Retail investors wanting a piece of high-rolling private-equity action should look cautiously at a novel pair of initial public offerings from giant buyout firms Kohlberg Kravis Roberts and Apollo Investment Group, as underwriting firms move to get a share of the lucrative market. Seen as the advance guard of a movement expected to sweep through the private-equity industry, the two multibillion-dollar firms created closed-end, public investment companies that will make private investments in middle-market companies. These mezzanine debt funds will generate income through debt, and eventually, stock in companies that are taken public. According to a Securities and Exchange Commission filing, KKR's business development company will invest up to 30% of its portfolio in distressed debt, high-yield or junk bonds and other distressed securities of public companies. Apollo raised $930 million and closed its doors to new money after pricing an IPO for its Apollo Investment Corp. ( AINV) on April 5. KKR filed a $750 million offering Monday that could raise well over $1 billion, according to industry observers. But David Menlow, president of IPOFinancial.com, said investors won't see the quick gains and high stock turnover once equated with initial public offerings. While the new securities are public, investors in the third- and fourth-largest IPOs of the year should go in with a whole new set of expectations, he said. "Investors coming into these deals have to just let go of whatever objectives they have for the short term," he said. "This is all about trusting Apollo or KKR. It's 'Let's put our faith with them.' It's a longer-term view, not something where you're going to buy these stocks and get a pop at the opening." Apollo Investment shares closed at $15.04 on Tuesday, and have reached only as high as $15.44 since they started trading April 6.