KKR going to an IPO

This week KKR confirmed they have filed with the New York Stock Exchange that they will be going to IPO.

Kohlberg Kravis Roberts & Co.'s Henry Kravis made personal visits to the securities sales forces of Morgan Stanley, Goldman Sachs Group Inc. and Citigroup Inc this week, drumming up interest in their upcomming IPO.

So who is KKR? KKR are the Private Equity company which engineered some of the largest Leveraged Buy Outs (LBO's) in history, throughout a spree of buys in 2006 and early 2007.

So what makes this interesting?

1) The IPO market currently is DEAD... in both the US and Australia. Unless you are in the mining or mining services industry... it is not the most ideal time. In 2007 there were 350 IPO's in Australia and this year... there has been 52.

2) They rely on debt funding to orchestrate this massive buy outs. Given that the credit markets are taking beat after beating as each quarter rolls buy. This does not makes sense

So now the question... Does legendary deal maker Henry Kravis know something that everyone else has missed? Is he timing his 4th quarter float to early... or will he be on the money.

Blackstone, the last Private Equity company to list is sitting at about 60% of their original float price.

So Henry... cheers to you for either what is going to be seen as genius or insanity! Either way... markets throughout the world will be watching!

China... After the Olympics?

2 weeks away from the start of the Beijing Olympic games.

For the last 8 years China has been gearing up for this event, with massive investments into the Nations Infrastructure. The building of Hotels, Apartments, Roads, Dams, Bridges, Stadiums, Public Transport, Retail precincts etc... has all received strong investment.

This focus is to ensure that in the 2weeks in which the greatest athletes on the planet, go head to head and toe to toe... that the phenomenon which is China, is powerfully showcased to the world!

My question is... what will happen to China after the Olympics? This expanding nation, which is behind the massive demand for Australian commodities... will have hosted it.

What are your thoughts on the direction of China after the Olympics? Will growth slow or will it accelerate?

Fannie Mae and Freddie Mac and the interesting week ahead

Between these two companies they own or guarantee more than $5 Trillion worth of loans with American home owners.

Right now they are reported to be on the brink of collapse, with President Bush and Henry Paulson (US Treasury Secretary) meeting over the weekend to discuss the 2 companies fate.

The challenge for the US economy is that Fannie and Freddie guarantee some 40 per cent of all mortgages in the US, but the value of the homes used to underwrite those mortgages has in many cases fallen well below the value of the loans.

Fannie Mae has seen their share price go from just over $70 down to $10.
Freddie Mac has seen their share price from $67 to just under $8.

Add to this, Merryl Lynch is expected to announce a further write down of $5Billion and the markets should be in for an interesting week.

The deal of the century!!!

Well... not really.

From time to time I get an email from a lovely gentleman in Nigeria, seeking my help with his delicate situation. In this email, they put forward to me the deal of the century, simply for assisting them in their pursuits.

Yes, they are also known as the Nigerian scammer.

I decided to post this today, as the markets have provide interesting times for traders... a mental break was in order, and I will throw in some humour for free.

419 Eaters, are people that turn the tide on the people creating the Nigerian email scams. They are absolutely brilliant at their craft and they highlight the amazing things these guys will do to get money.

A 419 eater, sees it as their job to... "enter into a dialogue with scammers, simply to waste their time and resources." It is also called scam baiting.

To see a whole list of these and entertain yourself for a period of time, go to http://www.419eater.com/html/letters.htm

The two funniest one I have read are...

http://www.419eater.com/html/joyce_ozioma.htm

http://www.419eater.com/html/martins_jide.htm

This blog post will guarantee that the next time you receive one of these emails, you will have a wry smile on your face.

Enjoy your week

The Weather Business...

If there is a special event coming up. or we are looking to plan an outing with family friends... often we look to the 'weather man' or girl, to give us their best prediction on the weather.

I used to joke that I would love to be a weather man in Melbourne, as it would be an easy job "cloudy, overcast, windy with potential for light rain" would be my frequent call.

Over the weekend NBC, Private Equity Group Blackstone and Bain Capital all got together to purchase the Weather Channel, which was previously privately held.

The pricetag... US$3.5 Billion!!! Who knew the weather business was so valuable. What is interesting is... they wanted $5 Billion.

The reasons they gave were simple "The Weather Channel is the third most distributed cable network and is viewable in more than 97 percent of cable television homes in the United States. Its website, www.weather.com, has nearly 40 million unique visitors per month."

40 million unique visitors is an astonishing amount of web traffic.

Did you any idea that the weather business was so profitable?