Aug. 21 (Bloomberg) -- Dollar General Corp. filed to raise as much as $750 million in an initial public offering as KKR & Co. LP, owner of the discount retailer, took advantage of a rebound in equity markets.

KKR, which took the firm private in 2007, will serve as one of the main underwriters along with Citigroup Inc., Goldman Sachs Group Inc. and six other banks. On Aug. 5, KKR-backed semiconductor maker Avago Technologies Ltd. raised $745 million in an IPO. The shares have gained 18 percent since the debut.

Buyout firms that spent a record $1.6 trillion on announced deals from 2005 to 2007 are eager to sell some of their holdings and distribute profits to investors. The firms last year called $148 billion from their limited partners and distributed $63 billion, according to London-based researcher Preqin Ltd.

“We’re seeing a split between those private-equity firms that chose their portfolios judiciously and those that may not have,” said Steven Kaplan, a professor at the University of Chicago’s Booth School of Business. “KKR’s portfolio looks good relative to others. They all bought high; it’s a question of who can sell high.”

After a single $828 million U.S. IPO in the first quarter, 14 companies have tapped the public markets bringing the total raised this year to $4.13 billion, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index has gained 48 percent from this year’s low in March, and is up 12 percent in 2009.

Dollar General, based in Goodlettsville, Tennessee, will use money from the sale to repay senior subordinated debt, according to a regulatory filing. KKR, Goldman Sachs, Citigroup and other shareholders will receive a $200 million dividend before the offering using cash from the proceeds of the sale.

Spending Less

Dollar General has two senior secured credit facilities for as much as $3.33 billion of which $2.3 billion is a term loan with the remainder an asset-backed revolving line of credit.

Net income was $83 million for the 13-week period ended May 1, compared with $5.9 million in the year-earlier period. Dollar General sales advanced 16 percent to $2.78 billion in the three months ended May 1.

KKR, Goldman Sachs and other investors paid $7.3 billion to acquire the retailer in 2007, according to Bloomberg data. The company has 8,577 stores in 35 states selling food, paper, cleaning products and other goods generally for $10 or less.

Shoppers are spending less on non-essentials and turning to discount chains including Family Dollar Stores Inc. and Wal-Mart Stores Inc., the world’s biggest retailer, as unemployment rises and home values drop in the worst economy since the 1930s.

Thirty-two percent of U.S. consumers said they are saving more, up 10 percentage points from a year earlier, according to a survey released last month by New York-based Deloitte LLP. The survey showed 90 percent will buy back-to-school items at discount department stores and 40 percent at so-called dollar stores.

To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net

Last Updated: August 21, 2009 00:01 EDT