A nice slow start to the week, financial disaster-wise, as no big investment bank announced a major writedown, no bad housing numbers were released and no emergency action was needed by Treasury and the Federal Reserve over the weekend.

An ‘80s star, Kohlberg Kravis Roberts & Co. returns to the spotlight as it strategically leaks that it will sell shares in itself to the public, a deal that will value the buyout firm at $15 to $19 billion, according to The Financial Times, or $12 to $15 billion, according to The Wall Street Journal and The New York Times, or $15 billion, according to Bloomberg.

I’d go with the lower estimates on this one.

Under the deal, the KKR will buy a struggling, publicly traded European affiliate, a move that helps shore up the unit and at the same time makes about 21 percent of the mother ship available to the public.

The move wins polite applause from the Journal:

From KKR’s perspective, the move is an elegant solution to shoring up the affiliate while also giving KKR access to the public markets. The firm has argued for months that the affiliate, KPE, was undervalued relative to its asset values. By that standard, KKR is buying KPE at a discount — which long-term could prove to be a wise purchase.

But the paper does remind readers that other private equity companies have faltered once they came public and that this is a “dark time” for companies that rely on debt to do their deals, indeed for all things financial.

Several big-name competitors, including Blackstone Group and Fortress Investment Group, have seen their shares hammered as financial-market turmoil makes it tougher for them to pull off big corporate buyouts, their bread and butter.

Andrew Ross Sorkin at the Times (who, puzzlingly, appears to have a statement released by founding cousins Henry R. Kravis and George Roberts that other media don’t) reminds us that a public private equity firm is a bit of a contradiction.

Of course, the great paradox of private equity firms’ pursuit of public offerings has not been lost on investors, with some questioning whether the firms are undermining the very model that they have said makes their investments so successful. Firms like Blackstone and Kohlberg Kravis have said that they will benefit by being public because they can use the currency of their shares to expand their business and attract and retain executives.


Otherwise, the papers reflect summer’s dog days. The Journal reveals that federal highway funds, which rely on a gas tax, are suffering because motorists are driving less. This may appear to be unsurprising—and it is—but the paper does have exclusively a new Department of Transportation report that shows driving in May was off 3.7 percent from the previous May. And there is good use of action verbs and adverbs:

An unprecedented cutback in driving is slashing the funds available … [etc.]


The FT leads its “Companies & Markets” section with thin gruel, word that Reed Elsevier is offering $330 million in financing to help the previously known sale of its publishing and information group. Yes, it is a sign that credit is hard to come by, but we knew that, and a $330 million financing deal is pretty small.

Essentially, the story offers a good example of how the short-staffed FT makes a little go a long way by putting smart spin on a nothing event.

Rooting through all the news—even the WSJ editorial page fails to provide a good yuck, except for a letter writer, one Philip D. Grant of Rowayton, Conn., who quotes Friedrich Hayek and sees in Fannie Mae “the road to serfdom.”

That crowd is big on Central European philosophers [Audit Correction: a previous version identified Hayek as German; he was Austrian, as the commenter below points out.]

If all you read were Forbes andWSJ’s opinion pages, you would think the government crashed the global financial system. But then, that is all some people read.

Myself, I worry about the future of news media financially and their ability to support news gathering and opinion blathering.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014).

Follow Dean on Twitter: @deanstarkman.