Last week, Wall Street Journal reported that private equity
(PE) arms of
Kohlberg Kravis Roberts & Co. L.P.
The Goldman Sachs Group, Inc.
) have exited their remaining stake in the discount retailer,
Dollar General Corporation
). KKR and Goldman sold their aggregate 4.2 million shares for
$60.71 per share.
The sale price was roughly three times Dollar General's initial
public offering (IPO). As an underwriter to the deal,
) purchased these shares and then offered them to the retail
Notably, in Jul 2007, a group of investors including affiliates
of KKR, Goldman and Citigroup Inc. had acquired Dollar General
for $7.3 billion in an all-stock deal. This turned Dollar General
into a private firm. However, in Aug 2009, Dollar General
announced an IPO and turned into a publicly traded company again.
Since then, these PE investors have been offloading their stake
in Dollar General from time to time. The last disposition was in
March this year, when KKR and Goldman sold their interests for
With shares of Dollar General trading near its 52-week high, we
believe it was the right time for KKR and Goldman to sell their
stakes and maximize returns from their investments. Further, on
Friday's (Dec 13, 2013) closing price of $60.48, Dollar General's
shares reflected a year-to-date return of roughly 40.9%.
Further, given the recent rally in equity market, more such exits
by PE firms will likely occur going forward. This will enable
these PE firms to reap profits from their investments and utilize
the cash generated to invest in other companies.
Currently, KKR carries a Zacks Rank #1 (Strong buy), while
Goldman holds a Zacks Rank #3 (Hold).
BARCLAY PLC-ADR (BCS): Free Stock Analysis
DOLLAR GENERAL (DG): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
KKR & CO LP (KKR): Free Stock Analysis
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