Fidelity and private-equity giant Kohlberg Kravis Roberts & Co. revealed Monday an agreement that gives Fidelity's customers access to IPO and other stock offerings from KKR's companies.

Fidelity's retail and institutional brokerage customers now have exclusive access to IPOs, putting Fidelity on equal footing with investment banks with large underwriting businesses. The deal will likewise provide a distribution channel for KKR's burgeoning capital markets buisiness.

Mark Haggerty, president of Fidelity Capital Markets, noted a positive outlook on the IPO market as just one of the strategic benefits of the partnership.

"Our new relationship with KKR gives Fidelity the ability to offer our retail, RIA and broker-dealer clients unique access to new issue equity offerings of KKR portfolio companies and the potential for more meaningful allocations in those offerings," Haggerty said. "We believe that with a portfolio of nearly 50 companies that generate wore than $200 billion in annual revenues, KKR will provide a significant source of investment opportunities for our customers over the coming years and be an important strategic relationship for our company."

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Fidelity Investments® and Kohlberg Kravis Roberts & Co. (KKR) today announced an agreement that enables Fidelity's retail and institutional brokerage customers the opportunity to participate in initial public offerings (IPOs) and follow-on offerings of KKR companies, while providing KKR's capital markets business with a new retail distribution channel.

Through the new relationship, Fidelity will have exclusive access to retail securities that are allocated to KKR in all U.S. public offerings in which KKR participates as an underwriter, including IPOs and follow-on offerings. Those retail securities will be made available to Fidelity's retail brokerage customers as well as to accounts managed by Fidelity's registered investment advisor (RIA), correspondent broker-dealer and other institutional clients. KKR will act as the underwriter of all retail securities that are distributed by Fidelity under the arrangement.

"While it's no secret that the IPO market has slowed over the last couple of years, we are beginning to see signs that it may be picking up momentum," said Mark Haggerty, president of Fidelity Capital Markets, the institutional trading division of Fidelity Investments. "Our new relationship with KKR gives Fidelity the ability to offer our retail, RIA and broker-dealer clients unique access to new issue equity offerings of KKR portfolio companies and the potential for more meaningful allocations in those offerings. We believe that with a portfolio of nearly 50 companies that generate more than $200 billion in annual revenues, KKR will provide a significant source of investment opportunities for our customers over the coming years and be an important strategic relationship for our company."

Craig Farr, member of KKR and head of KKR Capital Markets, said, "Over the past two years, we have built a global capital markets platform that includes institutional placement capabilities, meaningful underwriting capacity and a team of experienced capital markets and structuring professionals. Our alliance with Fidelity creates a new retail distribution channel for our capital markets business and allows us to provide a broader range of investors with greater access to our offerings. This is another important step in the continued development of KKR."

As part of the alliance, Fidelity and KKR also may offer directed share programs (DSPs) to issuers who wish to place securities directly to employees and other investors in connection with a new issue equity offering.

 

Edited by: Meredith Mazzilli


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