KKR Sued by Fund Over $560 Million Payment to Founder Group (1)

A pension fund sued KKR & Co. in Delaware over claims that the private equity giant plans to pay its founders and their associates nearly $560 million for worthless tax benefits when buying out their personally held partnership units on terms set during its initial public offering.

The lawsuit targets a proposed transaction through which KKR’s founders will exchange equity in certain affiliates for shares of the publicly traded parent company. It was filed Nov. 12 by law firms leading similar litigation against Apollo Global Management Inc. and Carlyle Group Inc.

Because of the tax-free nature of the transaction—which is ...