UPDATE: KKR announced plans on Wednesday to list its business development company, Capital Corporate Trust, on or around 14 November. It will trade on the New York Stock Exchange under the ticker CCT. Its new investment advisory agreement, in which KKR is the sole advisor, will become effective upon listing, according to the statement. The firm also announced a $185 million tender offer and the payment of future special dividends, and said it was considering the possibility of KKR and its employees purchasing $50 million of the stock in future open market purchases.
CNL Financial Group and KKR are anticipating taking their Corporate Capital Trust business development company public by the end of the year, a transaction that would involve changes in both the fees charged and the management structure.
Orlando-based CNL, CCT’s current investment advisor, and New York-based KKR Credit, CCT’s current sub-advisor, plan to list the BDC on the New York Stock Exchange in the fourth quarter, an event it began preparing for in April, according to US Securities and Exchange Commission documents.
Going public would fulfill an obligation of mid-market lender to consider a potential liquidity event by the end of 2018. In making the case for its listing in an investor presentation, KKR noted that completing the initial public offering by yearend would put the firm well ahead of that schedule.
In the same presentation, KKR also said CCT would be the third-largest BDC by assets, which stood at $4.39 billion as of 30 June, once it is listed. CCT would be surpassed only by Ares Capital Corporation and Prospect Capital.
In connection with the listing, KKR will become CCT’s sole investment advisor and cut the base management fee from 2 percent to 1.5 percent. It would still have a 20 percent performance fee over a 7 percent hurdle rate.
CCT’s investment portfolio comprised 71.1 percent senior debt; 12.2 percent subordinated debt; 9.4 percent asset-based finance; 2.4 percent Strategic Credit Opportunities Partners, a joint venture with Conway Capital; and 4.9 percent equity. The firm’s net asset value per share as of 30 June was $8.92. That figure is up from $8.81 at the same time last year but slightly down from the $9 per share as of 31 March.
The Carlyle Group listed its BDC in June, the first one to do so since Goldman Sachs BDC in March 2015. There were signs that Carlyle might not be the only firm to take a BDC public this year. The TCW Group’s BDC, TCW Direct Lending, signalled in an April regulatory filing it was considering a transaction that would allow the shareholders from its private BDC to receive the same number of shares in a vehicle with the capability to launch an IPO.