of Archstone to Equity Residential and AvalonBay is a very positive outcome for our creditors,” Owen Thomas, the chairman of Lehman’s board of directors, said in a statement.

Equity Residential, which is run by the billionaire Samuel Zell, will own about 60 percent of Archstone’s assets and liabilities. AvalonBay will own the remainder.

Lehman was advised by Gleacher Company, Citigroup, JPMorgan Chase and the law firm Weil, Gotshal Manges.

Equity Residential received advice from Morgan Stanley and the law firms Hogan Lovells and Morrison Foerster. AvalonBay was advised by Greenhill Company and the law firm Goodwin Procter.

Article source: http://dealbook.nytimes.com/2012/11/26/lehman-estate-to-sell-archstone-for-6-5-billion/?partner=rss&emc=rss

DealBook: Walgreen to Take Stake in Alliance Boots for $6.7 Billion

Sergio Dionisio/Associated PressA Boots pharmacy in central London.

7:20 p.m. | Updated

Two big retail chains on opposite sides of the Atlantic are betting that prescriptions, paper towels and nail polish are global goods.

On Tuesday, the American drugstore chain Walgreen Company agreed to buy a 45 percent stake in Alliance Boots, the European pharmacy retailer, for $6.7 billion, in a deal that will allow both companies to extend their worldwide reach.

Walgreen, which could gain full control of the company by 2015, can take advantage of Alliance Boots’ operations in Europe and several emerging markets. Alliance Boots gets a long-sought foothold in the United States.

The deal will create one of the world’s largest drugstore and pharmacy retailers, with more than 11,000 stores in 12 countries, as well as a wholesale pharmaceutical business with operations in 21 countries.

“This is a chance to create the world’s first truly global pharmacy and health care enterprise,” Gregory Wasson, chief executive of Walgreen, said in an interview. “There’s nothing else out there that can match it.”

The deal represents the latest strategic maneuver by Alliance Boots’ executive chairman, Stefano Pessina, to turn the European company into a global retailer.

Over the years, the Italian billionaire has expanded Alliance Boots through a number of international acquisitions. In 2006, he helped secure a $12 billion merger between Boots and a rival, Alliance Unichem.

A year later, he joined forces with the private equity firm Kohlberg Kravis Roberts to acquire Alliance Boots for $22 billion in the Continent’s biggest leveraged buyout.

In recent months, Mr. Pessina pursued an acquisition or merger, either in Asia or in North America, to continue Alliance Boots’ international expansion, according to a person with direct knowledge of the matter.

“If we want to be a global company, we need a presence in the U.S.,” Mr. Pessina, who will reinvest his proceeds from the deal to gain an 8 percent stake in Walgreen, said in an interview. “We will continue our expansion into new markets in Asia and Latin America.”

Under the terms of the deal, Walgreen will buy a 45 percent stake in Alliance Boots for $4 billion in cash and another $2.7 billion in company stock. Kohlberg Kravis Roberts, which had invested $1.8 billion in Alliance Boots, said it would receive $1.8 billion in cash and around $200 million in Walgreen stock.

The drugstore chain has the option to buy the remaining 55 percent stake in Alliance Boots three years after the deal closes, for $9.5 billion in cash and stock. If that happens, Walgreen would also assume the European company’s debt, which currently stands around $11 billion. The final price might vary depending on the performance of Walgreen’s shares and foreign exchange fluctuations.

The deal comes as Walgreen faces weakness in its home market. On Tuesday, the company reported an 11 percent drop in its earnings, to $537 million, for the three months through May 31.

Walgreen shares closed about 5.8 percent lower in New York.

The deal is the latest in a flurry of acquisitions of European targets by American companies. So far this year, the combined value of European mergers and acquisitions, excluding Walgreen’s acquisition of Alliance Boots, has reached $99.5 billion, according to the data provider Dealogic. Companies in the United States account for around 43 percent of the acquirers.

The $99.5 billion figure is a 21 percent decline over the same period in 2011, but is higher than the combined $72.7 billion of deals so far this year in the United States.

As part of the deal, Mr. Pessina of Alliance Boots and Dominic Murphy, a partner at Kohlberg Kravis Roberts, will join Walgreen’s board, while Mr. Wasson of Walgreen and several of the company’s executives will join the Alliance Boots board.

Walgreen said it expected annual costs savings of up to $150 million in the first year, and as much as $1 billion in savings by the end of 2016. The deal is expected to close by Sept. 1.

Goldman Sachs, Lazard and the law firms Wachtell, Lipton, Rosen Katz and Allen Overy advised Walgreen, while Centerview Partners and the law firms Darrois Villey Maillot Brochier and Simpson Thacher Bartlett advised Alliance Boots.


This post has been revised to reflect the following correction:

Correction: June 19, 2012

An earlier version of the story incorrectly said the deal is expected to close by the end of September. It is expected to close by September 1.

Article source: http://dealbook.nytimes.com/2012/06/19/walgreens-to-take-45-stake-in-alliance-boots-for-6-7-billion/?partner=rss&emc=rss

DealBook: Walgreens to Take Stake in Alliance Boots for $6.7 Billion

A Boots pharmacy in central LondonSergio Dionisio/Associated PressA Boots pharmacy in central London.

7:20 p.m. | Updated

Two big retail chains on opposite sides of the Atlantic are betting that prescriptions, paper towels and nail polish are global goods.

On Tuesday, the American drugstore chain Walgreen Company agreed to buy a 45 percent stake in Alliance Boots, the European pharmacy retailer, for $6.7 billion, in a deal that will allow both companies to extend their worldwide reach.

Walgreen, which could gain full control of the company by 2015, can take advantage of Alliance Boots’ operations in Europe and several emerging markets. Alliance Boots gets a long-sought foothold in the United States.

The deal will create one of the world’s largest drugstore and pharmacy retailers, with more than 11,000 stores in 12 countries, as well as a wholesale pharmaceutical business with operations in 21 countries.

“This is a chance to create the world’s first truly global pharmacy and health care enterprise,” Gregory Wasson, chief executive of Walgreen, said in an interview. “There’s nothing else out there that can match it.”

The deal represents the latest strategic maneuver by Alliance Boots’ executive chairman, Stefano Pessina, to turn the European company into a global retailer.

Over the years, the Italian billionaire has expanded Alliance Boots through a number of international acquisitions. In 2006, he helped secure a $12 billion merger between Boots and a rival, Alliance Unichem.

A year later, he joined forces with the private equity firm Kohlberg Kravis Roberts to acquire Alliance Boots for $22 billion in the Continent’s biggest leveraged buyout.

In recent months, Mr. Pessina pursued an acquisition or merger, either in Asia or in North America, to continue Alliance Boots’ international expansion, according to a person with direct knowledge of the matter.

“If we want to be a global company, we need a presence in the U.S.,” Mr. Pessina, who will reinvest his proceeds from the deal to gain an 8 percent stake in Walgreen, said in an interview. “We will continue our expansion into new markets in Asia and Latin America.”

Under the terms of the deal, Walgreen will buy a 45 percent stake in Alliance Boots for $4 billion in cash and another $2.7 billion in company stock. Kohlberg Kravis Roberts, which had invested $1.8 billion in Alliance Boots, said it would receive $1.8 billion in cash and around $200 million in Walgreen stock.

The drugstore chain has the option to buy the remaining 55 percent stake in Alliance Boots three years after the deal closes, for $9.5 billion in cash and stock. If that happens, Walgreen would also assume the European company’s debt, which currently stands around $11 billion. The final price might vary depending on the performance of Walgreen’s shares and foreign exchange fluctuations.

The deal comes as Walgreen faces weakness in its home market. On Tuesday, the company reported an 11 percent drop in its earnings, to $537 million, for the three months through May 31.

Walgreen shares closed about 5.8 percent lower in New York.

The deal is the latest in a flurry of acquisitions of European targets by American companies. So far this year, the combined value of European mergers and acquisitions, excluding Walgreen’s acquisition of Alliance Boots, has reached $99.5 billion, according to the data provider Dealogic. Companies in the United States account for around 43 percent of the acquirers.

The $99.5 billion figure is a 21 percent decline over the same period in 2011, but is higher than the combined $72.7 billion of deals so far this year in the United States.

As part of the deal, Mr. Pessina of Alliance Boots and Dominic Murphy, a partner at Kohlberg Kravis Roberts, will join Walgreen’s board, while Mr. Wasson of Walgreen and several of the company’s executives will join the Alliance Boots board.

Walgreen said it expected annual costs savings of up to $150 million in the first year, and as much as $1 billion in savings by the end of 2016. The deal is expected to close by Sept. 1.

Goldman Sachs, Lazard and the law firms Wachtell, Lipton, Rosen Katz and Allen Overy advised Walgreen, while Centerview Partners and the law firms Darrois Villey Maillot Brochier and Simpson Thacher Bartlett advised Alliance Boots.


This post has been revised to reflect the following correction:

Correction: June 19, 2012

An earlier version of the story incorrectly said the deal is expected to close by the end of September. It is expected to close by September 1.

Article source: http://dealbook.nytimes.com/2012/06/19/walgreens-to-take-45-stake-in-alliance-boots-for-6-7-billion/?partner=rss&emc=rss

DealBook: ConvaTec Said to Bid for Kinetic Concepts

ConvaTec, a company owned by two private equity firms, has made a bid for Kinetic Concepts that is higher than the wound-healing technology company’s $4.9 billion deal with another group of investors, a person briefed on the matter told DealBook on Sunday.

ConvaTec, which is owned by Avista Capital Partners and Nordic Capital, has obtained “highly confident” financing letters from Goldman Sachs and the Jefferies Group. Such correspondence means that while ConvaTec has not secured formal lending commitments, its investment banks believe that they can arrange the necessary debt financing.

Kinetic Concepts agreed last month to sell itself to a group of investors led by Apax Partners in the largest leveraged buyout since the financial crisis. Apax, along with the pension funds Canada Pension Plan Investment Board and the Public Sector Pension Investment Board, agreed to pay $68.50 a share in cash. Including Kinetic Concepts’ debt, the deal is valued at $6.3 billion.

Under the terms of Kinetic Concepts’ agreement with the Apax consortium, it could “initiate, solicit and encourage” higher bids until 11:59 p.m. on Sunday. Should the company strike a deal that its board determines is superior to the Apax offer, it will have to pay that group a $51.8 million breakup fee.

The bid by Convatec is unusual because private equity firms generally shun “jumping” bids once a deal is announced.

One possible complication for Convatec is unease about the financing markets, which have grown more volatile during the recent market turmoil. At least one potential transaction, Liberty Media’s proposed takeover of Barnes Noble, was scuttled because of rising financing costs. Liberty instead decided to buy a 16.6 percent stake in the bookseller for $204 million.

Kinetic Concepts has long been seen as an attractive takeover target because of its market-leading position in negative-pressure therapy, a technology that uses vacuum pumps to treat wounds. In recent years, however, lower-priced competitors have cut into the company’s market share.

Because of its relatively stable revenue, the wound-care industry has drawn the interest of private equity firms in recent years. Avista and Nordic bought ConvaTec from Bristol-Myers Squibb in 2008, in what was the largest leveraged buyout that year.

Shares in Kinetic Concepts closed on Friday at $65.37.

News of Convatec’s offer was reported earlier by Bloomberg News.

Article source: http://feeds.nytimes.com/click.phdo?i=ba3b1794d1b9530968e3bcb9e1d31569

DealBook: K.K.R. Earnings Fall 25%

George Roberts, left, and Henry Kravis, co-founders of Kohlberg Kravis Roberts.Gary SpectorGeorge Roberts, left, and Henry Kravis, co-founders of Kohlberg Kravis Roberts.

Kohlberg Kravis Roberts said on Wednesday that its second-quarter profit fell 25 percent as growth slowed in its main investment businesses.

The private equity giant reported $245.3 million in economic net income after taxes atop $117.6 million in fees. That amounts to an after-tax profit of 36 cents a stock unit; analysts had, on average, expected a profit of 41 cents, according to the market researcher Capital IQ.

Economic net income is a nonstandard profit measure used by publicly traded private equity firms that excludes some stock-based compensation costs. On a generally accepted accounting principles basis, K.K.R. earned $39.6 million for the quarter.

The firm said assets under management grew to $61.9 billion. Much of that growth resulted from an increase in the value of K.K.R.’s investments, as well as from newly raised capital.

“In an increasingly challenged global economic environment, our business continued its growth trajectory across all segments,” Henry R. Kravis and George R. Roberts, the firm’s co-founders and co-chairmen, said in a statement.

K.K.R.’s second-quarter performance trailed that of its main rival, the Blackstone Group, which more than tripled its profit for the period, thanks to its huge real estate arm.

Since becoming a public company, K.K.R. has focused on building up its operations outside of its core leveraged buyout business. The firm has raised billions of dollars for energy and infrastructure investments, and it has bolstered its nascent credit trading division.

Still, K.K.R. pointed to successes in its traditional private equity business. The unit increased assets under management to $47.1 billion, offset by payments made to its investors through the sales of portfolio companies and assets.

Article source: http://feeds.nytimes.com/click.phdo?i=3f62cdb0cc5036e4e76f518b55176adb