KKR & Co. said Thursday it would convert to a corporation from a partnership, a structural change that many publicly traded private-equity firms have been contemplating on the heels of sweeping U.S. tax legislation.
The partnership structure, with its multiple share classes and special tax-reporting requirements, has long limited the pool of investors willing or able to own shares of private-equity firms. Firms were nonetheless reluctant to change their structure because of the tax advantages of partnerships.
KKR
KKR, +3.91%
hopes the change will make the stock more attractive to mutual funds and other institutional investors, which mostly don’t invest in publicly traded partnerships. This lack of demand has depressed KKR’s stock price, said Scott Nuttall, KKR’s co-president and co-chief operating officer.
“It became clear to us that we’ve been fishing in a small pond with a slow leak and wondering why we weren’t catching anything,” he said on a conference call Thursday to discuss the firm’s first-quarter financial results.
An expanded version of this report appears at WSJ.com.
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