KKR Prices $2.25B Convertible Preferred Stock Offering

KKR & Co. Inc. has priced a $2.25 billion offering of convertible preferred stock to enhance its investment capabilities. With expectations to close by March 2025, this move can influence their capital structure and stock performance in the future.

Date: 05-03-2025

AI Rating: 7

Convertible Preferred Stock Offering
KKR & Co. Inc. (KKR) has successfully priced a $2.25 billion offering of its 6.25% Series D Mandatory Convertible Preferred Stock, which marks an upsizing from a previously announced offering of $1.50 billion. This significant capital raising is an essential strategy for KKR, as it enhances its ability to invest in private equity portfolio companies and fulfill other general corporate purposes.

The net proceeds from the offering are anticipated to be around $2.20 billion after deducting underwriting discounts and estimated offering expenses. This influx of capital could provide KKR with the necessary financial flexibility to pursue acquisitions in its Strategic Holdings segment, potentially impacting its revenue and net income positively in the long run.

Furthermore, the offering permits underwriters a 30-day option to purchase an additional $337.5 million, indicating strong demand for KKR’s equity. The automatic conversion of the mandatory convertible preferred stock into KKR's common stock on March 1, 2028, is structured in a way that could align the interests of existing shareholders with new investors, depending on the future valuation of KKR's common stock.

The dividends on this preferred stock, payable cumulatively at an annual rate of 6.25%, will begin on June 1, 2025, providing a potential return on investment for stakeholders who opt for this product. This dividend strategy is designed to sustain investor confidence, given that its payments will be determined by KKR's board and could be made in cash or stock.

Stocks: KKR