Business Context and Reporting Period
Company: KKR & Co. L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: September 9, 2015
Event: Announcement of an agreement to acquire a minority equity interest in Marshall Wace LLP, a global equity long/short and liquid alternatives manager.
Key Financial Metrics and Transaction Structure
This filing details a strategic investment rather than periodic financial performance. Key transaction metrics include:
- Initial Equity Stake: 24.9% interest in Marshall Wace.
- Equity Consideration: Approximately 7.4 million newly issued KKR Common Units (subject to foreign exchange rates).
- Cash Consideration: Cash to be delivered at closing, with the majority required to be invested in Marshall Wace funds for a minimum period.
- Future Upside: Options to acquire incremental 5% stakes in years 2, 3, and 4, potentially reaching an aggregate 39.9% ownership.
- Future Pricing: Based on Marshall Wace's future financial performance; payable in cash or Common Units at KKR's discretion.
- Liquidity Restrictions: Initial Common Units subject to a three-year transfer restriction. 50% of future consideration must be reinvested or held for three years.
Note: The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for KKR or Marshall Wace.
Material Changes and Strategic Outlook
The primary material change is the entry into a strategic partnership with Marshall Wace. This transaction is contingent upon the satisfaction or waiver of customary closing conditions, including regulatory approvals. The deal structure allows KKR to increase its ownership over time based on performance metrics, aligning long-term interests.
Risks, Contingencies, and Forward-Looking Statements
- Consummation Risk: No assurance that the subscription, closings, or issuance of Common Units will be completed or regarding the timing of such transactions.
- Regulatory Risk: Closing is subject to regulatory approvals.
- Forward-Looking Nature: Statements regarding the transaction are based on current beliefs and assumptions and are not guaranteed. KKR does not undertake an obligation to update these statements except as required by law.
Investor Verification Checklist
- Verify the final closing date and confirmation of regulatory approvals.
- Confirm the exact number of Common Units issued once foreign exchange rates are finalized.
- Review the specific terms of the cash consideration and the mandatory reinvestment period in Marshall Wace funds.
- Monitor future filings for the exercise of call/put options regarding the incremental 5% equity interests in subsequent years.
- Assess the impact of the 7.4 million new units on existing shareholder dilution.