Davis Polk & Wardwell LLP advised Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. as joint book-running managers in connection with the offering by KKR Financial Holdings LLC of $172.5 million principal amount of its 7.5% convertible senior notes due 2017 (which included the full exercise of the over-allotment option).

Based in San Francisco, California, KKR Financial Holdings LLC is a specialty finance company that uses leverage with the objective of generating competitive risk-adjusted returns. KKR invests in financial assets consisting primarily of below investment grade debt.

The Davis Polk corporate team included partners John M. Brandow, Joseph A. Hall and Margaret E. Tahyar and associates Wendi Hoeben, Paul Anderson, Lena V. Kiely, Jennifer Freiman, E. Ashley Harris and Meng Ding (not yet admitted). The tax team included partner Po Sit and associates Catherine Paskoff Chang and Kerry M. Shapleigh (not yet admitted). Associate Catherine L. Martin provided ’40 Act advice. Counsel Erin K. Cho provided ERISA advice. Natalie Chan was the legal assistant for the transaction. All members of the Davis Polk team are based in the New York office.