KKR & Co. (KKR) shares jumped 2.9% after the private-equity firm disclosed plans to convert to a corporation from a publicly-traded partnership, in an attempt to appeal more broadly to regular stock investors.
The conversion will allow investors to buy the shares without creating the need for a Schedule K-1, a special Internal Revenue Service tax form that's used to report earnings from partnerships, New York-based KKR said Thursday on its website.
According to KKR, the shares will appeal to a "broader eligible investor universe." The move will also simplify reporting on financial results and compensation expenses, the company said.
KKR can now more easily use its stock as a currency for acquisitions, analysts at the brokerage firm Jefferies wrote in a report. The publicly-traded partnerships rose to $22.13 each in New York trading.
The conversion plan follows complaints by big private-equity firms, including Blackstone Group LP (BX) , that their shares aren't valued highly enough by traders, potentially due to the partnership structure. Ares Management LP (ARES) , a smaller private-equity firm, announced a similar conversion in February.
"KKR's conversion from a partnership to a corporation is designed to broaden our investor base, simplify our structure and make it easier to invest in our shares," the company's co-CEOs, Henry Kravis and George Roberts, said in a statement. "We believe this change, together with continued strong performance, will increase our ability to generate significant long-term equity value for all of our shareholders."
KKR reported Thursday that assets under management climbed 28% from a year earlier to $176 billion. Net income fell by 34% to $170.1 million, driven by lower investment gains and fees, the company said.
Private-equity firms profit by raising money from investors and then buying stakes in private companies, hoping to gain by selling the investments later at a higher price.