Fidelity Investments and Kohlberg Kravis Roberts jointly announced Monday that the two firms have struck an agreement whereby the Boston-based mutual fund company's customers will be to access the initial public offerings and secondary stock sales of KKR portfolio companies.

 

Under the arrangement, KKR will serve as the underwriter of all retail securities that are distributed by Fidelity. The equities of KKR-owned companies will be made available to Fidelity's retail customers and accounts that are overseen by its registered investment advisor and broker/dealer.

 

“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," said Mark Haggerty, president of Fidelity Capital Markets, in a statement.

 

Because KKR's portfolio is comprised of close to 50 businesses, generating more than $200 billion in annual sales, Fidelity's customers will be able to tap into a potentially large vein of future securities offerings.

 

KKR, a New York-based private equity firm, typically holds its investments for five to 10 years before harvesting its companies through IPOs or direct sales. In addition, the firm may also execute secondary offerings of companies it has already taken public to realize partial liquidity on its remaining stakes.

KKR's capital markets unit will oversee the effort. From the private equity firm's standpoint, the partnership with the manager of almost $2.7 trillion in assets will broaden its existing capital markets business.

 

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