Fighting to stay listed

KKR Financial has been given an ultimatum by the New York Stock Exchange

For some publicly listed private equity firms, 2008 was a year to forget.

The share prices for both KKR Financial (the New York Stock Exchange-listed debt investment arm of US mega-firm Kohlberg Kravis Roberts) and US private equity firm Fortress Investment Group, for example, have fallen far since their public listings.

In 2008, KKR Financial shares nose-dived throughout the year and dipped below $1 in December. Having debuted at $24 per share in 2005, the price fell 90 percent overall last year as the firm struggled with investments in mortgage-backed securities.

KKR Financial was consequently warned by the NYSE that it must keep its share price at an average of at least $1 for 30 consecutive days or face delisting from the exchange. The firm has a period of six months in which to comply.

The firm's share price lingered below $1 for much of December, hitting a 52-week low of 57 cents on the 19th.However, the price has rallied recently – closing at $2.30 per share on 6 January.

Fortress's shares, meanwhile, have been on a slow descent since the housing bubble burst in 2007 and the credit markets seized. Its shares initially took off after the firm went public, shooting from an IPO price of $18 to range between $26 and $30 a share for a period. They began to dive in the autumn of 2007,when the firm's third-quarter earnings report showed a $38 million loss.

Fortress's shares also sank below the $1 level at the end of December, hitting a 52-week low of 95 cents on the 26th. Like KKR Financial, they also rallied in January to close at $2.25 per share on 7 January.

Fortress has not received a delisting warning from the NYSE, but this does not mean it is out of the woods. Alan Rambaldini, an equity analyst with investment research firm Morning star, says he expects Fortress's share price to continue to decline as long as global financial markets struggle.

He adds that management could elect to buy out the company and would be able to do so for a decent price as long as the shares trade low.